Re-filed to place greater prominence on
certain GAAP/IFRS measures
- Revenue more than doubled in Fiscal 2019 from the
previous year to reach $161.3
million
- Gross margin increased 4.2 percentage points to 25.0% on
record gross profit of $40.3 million
for Fiscal 2019
- Net loss reached $20.9
million for Fiscal 2019, an increase of $11.5 million
- Gross merchandise sales1 more than doubled in
Fiscal 2019 to reach $200.8
million
- Adjusted gross margin1 rose 6.1 percentage
points to 39.7% on record adjusted gross profit1 of
$79.8 million for Fiscal
2019
- Generated positive cash from operations ($0.9 million for Fiscal 2019) for a second year
in a row and ended Fiscal 2019 with a solid financial position
($47.6 million in cash, cash
equivalents and restricted cash)
- Launched new and innovative ready-to-eat and breakfast
meal solutions and private label grocery products
- Launched a proprietary reusable delivery box, initially
in Quebec and Alberta, positioning Goodfood as an industry
leader in environmentally sustainable initiatives
- Signed leases for two new production facilities in
Montreal and Vancouver, and doubled production capacity at
the main Montreal facility and at
the Calgary facility
- Reached milestone of 200,000 active
subscribers1 as at August 31,
2019, a net increase of 111,000 compared to Fiscal
2018
MONTREAL, Feb. 20, 2020 /CNW Telbec/ - Goodfood
Market Corp. ("Goodfood" or "the Company") (TSX: FOOD), a leading
online grocery company in Canada,
today announced strong financial results for the fourth quarter and
fiscal year ended August 31,
2019.
"Fiscal 2019 was an excellent year, with record results on
a number of key metrics. Our active
subscribers1, revenue, gross
merchandise sales1 and gross profit all more than
doubled year-over-year. We also expanded our product offering of
ready-to-cook meals, introduced breakfast and ready-to-eat meal
solutions and recently launched our private label grocery products,
allowing us to enhance our members' experience and significantly
broaden our addressable market. More recently, with a green vision
in mind, we launched several sustainable initiatives, including a
new proprietary reusable box which will eliminate several million
single-use packaging items. We have laid down a solid foundation to
play a leading role in accelerating the adoption of online grocery
shopping in Canada," said
Jonathan Ferrari, Chief Executive
Officer of Goodfood.
"Fiscal 2019 was another year of strong revenue and
subscriber1 growth and we
continue to invest in our facilities to meet our
subscribers'1 needs and exceed
their product expectations. In Fiscal 2020, we will have four
production facilities across the country and the capacity to meet
over $750 million of annual sales.
This year, we have also continued to invest in enhancing our
operational efficiency to support our growth and improve our
margins. As a result, our adjusted gross margin1
expanded to nearly 40%, reflecting our recent investments in
automation and gains in operating efficiency, and we are on track
to reach our long-term goal of adjusted gross
margins1 of 45%. We have also
more than quadrupled cash generated from operating activities
compared to last year and are increasingly funding our
subscriber1 growth with
internally generated cash from operations. Our solid financial
position allows us to continue executing our growth strategy and
pursue market leadership in our new product offerings. In Fiscal
2020, we will remain focused on three key objectives: furthering
our market leadership by growing our
subscriber1 base, improving
member experience by offering innovative, high-return products, and
investing in automation to continue expanding our gross
margin," added Neil
Cuggy, President and Chief Operating Officer of
Goodfood.
FINANCIAL
HIGHLIGHTS
|
For the three and
twelve-month periods ended August 31, 2019 and 2018
|
(Amounts are in
thousands of Canadian dollars – Audited except for non-IFRS
financial measures)
|
|
|
Q4 2019
|
Q4 2018
|
Variance
|
FY 2019
|
FY 2018
|
Variance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
45,259
|
$
|
21,371
|
$
|
23,888
|
$
|
161,333
|
$
|
70,502
|
$
|
90,831
|
Growth
%
|
|
|
|
|
|
112%
|
|
|
|
|
|
129%
|
Gross
profit
|
|
12,077
|
|
4,593
|
|
7,484
|
|
40,310
|
|
14,660
|
|
25,650
|
Gross margin
%
|
|
26.7%
|
|
21.5%
|
|
5.2
pp
|
|
25.0%
|
|
20.8%
|
|
4.2
pp
|
Gross merchandise
sales1
|
|
55,977
|
|
25,812
|
|
30,165
|
|
200,830
|
|
84,093
|
|
116,737
|
Growth
%
|
|
|
|
|
|
117%
|
|
|
|
|
|
139%
|
Adjusted gross
profit1
|
|
22,795
|
|
9,034
|
|
13,761
|
|
79,807
|
|
28,251
|
|
51,556
|
Adjusted gross
margin %1
|
|
40.7%
|
|
35.0%
|
|
5.7
pp
|
|
39.7%
|
|
33.6%
|
|
6.1
pp
|
Net loss
|
|
(5,887)
|
|
(2,956)
|
|
(2,931)
|
|
(20,937)
|
|
(9,434)
|
|
(11,503)
|
Cash provided by
(used in) operating activities
|
|
(2,710)
|
|
939
|
|
(3,649)
|
|
880
|
|
176
|
|
704
|
REVENUE AND GROSS MERCHANDISE
SALES1
Revenue for the fourth quarter of Fiscal 2019 more than
doubled to $45.3 million, compared to
$21.4 million in the corresponding
period of Fiscal 2018. Gross merchandise sales1 ("GMS"),
which reflects the total retail value of merchandise sold by
Goodfood before taking into account all incentives and credits,
more than doubled for the fourth quarter of Fiscal 2019 to
reach
$56.0 million, compared to
$25.8 million for the corresponding
period of Fiscal 2018. The increase in revenue and GMS1
was primarily driven by the continued growth in the number of
active subscribers1, the
expansion of the national platform to new geographies in
Canada, now reaching the vast
majority of the country's population, and the increase in the
product offering, including the launch of breakfast and
ready-to-eat meal solutions.
For Fiscal 2019, revenues grew 129% to a record
$161.3 million, compared to
$70.5 million for Fiscal 2018, while
GMS1 increased 139% to a record $200.8 million, versus $84.1 million last year, for the same reasons
mentioned above.
The GMS run-rate1 was $226.0 million at the end of the fourth quarter
of Fiscal 2019, compared to $256.5
million at the end of the third quarter of 2019. This
variance is explained by the fourth quarter being seasonally the
weakest of the year.
The reconciliation of revenue to GMS1is as
follows:
|
|
|
|
(Amounts are in
thousands of
Canadian dollars –
Unaudited)
|
Three-month
periods
ended August 31,
|
Years
ended August
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue
|
$
|
45,259
|
$
|
21,371
|
$
|
161,333
|
$
|
70,502
|
Credits removed from
cancelled accounts
|
|
-
|
|
-
|
|
(638)
|
|
-
|
Incentives and
credits
|
|
10,718
|
|
4,441
|
|
40,135
|
|
13,591
|
Gross merchandise
sales1
|
$
|
55,977
|
$
|
25,812
|
$
|
200,830
|
$
|
84,093
|
GROSS MARGIN AND ADJUSTED GROSS
MARGIN1
The gross margin for the fourth quarter of 2019 increased
substantially to 26.7%, compared to 21.5% for the corresponding
period of Fiscal 2018. Adjusted gross margin1 was 40.7%
for the fourth quarter of Fiscal 2019, compared to 35.0% for the
corresponding period last year, an improvement of 5.7 percentage
points. The increase in gross margin and adjusted gross
margin1 resulted primarily from lower production labour
costs as a percentage of revenue, driven by continued investments
in automation, lower packaging and shipping unit costs as a result
of additional operational efficiencies, increased density in
delivery zones and purchasing power with key suppliers. This was
partially offset by an increase in incentives and credits included
in revenue primarily driven by the increase in active
subscribers1, the continued
investments in the expansion of our national platform and the
increase in our product offering. The Company expects that fixed
costs as a percentage of revenue will continue to decrease with the
Company's continued growth which should further increase gross
margin and adjusted gross margin1 in the
future.
For Fiscal 2019, gross margin grew 4.2 percentage points
to 25.0% for gross profit of $40.3
million. For the same period, adjusted gross
margin1 grew 6.1 percentage points to 39.7% on adjusted
gross profit1 growth of 182% to $79.8 million. The increases in gross margin and
adjusted gross margin1 were mainly driven by reasons
mentioned above.
The reconciliation of adjusted gross profit1 and
adjusted gross margin1 is as follows:
|
(Amounts are in
thousands of
Canadian dollars –
Unaudited)
|
Three-month
periods
ended August 31,
|
Years
ended August 31,
|
|
2019
|
2018
|
2019
|
2018
|
Gross merchandise
sales1
|
$
|
55,977
|
$
|
25,812
|
$
|
200,830
|
$
|
84,093
|
Cost of goods
sold
|
|
33,182
|
|
16,778
|
|
121,023
|
|
55,842
|
Adjusted gross
profit1
|
$
|
22,795
|
$
|
9,034
|
$
|
79,807
|
$
|
28,251
|
Adjusted gross
margin1
|
|
40.7%
|
|
35.0%
|
|
39.7%
|
|
33.6%
|
NET LOSS AND NET LOSS PER SHARE
Net loss for the fourth quarter of Fiscal 2019 was
$5.9 million, or $0.10 per share (basic and diluted), compared to
a net loss of $3.0 million, or
$0.06 per share (basic and diluted)
for the corresponding period of Fiscal 2018. The increase in net
loss was mainly attributable to higher selling, general and
administrative expenses and depreciation and amortization expenses,
partially offset by higher gross profit.
Net loss for Fiscal 2019 was $20.9
million, or $0.38 per share
(basic and diluted), compared to a net loss of $9.4 million, or $0.19 per share (basic and diluted) for the
corresponding period of Fiscal 2018. The increase in net loss was
mainly attributable to the same reasons mentioned above.
LIQUIDITY AND CAPITAL
RESOURCES
Cash used in operating activities in the fourth quarter of
Fiscal 2019 amounted to $2.7 million,
compared to cash provided by operating activities of $0.9 million for the same period last year,
primarily due to a higher net loss, a less favorable change in
non-cash working capital and a tenant allowance that reimbursed a
significant portion of the capital expenditures for the production
facility in Alberta, Canada
received in the fourth quarter of Fiscal 2018, partially offset by
the impact of IFRS 16.
For Fiscal 2019, cash provided by operating activities
more than quadrupled to $0.9 million,
compared to $0.2 million for Fiscal
2018, mainly due to a favorable change in non-cash working capital,
mostly driven by the Company's growth and more favorable payment
terms with key suppliers, as well as the impact of IFRS 16,
partially offset by a higher net loss.
In Fiscal 2019, the Company closed three financing
transactions for proceeds of over $50
million and used its cash primarily to invest in automation
and the expansion of its production facilities in order to increase
operational efficiencies and production capacity, and in the
development of new product offerings.
As at August 31, 2019, the
Company had total debt of $14.0
million and $47.6 million in
cash, cash equivalents and restricted cash.
OUTLOOK
The online grocery industry is one of the fastest growing
industries in the world. As a result, Goodfood believes that there
are significant opportunities and advantages to rapidly grow its
subscriber1 base by continuing
to invest in highly targeted marketing campaigns, capacity
expansion through additional facilities and investments in
automation, increasing its product offering and in continuing to
expand its national platform.
Goodfood's strategy continues to focus on growing its
subscriber1 base while
investing in improving its cost structure to achieve its long-term
margin goals. Growing Goodfood's market share, scale and product
offering will allow the Company to deliver greater value to its
customers while attaining high returns on invested capital. As the
Company grows its subscriber1
base, we are confident that Goodfood will achieve economies
of scale and additional efficiencies which will lead to
improvements in profitability while maintaining an unrivalled
experience for
subscribers1.
It is important to note that the fourth quarter of
Goodfood, which includes the months of June, July and August, is
typically the slowest quarter of the year due to seasonal demand
patterns. As such, it is characterized by lower order rates, lower
marketing expenses and less new
subscriber1
additions.
CONFERENCE CALL
Goodfood will hold a conference call to discuss these
results on November 14, 2019, at
8:00AM Eastern Time. Interested
parties can join the call by dialing 1-647-788-4922 (Toronto or overseas) or 1-877-223-4471
(elsewhere in North America). To
access the webcast and view the presentation, click on this
link:
https://www.makegoodfood.ca/en/investisseurs/evenements
Parties unable to call in at this time may access a
recording by calling 1‑800-585-8367 and entering the passcode
8299731. This recording will be available on Thursday, November 14, 2019 as of 11:00 AM Eastern Time until 11:59 PM Eastern Time on
Thursday, November 21, 2019.
A full version of the Company's Management's Discussion
and Analysis (MD&A) and audited Financial Statements for the
year ended August 31, 2019 will be
posted on http://www.sedar.com later today.
NON-IFRS FINANCIAL MEASURES
Certain financial and non-financial measures included in
this news release do not have a standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by
other companies. The Company includes these measures because it
believes they provide to certain investors a meaningful way of
assessing financial performance. For a more complete description of
these measures and a reconciliation of Goodfood's non-IFRS
financial measures to financial results, please see Goodfood's
Management's Discussion and Analysis for the three-month and
twelve-month periods ended August 31,
2019.
Goodfood's definition of the non-IFRS terms are as
follows:
- Gross merchandise sales measures the total retail value
of all goods sold by the Company before taking into account all
incentives and credits.
- Gross merchandise sales run-rate is defined as gross
merchandise sales for the four-week period ended as at the date
indicated multiplied by thirteen. Management believes that gross
merchandise sales run-rate is a useful measure of financial
performance because it is indicative of gross merchandise sales on
an annual basis for the Company's current level of active
subscribers1.
- Adjusted gross profit is calculated as gross merchandise
sales less cost of goods sold.
- Adjusted gross margin is calculated as adjusted gross
profit divided by gross merchandise sales.
ACTIVE SUBSCRIBERS
An active subscriber is defined as an account that is
scheduled to receive a delivery or has elected to skip delivery in
the subsequent weekly delivery cycle. Active subscribers exclude
cancelled accounts. For greater certainty, an active subscriber is
only accounted for once, although different products might have
been ordered in a given weekly delivery cycle. While active
subscribers is not an IFRS or Non-IFRS Financial Measure, and
therefore, does not appear in and cannot be reconciled to a
specific line item in our financial statements, we believe that
active subscribers is a useful metric for investors because it is
indicative of future revenues. The Company reports the number of
active subscribers at the beginning and end of the period, rounded
to the nearest thousand.
ABOUT GOODFOOD
Goodfood (TSX:FOOD) is a leading online grocery company in
Canada, delivering fresh meal
solutions and grocery items that make it easy for members from
coast to coast to enjoy delicious meals at home every week.
Goodfood's mission is to make the impossible come true, from farm
to kitchen, by enabling members to do their weekly meal planning
and grocery shopping in less than 1 minute. Goodfood members get
access to a unique selection of products online as well as
exclusive pricing made possible by its world class direct to
consumer fulfilment eco-system that cuts out food waste and
expensive retail overhead. The Company has its main production
facility and administrative offices based in Montreal, Quebec, a second production facility
in Calgary, Alberta, a breakfast
facility in Montreal, Quebec and
is currently building out its new production facility in
Vancouver. Goodfood had 200,000
active subscribers1 as at
August 31, 2019.
www.makegoodfood.ca
Except where otherwise indicated, all amounts in this
press release are expressed in Canadian dollars.
FORWARD-LOOKING INFORMATION
This release contains forward-looking information" within
the meaning of applicable Canadian securities legislation. Such
forward-looking information includes, but is not limited to,
information with respect to our objectives and the strategies to
achieve these objectives, as well as information with respect to
our beliefs, plans, expectations, anticipations, estimates and
intentions. This forward-looking information is identified by the
use of terms and phrases such as "may", "would", "should", "could",
"expect", "intend", "estimate", "anticipate", "plan", "foresee",
"believe", or "continue", the negative of these terms and similar
terminology, including references to assumptions, although not all
forward-looking information contains these terms and phrases.
Forward-looking information is provided for the purposes of
assisting the reader in understanding the Company and its business,
operations, prospects and risks at a point in time in the context
of historical and possible future developments and therefore the
reader is cautioned that such information may not be appropriate
for other purposes. Forward-looking information is based upon a
number of assumptions and is subject to a number of risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from those that are
disclosed in or implied by such forward-looking information. These
risks and uncertainties include, but are not limited to, the
following risk factors which are discussed in greater detail under
"Risk Factors" in the Company's Annual Information Form for the
year ended August 31, 2019 available
on SEDAR at www.sedar.com: limited operating history, negative
operating cash flow, food industry, quality control and health
concerns, regulatory compliance, regulation of the industry, public
safety issues, product recalls, damage to Goodfood's reputation,
transportation disruptions, product liability, ownership and
protection of intellectual property, evolving industry,
unionization activities, reliance on management, factors which may
prevent realization of growth targets, competition, availability
and quality of raw materials, limited number of products,
environmental and employee health and safety regulations, online
security breaches and disruption, reliance on data centers, open
source license compliance, future capital requirements, operating
risk and insurance coverage, management of growth, conflicts of
interest, litigation, and catastrophic events. Although the
forward-looking information contained herein is based upon what we
believe are reasonable assumptions, readers are cautioned against
placing undue reliance on this information since actual results may
vary from the forward-looking information. Certain assumptions were
made in preparing the forward-looking information concerning
availability of capital resources, business performance, market
conditions, and customer demand. Consequently, all of the
forward-looking information contained herein is qualified by the
foregoing cautionary statements, and there can be no guarantee that
the results or developments that we anticipate will be realized or,
even if substantially realized, that they will have the expected
consequences or effects on our business, financial condition or
results of operation. Unless otherwise noted or the context
otherwise indicates, the forward-looking information contained
herein is provided as of the date hereof, and we do not undertake
to update or amend such forward-looking information whether as a
result of new information, future events or otherwise, except as
may be required by applicable law.
|
|
|
|
|
|
1 See the
non-IFRS financial measures and active subscribers sections at the
end of this press release.
|
SOURCE Goodfood Market Corp.