Vancouver, British Columbia--(Newsfile Corp. - May 23, 2023) - Delivra Health Brands Inc. (TSXV: DHB) (OTCQB: DHBUF) ("Delivra Health" or the "Company"), a consumer packaged goods company uniquely positioned in the health and wellness sector, is pleased to announce its financial and operating results for the three and nine months ended March 31, 2023 ("Q3 2023").
Management Commentary
"For the second time this year, the Company is profitable from an adjusted EBITDA ("Adjusted EBITDA")(1) perspective, for the three months ended March 31, 2023, and we are looking to repeat this moving forward by reinvesting in our business in the form of innovation and new distribution channels," said Gord Davey, President and Chief Executive Officer of Delivra Health. "As indicated when the Company reported on its performance for the three and six months ended December 31, 2022, the Company increased its investment in further innovation projects, customer programs and marketing campaigns in Q3 2023, and this is now supporting the Company's brands and its future prospects."
Financial Highlights for Q3 2023
Net revenue: The Company reported total net revenue from continued operations of $2.35 million in Q3 2023 as compared to $2.34 million in same period last year. The Company maintained approximately the same level of net revenue due to higher sales of Dream Water in the US to international distributors.
Gross profit and gross profit margin: The Company reported for Q3 2023 gross profit of $0.96 million and a gross profit margin of 41% compared to $0.91 million and 39% in same period last year. The increase in gross profit and gross profit margin was the result of increased sales volume higher margin sales from the US.
Expenses including SG&A and excluding non-cash items: For Q3 2023, the Company reported expenses of $1.25 million as compared to $1.55 million in the same period last year, representing a 19% reduction. The reduction was mainly driven by the implementation of certain operational improvements and cost reduction measures identified in the Company's strategic review, which was completed on March 29, 2021 (the "Strategic Review"), and which resulted in lower salaries and sales and marketing expenses.
Adjusted EBITDA(1): For Q3 2023, the Company reported Adjusted EBITDA of $0.023 million as compared to $(0.61) million in the same period last year, representing a $0.62 million year over year improvement from continued operations. This increase in Adjusted EBITDA resulted from management's focus on customer mix, gross profit margin improvement and efficient administrative and selling support functions.
Financial Highlights for the Nine Months Ending March 31, 2023
Net revenue: The Company reported total net revenue from continued operations of $6.47 million compared to $6.22 million in same period last year which is approximately a 4% increase. This increase was due to higher sales of Dream Water in the US to international distributors.
Gross profit and gross profit margin: The Company reported year-to-date gross profit of $2.83 million and a gross profit margin of 44% from continued operations as compared to $2.27 million and 36% in same period last year. The increase in gross profit and gross profit margin was the result of increased sales volume and improved customer mix supported by well-controlled operational costs.
Expenses including SG&A and excluding non-cash items: For the nine months ended March 31, 2023, the Company reported expenses of $3.26 million compared to $4.79 million in the same period last year, representing a 32% reduction. As noted previously, the reduction was mainly driven by the implementation of certain measures identified in the Company's strategic review, completed on February 12, 2020, which resulted in lower salaries and sales and marketing expenses to conserve cash.
Adjusted EBITDA(1): For the nine months ended March 31, 2023, the Company reported Adjusted EBITDA of $(0.009) million compared to $(2.34) million in the same period last year, representing a $2.35 million year over year improvement from continued operations. This increase in Adjusted EBITDA was driven by management's efforts in focusing on the right customer mix, margin improvement supported by efficient administrative and selling support functions.
Summary of Key Financial Results
| For the three months ended March 31 | For the nine months ended March 31 | |||
| ($000's, except share and per share amounts) | 2023 | 2022 | 2023 | 2022 |
| Continued operations: | $ | $ | $ | $ |
| Net revenue | 2,353 | 2,339 | 6,474 | 6,217 |
| Cost of sales | 1,083 | 1,399 | 3,207 | 3,761 |
| Inventory write-down | 309 | 26 | 441 | 187 |
| Gross profit | 961 | 914 | 2,826 | 2,269 |
| Expenses excluding non-cash expenses | 1,247 | 1,547 | 3,258 | 4,793 |
| Depreciation and amortization, share based compensation and Asset Impairment and write-downs | 342 | 982 | 1,123 | 2,284 |
| Total Expenses | 1,589 | 2,529 | 4,381 | 7,077 |
| Loss from Operations | (628) | (1,615) | (1,555) | (4,808) |
| Other (expense) income | (57) | (62) | 1,377 | 48 |
| Net gain (loss) from continued operations | (685) | (1,677) | (178) | (4,760) |
| Net gain (loss) per share - basic and diluted | (0.003) | (0.01) | (0.001) | (0.02) |
Adjusted EBITDA(1) (non-IFRS measure)
| For the three months ended March 31 | For the nine months ended March 31 | |||
| ($000's, except share and per share amounts) | 2023 | 2022 | 2023 | 2022 |
| Loss from operations | (628) | (1,615) | (1,555) | (4,808) |
| Inventory write-down | 309 | 26 | 441 | 187 |
| Asset impairment and write-downs | 398 | 398 | ||
| Depreciation and amortization | 332 | 527 | 996 | 1,592 |
| Share-based compensation | 10 | 57 | 127 | 294 |
| Adjusted EBITDA(1) | 23 | (607) | 9 | (2,337) |
| (1) Defined as loss from operations before interest, taxes, depreciation and amortization and adjusted for share-based compensation, common shares issued for services, asset impairment and write-downs, discontinued operations and other non-cash items, and is a non-IFRS measure discussed in the "Adjusted EBITDA" section. | ||||
Expenses excluding non-cash items
| For the three months ended March 31 | For the nine months ended March 31 | |||
| ($000's, except share and per share amounts) | 2023 | 2022 | 2023 | 2022 |
| General and administration | 964 | 1,240 | 2,816 | 3,472 |
| Sales and marketing | 283 | 307 | 442 | 1,321 |
| Total | 1,247 | 1,547 | 3,258 | 4,793 |
About Delivra Health Brands Inc.
Helping people take control of their health with alternative wellness solutions is what energizes the Delivra Health team! The Delivra Health portfolio features innovative brands like Dream Water and LivRelief, which deliver relief from common everyday issues like chronic pain, anxiety, and sleeplessness. Delivra Health products have allowed millions of customers to reclaim their mobility, energy, and in turn, quality of life. The websites of the Company's two subsidiaries are Dream Water and LivRelief. For more information, please visit www.delivrahealthbrands.com.
Non-IFRS Measures, Reconciliation and Discussion
This press release contains references to "Adjusted EBITDA" which is a non-IFRS financial measure. Adjusted EBITDA is a measure of the Company's loss from operations before interest, taxes, depreciation, and amortization and adjusted for share-based compensation, common shares issued for services, fair value effects of accounting for biological assets and inventories, asset impairment and write-downs, and other non-cash items, and is a non-IFRS measure.
This measure can be used to analyze and compare profitability among companies and industries, as it eliminates the effects of financing and capital expenditures. It is often used in valuation ratios and can be compared to enterprise value and revenue. This measure does not have any standardized meaning according to IFRS and, therefore, may not be comparable to similar measures presented by other companies.
There are no comparable IFRS financial measures presented in Delivra Health's financial statements. Reconciliations of the supplemental non-IFRS measure are presented in the Company's management discussion and analysis for the three and nine months ended March 31, 2023 ("Q3 2023 MD&A"). This non-IFRS financial measure is presented because management has evaluated the financial results both including and excluding the adjusted items and believes that the non-IFRS financial measure presented provides additional perspective and insights when analyzing the core operating performance of the business. The Company believes that the supplemental measure provides information which is useful to shareholders and investors in understanding the Company's performance and may assist in the evaluation of the Company's business relative to that of its peers.
The non-IFRS financial measure should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with the IFRS financial measures presented in the Company's financial statements. For more information, please see "Adjusted EBITDA (non-IFRS measure)" and "Non-IFRS Measures" in the Company's Q3 2023 MD&A, which is available under the Company's System for Electronic Document Analysis and Retrieval ("SEDAR") profile on www.sedar.com.
Notes:
- This is a non-IFRS reporting measure. For a reconciliation of this measure to the nearest IFRS measure, see "Adjusted EBITDA (non-IFRS measure)" and "Non-IFRS Measures" in the Company's Q3 2023 MD&A.
Cautionary Note Regarding Forward-Looking Statements
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements include, among other things, statements with respect to the Company's growth objectives, planned investment activities, management of expenses, increasing revenues and profitability, growth in new markets, new distribution partners, the Company's future prospects and brands.
These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: implications of the COVID-19 pandemic on the Company's operations; fluctuations in general macroeconomic conditions; fluctuations in securities markets; expectations regarding the size of the cannabis markets where the Company operates; changing consumer habits; the ability of the Company to successfully achieve its business objectives; plans for expansion; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; employee relations and the presence of laws and regulations that may impose restrictions on cultivation, production, distribution, and sale of cannabis and cannabis-related products in the markets where the Company operates. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Additional information regarding this and other risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in the Company's annual information form dated March 2, 2021, and under the heading "Risks and Uncertainties" in the Company's Q3 2023 MD&A, filed under the Company's profile on SEDAR at www.sedar.com.
Neither the TSX Venture Exchange ("TSX-V") nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accept responsibility for the adequacy or accuracy of this release.
Investor Relations:
Jack Tasse
Chief Financial Officer
IR@delivrahealth.com
1-877-915-7934
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/166862
