SBBC Simply Better Brands Corp

VANCOUVER, BC, May 15, 2024 /CNW/ - Simply Better Brands Corp. ("SBBC" or the "Company") (TSXV: SBBC) (OTCQB: SBBCF)  today reported interim financial results for the first quarter ended March 31, 2024. All amounts are expressed in United States dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-International Financial Reporting Standards ("IFRS") measures, see "Non-IFRS Measures" below.

On April 2, 2024, the Company announced the suspension of operations of its PureKana LLC subsidiary and the commencement of bankruptcy proceedings under Chapter 7 of the Bankruptcy Code of the United States. Accordingly, the results of the Purekana business for the first quarter of 2024 are reflected as discontinued operations in our financial statements. The following discussion highlights SBBC financial results on a continuing operations basis.

SBBC generated net revenue of $14.0 million in the first quarter of 2024, a 22% increase over the prior year, gross profit of $4.0 million, and adjusted EBITDA of $0.7 million from its continuing operations.

"We are very pleased with the continued strong performance and robust growth of TRUBAR^TM in the quarter and the further expansion of the brand's distribution footprint across North America," said SBBC Interim Chief Executive Officer and Chairman, Kingsley Ward. "With the action we have taken to streamline our portfolio, we are putting additional resources and investment behind TRUBAR^TM to continue building on its momentum and creating value for SBBC."

2024 FIRST QUARTER COMMERCIAL HIGHLIGHTS

• TRUBAR^TM Protein Bar: TRUBAR^TM generated gross revenue of $15.9 million in the first quarter, a 60% year-over-year increase vs. Q1 2023 revenue of $10.2 million. On a net basis, Q1 revenue was $13.0 million, reflecting the impact of a $2.9 million trade promotion expense to drive consumer awareness and trial nationwide at Costco. In addition to the Costco promotion, growth of the brand in the quarter was driven by continued multi-channel distribution expansion in the convenience, grocery, ecommerce, and club channels. These included a chainwide rollout of  TRUBAR^TM across more than 700 Sheetz convenience locations, the introduction of the brand in more than 250 additional regional grocery and convenience stores and increased consumer purchases at amazon.com. Looking ahead, the TRUBAR^TM  team has secured new distribution in major regional and national retailers representing an additional 5,000 stores. This new distribution is expected to roll out over the next two quarters.
  
  
• No B.S. Skincare:  The No B.S. brand recorded revenue of $0.7 million in the first quarter of 2024, an increase of 133% vs. Q1 2023 revenue of $0.3 million. The increase was driven by the national launch of the No B.S. brand in Walgreen's in Q4 2023 across the retail chain's 3,400 locations. 

Selected financial and operating information are outlined below and should be read with the Company's interim consolidated financial statements and related management's discussion and analysis for the quarter ended March 31, 2024, which are available under the Corporation's profile on SEDAR+ at www.sedarplus.ca

FINANCIAL HIGHLIGHTS FOR QUARTER ENDED MARCH 31, 2024

For the three months ended March 31, 2024, the Company generated revenue of $14.0 million with a gross profit of $4.0 million (29%) compared to $11.9 million with a gross profit of $4.5 million (38%) during the three months ended March 31, 2023.  TRUBAR's first quarter revenue for the three months ended March 31, 2024, was $13.0 million compared to $10.2 million for the comparable period in 2023 (increase of $2.8 million or 27%).    

Operating costs for the three months ended March 31, 2024, were $3.5 million, a decrease of $2.0 million (36%), compared to $5.5 million for the three months ended March 31, 2023.

During the three months ended March 31, 2024, the Company recorded a net loss of $0.96 million compared to a net loss of $2.7 million for the three months ended March 31, 2023.   The company's Purekana subsidiary accounted for $0.8 million of the consolidated $0.96 loss reported in Q1 2024. 

Non-IFRS Measures (EBITDA and Adjusted EBITDA)

EBITDA and Adjusted EBITDA are non-IFRS measures used by management that are not defined by IFRS. EBITDA and Adjusted EBITDA do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Management believes that EBITDA and Adjusted EBITDA provide meaningful and useful financial information as these measures demonstrate the operating performance of the business excluding non-cash charges.

"EBITDA" is calculated as earnings before interest, taxes, depreciation, depletion, and amortization. "Adjusted EBITDA" is calculated as EBITDA adjusted for non-cash, extraordinary, non-recurring, and other items unrelated to the Company's core operating activities.

The most directly comparable measure to EBITDA and Adjusted EBITDA calculated in accordance with IFRS is net loss. The following table presents the EBITDA and Adjusted EBITDA for the three months ended March 31, 2024, and 2023, and a reconciliation of same to net income (loss):

The Company had Adjusted EBITDA of $0.7 million from continuing operations for the three months ended March 31, 2024, a $0.2 million improvement over the Adjusted EBITDA achieved in the comparable period in 2023.  The improvement in Adjusted EBITDA was due to the lower operating expenses in the first quarter of 2024 compared to the prior year.   

Readers are cautioned that EBITDA and Adjusted EBITDA should not be construed as an alternative to net income as determined under IFRS; nor as an indicator of financial performance as determined by IFRS; nor a calculation of cash flow from operating activities as determined under IFRS; nor as a measure of liquidity and cash flow under IFRS. The Company's method of calculating EBITDA and Adjusted EBITDA may differ from methods used by other companies and, accordingly, the Company's EBITDA and Adjusted EBITDA may not be comparable to similar measures used by any other company. Except as otherwise indicated, EBITDA and Adjusted EBITDA are calculated and disclosed by SBBC on a consistent basis from period to period.  Specific adjusting items may only be relevant in certain periods.

See also Earnings before Interest, Taxes, Depreciation, and Amortization ("EBITDA") and Adjusted EBITDA (Non-GAAP Measures) in the Company's management discussion and analysis for the quarter ended March 31, 2024, available on SEDAR+ at www.sedarplus.ca.

Liquidity and Capital Resources

The Company's primary liquidity and capital requirements are for inventory and general corporate working capital purposes. The Company had a cash balance of $2.3 million as of March 31, 2024, which will provide capital to support the planned growth of the business and for general corporate working capital purposes. The Company's working capital deficiency increased from $12.4 million as of December 31, 2023, to a working capital deficiency of $13.2 million as of March 31, 2024 ($0.8 million increase).  Working capital deficiency included the Mainstreet loan ($10.4 million) which is classified as current.  It has been classified as current as a result of the noncompliance with the debt service covenant and nonpayment by Purekana LLC of a loan payment due December 11, 2023 (approximately $1.2 million). Also see subsequent events in the financial statements concerning the status of the Company's Purekana subsidiary and the Mainstreet loan (Purekana, LLC filed for Chapter 7 bankruptcy on April 3, 2024).  The Purekana LLC Mainstreet loan and its liabilities contributed materially to the working capital deficiency of the Company as of March 31, 2024.  With Purekana's Chapter 7 filing on April 3, 2024, the loan and liabilities will no longer be reflected on the Company's consolidated working capital position starting in the second quarter of 2024.

The Company continues to focus on improving its working capital position through a number of initiatives including equity and convertible debt private placements, issuance of promissory notes and establishment of lines of credit for its subsidiaries. 

Private Placements

The Company completed a non-brokered private placement for CAD $4 million in equity to be used for working capital and for growth initiatives in 2024 on May 9, 2024.

Line of Credit Facilities

Additionally, the Company has secured several lines of credit facilities for three of its subsidiaries to support the financing of purchase orders from key customers.    These lines of credit have been critical to finance the large retail purchase orders the Company's subsidiaries have successfully generated during the three months ended March 31, 2024.  For more information of the line of credit facilities please refer to note 8 in the interim first quarter 2024 financial statements for the period ended March 31, 2024.  During the three months ended March 31, 2024, the Company raised over $3.4 million in funds from these lines of credit to finance purchase orders from its large retail customers.  Over the same period, the Company repaid over $9.7 million of these credit facilities to the lender. TRU was able to increase its primary line of credit with this lender to $6 million in December 2022.  The nature of these loans is to turnover between 3-5 months from the time the money is advanced to repayment.

Promissory Notes and Loans Payable

During the three months ended March 31, 2024, the Company reduced the balance of promissory notes and loans payable outstanding by approximately $0.5 million (see notes 9 and 11 in the interim financial statements for the period ended March 31, 2024).    

The Company's ability to fund operating expenses will depend on its future operating performance which will be affected by general economic, financial, regulatory, and other factors including factors beyond the Company's control (See "Risk and Uncertainties").

Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to fund the business. Net cash flow is affected by the following items: (i) operating activities, including the level of accounts receivable, other receivable, accounts payable, accrued liabilities and unearned revenue and deposits; (ii) investing activities (iii) financing activities.

About Simply Better Brands Corp.

Simply Better Brands Corp.  is an international omni-channel platform with a portfolio of diversified assets in the rapidly growing plant-based, natural, and clean ingredient space. The Company targets informed, health-conscious Millennial and Generation Z consumers with a focus on opportunities for expansion into high-growth consumer product categories. For more information on Simply Better Brands Corp., please visit: For more information on Simply Better Brands Corp., please visit: https://www.simplybetterbrands.com/investor-relations.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Information

Certain statements contained in this news release constitute "forward-looking information" and "forward looking statements" as such terms are used in applicable Canadian securities laws. Forward-looking statements and information are based on plans, expectations and estimates of management at the date the information is provided and are subject to certain factors and assumptions, including, among others, that the Company's financial condition and development plans do not change as a result of unforeseen events, the regulatory climate in which the Company operates, and the Company's ability to execute on its business plans. Specifically, this news release contains forward-looking statements relating to, but not limited to expansion plans for TRU Brands products, and the success of the Company's marketing efforts.

Forward-looking statements and information are subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking statements and information. Factors that could cause the forward-looking statements and information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, that occurrences such as those referred to above are realized and result in delays, or cessation in planned work, that the Company's financial condition and development plans change, ability to obtain necessary regulatory approvals for proposed transactions, as well as the other risks and uncertainties applicable to the plant-based food, clean ingredient skincare and plant-based wellness or broader wellness industries and to the Company, and as set forth in the Company's management's discussion and analysis available under the Company's SEDAR+ profile at www.sedarplus.com.

The above summary of assumptions and risks related to forward-looking statements in this news release has been provided in order to provide shareholders and potential investors with a more complete perspective on the Company's current and future operations and such information may not be appropriate for other purposes. There is no representation by the Company that actual results achieved will be the same in whole or in part as those referenced in the forward-looking statements and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.

SOURCE Simply Better Brands Corp.