- Total revenue of
$29.1 million versus$29.6 million in Q2 2020 - Adjusted EBITDA of
$3.8 million versus$8.1 million in Q2 2020 - Net income of
$4.1 million ; Adjusted Net Income of$0.7 million
VAUGHAN, ON,
"While we are disappointed with our top and bottom-line second quarter results, the Board believes there are many reasons to be optimistic about the future", said
Selected Financial Highlights(1)(2)
(in thousands of US dollars except per share amounts) (unaudited) | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | |
Revenue | 29,115 | 29,638 | 57,757 | 61,020 | |
Gross profit | 11,682 | 14,526 | 25,278 | 28,920 | |
Net income for the period | 4,077 | 1,604 | 5,652 | 2,839 | |
Earnings per share (basic) | 0.11 | 0.04 | 0.15 | 0.08 | |
Adjusted EBITDA | 3,799 | 8,059 | 10,232 | 16,373 | |
Cash flow from operating activities | 2,530 | 7,687 | 4,275 | 5,040 | |
Adjusted Free Cash Flow | 2,266 | 7,146 | 3,901 | 4,221 | |
Adjusted Net Income | 732 | 4,039 | 3,351 | 7,658 | |
Adjusted Earnings per Share (diluted) | 0.02 | 0.10 | 0.08 | 0.18 |
(1) | See "Non-IFRS Measures" |
(2) | Earnings per share (basic) calculation does not include the impact of 2,463,963 common shares of the Company issuable upon the exchange of the units issued as part of The Mane Choice acquisition. |
Q2 2021 Business and Financial Review
Q2 2021 revenue decreased by 1.8% to
Gross profit decreased 19.6% to
EBITDA increased to
Adjusted EBITDA decreased to
In Q2 2021, the Company reported net income of
Adjusted Free Cash Flow was
Q2 2021 Financial Statements and Management's Discussion and Analysis
The Company's unaudited consolidated financial statements for the three- and six-month periods ended
Conference Call & Webcast
About
Non–IFRS Measures
This press release makes reference to certain non–IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non–IFRS measures including "Adjusted Earnings Per Share (diluted)", "Adjusted EBITDA", "Adjusted Free Cash Flow", "Adjusted Net Income", "EBITDA", and "Free Cash Flow". These non–IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non–IFRS measures in the evaluation of issuers. Our management also uses non–IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation. Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our Management's Discussion and Analysis. Such reconciliations can also be found in this press release under the headings "Q2 2021 Compared to Q2 2020".
"Adjusted Earnings Per Share (Diluted)" is computed similarly to basic earnings per share except that the weighted average number of shares outstanding is increased to include additional shares for the assumed conversion of preference shares, proportionate voting shares, and exchangeable shares and exercise of stock options, if dilutive. The average number of shares is calculated by assuming that outstanding conversions were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting period.
"Adjusted EBITDA" represents, for the applicable period, EBITDA before certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii) purchase accounting adjustments; (iii) share–based compensation; and (iv) unrealized foreign exchange (gain) loss.
"Adjusted Free Cash Flow" is calculated as free cash flow adjusted to add back acquisition related costs which are included in cash provided by operating activities. We believe Adjusted free cash flow is a useful measure to assess the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares. It also facilitates period-to-period comparisons.
"Adjusted Net Income" represents, for the applicable period, net income (loss) as adjusted to add back or deduct, as applicable, certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii) purchase accounting adjustments; (iii) share–based compensation; (iv) unrealized foreign exchange loss (gain); and (v) tax impacts of the aforementioned adjustments (based on annual effective tax rate).
"EBITDA" represents net income (loss) for the period before: (i) income tax expense (recovery); (ii) interest and accretion; and (iii) amortization and depreciation.
''Free Cash Flow'' represents, for the applicable period, cash provided by operating activities less cash used to purchase property and equipment. Free cash flow is a key metric that measures the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares.
''Net debt'' is calculated as long-term debt before unamortized deferred financing costs less cash as reported in the consolidated statements of financial position
Forward-Looking Information
Certain information in this press release, including the Board's optimism regarding new executive leadership, the Company's portfolio of brands and operational scale, and the reopening of markets internationally and the associated benefits to shipments and consumer sales, constitutes forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events.
Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by
Q2 2021 Compared to Q2 2020
(in thousands of US dollars) (unaudited) | Q2 2021 | Q2 2020 | $ Change | % Change | ||||
Consolidated statements of operations: | ||||||||
Revenue | 29,115 | 29,638 | (523) | (1.8%) | ||||
Cost of sales | 17,433 | 15,112 | 2,321 | 15.4% | ||||
Gross profit | 11,682 | 14,526 | (2,844) | (19.6%) | ||||
Expenses | ||||||||
Selling and administrative | 8,027 | 7,780 | 247 | 3.2% | ||||
Amortization and depreciation | 1,088 | 1,039 | 49 | 4.7% | ||||
Interest and accretion | 1,707 | 1,776 | (69) | (3.9%) | ||||
Foreign exchange loss | 71 | 240 | (169) | (70.4%) | ||||
Integration, restructuring, and other | (4,705) | 1,715 | (6,420) | nmf | ||||
6,188 | 12,550 | (6,362) | (50.7%) | |||||
Income before income taxes | 5,494 | 1,976 | 3,518 | 178.0% | ||||
Income tax expense (recovery) | ||||||||
Current | (60) | (40) | (20) | 50.0% | ||||
Deferred | 1,477 | 412 | 1,065 | 258.5% | ||||
1,417 | 372 | 1,045 | 280.9% | |||||
Net income for the period | 4,077 | 1,604 | 2,473 | 154.2% | ||||
EBITDA (1) | 8,289 | 4,791 | 3,498 | 73.0% | ||||
Adjusted EBITDA (1) | 3,799 | 8,059 | (4,260) | (52.9%) | ||||
Adjusted Net Income (1) | 732 | 4,039 | (3,307) | (81.9%) |
(1) See "Non-IFRS Measures". |
(in thousands of US dollars) (unaudited) | Q2 2021 | Q2 2020 | YTD Q2 2021 | YTD Q2 2020 | |||||
Consolidated net income: | 4,077 | 1,604 | 5,652 | 2,839 | |||||
Income tax expense | 1,417 | 372 | 2,016 | 1,180 | |||||
Interest and accretion | 1,707 | 1,776 | 3,485 | 3,818 | |||||
Amortization and deprecation | 1,088 | 1,039 | 2,167 | 2,068 | |||||
EBITDA | 8,289 | 4,791 | 13,320 | 9,905 | |||||
Integration, restructuring, and other | (1) | (4,705) | 1,715 | (3,638) | 3,175 | ||||
Purchase accounting adjustments | (2) | — | 664 | — | 2,321 | ||||
Share-based compensation | (3) | 235 | 646 | 538 | 1,275 | ||||
Unrealized foreign exchange loss (gain) | (20) | 243 | 12 | (303) | |||||
Adjusted EBITDA | 3,799 | 8,059 | 10,232 | 16,373 |
(in thousands of US dollars) (unaudited) | Q2 2021 | Q2 2020 | YTD Q2 2021 | YTD Q2 2020 | |||||
Consolidated net income: | 4,077 | 1,604 | 5,652 | 2,839 | |||||
Integration, restructuring, and other | (1) | (4,705) | 1,715 | (3,638) | 3,175 | ||||
Purchase accounting adjustments | (2) | — | 664 | — | 2,321 | ||||
Share-based compensation | (3) | 235 | 646 | 538 | 1,275 | ||||
Unrealized foreign exchange loss (gain) | (20) | 243 | 12 | (303) | |||||
Tax impact of the above adjustments | 1,145 | (833) | 787 | (1,649) | |||||
Adjusted Net Income | 732 | 4,039 | 3,351 | 7,658 |
(1) | Refer to Note 9 to the unaudited condensed consolidated interim financial statements for further details. |
(2) | In conjunction with the 2019 Acquisition, the fair value adjustment of inventory as part of the initial purchase price allocation was expensed to cost of sales as the inventories were sold. |
(3) | Represents recognition of share-based payments, which have been accounted for as selling and administrative expenses. |
(in thousands of US dollars) (unaudited) | Q2 2021 | Q2 2020 | YTD Q2 2021 | YTD Q2 2020 | ||||
Cash provided by operating activities | 2,530 | 7,687 | 4,275 | 5,040 | ||||
Less: purchase of property and equipment | (264) | (541) | (374) | (819) | ||||
Free cash flow and adjusted free cash flow | 2,266 | 7,146 | 3,901 | 4,221 |
(2) See "Non-IFRS Measures". |
SOURCE
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