Happy Belly Food Group Announces 7th Consecutive Record Quarter, and 9th Consecutive Quarter of QoQ Growth

Rhea-AI Summary

Happy Belly Food Group Inc. announces its 7th consecutive record quarter and 9th consecutive quarter of QoQ growth, highlighting strong financial results and corporate achievements for the year ended December 31st, 2023. The company reported substantial revenue growth, improved gross profit margins, positive EBITDA in both the CPG and QSR divisions, and a healthy balance sheet. Strategic partnerships, acquisitions, franchise agreements, and store openings indicate a robust growth strategy and expansion plans. The company's performance reflects disciplined financial management, operational excellence, and a commitment to shareholder value.

Positive

• Happy Belly Food Group Inc. achieved its 7th consecutive record quarter and 9th consecutive quarter of QoQ growth in fiscal 2023.
• Total revenues for 2023 were $5.45 million, a 96% year-over-year increase from $2.78 million in 2022.
• Gross profit improved to $2.62 million (52% margin) in 2023 from $1.26 million (44% margin) in 2022, a 117% increase year over year.
• QSR division revenue grew by 120% year over year to $3.72 million in 2023.
• CPG division revenue increased by 24% year over year to $1.30 million in 2023.
• Positive EBITDA was reported for both CPG and QSR divisions in 2023.
• Total net operating loss for 2023 was $0.57 million, an improvement from $1.42 million in 2022.
• The company maintained a healthy balance sheet with net working capital of $0.80 million and cash equivalents of $1.27 million as of December 31, 2023.
• Strategic partnerships and acquisitions include Coho Collective Kitchens, Yolks Breakfast Inc., Joey Turks restaurant, and Rosie's Burgers.
• Franchise agreements and store openings in various locations demonstrate a strong growth strategy and expansion plan.
• The company's performance reflects financial discipline, operational efficiency, and a focus on enhancing shareholder value.

Negative

• None.

Toronto, Ontario--(Newsfile Corp. - April 19, 2024) - Happy Belly Food Group Inc. (CSE: HBFG) (OTCQB: VGANF) ("Happy Belly" or the "Company"), a leading consolidator of emerging food brands, is pleased to announce its financial results and corporate update for the year ended December 31^st, 2023.

"I'm extremely proud of the positive progress that our management team, alongside our brand partners, have been able to achieve in fiscal 2023. With our ninth (9^th) consecutive QoQ growth, and seventh (7^th) consecutive record setting quarter in revenue, you can see our continued commitment to shareholders as we continue to execute our plans and improve company wide performance," said Shawn Moniz, Chief Executive Officer of Happy Belly Food Group. "We are once again witnessing the consistent and repeatable pattern of Happy Belly's operations staying financially disciplined while achieving organic and inorganic growth as we successfully added 8 additional locations to our physical store count in 2023 vs 2022.

"We achieved positive EBITDA for BOTH our CPG and QSR divisions as we accelerated growth within those verticals. Each quarter has resulted in significant QoQ growth while continuing to accelerate our growth, improve operations within our businesses and deliver consistent record quarters for our shareholders."

Financial Highlights

• The Company recorded total revenues (product sales and other income) of $5.45 million for fiscal 2023 representing 96% year over year growth (2022 - $2.78 million). The Company continues to realize significant positive momentum in top line sales, driven by organic restaurant sales and new restaurant openings. Gross profit continues to improve due to cost control measures and overall top line sales growth, reporting $2.62 million (52%) versus $1.26 million (44%) in fiscal 2022. Total gross profit increased by 117% year over year.

• Total system wide restaurant sales were $5.75 million in 2023 (13 restaurants) versus $1.63 million in the prior year (5 restaurants). Q4 restaurant sales accounted for $1.91 million.

• Q4 2023 was the seventh consecutive record quarter for the company delivering $1.6 million in total revenue vs $1.5 million in Q3 2023, despite seasonality and extremely strong sales performance during the prior quarter.

• Q4 2023 represents the ninth consecutive quarter of QoQ growth and gross profit has improved by 37% versus Q4 2022.

• The Company delivered very strong operating results from its Quick Service Restaurants ("QSR") and the Consumer Product Goods ("CPG") divisions.

  • QSR division recorded revenue increases from $1.69 million in fiscal 2022 to $3.72 million in fiscal 2023 (120% year over year improvement), attributed to strong organic sales momentum on baseline restaurants and two new Heal Wellness openings in Q2 2023 (Milton and Port Credit, Ontario).

  • QSR division recorded positive EBITDA⁽¹⁾ of $440,090 in fiscal 2023 compared to a loss of $64,200 in the prior year. The QSR segment of Happy Belly Food Group continues to see positive EBITDA growth year over year.

  • Our CPG division recorded revenue increases from $1.05 million in fiscal 2022 to $1.30 million in fiscal 2023 (24% year over year improvement), driven by improved organic growth and increased distribution channels.

  • The CPG division reported positive EBITDA⁽¹⁾ of $430 in fiscal 2023 compared to a loss of $94,181 in 2022.

• Total net operating loss for the Company after removal of non-cash items and financing charges for 2023 was $0.57 million compared to $1.42 million in 2022. Two new corporate restaurant openings for Heal Wellness, one-time costs of building the Joey Turks restaurant, increased legal and training costs were the primary factors in the increased operating expenses.

• The Company continues to maintain a healthy balance sheet with net working capital of $0.80 million in 2023. Cash and cash equivalents is $1.27 million as of December 31, 2023.

• Since March 2023 when our franchising program was launched the company recorded nine (9) months worth of franchising revenue inclusive of franchise fees and royalties for a total of $228,070 in fiscal 2023 versus nil in 2022.

"Franchising revenue for all our QSR brands is a key component to our future expansion and growth model. Happy Belly's performance will continue to improve as we remain disciplined, and work to continue to close the gap towards company-wide profitability. We have a great team with the patience and experience to continue building our stable of emerging brands, and the funding to continue accelerating growth organically and through accretive M&A opportunities."

Q4 Corporate Highlights

• On December 8^th, 2023, the Issuer announces partnering with Coho Collective Kitchens to help propel their growth strategy.

• On December 5^th, 2023, the Issuer announces signing a definitive agreement to acquire 50% of Yolks Breakfast Inc., a BC based breakfast chain.

• On December 1^st, 2023, the Issuer announces signing of a Ten-Unit term sheet in Florida, USA, in preparation for US entry of the Heal Wellness brand.

• On November 29^th, 2023, the Issuer announces the signing of real estate location in Sherwood Park, Alberta, as part of a Five-Unit franchise agreement for the Heal Wellness brand in Alberta.

• On November 27^th, 2023, the Issuer announces the opening of the first ever Joey Turks restaurant in Hamilton, Ontario, which is a fast casual Caribbean restaurant brand.

• On November 23^rd, 2023, the Issuer announces the company secured a new store location for the opening of a 3^rd Rosie's Burgers in downtown Toronto, Ontario. In addition, an area development agreement announced for 20 franchised restaurants in Alberta and 30 franchised restaurants in Ontario for Rosie's Burgers.

• On November 17^th, 2023, the Issuer announces the signing of real-estate location in Chilliwack, British Columbia, as part of a Five-Unit franchise agreement for the Heal Wellness brand in British Columbia.

• On November 14^th, 2023, the Issuer announces the acquisition of smash burger brand Rosie's Burgers.

• On October 5^th, 2023, the Issuer announces the signing of Six-Unit franchise agreement in the greater Toronto area for the Lettuce Love brand.

Subsequent Events

• On April 18^th, 2024, the Issuer's HEAL Wellness QSR Announces the Signing of Its 24th Franchise and Secured Real-Estate in the City of Edmonton, Alberta.

• On April 17^th, 2024, the Issuer's Joey Turks Island Grill QSR Announces the Signing of the Brand's Second Real-Estate Location in Scarborough, Ontario.

• On April 16^th, 2024, the Issuer's Yolks Breakfast Signs Three-Unit Franchise Agreement in Calgary, Alberta.

• On April 11^th, 2024, the Issuer's Yolks Breakfast Announces Signing of First Real-Estate Location in Canada's Capital, Ottawa, Ontario, as National Expansion Accelerates.

• On April 5^th, 2024, the Issuer's Yolks Breakfast Signs Five-Unit Franchise Agreement in Ontario.

• On April 3^rd, 2024, the Issuer's Joey Turks Island Grill Announces the Signing of the Brand's First Franchisee for Scarborough, Ontario.

• On March 25^th, 2024, the Issuer's CPG Division Expands with First International Order, Record Sales Month and Record Purchase Order.

• On March 15^th, 2024, the Issuer's HEAL Wellness QSR Announces the Opening of its Newest Location in The Beaches, Toronto.

• On March 5^th, 2024, the Issuer's HEAL Wellness QSR Announces the Signing of Its 19th Franchise, in the City of Hamilton, Ontario.

• On February 23^rd, 2024, the Issuer Closed a 3rd Above-Market Non-Brokered Convertible Note Financing for Proceeds of C$1,000,000 from its first investment fund, Trio Capital.

• On February 13^th, 2024, the Issuer's Heal Wellness QSR Announces Signing of Real-Estate Location in West Abbotsford, British Columbia.

• On February 7^th, 2024, the Issuer's Breakfast Brand Yolks Signs 25-Unit Area Development Agreement in Ontario with Experienced Breakfast Developer.

• On January 29^th, 2024, the Issuer Closes Acquisition of Yolks Breakfast Inc, a BC Based Breakfast Restaurant Chain.

• On January 24^th, 2024, the Issuer Announces the Securing of a Lease for a New Co-Branded Store with Lettuce Love Café and Heal Wellness QSRs in the Bloor-West Neighborhood of Toronto.

• On January 18^th, 2024, the Issuer's Heal Wellness QSR Announces Signing of Real-Estate Location Serving the University of Alberta in Edmonton.

• On January 10^th, 2024, the Issuer's Joey Turks Island Grill Launches Franchising Program with the Signing of a 30 Unit Area Development Agreement for Ontario.

• On January 4^th, 2024, the Issuer Signs Binding Agreement to Acquire 100% of CraveIT Restaurant Group's Via Cibo Restaurant Chain.

(1) EBITDA Is a non-IFRS and non-GAAP financial measure which does not have a standardised meaning prescribed by IFRS. The Company has included this performance measure, EBITDA (Earnings before interest, taxes, depreciation and amortization). The Company believes that, in addition to conventional measures prepared in accordance with IFRS, we and certain investors use this information to evaluate the Company's performance and ability to generate cash, profits and meet financial commitments. This Non-IFRS measure is 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.

EBITDA is calculated by adding back interest, taxes, depreciation and amortization to the Company's net income/loss.

About Happy Belly Food Group
Happy Belly Food Group Inc. (CSE: HBFG) (OTCQB: VGANF) ("Happy Belly" or the "Company"), a leading consolidator of emerging food brands.

Happy Belly Food Group
Shawn Moniz
Chief Executive Officer

FOR FURTHER INFORMATION, PLEASE VISIT:

www: www.happybellyfg.com or email hello@happybellyfg.com
If you wish to contact us please call: (604) 737-2303

Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this press release, which has been prepared by management.

Cautionary Note Regarding Forward-Looking Statements

All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to the Company within the meaning of applicable securities laws. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur, and include the future performance of LumberHeads Food Co. Forward-looking statements are based on the opinions and estimates at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. There are uncertainties inherent in forward-looking information, including factors beyond the Company's control. There are no assurances that the business plans for Happy Belly described in this news release will come into effect on the terms or time frame described herein. The Company undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's Management's Discussion and Analysis and other disclosure filings with Canadian securities regulators, which are posted on www.sedarplus.ca.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/206173

FAQ

What were Happy Belly Food Group's total revenues for fiscal 2023?

Happy Belly Food Group reported total revenues of $5.45 million for fiscal 2023, representing a 96% year-over-year growth.

How many consecutive record quarters did the company achieve in 2023?

Happy Belly Food Group achieved its 7th consecutive record quarter and 9th consecutive quarter of QoQ growth in 2023.

Did the company report positive EBITDA for both its CPG and QSR divisions in 2023?

Yes, the company reported positive EBITDA for both its CPG and QSR divisions in 2023.

What was the year-over-year revenue growth for Happy Belly Food Group's QSR division in 2023?

The QSR division revenue grew by 120% year over year to $3.72 million in 2023.

How did the company's gross profit margin change from 2022 to 2023?

The company's gross profit improved to $2.62 million (52% margin) in 2023 from $1.26 million (44% margin) in 2022, a 117% increase year over year.

What strategic partnerships and acquisitions did Happy Belly Food Group announce in 2023?

Happy Belly Food Group announced partnerships with Coho Collective Kitchens, acquisition of Yolks Breakfast Inc., opening of Joey Turks restaurant, and acquisition of Rosie's Burgers in 2023.

What was the total net operating loss for the company in 2023?

The total net operating loss for the company in 2023 was $0.57 million, an improvement from $1.42 million in 2022.

How did the company's CPG division perform in terms of revenue and EBITDA in 2023?

The CPG division reported revenue increases from $1.05 million in 2022 to $1.30 million in 2023, with positive EBITDA of $430 in 2023 compared to a loss of $94,181 in 2022.