Gross profit grew 71% year over year backed by the Company's successful shift to higher margin categories
HIGHLIGHTS OF FISCAL 2023
- Generated strong volume in the last six months of the year to reach sales of
$123.3 million , comparable to the previous fiscal year. - Positioned our product mix to higher product margin categories, with the share of such product categories growing to 25.8% and 24.6% of revenue, respectively, during the three and twelve months ended
March 31, 2023 . - Gross profit increased by 71.4% to
$6.8 million and adjusted gross profit increased by 19.9% to$9.2 million for fiscal 2023 compared to the fiscal year endedMarch 31, 2022 . Adjusted gross profit as a percentage of revenue increased from 6.1% to 7.4% in the period. - Cash generated from operating activities of
$5.0 million in fiscal 2023, an improvement of$17.5 million from$12.5 million of cash used by operating activities in fiscal 2022. - Commissioned 60,000 MT, state-of-the-art, environmentally-friendly pea splitting facility in
Zealandia, Saskatchewan and retail bagging lines inClayton, North Carolina , providing further platforms for growth in higher margin categories.
"GFI is pleased to report its year end results, showing our continued improvement in gross profit margin driven by our shift in focus to higher margin products and services", commented
"Our plant-based ingredients segment grew EBITDA over 125%, year-over-year, backed by our strategic positioning in higher margin product categories, despite the pea splitter going through its ramp up phase", added
Fourth Quarter Results
Financial Highlights – Three Months ended
- The Company recorded revenue of
$29.9 million in the three months endedMarch 31, 2023 , a 14.2% decrease in comparison to the prior comparable period, predominantly attributable to one large sale in the previous period and the Company's shift to more premium, value-added ingredients. - Despite the decline in sales, gross profit was
$0.7 million in the three months endedMarch 31, 2023 , consistent with the prior comparable period, resulting in an increase in gross profit margin to 2.2% in the three months endedMarch 31, 2023 , in comparison to 2.0% in the three months endedMarch 31, 2022 . - Adjusted gross profit1 was
$1.4 million or 4.9% of revenue in the three months endedMarch 31, 2023 , compared to$1.5 million or 4.4% of revenue in the prior comparable period, predominantly attributable to the Company's successful shift to higher margin, value-added products.
Financial Highlights – Fiscal Year ended
- Revenues were
$123.3 million , a slight decrease of 0.9% or$1.2 million compared to$124.4 million in the fiscal year endedMarch 31, 2022 . During the period, the Company focused its sales efforts on driving higher margin categories rather than volume. - Gross profit increased by 71.4% or
$2.8 million to$6.8 million in the fiscal year endedMarch 31, 2023 , compared to$4.0 million in the fiscal year endedMarch 31, 2022 . The Company's increased focus on higher margin product categories drove a 2.3% increase in gross profit margin to 5.5% of revenue, compared to 3.2% in the prior comparable period. - Adjusted gross profit1 was
$9.1 million or 7.4% of revenue in the fiscal year endedMarch 31, 2023 , compared to$7.6 million or 6.1% of revenue in the prior comparable period. The$1.5 million increase is attributable the Company's shift to higher margin product categories, including a year of the pet food operations (2023 – 19.3% of plant-based ingredient sales, 2022 – 6.3%) and commissioning of the pea splitting line (2023 – 5.4% of plant-based ingredient sales, 2022 – 1.8%), despite the increased overhead costs, one-time branding and market development expenses from the consumer products segment, and$2.3 million negative realized foreign exchange gains/losses.
Highlights – Subsequent to the fiscal year ended
- Completed the installation of the retail packaging capabilities at the Company's US distribution center in
Clayton, North Carolina . The retail packaging lines are capable of packaging products in pouches and pillow bags, including 1lb, 2lb and 4lb formats. The capabilities were built within the Company's existing distribution center, providing highly efficient operation with retail packaging and order fulfillment in the same location. The initial focus for the facility will be packaging GFI's branded North Lily and North Lily Organics ingredients into pillow bags and then distributing throughoutNorth America . GFI will also be providing private label bagging services to third party customers at gross margins higher than fiscal 2023 consolidated gross margins. - Completed the divestiture of the Yofiit business to the founders, resulting in GFI receiving a vendor-take-back note of
$2.7 million and cancellation of one million outstanding shares of GFI. Yofiit recorded a loss for the fiscal year endedMarch 31, 2023 of$2.0 million and incurred a decrease in cash from discontinued operations of$2.6 million . As part of the transaction, the Company retained ownership of the working capital associated with the business and entered into an inventory purchase sales agreement with the purchasers to be executed over a six-month period following the closing of the transaction. - Refocused the Company's consumer packaged good (CPG) segment resulting in a significant decrease in overhead and marketing expenses associated with the division. The CPG segment recorded a loss during the fiscal year ended
March 31, 2023 of$0.9 million and used cash from operations of$2.7 million . The Company shifted and increased focus back to its core ingredients and value-added business segment for the immediate future. Management believes that CPG segment still aligns with our long-term farm-to-fork strategy and will focus primarily on consumer products that connect directly to our core ingredients procurement and value-added processing capabilities and can be distributed effectively with low marketing costs.
Income Statement Summary
Three months ended | Fiscal year ended | |||||||||||
2023 | 2022 | change | 2023 | 2022 | change | |||||||
Revenue | $ | 29,862,358 | 34,817,520 | (14.2) | % | $ | 123,260,182 | 124,420,186 | (0.9) | % | ||
Cost of sales | 29,199,446 | 34,113,841 | (14.4) | 116,441,751 | 120,443,228 | (3.3) | ||||||
Gross profit (loss) | 662,912 | 703,679 | (5.8) | 6,818,431 | 3,976,958 | 71.4 | ||||||
Expenses: | ||||||||||||
General and administration | 2,314,873 | 1,414,899 | 63.6 | 8,336,827 | 5,889,046 | 41.6 | ||||||
Depreciation and amortization | 174,826 | 94,209 | 85.6 | 645,524 | 259,847 | 148.4 | ||||||
Loss before the undernoted | (1,826,787) | (805,429) | (126.8) | (2,163,920) | (2,171,935) | 0.4 | ||||||
Other expenses | 694,349 | 1,635,270 | (57.5) | 8,329,716 | 4,198,773 | 98.4 | ||||||
Loss before income taxes | (2,521,136) | (2,440,699) | (3.3) | (10,493,636) | (6,370,708) | (64.7) | ||||||
Income tax recovery | (187,240) | (149,942) | (24.0) | (1,864,622) | (114,403) | (1,529.9) | ||||||
Loss for the period from continuing operations | $ | (2,333,896) | (2,290,757) | (1.9) | % | $ | (8,629,014) | (6,256,305) | (37.9) | % | ||
Non-IFRS Measures Summary1
Three months ended | Fiscal year ended | |||||||||||
2023 | 2022 | change | 2023 | 2022 | change | |||||||
Gross profit margin | 2.2 % | 2.0 % | 5.5 % | 3.2 % | ||||||||
Adjusted gross profit | $ | 1,450,579 | 1,535,972 | (5.6) | % | $ | 9,159,590 | 7,640,689 | 19.9 | % | ||
Adjusted gross profit margin | 4.9 % | 4.4 % | 7.4 % | 6.1 % | ||||||||
EBITDA | $ | (1,313,068) | (1,324,578) | 0.9 | % | $ | (6,414,550) | (3,230,366) | (98.6) | % | ||
EBITDA margin | (4.4) % | (3.8) % | (5.2) % | (2.6) % | ||||||||
Adjusted EBITDA | $ | (1,724,242) | (559,459) | (208.2) | % | $ | (1,979,615) | (627,615) | (215.4) | % | ||
Adjusted EBITDA margin | (5.8) % | (1.6) % | (1.6) % | (0.5) % | ||||||||
1 Gross profit margin, adjusted gross profit, adjusted gross profit margin, EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin are non-IFRS performance measures. Refer to "Cautionary Statements - Non-IFRS Measures" in this release for further details. |
The audited financial statements for the fiscal year ended
About GFI
GFI is a fast-growing Canadian plant-based food and ingredients company, connecting the local farm to the global supply chain for peas, beans, lentils, chickpeas and other high protein specialty crops. GFI's vision is to become a vertically integrated farm-to-fork plant-based company providing traceable, locally sourced, healthy and sustainable food and ingredients. GFI is organized into four primary business lines: Core Ingredients, Value-Added Ingredients, Plant-Based Pet Food Ingredients and Downstream Products. Headquartered in
Disclaimer
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Cautionary Statements
Non-IFRS Measures
This news release contains the financial performance metric of gross profit margin, adjusted gross profit, adjusted gross profit margin, EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin, all of which are measures that are not recognized or defined under IFRS (collectively the "Non-IFRS Measures"). As a result, this data may not be comparable to data presented by other food and ingredients companies. The Company believes that the Non-IFRS Measures are useful indicators of operational performance and are specifically used by management to assess the financial and operational performance of the Company.
Changes to Prior Period Presentation
In the current reporting period, management undertook a review of the historical adjusting items as part of an effort to reduce the number of non-IFRS items it adjusts for in its financial reporting. Management concluded that in order to present adjusting items in a manner more consistent with current and future fiscal year operating results, the Company will no longer adjust for net insurance proceeds associated with the take-or-pay toll processing agreement ("TPA") cancelled in Q4 of the year ended
Starting in the first quarter of the current reporting period, net insurance proceeds will not be considered as an adjusting item. The rationale for the adjustment to the allocation of net insurance proceeds in the quarters and year ended
Non-IFRS Measures Definitions
Gross profit margin is defined as gross profit divided by revenue.
Adjusted gross profit is calculated by adding or deducting, as applicable from gross profit, certain costs, charges or benefits incurred in such period which in management's view are either not indicative or are directly correlated to the Company's process to sell its products, including: (a) realized foreign exchange loss (gain) and (b) overhead costs attributable to brining inventory to a saleable condition that have been recorded as cost of sales under IFRS. Adjusted gross profit margin represents adjusted gross profit divided by revenue.
EBITDA calculates, for the applicable period, earnings before interest, taxes and depreciation and amortization. Interest includes all finance costs net of interest income and depreciation and amortization includes the depreciation of property, plant and equipment, amortization of right-of-use assets, amortization of intangible assets and amortization of deferred financing fees. Management does not use EBITDA as a financial performance metric. EBITDA margin represents EBITDA divided by revenue.
Adjusted EBITDA is calculated by adding and deducting, as applicable from EBITDA, certain expenses, costs, charges or benefits incurred in such period which in management's view are either not indicative of underlying business performance, impact the ability to assess the operating performance of our business or are deemed non-cash, non-recurring or one-time in nature. Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.
The following tables provide a reconciliation of the Non-IFRS Measures to the most directly comparable financial measures disclosed in the Financial Statements.
The following table provides a reconciliation of segment and consolidated gross profit to adjusted gross profit for the periods presented:
Three months ended | Fiscal year ended | |||||||||
2023 | 2022 | change | 2023 | 2022 | change | |||||
Gross profit | $ | 662,912 | 703,679 | (5.8) | % | $ | 6,818,431 | 3,976,958 | 71.4 | % |
Less: | ||||||||||
Realized foreign exchange loss (gain) (1) | 509,541 | 135,969 | 274.7 | 2,323,159 | (406,597) | (671.4) | ||||
Plus: Total costs attributable to bringing inventory to a saleable condition: (2) | ||||||||||
Overhead | 1,019,829 | 801,812 | 27.2 | 3,707,647 | 2,602,477 | 42.5 | ||||
Amortization of property plant and equipment | 277,379 | 166,450 | 66.6 | 956,671 | 654,657 | 46.1 | ||||
Adjusted gross profit | $ | 1,450,579 | 1,535,972 | (5.6) | % | $ | 9,159,590 | 7,640,689 | 19.9 | % |
Adjusted gross profit margin | 4.9 % | 4.4 % | 7.4 % | 6.1 % |
(1) | Consists of realized gains and losses on foreign exchange rates for executed transactions. The Company does not participate in hedge accounting practices, but books forward contracts at the time the Company enters into a new contract with a foreign currency denominated vendor. The gain or loss realized at the time of sale is directly related to each of the executed contracts and as a result is indicative of the margin realized on said contract. |
(2) | This is an IFRS adjustment to allocate applicable overhead costs, including compensation and benefits and other general and administration costs, and amortization of property, plant and equipment specifically related to the Company's operating facilities to cost of sales. Management views these costs as fixed in nature and does not assess them as being indicative of the variable cost of selling its products. |
The following table provides a reconciliation of consolidated loss for the period to EBITDA and adjusted EBITDA for the periods presented:
Three months ended | Fiscal year ended | |||||||||
2023 | 2022 | change | 2023 | 2022 | change | |||||
Loss for the period | $ | (2,333,896) | (2,290,757) | (1.9) | % | $ | (8,629,014) | (6,256,305) | (37.9) | % |
Plus: | ||||||||||
Income tax recovery | (187,240) | (149,942) | 24.9 | (1,864,622) | (114,403) | 1,529.9 | ||||
Interest (1) | 705,305 | 830,489 | (15.1) | 2,391,448 | 2,165,981 | 10.4 | ||||
Depreciation and amortization (2) | 502,763 | 285,632 | 76.0 | 1,687,638 | 974,361 | 73.2 | ||||
EBITDA | (1,313,068) | (1,324,578) | 0.9 | (6,414,550) | (3,230,366) | (98.6) | ||||
Other income (3) | (29) | (495,233) | (100.0) | (5,050) | (464,196) | (98.9) | ||||
Loss on derivative liability related to convertible debentures (4) | - | 129,933 | (100.0) | 221,173 | 1,370,519 | (83.9) | ||||
(Gain) loss on warrant revaluation (4) | (9,514) | 33,587 | 128.3 | (172,633) | 131,764 | 231.0 | ||||
Unrealized (gain) loss on derivative financial instruments (5) | (543,383) | (315,136) | 72.4 | 135,611 | (185,363) | (173.2) | ||||
Unrealized foreign exchange loss (5) | 13,699 | 177,396 | (92.3) | 53,912 | 451,088 | (88.0) | ||||
Listing expense (6) | - | - | n/a | 2,075,733 | - | n/a | ||||
Acquisition / one-time transaction and brand development costs (6) | 51,150 | 1,195,279 | (95.7) | 1,478,028 | 1,195,279 | 23.7 | ||||
Share based compensation (7) | 76,903 | 39,293 | 95.7 | 301,833 | 103,660 | 191.2 | ||||
Start-up expenses (8) | - | - | n/a | 346,328 | - | n/a | ||||
Adjusted EBITDA | $ | (1,724,242) | (559,459) | (206.1) | % | $ | (1,979,615) | (627,615) | 722.8 | % |
Adjusted EBITDA margin | (5.8) % | (1.6) % | (1.6) % | (0.5) % |
(1) | Interest includes all finance costs net of interest income. |
(2) | Depreciation and amortization includes depreciation of property, plant and equipment, amortization of right-of-use assets, amortization of intangible assets and amortization of deferred financing fees. |
(3) | Consists of incomes and expenses incurred outside of the normal course of operation. |
(4) | This is a non-cash item that consists of the fair value revaluation of the convertible debentures and warrants. |
(5) | Consists of (i) non-cash, unrealized gains and losses attributable to foreign exchange rate fluctuations and (ii) non-cash gains and losses on foreign exchange "mark-to-market" in connection with our derivative financial instruments. |
(6) | Consists of acquisition, integration and other costs such as legal, consulting and other fees and expenses incurred in respect of acquisitions, financing, rebranding and product development costs and Transaction-related activities completed during the applicable period. |
(7) | This is a non-cash item and consists of the amortization of the estimated fair value of share-based options granted under the Company's share-based option plan. |
(8) | Start-up costs expenses are costs as a result of operating the new pea-splitting facility during the period of commissioning and commercialization of the product. During this period, the Company is incurring costs to operate the facility, complete product testing and fine-tuning equipment in the process with low to minimal volumes of third-party sales. These costs include but are not limited to general overhead costs and other temporary expenses required to ramp-up production. |
Non-IFRS Measures should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the GFI's operating results, underlying performance and prospects in a manner similar to GFI's management.
Accordingly, these Non-IFRS Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Forward-Looking Statements
This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Forward looking statements in this press release include without limitation statements relating to GFI continuing to add further downstream processing and the effects thereof and GFI's business objectives. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. GFI undertakes no obligation to comment analyses, expectations or statements made by third-parties in respect of GFI, its securities, or financial or operating results (as applicable). Although GFI believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond GFI's control, including the risk factors discussed in GFI's annual information form for the year ended
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