Q1 FY2022 Financial Highlights
- Revenue was
$29.0 million , a decrease of$2.9 million , or 9.1% as compared to Q1 FY2021; - Gross profit1 was
$9.8 million , a decrease of$1.9 million , or 16.0% as compared to Q1 FY2021; and - Consolidated gross profit margin1 was 33.9%, a decrease of 2.8% as compared to Q1 FY2021
"The Company's quarterly results in Q1 FY2022 were impacted by COVID-related supply chain and capacity challenges, significant regional flooding in
Changes to the Company's Board of Directors and Appointment of Mr.
It is with great sadness that Freshlocal's Board of Directors announces the passing of its board member,
Key Financial Information
All amounts in CAD $ millions except Active customers, AOS, and Same-store sales and | Three months ended | |||||
|
| Change | ||||
Consolidated | ||||||
Revenues | 29.0 | 31.9 | (9.1) | % | ||
Gross profit1 | 9.8 | 11.7 | (16.2) | % | ||
Net loss and comprehensive loss | (8.2) | (15.9) | (48.4) | % | ||
Net loss per share | (0.19) | (0.45) | (57.8) | % | ||
Adjusted EBITDA 1 | (6.6) | (2.4) | 175.0 | % | ||
Cash flow used in operations | (10.2) | (5.0) | 104.0 | % | ||
eGrocery Business Segment | ||||||
Revenues | 21.0 | 25.0 | (15.8) | % | ||
Active customers1, 2 | 25,819 | 29,559 | (12.7) | % | ||
Average Order Size ("AOS")1 | 123 | 140 | (12.1) | % | ||
Blush Lane Business Segment | ||||||
Revenues | 8.5 | 9.5 | (10.5) | % | ||
Same-store sales | (8) | % | 25 | % |
1 | These are "non-IFRS financial measures" that do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For additional information regarding these financial metrics, including definitions and reconciliations from each of these non-IFRS financial measures to their most directly comparable measure under IFRS, where available, see "Metrics and Reconciliation of Non-IFRS Financial Measures" below. |
2 | The "Active customers" metric is based on the number of individual customer accounts that have completed an order on Freshlocal's eCommerce platform in the past 90 days, measured as of the period end noted. |
The quarterly financial information presented above should be read in conjunction with Freshlocal's unaudited interim condensed consolidated financial statements and management's discussion and analysis as at and for the three months ended
Business Highlights
Q1 FY 2022 and the Period Subsequent to Quarter-End:
- Private Placement – In
December 2021 , the Company completed a$13.9 million brokered private placement of convertible debenture units ("Convertible Debenture Units"). The private placement was completed in two tranches as follows: (i) onDecember 2, 2021 , 12,415 Convertible Debenture Units were issued for aggregate gross proceeds of$12.4 million ; and (ii) onDecember 23, 2021 , 1,500 Convertible Debenture Units were issued for aggregate gross proceeds of$1.5 million . Each Convertible Debenture Unit is comprised of: (i) one 8% subordinated unsecured Convertible Debenture in a principal amount of$1,000 (collectively, the "Convertible Debentures"), is convertible into common shares of the Company at a conversion price of$1.90 per common share, subject to adjustment in certain events ("the Conversion Price") and maturing on theDecember 31, 2024 (the "Maturity Date"); and (ii) 263 common share purchase warrants of the Company (the "Warrants"). Each Warrant entitles the holder thereof to purchase one common share of the Company at a price of$1.25 per common share until the Maturity Date. The Convertible Debentures were created and issued pursuant to a trust indenture datedDecember 2, 2021 between the Company andComputershare Trust Company of Canada ("Computershare") as debenture trustee, as supplemented by the first supplemental indenture datedDecember 23, 2021 (together the "Trust Indenture") and the Warrants were created and issued pursuant to a warrant indenture (the "Warrant Indenture") datedDecember 2, 2021 between the Company and Computershare, as warrant agent. Silicon Valley Bank "SVB" Forbearance Agreement – In connection with the breach of certain financing covenants under the terms of the Company's debt facility with SVB (the "SVB Debt Facility"), onDecember 2, 2021 , the Company entered into a forbearance agreement with SVB under which SVB granted the Company certain relief provisions throughJanuary 15, 2022 . These relief provisions are subject to, among other things, the completion of certain financing milestones and repayment terms that have been materially completed. OnFebruary 15, 2022 , SVB extended the Forbearance Period toMarch 31, 2022 to allow for the completion of certain administrative requirements and the reset of the minimum Adjusted EBITDA target byFebruary 28, 2022 .- Appointment of Chief Executive Officer – On
December 15,2021 , the Company announced the appointment ofSimon Cairns , President ofFood-X Technologies Inc. ("FoodX"), as the new Chief Executive Officer of Freshlocal, replacingPeter van Stolk who remains on the Company's Board of Directors.Mr. Cairns brings over 20 years of leadership experience centered on the design, development, and sales of SaaS-based eCommerce platforms, most recently as Chief Executive officer and General Manager of PNI Media. - Digital Supercluster (the "Supercluster") Funding – On
December 28, 2021 , the Company secured an additional$800,000 in non-dilutive funding to further enhance the FoodX eGrocery Management Solution ("eGMS"), with a focus on ensuring waste reduction and safe food delivery. Freshlocal is excited to once again partner with the Supercluster to support our frontline workers in providing solutions for safe food processes during the COVID-19 pandemic. Export Development Canada ("EDC") Secured Credit Facility – OnDecember 28, 2021 , the Company entered into a secured$8.8 million credit facility agreement with EDC (the "EDC Facility") to support Freshlocal's international expansion efforts related to its FoodX SaaS-based eGMS. Pursuant to the terms of the EDC Facility, the Company can make periodic withdrawals for a period of six months, subject to the satisfaction of certain customary conditions.
Subsequent Event:
- Departure of Chief Technology Officer – On
February 14, 2022 ,Jeffery King , the Chief Technology Officer of the Company departed from the Company.
Earnings Conference Call
The Company will hold a conference call on
Details of the Earnings Conference Call:
When: | |
Registration: | Please use the following link: |
https://www.incommglobalevents.com/registration/q4inc/10011/freshlocal-solutions-q1-fy2022-results-conference-call/ | |
Webcast: | The webcast and presentation slides can be accessed at Freshlocal's website: |
https://ir.freshlocalsolutions.com | |
Replay: | A webcast replay will be available until |
https://ir.freshlocalsolutions.com/events-and-presentations |
About
Freshlocal is a
Notice on Forward Looking Information
Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include but are not limited to information with respect to strategic initiatives to drive cash flow in Freshlocal's eGrocery operations, advancing the FoodX platform into a second country with a key European customer and the anticipated operational date of the Company's second Carrefour facility, the Company's objectives and the strategies for achieving those objectives, as well as information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. Often, but not always, forward-looking statements or information can be identified by the use of words such as "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.
With respect to forward-looking statements and information contained herein, the Company has made numerous assumptions including, among other things, the availability of capital resources, business performance, market conditions, and customer demand. The foregoing list of assumptions is not exhaustive.
Although management of the Company believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that forward-looking statements or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to: inability to achieve business objectives, history of losses, reliance on management, management of growth, online security breaches, disruptions and cyber-attacks, compliance with privacy and data protection legislation, protection of intellectual property, reliance on hardware and software, data security incidents, third-party data transmission issues, reliance on data centres, operating risk and insurance coverage, conflicts of interest, litigation, risks associated with the grocery industry, limited operating history as a SaaS platform, health risks and quality control, regulatory compliance, product recalls, transportation disruptions, inability to effectively react to changing consumer trends, competition, risks related to customer concentration, damage to the Company's reputation, risks related to the COVID-19 pandemic, including the severity and duration thereof, public safety issues, catastrophic events and climate change, extreme weather and weather events, environmental risks and other risk factors as detailed from time to time. This is not an exhaustive list of risks that may affect the Company's forward-looking statements. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
Metrics and Reconciliation of Non-IFRS Financial Measures
Freshlocal uses metrics and non-IFRS financial measures for which a complete definition is presented below and for which a reconciliation to financial information in accordance with IFRS is presented herein. These measures are meant to supplement financial performance measures reported in accordance with IFRS and to provide further understanding of the Company's operating results from management's perspective. They do not substitute, are not superior to IFRS financial measures and do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures as presented by other issuers.
Non-IFRS Metrics | Definition |
eGrocery Average | Total sales net of returns and credits, divided by the number of orders made during the period. The Company believes that AOS is a useful metric for readers because it is indicative of eGrocery adoption, consumers expanding their share of purchases made online and the strength of our online consumer business. |
Active customers | The number of individual customer accounts that have completed an order on our eCommerce platform in the past 90 days, measured as of the period end noted. |
Same-store sales | Retail segment sales from the same location for stores in operation in that location in comparative periods. |
Non-IFRS Financial | Definition |
Adjusted EBITDA | Adjusted EBITDA represents net income or loss before net finance expenses (income), transaction expenses, depreciation and amortization expense, stock-based compensation expense, other expenses (income), and other non-recurring adjustments. We believe that this is a more representative measure to monitor the Company's operational results and is consistent with our covenant reporting measures. |
Gross profit | Gross profit represents revenue net of returns and credits less cost of sales. |
The financial information has been prepared in accordance with IFRS. However, financial measures used, namely adjusted operating gain (loss) and gross profit, for which a reconciliation is presented in the following table, do not have any standardized meaning under IFRS and could be calculated differently by other companies. Those measures may not be comparable to similar measures described by other companies, as IFRS does not have standard definitions for these measures. These measures should be considered as a supplement to IFRS measures and for further understanding of Freshlocal's operating results. Readers should use these non-IFRS measures in conjunction with the IFRS financial statements for each applicable period.
This section presents a reconciliation of financial information in the unaudited interim condensed consolidated financial statements of Freshlocal for the three months ended
The following tables summarize non-IFRS measures used in this press release for the three months ended
Adjusted EBITDA
(In thousands of Canadian dollars) | Three months ended | |
2022 | 2021 | |
Net loss and comprehensive loss | (8,233) | (15,924) |
Net finance expense | 227 | 12,095 |
Depreciation and amortization expense | 1,244 | 1,121 |
Stock-based compensation | 147 | 322 |
Other income | (2) | — |
Adjusted EBITDA | (6,617) | (2,386) |
Gross Profit
(In thousands of Canadian dollars) | Three months ended | |
2022 | 2021 | |
Revenue | 28,980 | 31,872 |
Cost of sales | (19,159) | (20,187) |
Gross profit | 9,821 | 11,685 |
SOURCE
© Canada Newswire, source