$19.6 Million in Revenue Represents
Year-Over-Year Growth of 28.3%
$5.7 Million Reduction in Operating Expenses, a
37% Year-over-Year Improvement
Company Identifies an Estimated $5 million in
Additional Cost-Savings and Margin Enhancements, Now Approximately
$20 Million Total
(All amounts are unaudited and in U.S.
dollars)
The Alkaline Water Company Inc. (NASDAQ and CSE: WTER) (the
“Company”), the country’s largest independent alkaline water
company and the Clean Beverage® company, today reported financial
results for the quarter ending September 30, 2022. The Company
reported record revenue of approximately $19.6 million,
representing the best quarterly revenue in company history and
28.3% year-over-year growth. The Company filed the corresponding
Form 10-Q with the SEC on November 14th, 2022, also available here:
ir.thealkalinewaterco.com
“In our first full quarter since we announced our Pathway to
Profitability, The Alkaline Water Company’s operating results show
the significant progress we are already making toward our goal of
profitability,” said Frank Lazaran, President and CEO of The
Alkaline Water Company. “We’ve reported record revenue, our
spending is down, and we are improving our gross margin, having
regained almost 300 basis points over last quarter.
“We grew revenue 28.3% year-over-year, to a record $19.6 million
while at the same time reducing operating expenses by $5.7 million.
We reiterate our revenue guidance of $70 million. Due to our
continued emphasis on executing our Pathway to Profitability
strategy, we project our gross margins will be between 26% and 27%
next quarter and 29% and 30% for the last quarter of the fiscal
year which ends March 31, 2023. This would amount to a gross margin
improvement of approximately 850 to 900 BPS over the course of the
year.”
Second Quarter Fiscal 2023 Financial
Highlights (all amounts in U.S. dollars)
(unaudited):
- Record revenue of $19.6 million, +28.3% year-over-year
compared to $15.3 million
- Gross Profit was $4.6 million, 23.7% of revenue, up 295 BPS
sequentially over first quarter
- Total Operating Expenses were $9.7 million, a 37% YoY
improvement
- Total Operating Loss was ($5.1 million), a 50% YoY
improvement
- Net Loss was ($8.4 Million), a $2 million YoY
improvement
- Net Loss Per Share of ($0.06) compared to ($0.11) in Q2 Fiscal
2022
- Cash Position on September 30, 2022 was approximately $2.3
million
Complete results for the Company’s Second Quarter Fiscal Year
2023 have been filed on EDGAR at www.sec.gov and on SEDAR under the
Company’s profile on www.sedar.com.
Pathway to Profitability
Update
The Company announced that an estimated $5 million in
additional cost savings and margin enhancements have been
identified. Total estimated savings, once fully implemented
throughout fiscal years 2023 and 2024, are now approximately $20
million compared to fiscal year 2022.
“We have examined and reexamined the cost of every single
component involved in the production and distribution of
Alkaline88, and we are doing everything we can to become a more
efficient company and rebuild our gross margin,” continued Mr.
Lazaran. “Non-essential General and Administrative expenses remain
frozen, saving us almost $2.7 million compared to last year and
Sales and Marketing expenses were reduced more than $3 million from
a year ago.
“Our total operating losses were reduced by over $5 million, a
50% improvement year-over-year. Our net loss improved by $2 million
from prior year quarter to $8.4 million which included
approximately $3.1 million, or $0.02 per share, in non-cash
nonrecurring other expenses. We’ve made significant progress toward
profitability in a very short time while increasing total revenue
by 28.3% and continuing to grow the Alkaline88 brand.”
The Company provided additional details on measures taken as
part of its Pathway to Profitability strategy:
- Reduction in Freight and Shipping & Handling
- Strengthened production and distribution network
- Lower fuel prices in Q2 vs Q1
- Renegotiated prices with primary transportation partners for up
to $1 million in potential savings per year at current shipping
volumes
- Decreased less-than-full-truckload shipments to high-volume
customers
- Freight cost per case shipped in the second quarter was down
approximately 20% year-over-year and 6% sequentially over last
quarter
- New Lower Prices for Raw Materials
- Renegotiated lower prices with multiple raw material vendors,
including bottles and packaging options
- The Company will begin to see the benefit of newly negotiated
lower prices on raw materials after more expensive existing
inventory is sold through in Q3 and Q4
- Inventory Reduction
- Over $800,000 reduction in overall inventory in Q2,
approximately $500,000 of which was raw materials
- Goal to reduce overall inventory by $2 million by end of
year
- Financing
- The Company has executed term sheets for $6-$7 million of
nondilutive financing, anticipated to close by year end
Second Quarter Fiscal Year 2023 Key
Business Highlights
The Company provided additional insight into the success of
Alkaline88® at retail and its trajectory for continued growth as a
brand within the Value-Added Water category.
- Nielsen Data Shows Strong Growth at Retail (for
xAOX+Conv. ending 10/08/2022)
- Alkaline88® grew 36.6% year-over-year in retail sales
for the trailing 52 weeks with sales totaling almost $90
million
- Alkaline88’s growth rate outpaced the category’s by 2.8 times
for the trailing 13 weeks
- Alkaline88’s 13-week retail sales were over $26
million
- New Stores
- Alkaline88 has closed deals to add over 11,000 new locations to
its retail footprint since the start of the calendar year
- Second quarter additions include Dollar Tree, BJs Wholesale
Club, AMPM, and Giant Eagle
- SKU Expansion
- Alkaline88 has closed deals to add new SKUs to existing clients
in over 18,000 locations since the start of the calendar year
- Second quarter additions include adding the Alkaline88 2-liter
in Rite-Aid nationally and H-E-B in Texas.
- Convenience Store Channel Growth
- Alkaline88 is now a top-15 brand in the convenience channel by
dollar volume according to 52-week Nielsen data
- Cases shipped are up 2.5 times in the first half of fiscal year
2023 over the same period from the previous year
- 12 states now have Direct-Store-Delivery coverage
- Alkaline88’s weighted distribution of less than 5% is one-tenth
the average of the larger brands in the channel, suggesting strong
opportunity for continued growth
“Alkaline88 is the largest independent enhanced-water brand in
the country,” continued Mr. Lazaran. “We are outpacing the
competition and showing strong growth at retail as a growing brand
in a growing beverage category, with products that consumers love.
This continued success at retail combined with the clear
improvements to our operating results make us very optimistic about
the future of The Alkaline Water Company.”
Second Quarter Fiscal Year 2023
Conference Call
The Company will host a conference call Tuesday November 15th,
at 8:30 AM Eastern Time.
Conference Call Details: Date: November 15, 2022 Time:
8:30AM Eastern Time (ET) Dial-in Number for U.S. and Canadian
Callers: 877-407-3088 Dial-in Number for International Callers
(Outside of the U.S. and Canada): 201-389-0927 Conference ID
Number: 13734370
Participating on the call will be the Company’s President and
CEO, Frank Lazaran, and Chief Financial Officer, David Guarino, who
will discuss operational and financial highlights for the second
quarter and the outlook for the second half of fiscal year 2023.
They will be joined for the question-and-answer portion of the call
by the Company’s Director of Sales and Operations, Frank
Chessman.
To join the live conference call, please dial into the
above-referenced telephone numbers five to ten minutes prior to the
scheduled call time.
A replay will be available for one week starting on November
15th, 2022, at approximately 12:30 PM (ET). To access the replay,
please dial 877-660-6853 in the U.S. or Canada and 201-612-7415 for
international callers and use Access ID: 13734370
About The Alkaline Water Company:
The Alkaline Water Company is the Clean Beverage® company making
a difference in the water you drink and the world we share.
Founded in 2012, The Alkaline Water Company (NASDAQ and CSE:
WTER) is headquartered in Scottsdale, Arizona. Its flagship
product, Alkaline88®, is a leading premier alkaline water brand
available in bulk and single-serve sizes along with eco-friendly
aluminum packaging options. With its innovative, state-of-the-art
proprietary electrolysis process, Alkaline88® delivers perfect 8.8
pH alkaline drinking water with trace minerals and electrolytes and
boasts our trademarked “Clean Beverage” label. In 2021, The
Alkaline Water Company was pleased to welcome Shaquille O’Neal to
its board of advisors and to serve as the celebrity brand
ambassador for Alkaline88®.
To purchase The Alkaline Water Company’s products online, visit
us at www.alkaline88.com.
To learn more about The Alkaline Water Company, please visit
www.thealkalinewaterco.com or connect with us on Facebook, Twitter,
Instagram, or LinkedIn.
Notice Regarding Forward-Looking Statements
This news release contains “forward-looking statements.”
Statements in this news release that are not purely historical are
forward-looking statements and include any statements regarding
beliefs, plans, expectations or intentions regarding the future.
Such forward-looking statements include, among other things, the
following: the statements relating to an estimated $5 million in
additional cost-savings and margin enhancements, now approximately
$20 million total (to be fully implemented throughout fiscal years
2023 and 2024) compared to fiscal year 2022; the statements
relating to the Company’s pathway to profitability and the
Company’s goal of profitability; the Company’s revenue guidance of
$70 million; the Company’s projection that the Company’s gross
margins will be between 26% and 27% next quarter and 29% and 30%
for the last quarter of the fiscal year which ends March 31, 2023
and that this would amount to a gross margin improvement of
approximately 850 to 900 BPS over the course of the year; that the
Company is doing everything it can to become a more efficient
company and rebuilding its gross margin; the statements relating to
the Company’s pathway to profitability strategy, including up to $1
million in potential savings per year at current shipping volumes
and goal to reduce overall inventory by $2 million by end of year;
that the Company will begin to see the benefit of newly negotiated
lower prices on raw materials after more expensive existing
inventory is sold through in Q3 and Q4; the Company’s trajectory
for continued growth as a brand within the Value-Added Water
category; the statement regarding proposed $6-$7 million dollars of
nondilutive financing, anticipated to close by year end; the
statement relating to strong opportunity for continued growth in
convenience store channel; and that the continued success at retail
combined with the clear improvements to the Company’s operating
results make the Company very optimistic about the future of The
Alkaline Water Company.
The material assumptions supporting these forward-looking
statements include, among others, that the Company’s cost-saving
and margin enhancement measures will be fully implemented and, once
implemented, they will be effective to reduce the Company’s annual
expense and enhance the Company’s margin to the extent anticipated
by the Company; that the Company’s burn rate to reach the level
anticipated by the Company as a result of the Company’s proactive
reduction in its monthly burn rate; that the demand for the
Company’s products will continue to significantly grow; that the
past production capacity of the Company’s co-packing facilities can
be maintained or increased; that there will be increased production
capacity through implementation of new production facilities, new
co-packers and new technology; that there will be an increase in
number of products available for sale to retailers and consumers;
that there will be an expansion in geographical areas by national
retailers carrying the Company’s products; that there will be an
expansion into new national and regional grocery retailers; that
there will be an expansion into new e-commerce, home delivery,
convenience, and healthy food channels; that there will not be
interruptions on production of the Company’s products; that there
will not be a recall of products due to unintended contamination or
other adverse events relating to the Company’s products; and that
the Company will be able to obtain additional capital to meet the
Company’s growing demand and satisfy the capital expenditure
requirements needed to increase production and support sales
activity. In addition, the Company’s fiscal year 2023 revenue
guidance is based on the Company’s expectation that the Company’s
topline to be driven by the momentum the Company is carrying
forward as one of the fastest-growing top-ten brands in one of the
fastest growing beverage categories; and the Company’s belief that
the Company will continue to see continued organic growth within
the Company’s existing retail clients and distribution expansion to
new clients throughout the country. Actual results could differ
from those projected in any forward-looking statements due to
numerous factors. Such factors include, among others, governmental
regulations being implemented regarding the production and sale of
alkaline water or any other products, including products containing
hemp/CBD; the fact that consumers may not embrace and purchase any
of the Company’s CBD-infused products; the fact that the Company
may not be permitted by the FDA or other regulatory authority to
market or sell any of its CBD-infused products; additional
competitors selling alkaline water and enhanced water products in
bulk containers reducing the Company’s sales; the fact that the
Company does not own or operate any of its production facilities
and that co-packers may not renew current agreements and/or not
satisfy increased production quotas; the fact that the Company has
a limited number of suppliers of its unique bulk bottles; the
potential for supply-chain interruption due to factors beyond the
Company’s control; the fact that there may be a recall of products
due to unintended contamination; the inherent uncertainties
associated with operating as an early stage company; changes in
customer demand and the fact that consumers may not embrace
enhanced water products as expected or at all; the extent to which
the Company is successful in gaining new long-term relationships
with new retailers and retaining existing relationships with
retailers; the Company’s ability to raise the additional funding
that it will need to continue to pursue its business, planned
capital expansion and sales activity; competition in the industry
in which the Company operates and market conditions; and the risk
that the proposed $6-$7 million of nondilutive financing may not
close by year end or at all. These forward-looking statements are
made as of the date of this news release, and the Company assumes
no obligation to update the forward-looking statements, or to
update the reasons why actual results could differ from those
projected in the forward-looking statements, except as required by
applicable law, including the securities laws of the United States
and Canada. Although the Company believes that any beliefs, plans,
expectations and intentions contained in this news release are
reasonable, there can be no assurance that any such beliefs, plans,
expectations or intentions will prove to be accurate. Readers
should consult all of the information set forth herein and should
also refer to the risk factors disclosure outlined in the reports
and other documents the Company files with the SEC, available at
www.sec.gov, and on the SEDAR, available at www.sedar.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221111005570/en/
The Alkaline Water Company Inc. Jeff Wright Director of
Investor Relations 866-242-0240
investors@thealkalinewaterco.com
Media Jessica Starman 888-461-2233
jessica@elev8newmedia.com
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