ELSE NUTRITION HOLDINGS INC
(BABY)
(BABYF)
(0YL.F)
("Else" or the
"Company") the
Plant-Based baby, toddler, and children nutrition company, today
reported second quarter 2023 financial results for the period
ending June 30, 2023. The financial statements and MD&A are
available on SEDAR under the Company’s profile.
Financial Highlights
- 2Q23 total
revenues were $2.4M, a 3% increase versus $2.3M in 2Q22. 1H23
revenues increased 35% YoY, versus 1H22.
- Sales to
brick-and-mortar retailers in the US and Canada during 2Q23
increased by 157% YoY, versus 2Q22. As of 2Q23, Else products were
listed in nearly 13,000 stores in North America, compared with
3,000 stores in 2Q22. Management expects to reach over 15,000
listed stores and over 40,000 points of distribution by the end of
2023.
- Total ecommerce
sales during 2Q23 decreased by 42% YoY, versus 2Q22. The decline in
sales was the consequence of the Company’s decision to divert
product from e-commerce channels in favor of brick-and-mortar
retailers in the last three quarters. The Company is amid
rebuilding its sales velocity on Amazon and its own e-commerce
store and expects these channels to return to growth in 2H23.
E-commerce sales increased 26% in 2Q23 vs. 1Q23.
- Cash balance as
of June 30, 2023, was $4.6M CAD, including restricted cash and
short-term bank deposit. On July 10, Else received an additional
$3M CAD ($2.5M US) of investment from Lind Partners. The total
amount for potential investment from Lind Partners was up to $19M
CAD ($13M US) of which the Company has drawn down $8.1M
US.
Recent Business Highlights
-
Expanded distribution to more than 7,000 CVS stores, more than
1,100 Walmart stores, 900 Shoppers Drug Mart locations across 11
provinces and territories, over 440 Loblaws stores, over 600
Sobey’s stores, 161 Giant Food Stores, and 110 Schnucks
Supermarkets.
-
Else Kids Vanilla, Else Kids Cocoa, and Else Toddler Organic &
Else Toddler Omega, were approved for US federal insurance billing
under the Center for Medicare & Medicaid Services, opening new
avenues for distribution and increasing the accessibility of Else's
plant-based nutrition products.
-
Else nutritional products for toddlers and kids have been approved
by the Oklahoma Women, Infants, and Children (WIC) program. This
authorization comes on the heels of the Company's recent
achievements of product approvals in Arizona and under US federal
insurance billing, reflecting the continued execution of its
strategic vision to broaden the accessibility of plant-based
nutrition products across the United States.
-
Expanded production capacity by adding a second manufacturing
facility in the US and launching its first production facility in
Europe. The additional facilities will increase the Company’s
production capacity by about three times, greatly reducing the risk
of future out of stock situations. The Company anticipates the new
scaled manufacturing capacity to decrease its manufacturing costs,
beginning in 2H23.
-
Expected to launch kids ready to drink products in 2H23 in USA and
Canada, and adult ready-to-drink products in 2024.
-
The Company plans to enter Western Europe in 2H23. The initial
launch will be in the UK via Amazon and natural food distributors,
with other European countries to follow.
-
The Company plans to enter Australia in 2H23. The initial launch
will be via Amazon to be followed by drug and grocery chains.
-
Received critical approval by the Institutional Review Board (IRB)
of the infant growth study protocol for the testing of the Else
Infant Formula.
Management Commentary
Hamutal Yitzhak, CEO of Else Nutrition,
commented, “2Q23 was another step forward in our mission to become
a global leader in the plant-based nutrition arena. We are
continuing to expand our points of distribution among various
geographies and channels. Else has now become a national brand in
North America, and we are now being sold in prominent retailers
such as Walmart, CVS, and Shoppers Drug Mart. We expect to reach
over 15,000 retail locations by the end of 2023.
Our two new manufacturing facilities in the US
and Europe are now operational, more than tripling our production
capacity, allowing us to properly meet our customers’ growing
demands and mitigating the risk of future out-of-stock situations.
In addition, our new facilities have made our production more
efficient and cost-effective, and we expect to realize a lower cost
of production leading to higher margin in upcoming quarters.
While we have now rightsized our production and
inventory levels, there is still work to do to remedy the effects
caused by our production issues. After approximately nine months of
diverting inventory from e-commerce channels in favor of
brick-and-mortar customers, we are now in the process of rebuilding
our sales velocity in e-commerce channels which should lead to
increased growth in 2H23.
Our sales to retail stores remain robust as
retailers are seeing healthy sales of our products and we continue
to grow our store count. Importantly, major retailers are expanding
the number SKUs. As an example, we recently announced that Walmart
has added both Toddler Organic and Toddler Omega to its shelves
alongside the already available Super Cereal and Kids Shake
products.
Our international expansion remains on track.
Our launch into the Canadian market in 3Q22 was above our
expectations, and the consumer enthusiasm has continued.
Furthermore, we are excited at the prospect of entering Western
Europe and Australia in 2H23.
Our growth objectives in 2023 and beyond remain
intact. However, given the challenging capital markets environment,
we are now even more focused on expense management, capital
efficiency and being good stewards of capital. In recent months we
have reduced expenses across all areas of our business and
implemented significant efficiencies. Total Operating expenses in
1H23 decreased 17% versus the same period last year, despite our
revenues increasing 35%. We believe that our revised expense
structure combined with our anticipated top-line growth and margin
expansion will allow us to reach cash flow breakeven during
2H2024.”
FDA Update
As part of the pathway to bring its infant
formulation to market under FDA and other authorities’ approvals,
Else concluded two successful preclinical safety studies on its
plant-based infant formula, to demonstrate safety and nutrient
bioavailability of the infant formula and its ingredients. The
results demonstrated proper growth, similar to dairy-based infant
formula, in a neonatal preclinical model, as well as the infant
formula protein efficiency and quality. Those are the key two steps
out of three, on the path to obtaining the FDA and other regulatory
permits to bring the product to market. In February 2023, the
Company announced that the Institutional Review Board (the ethical
committee) approved the infant growth study protocol for the
testing of the Else Infant Formula. As a final step before
initiating the study, the Company has now submitted the preclinical
studies results as well as the infant growth study protocol to the
FDA for review and is in discussion with the FDA for the infant
formula optimization prior to the clinical study initiation, in
parallel to continuously seeking for a comparator formula which is
currently unavailable due to the continuous infant formula shortage
followed by several recent product recalls in the US.
Conference Call
Hamutal Yitzhak, CEO and Co-Founder, will hold a
conference call to discuss the quarter's financial results
at 10:00 a.m. (Eastern Time) on August 14, 2023.
Interested parties can listen via a live webcast,
from the link available in the Investors section of the Company's
website or at https://app.webinar.net/nlg7JVlWQPG
A replay will be available after the call, in the
Investors section of the Company's website at
https://app.webinar.net/nlg7JVlWQPG
About Else Nutrition Holdings
Inc.
Else Nutrition Holdings Inc. is a food and
nutrition company in the international expansion stage focused on
developing innovative, clean, and plant-based food and nutrition
products for infants, toddlers, children, and adults. Its
revolutionary, plant-based, non-soy formula is a clean-ingredient
alternative to dairy-based formula. Else Nutrition (formerly INDI)
won the "2017 Best Health and Diet Solutions" award at Milan's
Global Food Innovation Summit. The holding company, Else Nutrition
Holdings Inc., is a publicly-traded company, listed on TSX Venture
Exchange under the trading symbol BABY and is quoted on the US OTC
Markets Q.X. board under the trading symbol BABYF and the Frankfurt
Exchange under the symbol 0YL. Since launching its Plant-Based
Complete Nutrition for Toddlers, made of whole foods, almonds,
buckwheat, and tapioca, the brand has received thousands of
powerful testimonials and reviews from parents and gained national
retailer support from Sprouts Farmers Market, and achieved rapid
sales growth. Else became the #1 Best Seller on Amazon in the Fall
of 2020 in the New Baby & Toddler Formula Category. It recently
won the 'Best Dairy Alternative' Award 2021 at World Plant-Based
Expo and was a Nexty Award Finalist at Expo West 2022 in the
Plant-Based lifestyle category.
Investor Relations
Contact:Lytham Partners, LLCBen ShamsianNew York |
PhoenixE: shamsian@lythampartners.comP: 646-829-9701
RBMG – RB Milestone Group LLCTrevor Brucato, Managing DirectorE:
Baby@rbmilestone.comwww.rbmilestone.com
Toronto Stock Exchange
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policies of the Toronto Stock Exchange) a responsibility for the
adequacy or accuracy of this release.
Caution Regarding Forward-Looking
Statements
This press release contains statements that may
constitute “forward-looking statements” within the meaning of
applicable securities legislation. Forward-looking statements are
typically identified by words such as “will” or similar
expressions. Forward-looking statements in this press release
include statements with respect to the anticipated dates for filing
the Company’s financial disclosure documents. Such forward-looking
statements reflect current estimates, beliefs and assumptions,
which are based on management’s perception of current conditions
and expected future developments, as well as other factors
management believes are appropriate in the circumstances. No
assurance can be given that the foregoing will prove to be correct.
Forward-looking statements made in this press release assume, among
others, the expectation that there will be no interruptions or
supply chain failures as a result of COVID 19 and that the
manufacturing, broker and supply logistic agreement with the
Company do not terminate. Actual results may differ from the
estimates, beliefs and assumptions expressed or implied in the
forward-looking statements. Readers are cautioned not to place
undue reliance on any forward-looking statements, which reflect
management’s expectations only as of the date of this press
release. The Company disclaims any obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
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