Jamieson Wellness Inc. Reports Third Quarter 2024 Results

Nov 07, 2024 04:05 pm
TORONTO -- 

Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX: JWEL) today reported its third quarter results for the period ended September 30, 2024. All amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS and other financial measures. See “Non-IFRS and Other Financial Measures” below.

“Our brands continued to resonate with consumers globally in the third quarter, with strong consumption and growth in all of our key markets,” said Mike Pilato, President and CEO of Jamieson Wellness. “Consumers continue to improve their health and wellness with quality brands they can trust, which is reflected in our branded revenue growth of 20% in the quarter.

“As we prepare to close 2024, we remain focused on the execution of our strategic priorities. Our newly launched integrated advertising campaign in Canada continues to reinforce Jamieson’s position as the leading VMS brand in the country and we are preparing to take its success into international markets in 2025. Our investments in brand growth in China and in the U.S. are ongoing, and we have increased collaboration with our key distributor partners to further fuel the growth in our International business segment.

“Our results this quarter were driven by the growing consumer momentum behind proactive health and wellness solutions, and exceptional execution by our entire team. I want to thank all our team members for their dedication to delivering growth, relentless pursuit of our commitments, and passion for ensuring our high-quality products help to inspire better lives every day.”

Third Quarter Highlights

  • Successful launch of the Jamieson brand’s integrated advertising campaign in Canada, focused on the Company’s 102-year-history of quality and trust
  • Achieved the Company’s highest third quarter revenue to date in China, driven by investments in increasing brand awareness, market penetration, and ecommerce programs
  • Sustained growth of the youtheory brand, led by consumption of product innovations
  • 25% International revenue growth, driven by innovation and distribution gains in multiple markets
  • Renewed the Company’s partnership with environmental restoration company veritree, expanding its Canadian kelp restoration project and committing to two new international tree planting projects in 2025

Third Quarter Financial Results Consolidated Summary

All comparisons are with the third quarter of 2023

  • Consolidated revenue increased 16.3% to $176.2 million, driven by 20.0% growth in Jamieson Brands and lower revenue in Strategic Partners, as expected
  • Gross profit increased by $16.4 million to $67.6 million; normalized gross profit increased by $12.9 million largely driven by higher revenues and increased margins
  • Gross profit margin3 increased by 460 basis points; normalized gross profit margin increased 230 basis points due to a higher mix of Jamieson Brands sales and the impact of normalizing for the amortization of fair value adjustments in the prior year
  • EBITDA1 increased by $2.4 million to $27.9 million, mainly driven by higher revenues and gross profit; Adjusted EBITDA1 increased by $2.0 million to $33.9 million, reflecting the impact of higher sales and pricing, partially offset by investments in demand driving marketing
  • Net earnings was $10.4 million; Adjusted net earnings1 was $15.8 million, or $0.8 million higher, reflecting higher normalized earnings from operations and lower interest rates in the current year
  • Diluted earnings per share was $0.24; Adjusted diluted earnings per share2 was $0.37

Summary of Segment Results

All comparisons are with the third quarter of 2023

Jamieson Brands

  • Revenue increased 20.0% or $25.9 million to $155.0 million
    • Canada revenue increased by 15.1% to $87.3 million, driven by continued strong consumer consumption, pricing, and lapping of a customer inventory reduction
    • China revenue increased 81.7% to $22.6 million on a constant currency basis, driven by the Company’s marketing and promotional investment strategy in the country
    • youtheory revenue increased 5.7% to $34.9 million, driven by consumer consumption, innovation and new distribution, partially offset by the initial stocking of product renovations in the prior year
    • International revenue increased by 25.2% to $10.3 million on a constant currency basis, driven by innovation and distribution gains
  • Gross profit increased by $17.6 million to $65.3 million; normalized gross profit increased by $14.1 million mainly due to higher revenues and increased margins
  • Gross profit margin3 increased by 520 basis points to 42.1%; normalized gross profit margin increased by 250 basis points to 42.1%, mainly driven by channel mix and favourable category growth in China, the Company’s higher margin geography
  • Adjusted EBITDA1 increased by $3.2 million to $32.3 million, driven by higher gross profit partially offset by investments in SG&A to drive brand awareness and growth in China; Adjusted EBITDA margin2 was 20.9%, a decrease of 170 basis points due to higher SG&A as a percentage of revenue

Strategic Partners

  • Revenue was $21.2 million, an expected decrease of 5.4% or $1.2 million, reflecting the Company’s previously announced transition away from a customer contract
  • Gross profit was $2.3 million, a decrease of $1.1 million; gross profit margin3 was 10.9%, a decrease of 460 basis points impacted by lower plant utilization and customer mix
  • Adjusted EBITDA1 was $1.6 million, a decrease of $1.2 million; Adjusted EBITDA margin2 was 7.4%, a decrease of 490 basis points

Balance Sheet and Cash Flow from Operations

All comparisons are with the third quarter of 2023

  • As at September 30, 2024, the Company had approximately $207.2 million in cash and available revolving and swingline facilities and net debt1 of $292.8 million
  • The Company generated $24.2 million in cash from operations compared to $14.0 million used in Q3 2023
  • Cash from operating activities before working capital considerations of $18.5 million increased by $0.8 million
  • Cash generated from working capital increased by $37.4 million driven by timing of accounts receivable collections, income tax payable, and drawdown of inventory

1 This is a non-IFRS financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS financial measure.

2 This is a non-IFRS ratio. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS ratio.

3 This is a supplementary financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each supplementary financial measure.

Narrowing Fiscal 2024 Outlook and Maintaining Fiscal 2025 Outlook

The Company is narrowing its outlook for the 2024 fiscal year and is now anticipating the following:

  • Revenue to range between $725.0 to $755.0 million (+7.2% to +11.7% growth)
  • Adjusted EBITDA to range from $139.0 to $143.0 million (up to 3.6% growth)
  • Adjusted diluted earnings per share to range from $1.57 to $1.63 (up to +5.2% growth)

In fiscal 2025, the Company continues to anticipate the following:

  • The return of low double-digit growth with Adjusted EBITDA of between $155.0 and $165.0 million
  • Profitability driven by Jamieson Brands and Strategic Partners volume growth, and manufacturing efficiencies
  • SG&A and marketing investments consistent with Jamieson Brands revenue growth rates

For additional details on the Company’s fiscal 2024 and 2025 outlook, including guidance for the fourth quarter of 2024, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the three and nine months ended September 30, 2024.

Declaration of Third Quarter Dividend

The board of directors of the Company declared a cash dividend for the third quarter of 2024:

  • $0.21 per common share, or approximately $8.8 million in the aggregate
  • Paid on December 13, 2024 to all common shareholders of record at the close of business on November 29, 2024
  • The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (Canada)

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s unaudited condensed consolidated interim financial statements and accompanying notes as at and for the three and nine months ended September 30, 2024 and related MD&A are available under the Company’s profile on SEDAR+ at www.sedarplus.com and on the Investor Relations section of the Company’s website at https://investors.jamiesonwellness.com.

Conference Call

Management will host a conference call to discuss the Company’s third quarter 2024 results at 5:00 p.m. ET today, November 7, 2024. To access:

About Jamieson Wellness

Jamieson Wellness is dedicated to Inspiring Better Lives Every Day with its portfolio of innovative natural health brands. Established in 1922, the Jamieson brand is Canada's #1 vitamins, minerals and supplements (“VMS”) brand. The Company’s youtheory brand, acquired in 2022, is an established and growing lifestyle brand in the U.S. Combined, these global brands are available in more than 50 countries worldwide. The Company also offers a variety of innovative VMS products as well as sports nutrition products to consumers in Canada with its Progressive, Smart Solutions, Iron Vegan and Precision brands. The Company is a participant of the United Nations Global Compact and adheres to its principles-based approach to responsible business. For more information please visit www.jamiesonwellness.com.

Jamieson Wellness’ head office is located at 1 Adelaide Street East Suite 2200, Toronto, Ontario, Canada.

Forward-Looking Information

This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company’s anticipated results and its outlook for its 2024 revenue, Adjusted EBITDA and Adjusted diluted earnings per share. Words such as “expect”, “anticipate”, “intend”, “may”, “will”, “estimate” and variations of such words and similar expressions are intended to identify such forward-looking information. This information reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated March 28, 2024 and under the “Risk Factors” section in the MD&A filed today, November 7, 2024. This information is based on the Company’s reasonable assumptions and beliefs in light of the information currently available to it and the statements are made as of the date of this press release. The Company does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law or regulatory authority.

The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company’s results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “Forward-looking Information” and “Risk Factors” within the MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.

 

Jamieson Wellness Inc.

Selected Consolidated Financial Information

In thousands of Canadian dollars, except share and per share amounts

 

Three months ended

Nine months ended

September 30

September 30

2024

2023

2024

2023

 
Revenue

176,155

 

151,505

 

488,999

 

455,807

 

Cost of sales

108,584

 

100,355

 

313,615

 

301,275

 

Gross profit

67,571

 

51,150

 

175,384

 

154,532

 

 
Gross profit margin

38.4

%

33.8

%

35.9

%

33.9

%

 
Selling, general and administrative expenses

41,982

 

30,780

 

125,407

 

98,004

 

Share-based compensation

1,788

 

1,413

 

5,281

 

4,334

 

Earnings from operations

23,801

 

18,957

 

44,696

 

52,194

 

 
Operating margin

13.5

%

12.5

%

9.1

%

11.5

%

 
Foreign exchange (gain)/ loss

578

 

(1,359

)

(373

)

286

 

Interest expense and other financing costs

5,068

 

5,589

 

14,588

 

17,899

 

Accretion on preferred shares

2,169

 

2,041

 

6,509

 

2,868

 

Earnings before income taxes

15,986

 

12,686

 

23,972

 

31,141

 

Provision for income taxes

5,568

 

4,915

 

8,960

 

9,101

 

Net earnings

10,418

 

7,771

 

15,012

 

22,040

 

 
Net earnings attributable to:
Shareholders

10,564

 

8,224

 

15,104

 

23,475

 

Non-controlling interests

(146

)

(453

)

(92

)

(1,435

)

10,418

 

7,771

 

15,012

 

22,040

 

Adjusted net earnings

15,834

 

14,991

 

34,403

 

37,469

 

 
EBITDA

27,934

 

25,512

 

59,441

 

67,095

 

Adjusted EBITDA

33,914

 

31,871

 

81,566

 

87,435

 

 
Adjusted EBITDA margin

19.3

%

21.0

%

16.7

%

19.2

%

 
Weighted average number of shares
Basic

41,566,805

 

42,055,796

 

41,501,326

 

41,926,277

 

Diluted

42,943,970

 

42,567,969

 

42,747,176

 

42,421,242

 

 
Earnings per share attributable to common shareholders:
Basic, earnings per share

0.25

 

0.18

 

0.36

 

0.53

 

Diluted, earnings per share

0.24

 

0.18

 

0.35

 

0.52

 

Adjusted diluted, earnings per share

0.37

 

0.35

 

0.80

 

0.88

 

 

Jamieson Wellness Inc.

Consolidated Statements of Financial Position

In thousands of Canadian dollars

 

September 30,
2024

December 31,
2023

Assets
Current assets
Cash

42,190

36,863

Accounts receivable

137,846

164,499

Inventories

193,476

182,456

Derivatives

211

3,707

Prepaid expenses and other current assets

6,911

5,335

Income taxes recoverable

5,352

-

385,986

392,860

Non-current assets
Property, plant and equipment

101,716

106,903

Goodwill

277,431

274,411

Intangible assets

366,050

366,521

Deferred income tax

4,288

2,879

Total assets

1,135,471

1,143,574

 
Liabilities
Current liabilities
Accounts payable and accrued liabilities

108,669

135,520

Income taxes payable

2,335

2,263

Derivatives

3,345

-

Current portion of other long-term liabilities

25,584

7,546

139,933

145,329

Long-term liabilities
Long-term debt

335,000

325,000

Post-retirement benefits

1,167

1,078

Deferred income tax

59,913

60,532

Redeemable preferred shares

95,918

89,409

Other long-term liabilities

18,569

41,031

Total liabilities

650,500

662,379

 
Equity
Share capital

320,179

312,593

Warrants

14,705

14,705

Contributed surplus

23,057

19,089

Retained earnings

71,270

80,654

Accumulated other comprehensive income

13,351

11,892

Total shareholders' equity

442,562

438,933

Non-controlling interests

42,409

42,262

Total equity

484,971

481,195

Total liabilities and equity

1,135,471

1,143,574

Non-IFRS and Other Financial Measures

This press release makes reference to certain financial measures, including non-IFRS financial measures that are historical, non-IFRS measures that are forward-looking, non-GAAP ratios and supplementary financial measures. Management uses these financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing the Company’s business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses the following non-IFRS financial measures: “EBITDA”, “Adjusted EBITDA” and “Adjusted net earnings”, the most directly comparable financial measure for each that is disclosed in its financial statements being net earnings, “normalized gross profit”, “normalized SG&A”, “normalized earnings from operations”, “cash from operating activities before working capital considerations” and “net debt”, the most directly comparable financial measures for each that is disclosed in its financial statements being gross profit, SG&A, earnings from operations, cash flows from operating activities, and long-term debt, respectively, the following non-IFRS ratios: “Adjusted EBITDA margin”, “Adjusted diluted earnings per share”, “normalized gross profit margin”, “normalized operating margin”, and the following supplementary financial measures: “gross profit margin” and “operating margin” to provide supplemental measures of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non-IFRS and supplementary financial measures in order to prepare annual operating budgets and to determine components of management compensation. For an explanation of the composition of each such measure and the usefulness and additional uses of each by management, see the “How we Assess the Performance of our Business” section of the MD&A, which is incorporated by reference. See below for a quantitative reconciliation of each non-IFRS financial measure to its most directly comparable financial measure disclosed in the Company’s financial statements to which the measure relates.

The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA, and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings from operations to normalized earnings from operations and net debt, each of which are non-IFRS financial measures (see the “Non-IFRS and Other Financial Measures” of this press release for further information on each non-IFRS financial measure) for the three and nine months ended September 30, 2024, and September 30, 2023.

 

Jamieson Wellness Inc.

Segment Information

In thousands of Canadian dollars, except as otherwise noted

 
Jamieson Brands
 

Three months ended
September 30

2024

2023

$ Change

% Change

 
Revenue

154,988

 

129,138

 

25,850

 

20.0

%

 
Gross profit

65,257

 

47,691

 

17,566

 

36.8

%

Amortization of fair value adjustments (2)

-

 

3,504

 

(3,504

)

(100.0

%)

Normalized gross profit

65,257

 

51,195

 

14,062

 

27.5

%

 
Gross profit margin

42.1

%

36.9

%

-

 

5.2

%

Normalized gross profit margin

42.1

%

39.6

%

-

 

2.5

%

 
Share-based compensation (3)

1,788

 

1,413

 

375

 

26.5

%

 
Selling, general and administrative expenses

40,516

 

29,258

 

11,258

 

38.5

%

Acquisition and divestiture related costs (4)

(541

)

(431

)

(110

)

(25.5

%)

IT system implementation (5)

(2,992

)

(2,370

)

(622

)

(26.2

%)

Other

(81

)

-

 

(81

)

-

 

Normalized selling, general and administrative expenses

36,902

 

26,457

 

10,445

 

39.5

%

 
Earnings from operations

22,953

 

17,020

 

5,933

 

34.9

%

Acquisition and divestiture related costs (4)

541

 

431

 

110

 

25.5

%

IT system implementation (5)

2,992

 

2,370

 

622

 

26.2

%

Amortization of fair value adjustments (2)

-

 

3,504

 

(3,504

)

(100.0

%)

Other

81

 

-

 

81

 

(100.0

%)

Normalized earnings from operations

26,567

 

23,325

 

3,242

 

13.9

%

 
Operating margin

14.8

%

13.2

%

-

 

1.6

%

Normalized operating margin

17.1

%

18.1

%

-

 

(1.0

%)

 
Adjusted EBITDA

32,340

 

29,125

 

3,215

 

11.0

%

Adjusted EBITDA margin

20.9

%

22.6

%

-

 

(1.7

%)

 
 
Strategic Partners
 

Three months ended
September 30

2024

2023

$ Change

% Change

 
Revenue

21,167

 

22,367

 

(1,200

)

(5.4

%)

 
Gross profit

2,314

 

3,459

 

(1,145

)

(33.1

%)

Gross profit margin

10.9

%

15.5

%

-

 

(4.6

%)

 
Selling, general and administrative expenses

1,466

 

1,522

 

(56

)

(3.7

%)

 
Earnings from operations

848

 

1,937

 

(1,089

)

(56.2

%)

 
Operating margin

4.0

%

8.7

%

-

 

(4.7

%)

 
Adjusted EBITDA

1,574

 

2,746

 

(1,172

)

(42.7

%)

Adjusted EBITDA margin

7.4

%

12.3

%

-

 

(4.8

%)

 
 
Jamieson Brands
 

Nine months ended
September 30

2024

2023

$ Change

% Change

 
Revenue

426,123

 

370,164

 

55,959

 

15.1

%

 
Gross profit

167,671

 

141,211

 

26,460

 

18.7

%

Labour relations costs (1)

4,713

 

-

 

4,713

 

100.0

%

Amortization of fair value adjustments (2)

-

 

5,819

 

(5,819

)

(100.0

%)

Acquisition and divestiture related costs (4)

165

 

-

 

165

 

100.0

%

Normalized gross profit

172,549

 

147,030

 

25,519

 

17.4

%

 
Gross profit margin

39.3

%

38.1

%

-

 

1.2

%

Normalized gross profit margin

40.5

%

39.7

%

-

 

0.8

%

 
Share-based compensation (1)

5,281

 

4,334

 

947

 

21.9

%

 
Selling, general and administrative expenses

120,839

 

93,200

 

27,639

 

29.7

%

Acquisition and divestiture related costs (4)

(865

)

(5,539

)

4,674

 

84.4

%

IT system implementation (5)

(9,421

)

(4,469

)

(4,952

)

(110.8

%)

Labour relations costs (1)

(1,675

)

-

 

(1,675

)

(100.0

%)

Other

(378

)

179

 

(557

)

(311.2

%)

Normalized selling, general and administrative expenses

108,500

 

83,371

 

25,129

 

30.1

%

 
Earnings from operations

41,551

 

43,677

 

(2,126

)

(4.9

%)

Acquisition and divestiture related costs (4)

1,030

 

5,539

 

(4,509

)

(81.4

%)

IT system implementation (5)

9,421

 

4,469

 

4,952

 

110.8

%

Labour relations costs (1)

6,388

 

-

 

6,388

 

(100.0

%)

Amortization of fair value adjustments (2)

-

 

5,819

 

(5,819

)

(100.0

%)

Other

378

 

(179

)

557

 

311.2

%

Normalized earnings from operations

58,768

 

59,325

 

(557

)

(0.9

%)

 
Operating margin

9.8

%

11.8

%

-

 

(2.0

%)

Normalized operating margin

13.8

%

16.0

%

-

 

(2.2

%)

 
Adjusted EBITDA

76,155

 

76,432

 

(277

)

(0.4

%)

Adjusted EBITDA margin

17.9

%

20.6

%

-

 

(2.7

%)

 
 
Strategic Partners
 

Nine months ended
September 30

2024

2023

$ Change

% Change

 
Revenue

62,876

 

85,643

 

(22,767

)

(26.6

%)

 
Gross profit

7,713

 

13,321

 

(5,608

)

(42.1

%)

Gross profit margin

12.3

%

15.6

%

-

 

(3.3

%)

 
Selling, general and administrative expenses

4,568

 

4,804

 

(236

)

(4.9

%)

Other

-

 

(72

)

72

 

100.0

%

Normalized selling, general and administrative expenses

4,568

 

4,732

 

(164

)

(3.5

%)

 
Earnings from operations

3,145

 

8,517

 

(5,372

)

(63.1

%)

Other

-

 

72

 

(72

)

(100.0

%)

Normalized earnings from operations

3,145

 

8,589

 

(5,444

)

(63.4

%)

 
Operating margin

5.0

%

9.9

%

-

 

(4.9

%)

Normalized operating margin

5.0

%

10.0

%

-

 

(5.0

%)

 
Adjusted EBITDA

5,411

 

11,003

 

(5,592

)

(50.8

%)

Adjusted EBITDA margin

8.6

%

12.8

%

-

 

(4.2

%)

 
 

Reconciliation of Non-IFRS Financial Measures

In thousands of Canadian dollars

 

Three months ended

Nine months ended

September 30

September 30

2024

2023

2024

2023

 
 
Net earnings:

10,418

 

7,771

 

15,012

 

22,040

 

Add:
Provision for (recovery of) income taxes

5,568

 

4,915

 

8,960

 

9,101

 

Interest expense and other financing costs

5,068

 

5,589

 

14,588

 

17,899

 

Accretion on preferred shares

2,169

 

2,041

 

6,509

 

2,868

 

Depreciation of property, plant, and equipment

3,201

 

3,695

 

9,953

 

10,821

 

Amortization of intangible assets

1,510

 

1,501

 

4,419

 

4,366

 

 
Earnings before interest, taxes, depreciation, and amortization (EBITDA)

27,934

 

25,512

 

59,441

 

67,095

 

Share-based compensation (3)

1,788

 

1,413

 

5,281

 

4,334

 

Foreign exchange loss/(gain)

578

 

(1,359

)

(373

)

286

 

Acquisition and divestiture related costs (4)

541

 

431

 

1,030

 

5,539

 

Labour relations costs (1)

-

 

-

 

6,388

 

-

 

IT system implementation (5)

2,992

 

2,370

 

9,421

 

4,469

 

Amortization of fair value adjustments (2)

-

 

3,504

 

-

 

5,819

 

Other

81

 

-

 

378

 

(107

)

Adjusted EBITDA

33,914

 

31,871

 

81,566

 

87,435

 

 
Provision for income taxes

(5,568

)

(4,915

)

(8,960

)

(9,101

)

Interest expense and other financing costs

(5,068

)

(5,589

)

(14,588

)

(17,899

)

Depreciation of property, plant, and equipment

(3,201

)

(3,695

)

(9,953

)

(10,821

)

Amortization of intangible assets

(1,510

)

(1,501

)

(4,419

)

(4,366

)

Share-based compensation (3)

(1,666

)

(1,290

)

(4,915

)

(4,047

)

Tax deduction from vesting of certain share-based awards

-

 

-

 

-

 

(1,022

)

Tax effect of normalization adjustments

(1,067

)

110

 

(4,328

)

(2,710

)

Adjusted net earnings

15,834

 

14,991

 

34,403

 

37,469

 

 
 

Three months ended

Nine months ended

September 30

September 30

2024

2023

2024

2023

 
Gross profit

67,571

 

51,150

 

175,384

 

154,532

 

Labour relations costs (1)

-

 

-

 

4,713

 

-

 

Amortization of fair value adjustments (2)

-

 

3,504

 

-

 

5,819

 

Acquisition and divestiture related costs (4)

-

 

-

 

165

 

-

 

Normalized gross profit

67,571

 

54,654

 

180,262

 

160,351

 

Normalized gross profit margin

38.4

%

36.1

%

36.9

%

35.2

%

 
Selling, general and administrative expenses

41,982

 

30,780

 

125,407

 

98,004

 

Acquisition and divestiture related costs (4)

(541

)

(431

)

(865

)

(5,539

)

IT system implementation (5)

(2,992

)

(2,370

)

(9,421

)

(4,469

)

Labour relations costs (1)

-

 

-

 

(1,675

)

-

 

Other

(81

)

-

 

(378

)

107

 

Normalized selling, general and administrative expenses

38,368

 

27,979

 

113,068

 

88,103

 

 
Earnings from operations

23,801

 

18,957

 

44,696

 

52,194

 

Acquisition and divestiture related costs (4)

541

 

431

 

1,030

 

5,539

 

IT system implementation (5)

2,992

 

2,370

 

9,421

 

4,469

 

Labour relations costs (1)

-

 

-

 

6,388

 

-

 

Amortization of fair value adjustments (2)

-

 

3,504

 

-

 

5,819

 

Other

81

 

-

 

378

 

(107

)

Normalized earnings from operations

27,415

 

25,262

 

61,913

 

67,914

 

Normalized operating margin

15.6

%

16.7

%

12.7

%

14.9

%

 
(1)

These expenses are mainly comprised of third-party legal, security fees, unavoidable facility expenditures, customer fines and penalties, along with freight charges to expedite shipments to customers as it relates to a labour disruption in Q1 2024.

 
(2)

Post-closing amortization of the fair value increase of acquired inventories related to the April 28, 2023 transaction with our former distribution partner in China.

 

(3)

The Company’s share-based compensation expense pertains to our long-term incentive plan (the “LTIP”) (refer to “Share-based compensation”), with stock options, performance-based share units (“PSUs”), time-based restricted share units (“RSUs”), and deferred share units (“DSUs”) expenses, along with associated payroll taxes.

 

(4)

Current period mainly pertains to legal, tax and LTIP set-up costs associated with the integration of our former distributor partner in China, while prior year was mainly comprised of acquisition costs relating to the same transaction which closed on April 28, 2023.

 

(5)

Current quarter expense mainly pertains to development costs associated with our IT system implementation to augment our system infrastructure. Unlike other system improvement projects with costs capitalized, due to its cloud-based nature, these system implementation costs are expensed accordingly.

 

Reconciliation of Net Debt

In thousands of Canadian dollars

 
($ in 000's) As at September 30, As at December 31,

2024

2023

 
Long-term debt

335,000

 

325,000

 

Cash

(42,190

)

(36,863

)

Net debt

292,810

 

288,137

 

 

Investor and Media Contact Information:
Jamieson Wellness
Ruth Winker
416-960-0052
[email protected]