ELSE NUTRITION HOLDINGS INC
(BABY)
(BABYF)
(0YL.F)
("Else" or the
"Company") the
Plant-Based baby, toddler, and children nutrition company, today
reported fourth quarter and fiscal year 2022 financial results for
the period ending December 31, 2022. The financial statements and
MD&A are available on SEDAR under the Company’s profile.
Fourth Quarter and Fiscal Year
2022 Financial
Highlights
- 4Q22 revenues were $2.4M, an 86%
increase versus $1.3M in 4Q21, and a 5% increase versus $2.2M in
3Q22. Revenue growth continued to be hampered by product shortages
caused by a mechanical malfunction at the Company’s US facility.
The demand for products remained very high, outstripping the
available supply. Management estimates the revenue loss from the
malfunction was roughly $1.1M in 4Q22.
- Sales to brick-and-mortar retailers
in 4Q22 increased 69% versus 3Q22. Sales on Amazon in 4Q22
decreased by 24% versus 3Q22. Demand exceeded supply during the
quarter as the Company continued to pull back on supplying
Amazon.com and its own e-store, to be able to fulfill all orders
from brick-and-mortar retailers.
- Sales in Canada, via Amazon and
brick-and-mortar retailers increased over 100% in 4Q22 versus
3Q2022 and represented roughly 10% of the Company’s formula sales.
Demand exceeded supply during the quarter and the Company chose to
pull back on supplying Amazon.ca and its own e-store, to be able to
fulfill at least part of the orders from brick-and-mortar
retailers, still creating a significant backlog that was fulfilled
in 1Q2023.
- Fiscal year 2022 revenues were
$8.6M, an 82% increase versus $4.7M in FY2021.
- Cash balance as of December 31,
2022, was $16.6M CAD (including restricted cash and short-term bank
deposit), after a successful capital investment of $4.1M from Lind
Partners LLC.
Recent Business
Highlights
- Else products are listed in over 11,000 stores in North
America, compared with 1,200 stores in 1Q22. Management expects to
reach 20,000 listed stores and 50,000 points of distribution by the
end of 2023.
- Expanded US distribution to more than 6,000 CVS stores, more
than 750 Walmart stores, over 400 Win Dixie stores and to 161 Giant
Food Stores.
-
Expanded production capacity by adding a second manufacturing
facility in the US and launching its first production facility in
Europe. The additional production facilities will increase the
Company’s production capacity by about three times, greatly
reducing the risk of future out of stock situations.
-
Expanded its presence in the Chinese market with the launch on
JD.com, China’s largest online retailer with 580 million annual
active customers. This launch follows the Company’s successful
launch on Tmall in September. The Company will be selling its
Toddler Formula, Kids nutritional drinks and Baby Cereal products
directly to Chinese consumers through the store.
-
Entered the Canadian market with the launch on Amazon.ca and in
brick-and-mortar stores. The success of the launch exceeded
expectations given a fast entry to major retailers across the
country and a high demand for Else’s products. The Company expects
to be listed in more than 3,000 Canadian stores by the end of
2023.
-
The Company plans to enter Western Europe in 2H2023. The initial
launch will be in the UK via Amazon and natural food distributors,
with other European countries to follow.
- Successfully completed the second
and last preclinical study on its infant formula, setting the path
to FDA approval.
Management Commentary
Hamutal Yitzhak, CEO of Else Nutrition,
commented, “We are very pleased with the significant progress we
made in 2022, as we continue our journey to become a global leader
in the plant-based nutrition arena. We are becoming a recognized
national brand in the US, carried by major grocery and drug
retailers. We ended 2022 with Else products listed in over 11,000
store locations, an incredible growth from roughly 1,200 stores at
the end of 2021. Our customers now include prominent retailers such
as CVS and Walmart, as well as leading e-commerce sites such as
Amazon, Walmart.com, Tmall, and JD. We expect to reach 20,000
retail locations in 2023. We also expanded our geographic reach
during 2022, as we entered the Canadian and Chinese markets.
Furthermore, we widened our product assortment, from a single SKU
to more than 15, adding Nutritional Kids Shakes, Baby Super
Cereals, and Toddler Omega. We expect to double our SKU count in
2023 which should further accelerate our growth.
We are pleased to announce that the product
shortages which limited our ability to supply our customers, thus
hampering our sales growth in recent months, are essentially behind
us. We worked diligently to secure two additional manufacturing
facilities in the US and Europe and have been manufacturing at our
new US facility for weeks. The two new facilities have more than
tripled our current production capacity, mitigating the risk of
future out-of-stock situations. We estimate the revenue impact due
to the product shortage to be roughly $1.5M during the second half
of 2022, roughly over 15% of our annual sales.
As we look out into 2023, we remain focused on
our growth objectives. We continue to be enthusiastic about our
international expansion. Growing our sales in China will be a
priority in 2023, following our successful launches on Tmall Global
and JD.com. China is the world’s largest infant formula market,
valued at roughly $33 billion and expected to grow to $40 billion
by 2025. Our entry into Canada in August had a much greater than
anticipated start, and the outsized demand has continued. We expect
to roughly double our store base in Canada in 2023. Furthermore, we
are excited to enter the UK and Australia in the second half of
2023, as demand for an alternative to dairy and soy formula
continues to increase in those regions.
In 2023 we will begin our infant growth clinical
study for the FDA and European permits, with expected conclusion in
2024. Receiving FDA approval is a very high priority for Else
Nutrition, as we believe that becoming the first non-dairy and
non-soy FDA-approved infant formula will be transformational for
the valuation of the Company.
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 during
2021 and 2022 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 infant growth study protocol to the
FDA for review and is awaiting the FDA response, as well as a
comparator formula availability, currently unavailable due to the
continuous infant formula shortage followed by several recent
product recalls in the US. In 2023, a second clinical growth study
on the healthy toddler population has started as part of the
company’s plans to continue research activity demonstrating the
safety, tolerability, and efficacy of its product range.
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 March 31, 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/MDxXRYw6vqg.
A replay will be available after the call, in the Investors
section of the Company's website at
https://app.webinar.net/MDxXRYw6vqg.
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, LLCMr. Ben 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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