Good Natured Products Inc. Announces Fourth Quarter 2023 Results
Good Natured Products Inc. announced its financial results for Q4 2023, reporting revenue of $18.6 million, adjusted EBITDA of $0.1 million, and a variable gross margin of 35%. The Company experienced revenue declines compared to Q3 2023, attributed to lower third-party sales and order volatility. Despite these challenges, the Company managed costs effectively to deliver positive adjusted EBITDA for the ninth consecutive quarter. Cash used in operating activities was $2.5 million for FY2023, with an ending cash balance of $7.3 million.
Company delivered positive adjusted EBITDA for the ninth consecutive quarter.
Variable gross margin increased to 35% in Q4 2023.
Cost reduction efforts resulted in a decline in SG&A expenses by 22% compared to Q4 2022.
The Company generated positive cash flow from operations for FY2023, excluding financing expenses.
Focus on restructuring debt obligations to enhance long-term growth potential.
Revenue in Q4 2023 declined by 4% compared to Q3 2023.
Net loss increased to $6.1 million in Q4 2023.
Cash balance decreased to $7.3 million at the end of December 31, 2023.
Net working capital deficit of ($1.4) million as at December 31, 2023.
Proposal to amend terms of 7.0% convertible unsecured subordinated debentures due to financial constraints.
Vancouver, British Columbia--(Newsfile Corp. - April 30, 2024) - good natured Products Inc. (TSXV: GDNP) (OTCQB: GDNPF) (the "Company" or "good natured®"), a North American leader in eco-friendly food packaging, bio-based plastic extrusion and plant-based products, today announced its financial results for the three months ended December 31, 2023 ("Q4 2023").
Q4 2023 Highlights
Revenue of
$18.6 million compared to$23.3 million for the three months ended December 31, 2022 ("Q4 2022") and$19.4 million for the three months ended September 30, 2023 ("Q3 2023").Adjusted EBITDA1 of
$0.1 million compared to nil in Q4 2022 and$0.7 million in Q3 2023.Variable gross margin1 of
35% compared to33% in Q4 2022 and37% in Q3 2023.SG&A expenses of
$3.8 million compared to$4.9 million in Q4 2022 and$3.4 million in Q3 2023.Cash used in operating activities was
$2.5 million for the twelve months ended December 31, 2023 ("FY2023") compared to$4.6 million generated for the twelve months ended December 31, 2022 ("FY2022").Ending cash balance of
$7.3 million compared to$11.9 million at December 31, 2022.
Revenue in Q4 2023 declined by
During Q4 2023, the Company took actions to reduce its cost structure considering the above-mentioned changes in operating conditions and continued to do so subsequent to quarter end as overall market competitiveness and volatility is expected to continue in the coming year.
"Our Q4 2023 results have reinforced the strategic importance of driving a robust, profitable, and purposefully differentiated product and customer mix to be resilient against any one factor disproportionately impacting our results," stated Paul Antoniadis, CEO of good natured®. "Coupled with this, we continued the transformation into a lower operating cost structure. Given the factors encountered in Q4 2023, the team did a tremendous job managing costs to deliver positive Adjusted EBITDA1 for the ninth consecutive quarter."
Q4 2023 Financial Overview
Revenue for Q4 2023 decreased
Variable gross margin2 for Q4 2023 increased to
Selling, general and administrative expenses ("SG&A") in Q4 2023 decreased by
The Company's Adjusted EBITDA1 increased to
The Company incurred a net loss of
Cash Flow & Balance Sheet Overview
Cash used by operating activities for FY2023 was
Cash balance as at December 31, 2023 was
The Company remains committed to exploring options that will enhance its ability to execute on strategic growth over the long term. This includes a focus on ways to restructure and renegotiate its debt obligations to reduce leverage and cash interest payments. As part of this process, the Company announced a proposal to amend the terms of its
As at December 31, 2023, the Company's total asset to liability ratio was 1.10 compared to 1.22 as at December 31, 2022.
The Company's Q4 2023 financial statements and Management's Discussion and Analysis are available on SEDAR+ at sedarplus.ca and on the Company's website at goodnaturedproducts.com/pages/investor.
The good natured® corporate profile can be found at:
goodnaturedproducts.com/pages/investor
About good natured Products Inc.
good natured® is at the forefront of North America's shift toward sustainability, showcasing over 90 plant-based packaging designs and an extensive portfolio of more than 400 products and services. These offerings are purposefully designed to reduce environmental impact by using more renewable materials, less fossil fuel, and eliminating chemicals of concern.
Manufactured locally in the US and Canada, good natured® engineers and distributes a diverse range of bio-based products across various sectors, including grocery, restaurant, electronics, automotive, and pharmaceutical via both wholesale and direct channels.
The Company is dedicated to providing an industry-leading customer experience in order to encourage the transition to renewable alternatives. By making it easy and affordable for businesses to adopt bio-based products and packaging, good natured® aims to empower them to reach their sustainability objectives.
For more information: goodnaturedproducts.com
On behalf of the Company:
Paul Antoniadis - Executive Chair & CEO
Contact: 1-604-566-8466
Investor Contact:
Spencer Churchill
Investor Relations
1-877-286-0617 ext. 113
invest@goodnaturedproducts.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Non-GAAP Financial Measures
We have included in this press release a discussion of the Company's variable gross profit, variable gross margin, SG&A excluding acquisition activity and one-time charges, and adjusted EBITDA all non-GAAP measures, for Q3 2023, Q4 2023, FY2023, Q4 2022 and FY2022 to provide, what management believes, is a meaningful comparison of the Company's performance in Q4 2023 and FY2023. These non-GAAP measures do not have standardized meanings, and therefore may not be comparable to similar measures presented by other issuers. Variable gross profit, variable gross margin, SG&A excluding acquisition activity and one-time charges, and adjusted EBITDA are more fully defined and discussed in the Company's Q4 2023 Management's Discussion and Analysis under the heading "non-IFRS financial measures", which is available on the Company's SEDAR profile at www.sedar.com and on the Company's investor website at goodnaturedproducts.com/pages/investor
.
The following table provides a reconciliation of net loss to adjusted EBITDA for the periods ended:
3 mon. ended Dec 31 | Year Ended Dec 31 | ||||||||||||||||||||
2023 | 2022 | +/- | 2023 | 2022 | +/- | ||||||||||||||||
Net loss for the period | $ | (6,138 | ) | $ | (4,912 | ) | $ | (15,481 | ) | $ | (11,582 | ) | |||||||||
Share-based compensation | 365 | 594 | - | 1,837 | 2,150 | - | |||||||||||||||
Depreciation | 566 | 514 | 2,309 | 1,950 | |||||||||||||||||
Depreciation in COGS & SG&A | 482 | 442 | 2,068 | 1,662 | |||||||||||||||||
Financing costs | 1,960 | 1,863 | 7,676 | 5,550 | |||||||||||||||||
Foreign exchange loss (gain) | (109 | ) | 695 | - | (88 | ) | 847 | - | |||||||||||||
Gain on WINN Loan | - | - | -% | (42 | ) | (15 | ) | ||||||||||||||
Loss on financing | - | - | -% | - | 449 | - | |||||||||||||||
Loss on impairment | 4,688 | - | 4,688 | - | |||||||||||||||||
Acquisition related expenses & one-time charges | 566 | 863 | - | 1,211 | 2,164 | - | |||||||||||||||
Deferred income taxes recovery | (2,313 | ) | (54 | ) | 4, | (2,688 | ) | (216 | ) | ||||||||||||
Adjusted EBITDA1 | 67 | 5 | 1, | 1,490 | 2,959 | - |
The following table provides a reconciliation of variable gross profit to gross profit and variable gross margin to gross margin for the periods ended:
3 mon. ended Dec 31 | Year ended Dec 31 | |||||||||||||||||
2023 | 2022 | +/- | 2023 | 2022 | +/- | |||||||||||||
Revenue | $ | 18,589 | $ | 23,306 | - | $ | 76,583 | $ | 100,966 | - | ||||||||
Variable cost of product | 12,142 | 15,652 | - | 48,749 | 67,744 | - | ||||||||||||
Variable Gross Profit1 | 6,447 | 7,654 | - | 27,834 | 33,222 | - | ||||||||||||
Variable Gross Margin %1 | ||||||||||||||||||
Fixed factory overhead | 1,863 | 1,846 | 7,800 | 6,900 | ||||||||||||||
Gross profit | 4,584 | 5,808 | - | 20,034 | 26,322 | - | ||||||||||||
Gross margin % |
The following table provides a reconciliation of selling, general and administrative expense excluding acquisition activity and one-time charges:
3 mon. ended Dec 31 | Year Ended Dec 31 | |||||||||||||||||
2023 | 2022 | +/- | 2023 | 2022 | +/- | | ||||||||||||
SG&A Wages | $ | 2,343 | $ | 2,468 | - | $ | 9,148 | $ | 9,488 | - | ||||||||
SG&A Other | 752 | 1,370 | - | 3,815 | 5,479 | - | ||||||||||||
Product Development expense | 161 | 182 | - | 620 | 741 | - | ||||||||||||
Acquisition related expenses & one-time charges1 | 566 | 863 | - | 1,211 | 2,164 | - | ||||||||||||
SG&A | 3,822 | 4,883 | - | 14,794 | 17,872 | - | ||||||||||||
SG&A % of Revenue | ||||||||||||||||||
SG&A Excluding Acquisition Activity & One-Time Charges1 | 3,256 | 4,020 | - | 13,583 | 15,708 | - | ||||||||||||
SG&A % of Revenue Excluding Acquisition Activity & One-Time Charges1 | ||||||||||||||||||
SG&A Wages % of Revenues |
Cautionary Statement Regarding Forward-Looking Information
This news release contains forward-looking information within the meaning of securities laws including statements related to Company plans, focuses and outlook for 2024.
By their nature, forward-looking statements involve known and unknown risks, uncertainties, changes in circumstances and other factors that are difficult to predict and many of which are outside of the Company's control which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Forward-looking information contained in this news release is based on our current estimates, expectations and projections regarding, among other things, future plans and strategies, projections, future market and operating conditions, supply conditions, end customer demand conditions, anticipated events and trends, general market conditions, the economy, financial conditions, sales volume and pricing, expenses and costs, and other future conditions which we believe are reasonable as of the current date. Important factors that could cause actual results and financial conditions to differ materially from those indicated in the forward-looking statements include, but are not limited to: future capital needs and uncertainty of additional financing, risks relating to general economic, market and business conditions and unforeseen delays in the realization of the Company's plans, risks related to the loss of key manufacturing equipment, capability or facilities, the performance of plant-based materials and the ability of the Company's products and packaging to meet significant technical requirements, changes in raw material supply and costs, labour availability and labour costs, fluctuations in operating results, and other related risks as more fully set out in the Annual Information Form of the Company and other documents disclosed under the Company's filings at www.sedar.com. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date.
If relying on the C