TORONTO--(BUSINESS WIRE)--
Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX:
JWEL) today reported financial results for its first quarter ended March
31, 2018. All amounts are expressed in Canadian dollars. Certain
metrics, including those expressed on an adjusted basis, are non-IFRS
measures. See “Non-IFRS Financial Measures” below.
Highlights of First Quarter 2018 Results versus First Quarter 2017
Results
-
Revenue increased 8.0% to $70.1 million;
-
Adjusted EBITDA increased 11.0% to $12.7 million;
-
Net Income was $4.6 million and Adjusted Net Income increased 165.4%
to $5.8 million;
-
Earnings per diluted share were $0.12 and Adjusted earnings per
diluted share were $0.15.
“The Jamieson brand continues to enjoy excellent momentum during the
first quarter driven by strong consumer demand and the launch of our new
Jamieson Essentials plus Protein. Jamieson brands led sales gains in the
quarter, driving 8.0% consolidated revenue growth and strong increases
in both Adjusted Net Income and Adjusted EBITDA,” said Mark Hornick,
President and Chief Executive Officer of Jamieson Wellness. “Strategic
Partners revenue was impacted by the timing of orders, which we
anticipate will balance out in the third and fourth quarters. We have
also begun the integration of our health food operations, including the
consolidation of our distribution facilities and the integration of the
salesforce. We remain confident with our 2018 outlook, our innovation
pipeline and are focused on capturing incremental international growth
opportunities.”
First Quarter 2018 Results
Revenue increased 8.0% to $70.1 million in the first quarter of 2018
from $64.9 million in the first quarter of 2017 and was driven by a
13.2% increase in Jamieson Brands revenue, partially offset by a
14.8% decrease in Strategic Partners revenue. The increase in the
Jamieson Brands revenue was driven by 7.8% organic growth and the
acquisition of Body Plus. The decrease in Strategic Partners was
primarily driven by the timing of customer orders, including the launch
of customer branded innovation during the first quarter of 2017 that was
not repeated in first quarter of 2018.
Gross profit increased 14.2% to $25.4 million in the first quarter of
2018 from $22.2 million in the first quarter of 2017 and gross profit
margin increased 200 basis points to 36.2% from 34.2% in the same
respective period. The increase in the gross profit margin was primarily
driven by segment mix, manufacturing efficiencies and includes higher
relative margins from Sonoma activities.
Selling, general and administrative expenses (“SG&A”) increased 10.2% to
$14.8 million in the first quarter of 2018 from $13.4 million in the
first quarter of 2017. As a percentage of revenue, SG&A increased 40
basis points to 21.1% from 20.7% in the prior year period. The increase
as a percentage of revenue reflected the inclusion of $0.6 million of
public company costs and the higher SG&A as a percentage of revenue
associated with the acquired businesses, partially offset by $0.7
million of lower marketing costs as marketing spend this year is aligned
to support the launch of Jamieson Essentials plus Protein in the second
quarter of 2018.
Operating income increased 26.2% to $10.1 million in the first quarter
of 2018 from $8.0 million in the first quarter of 2017 and operating
margin increased 200 basis points to 14.4% from 12.4% in the same
respective periods.
Interest expense and other financing costs were $2.2 million in the
first quarter of 2018 compared to $8.3 million in the first quarter of
2017. The change was driven by lower borrowings including discharge of
the note payable to Jamieson Finco LP in the pre-IPO reorganization,
lower interest rates on the Company’s credit facility entered into in
January 2017 and a write-off of deferred financing fees in the first
quarter of 2017.
Net income for the first quarter of 2018 was $4.6 million compared to
net loss of $21.7 million in the first quarter of 2017. Adjusted Net
Income, which excludes all non-operating expenses, increased to $5.8
million in the first quarter of 2018 from $2.2 million in the first
quarter of 2017.
Adjusted Net Income for the first quarter of 2018 excludes costs
associated with termination benefits and related costs, business
integration costs, foreign exchange losses, other non-recurring expenses
and adjusts for purchase consideration accounted for as compensation
expense, as well as the related tax effects of each item. Adjusted Net
Income for the first quarter of 2017 excludes costs associated with
preferred share accretion, write-off of deferred financing fees,
termination benefits and related costs, acquisition costs, purchase
consideration accounted for as compensation expense, amortization of
fair value adjustments, share based compensation, foreign exchange loss,
public offering costs, other non-recurring expenses and related tax
effects. A detailed reconciliation of reported net income to non-IFRS
Adjusted Net Income is included in the tables accompanying this release
under the heading Non-IFRS measures.
Adjusted EBITDA increased 11.0% to $12.7 million in the first quarter of
2018 from $11.4 million in the first quarter of 2017 and Adjusted EBITDA
as a percentage of revenue was 18.1% compared to 17.6% in the prior year
period.
Balance Sheet & Cash Flow
The Company used $5.2 million of cash from operations during the first
quarter of 2018 compared to generating $8.1 million of cash from
operations during the first quarter of 2017. The decrease reflects
deferred compensation associated with the acquisition of Body Plus and
Sonoma and higher inventories relating to the timing of sales in the
Strategic Partners segment. The Company’s cash at March 31, 2018 was
$2.4 million compared to $4.8 million on December 31, 2017. On February
27, 2018, the Company declared a quarterly dividend of $0.08 per common
share to holders of record as of March 7, 2018 and paid such dividend on
March 15, 2018. The dividend payment was approximately $3.0 million in
the aggregate.
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Three months ended
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|
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|
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March 31
|
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($ in 000's)
|
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2018
|
|
|
2017
|
|
|
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
4,833
|
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|
15,881
|
|
|
|
(11,048
|
)
|
|
(69.6
|
%)
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|
Cash flows from (used in):
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|
|
|
|
|
|
|
|
|
Operating activities
|
|
(5,159
|
)
|
|
8,114
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|
|
|
(13,273
|
)
|
|
(163.6
|
%)
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|
Investing activities
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|
(3,066
|
)
|
|
(83,204
|
)
|
|
|
80,138
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|
96.3
|
%
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|
Financing activities
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|
5,765
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|
67,604
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|
|
|
(61,839
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)
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|
(91.5
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%)
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Cash, end of period
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|
2,373
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|
8,395
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|
(6,022
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)
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(71.7
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%)
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Outlook
The Company is reiterating its outlook for fiscal 2018, which was
initially provided when the Company reported fourth quarter and full
year 2017 results on February 22, 2018. The company continues to
anticipate generating revenue in a range of $325.0 to $335.0 million,
Adjusted EBITDA in a range of $67.0 to $69.0 million and adjusted
diluted earnings per share in a range of $0.83 to $0.87. This outlook is
based, in part, on a forecasted CAD/USD exchange rate of $1.25, the
potential for higher interest rates and a fully diluted share count of
approximately 39.8 million shares.
Consolidated Financial Statements and Management’s Discussion and
Analysis
The Company’s unaudited condensed consolidated interim financial
statements and accompanying notes as at and for the three months ended
March 31, 2018 and related management’s discussion and analysis of
financial condition and results of operations (“MD&A”) are available
under the Company’s profile on SEDAR at www.sedar.com
and on the Investor Relations section of the Company’s website at https://investors.jamiesonwellness.com.
Conference Call
Management will host a conference call to discuss the Company’s first
quarter 2018 results at 5:00 p.m. ET on May 9, 2018. The call can be
accessed live over the telephone by dialing 1-877-425-9470 from Canada
and the U.S. or 1-201-389-0878 from international locations. A replay
will be available shortly after the call and can be accessed by dialing
1-844-512-2921 from Canada and the U.S. or 1-412-317-6671 from
international locations. The passcode for the replay is 13679115 and it
will be available until Wednesday, May 23, 2018.
Interested parties may listen to a simultaneous webcast of the
conference call by logging on via the Investor Relations section of the
Company’s website at https://investors.jamiesonwellness.com
or directly at http://public.viavid.com/index.php?id=129450.
A replay of the webcast will be available for approximately 30 days
following the call.
About Jamieson Wellness
Jamieson Wellness is dedicated to improving the world’s health and
wellness with its portfolio of innovative natural health brands.
Established in 1922, Jamieson Vitamins is the Company’s heritage
brand and Canada’s #1 consumer health brand. Jamieson Wellness
manufactures and markets sports nutrition products and specialty
supplements under its Progressive, Precision and Iron
Vegan brands. The Company also markets products by Lorna
Vanderhaeghe Health Solutions (LVHS), the #1 women’s natural health
focused brand in Canada. For more information please visit
jamiesonwellness.com.
Jamieson Wellness’ head office is located at 2 St. Clair Avenue West,
Toronto, Ontario, Canada.
Forward-Looking Information
This press release may contain forward-looking information within the
meaning of applicable securities legislation. Such information includes,
but is not limited to, statements related to the Company’s anticipated
growth opportunities and its outlook for its 2018 revenue and Adjusted
EBITDA. Words such as “expect,” “anticipate,” “intend,” “attempt,”
“may,” “plan,” “will”, “can”, “believe,” “seek,” “estimate,” and
variations of such words and similar expressions are intended to
identify such forward-looking information. This information reflects the
Company’s current expectations regarding future events. Forward-looking
information is based on a number of assumptions and is subject to a
number of risks and uncertainties, many of which are beyond the
Company’s control that could cause actual results and events to differ
materially from those that are disclosed in or implied by such
forward-looking information. Such risks and uncertainties include, but
are not limited to, the factors discussed under “Risk Factors” in the
Company’s Annual Information Form dated March 29, 2018. This information
is based on the Company’s reasonable assumptions and beliefs in light of
the information currently available to it and the statements are made as
of the date of this press release. The Company does not undertake any
obligation to update such forward-looking information, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable law or regulatory authority.
We caution that the list of risk factors and uncertainties is not
exhaustive and other factors could also adversely affect the Company’s
results. Readers are urged to consider the risks, uncertainties and
assumptions associated with these statements carefully in evaluating the
forward-looking information and are cautioned not to place undue
reliance on such information. See “Forward-looking Information” and
“Risk Factors” within the Company’s MD&A for a discussion of the
uncertainties, risks and assumptions associated with these statements.
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Jamieson Wellness Inc.
Unaudited Condensed Consolidated Interim Statements of Operations
and Comprehensive Income (Loss)
In thousands of Canadian dollars, except per share data
|
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Three months ended
|
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|
|
March 31
|
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|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Revenue
|
|
70,104
|
|
|
64,901
|
|
|
Cost of sales
|
|
44,734
|
|
|
42,692
|
|
|
Gross profit
|
|
25,370
|
|
|
22,209
|
|
|
|
|
|
|
|
|
Gross profit margin
|
|
36.2
|
%
|
|
34.2
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%
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
14,817
|
|
|
13,441
|
|
|
Share-based compensation
|
|
427
|
|
|
746
|
|
|
Earnings from operations
|
|
10,126
|
|
|
8,022
|
|
|
|
|
-
|
|
|
-
|
|
|
Operating margin
|
|
14.4
|
%
|
|
12.4
|
%
|
|
|
|
|
|
|
|
Foreign exchange loss
|
|
200
|
|
|
232
|
|
|
Termination benefits and related costs
|
|
1,732
|
|
|
2,499
|
|
|
Public offering costs
|
|
-
|
|
|
231
|
|
|
Acquisition costs
|
|
-
|
|
|
1,857
|
|
|
Other (income) expenses
|
|
(12
|
)
|
|
1,703
|
|
|
Preferred share accretion
|
|
-
|
|
|
15,385
|
|
|
Interest expense and other financing costs
|
|
2,176
|
|
|
8,312
|
|
|
Income (loss) before income taxes
|
|
6,030
|
|
|
(22,197
|
)
|
|
Provision for (recovery of) income taxes
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|
1,404
|
|
|
(546
|
)
|
|
Net income (loss)
|
|
4,626
|
|
|
(21,651
|
)
|
|
Adjusted net income
|
|
5,760
|
|
|
2,170
|
|
|
|
|
|
|
|
|
EBITDA
|
|
10,339
|
|
|
3,605
|
|
|
Adjusted EBITDA
|
|
12,686
|
|
|
11,424
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
18.1
|
%
|
|
17.6
|
%
|
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
Basic
|
|
37,831,159
|
|
|
520,253
|
|
|
Diluted
|
|
39,666,424
|
|
|
520,253
|
|
|
Adjusted Diluted
|
|
39,666,424
|
|
|
39,666,424
|
|
|
|
|
|
|
|
|
Earnings per share attributable to common shareholders:
|
|
|
|
|
|
Basic, earnings (loss) per share
|
|
0.12
|
|
|
(41.62
|
)
|
|
Diluted, earnings (loss) per share
|
|
0.12
|
|
|
(41.62
|
)
|
|
Adjusted Diluted, earnings per share
|
|
0.15
|
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
Jamieson Wellness Inc.
Unaudited Condensed Consolidated Interim Statements of Financial
Position
In thousands of Canadian dollars
|
|
|
|
|
|
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash
|
|
2,373
|
|
|
4,833
|
|
|
Accounts receivable
|
|
57,795
|
|
|
71,996
|
|
|
Inventories
|
|
69,746
|
|
|
59,080
|
|
|
Derivatives
|
|
747
|
|
|
-
|
|
|
Prepaid expenses and other current assets
|
|
1,899
|
|
|
1,507
|
|
|
|
|
132,560
|
|
|
137,416
|
|
|
Non-current assets
|
|
|
|
|
|
Property, plant and equipment
|
|
46,926
|
|
|
45,173
|
|
|
Goodwill
|
|
122,975
|
|
|
122,975
|
|
|
Intangible assets
|
|
203,442
|
|
|
204,264
|
|
|
Deferred income tax
|
|
2,586
|
|
|
2,727
|
|
|
Total Assets
|
|
508,489
|
|
|
512,555
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
60,500
|
|
|
66,621
|
|
|
Income taxes payable
|
|
952
|
|
|
4,267
|
|
|
Derivatives
|
|
-
|
|
|
1,081
|
|
|
Current portion of long-term debt
|
|
10,969
|
|
|
9,750
|
|
|
|
|
72,421
|
|
|
81,719
|
|
|
Long-term liabilities
|
|
|
|
|
|
Long-term debt
|
|
160,785
|
|
|
153,459
|
|
|
Post-retirement benefits
|
|
4,998
|
|
|
4,856
|
|
|
Deferred income tax
|
|
50,405
|
|
|
51,697
|
|
|
Total Liabilities
|
|
288,609
|
|
|
291,731
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
Share capital
|
|
235,876
|
|
|
234,908
|
|
|
Contributed surplus
|
|
7,508
|
|
|
7,437
|
|
|
Deficit
|
|
(22,811
|
)
|
|
(19,486
|
)
|
|
Accumulated other comprehensive loss
|
|
(693
|
)
|
|
(2,035
|
)
|
|
Total shareholders' equity
|
|
219,880
|
|
|
220,824
|
|
|
Total Liabilities and Shareholders' equity
|
|
508,489
|
|
|
512,555
|
|
|
|
|
|
|
|
|
Jamieson Wellness Inc.
Segment Information
In thousands of Canadian dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
Jamieson Brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
59,894
|
|
|
52,920
|
|
|
|
6,974
|
|
|
13.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
22,808
|
|
|
19,383
|
|
|
|
3,425
|
|
|
17.7
|
%
|
|
|
Gross profit margin
|
|
38.1
|
%
|
|
36.6
|
%
|
|
|
-
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations
|
|
9,136
|
|
|
6,633
|
|
|
|
2,503
|
|
|
37.7
|
%
|
|
|
Operating margin
|
|
15.3
|
%
|
|
12.5
|
%
|
|
|
-
|
|
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
11,352
|
|
|
9,706
|
|
|
|
1,646
|
|
|
17.0
|
%
|
|
|
Adjusted EBITDA margin
|
|
19.0
|
%
|
|
18.3
|
%
|
|
|
-
|
|
|
0.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Partners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
$ Change
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
10,210
|
|
|
11,981
|
|
|
|
(1,771
|
)
|
|
(14.8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
2,562
|
|
|
2,826
|
|
|
|
(264
|
)
|
|
(9.3
|
%)
|
|
|
Gross profit margin
|
|
25.1
|
%
|
|
23.6
|
%
|
|
|
-
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations
|
|
990
|
|
|
1,389
|
|
|
|
(399
|
)
|
|
(28.7
|
%)
|
|
|
Operating margin
|
|
9.7
|
%
|
|
11.6
|
%
|
|
|
-
|
|
|
(1.9
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
1,334
|
|
|
1,718
|
|
|
|
(384
|
)
|
|
(22.4
|
%)
|
|
|
Adjusted EBITDA margin
|
|
13.1
|
%
|
|
14.3
|
%
|
|
|
-
|
|
|
(1.2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS Financial Measures
This press release makes reference to certain non-IFRS measures.
Management uses these non-IFRS financial measures for purposes of
comparison to prior periods and development of future projections and
earnings growth prospects. This information is also used by management
to measure the profitability of ongoing operations and in analyzing the
Company’s business performance and trends. 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 the Company’s results of
operations from management’s perspective. Accordingly, they should not
be considered in isolation nor as a substitute for analysis of the
Company’s financial information reported under IFRS. We use non-IFRS
measures, including “gross profit”, “gross profit margin”, “operating
margin” “EBITDA”, “Adjusted EBITDA”, “Adjusted EBITDA margin”, “Adjusted
Net Income” and “Adjusted Diluted Earnings per Share” to provide
supplemental measures of the Company’s operating performance and thus
highlight trends in the Company’s core business that may not otherwise
be apparent when relying solely on IFRS financial measures. Management
also uses non-IFRS measures in order to prepare annual operating budgets
and to determine components of management compensation. Definitions of
non-IFRS measures can be found in our MD&A.
|
Reconciliation of Adjusted Net Income
In thousands of Canadian dollars
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
4,626
|
|
|
(21,651
|
)
|
|
Adjustments to net income (loss):
|
|
|
|
|
|
Share-based compensation
|
|
-
|
|
|
441
|
|
|
Amortization of fair value adjustments
|
|
-
|
|
|
565
|
|
|
Amortization of deferred financing fee
|
|
-
|
|
|
3,078
|
|
|
Foreign exchange loss
|
|
200
|
|
|
232
|
|
|
Termination benefits and related costs
|
|
1,732
|
|
|
2,499
|
|
|
Acquisition costs
|
|
-
|
|
|
1,857
|
|
|
Purchase consideration accounted for as compensation expense
|
|
(1,066
|
)
|
|
1,476
|
|
|
Public offering costs
|
|
-
|
|
|
231
|
|
|
Preferred share accretion
|
|
-
|
|
|
15,385
|
|
|
Non-recurring business integration
|
|
961
|
|
|
-
|
|
|
Other
|
|
93
|
|
|
213
|
|
|
Related tax effects
|
|
(786
|
)
|
|
(2,156
|
)
|
|
Adjusted net income
|
|
5,760
|
|
|
2,170
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDA and Adjusted EBITDA
In thousands of Canadian dollars
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
4,626
|
|
|
(21,651
|
)
|
|
Add:
|
|
|
|
|
|
Provision for (recovery of) income taxes
|
|
1,404
|
|
|
(546
|
)
|
|
Interest expense and other financing costs
|
|
2,176
|
|
|
8,312
|
|
|
Preferred share accretion
|
|
-
|
|
|
15,385
|
|
|
Depreciation of property, plant, and equipment
|
|
1,263
|
|
|
1,271
|
|
|
Amortization of intangible assets
|
|
870
|
|
|
834
|
|
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation, and amortization
(EBITDA)
|
|
10,339
|
|
|
3,605
|
|
|
Add EBITDA adjustments:
|
|
|
|
|
|
Share-based compensation
|
|
427
|
|
|
746
|
|
|
Amortization of fair value adjustments
|
|
-
|
|
|
565
|
|
|
Foreign exchange loss
|
|
200
|
|
|
232
|
|
|
Termination benefits and related costs
|
|
1,732
|
|
|
2,499
|
|
|
Acquisition costs
|
|
-
|
|
|
1,857
|
|
|
Purchase consideration accounted for as compensation expense
|
|
(1,066
|
)
|
|
1,476
|
|
|
Public offering costs
|
|
-
|
|
|
231
|
|
|
Non-recurring business integration
|
|
961
|
|
|
-
|
|
|
Other
|
|
93
|
|
|
213
|
|
|
Adjusted EBITDA
|
|
12,686
|
|
|
11,424
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180509006260/en/
Source: Jamieson Wellness Inc.