FY 2022 Total Net Revenue of
FY 2022 E-commerce Net Revenue up 15% — Q4 2022, down 24%
E-commerce Penetration 60%
FY 2022 Break-Even Free Cash Flow
"Despite a strong first nine months of 2022, which saw total net revenue increase by 27% from the prior comparable period, total net revenue in the fourth quarter experienced the full effects of a weakening economy, which led to a slowing in consumer demand for our products, particularly in
Provided below are the financial highlights and a discussion of our financial results for Q4 2022 and FY 2022, which are to be read in conjunction with the Company's consolidated financial statements and the accompanying notes thereto, the Company's Management's Discussion and Analysis ("MD&A") for the period and our most recent Annual Information Form ("AIF"), incorporated by reference herein, and as described from time to time in the reports and disclosure documents filed by the Company with the Canadian securities regulatory agencies and commissions.
Overview of Results for the Three-Month Period Ended
Selected financial highlights for the period include the following:
- Total net revenue decreased 18.6% to
$5.2 million as compared to$6.4 million . - E-Commerce net revenue decreased 23.5% to
$3.0 million , and e-commerce average order value ("AOV") increased by 4.3% to$965 per transaction. E-Commerce net revenue as a proportion of total net revenue ("E-commerce penetration") increased to 58.0% versus 54.5%. - Retail net revenue was
$2.2 million as compared to$2.5 million , a decrease of 10.6%. At year-end, we operated eight stores, as compared to nine stores at the end of Q4 2021. - Gross margin increased to a record level 44.0% as compared to 40.0% due primarily to increased e-commerce activity in the period.
- Selling, general and administrative ("SG&A") expenses decreased 7.2% to
$2.6 million , or 49.0% of net revenue, as compared to$2.8 million , or 43.0% of net revenue. - Adjusted Net Loss (a non-IFRS measure) was
$0.3 million as compared to Adjusted Net Income of$0.1 million . Q4 2022 Adjusted Net Loss as a percent of total net revenue was (6.1%). - We generated near break-even Adjusted EBITDA (a non-IFRS measure) as compared to an Adjusted EBITDA profit of
$0.3 million . Q4 2022 Adjusted EBITDA as a percent of total net revenue was (1.0%). - Cash earnings came in at a loss of
$0.5 million as compared to$0.2 million . - Free Cash Flow came in at near break-even levels compared to positive Free Cash Flow of
$1.4 million . - Cash availability at the end of Q4 2022 totalled
$2.9 million as compared to$3.7 million at the end of Q4 2021.
____________________ |
1 Free Cash Flow, a non-IFRS measure, is defined as net cash generated from operating activities excluding net cash used in investing activities. |
Overview of Results for Year Ended
Despite the slowdown experienced in Q4 2022, FY 2022 revenue performance was higher compared to prior year due primarily to solid revenue growth in our e-commerce channel. This was aided by increased gross margins, a strong
Selected financial highlights include the following:
- Total net revenue increased 11.0% to
$20.0 million from$18.0 million . - E-Commerce net revenue increased 15.0% to
$12.1 million and e-commerce AOV increased 3.3% to$950 per transaction. E-Commerce penetration increased to 60.7% versus 58.6%. - Retail net revenue was
$7.9 million as compared to$7.5 million , an increase of 5.2%. - Gross margin increased to 38.2% as compared to 37.6%.
- SG&A expenses increased 11.4% to
$9.6 million , in line with the increase in revenue, and was 48.2% of net revenue, as compared to$8.7 million , or 48.0% of net revenue in FY 2021. - Adjusted Net Loss (a non-IFRS measure) was
$2.4 million as compared to an Adjusted Net Loss of$2.3 million . - Adjusted EBITDA (a non-IFRS measure) remained unchanged and came in at a loss of
$1.4 million . - Cash earnings came in at a loss of
$0.7 million as compared to a loss of$1.8 million . - Free Cash Flow (a non-IFRS measure) was break-even as compared to Free Cash Flow of negative
$3.6 million .
Selected Consolidated Financial Information
The following table summarizes LXR's recent results for the periods indicated:
LXR Consolidated statements of loss and comprehensive loss (in Canadian dollars) | ||||||||
For the three-month | For the years ended | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net revenue | 5,223,973 | 6,415,527 | 20,007,368 | 18,031,254 | ||||
Cost of sales | 2,924,446 | 3,847,575 | 12,368,547 | 11,253,183 | ||||
Gross profit | 2,299,527 | 2,567,952 | 7,638,821 | 6,778,071 | ||||
Operating expenses | ||||||||
Selling, general and administrative expenses | 2,560,002 | 2,759,220 | 9,651,425 | 8,662,470 | ||||
Depreciation of property and equipment | 80,435 | 68,471 | 311,786 | 277,506 | ||||
Amortization of intangible assets | 2,034 | 4,674 | 12,882 | 42,482 | ||||
Loss from operating activities | (342,944) | (264,413) | (2,337,272) | (2,204,389) | ||||
Other income and expenses | ||||||||
Finance costs | 172,048 | 111,286 | 590,279 | 542,754 | ||||
Foreign exchange (gain) loss | 211,595 | 126,740 | (1,303,616) | 142,172 | ||||
Loss before income taxes | (726,587) | (502,439) | (1,623,935) | (2,889,315) | ||||
Income tax expense (recovery) | ||||||||
Current | 12,944 | (9,636) | 22,904 | 8,934 | ||||
12,944 | (9,636) | 22,904 | 8,934 | |||||
Net Loss | (739,531) | (492,803) | (1,646,839) | (2,898,249) |
The following table provides a reconciliation of Net Profit or Loss to Adjusted Net Income or Adjusted Net Loss and Net Profit or Loss to EBITDA and Adjusted EBITDA for the periods indicated:
For the three-month periods ended | For the years ended | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Reconciliation of Net Loss to Adjusted Net Loss | ||||||||||||
Net Loss | (739,531) | (492,803) | (1,646,839) | (2,898,249) | ||||||||
Adjustments to Net Loss: | ||||||||||||
Foreign exchange loss | 211,595 | 126,740 | (1,303,616) | 142,172 | ||||||||
Stock-Based Compensation Expense | 210,316 | 643,057 | 520,824 | 748,838 | ||||||||
Gain on disposals of property and equipment | — | — | — | (1,250) | ||||||||
Information Technology expense | — | — | 62,479 | — | ||||||||
Government Grant (CEWS) | — | — | — | (177,361) | ||||||||
Gain on European related balances | — | (163,272) | — | (163,272) | ||||||||
Store closing costs | — | 9,508 | — | — | ||||||||
Adjusted Net Loss | (317,620) | 123,230 | (2,367,152) | (2,339,614) | ||||||||
For the three-month periods ended | For the years ended | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
Reconciliation of net Loss to Adjusted EBITDA | ||||||||||||
Net Loss | (739,531) | (492,803) | (1,646,839) | (2,898,249) | ||||||||
Add: Amortization and depreciation expense | 82,469 | 73,145 | 324,668 | 319,988 | ||||||||
Add: Finance costs | 172,048 | 111,286 | 590,279 | 542,754 | ||||||||
Add: Income tax expense/(recovery) | 12,944 | (9,636) | 22,904 | 8,934 | ||||||||
EBITDA | (472,070) | (318,008) | (708,988) | (2,026,573) | ||||||||
Adjustments to EBITDA: | ||||||||||||
Foreign exchange loss | 211,595 | 126,740 | (1,303,616) | 142,172 | ||||||||
Gain on disposals of property and equipment | — | — | — | (1,250) | ||||||||
Information Technology expense | — | — | 62,479 | — | ||||||||
Loss on disposition of subsidiaries | — | — | — | — | ||||||||
Stock-based compensation expense | 210,316 | 643,057 | 520,824 | 748,838 | ||||||||
Government Grant (CEWS) | — | — | — | (177,361) | ||||||||
Gain on European-related balances | — | (163,272) | — | (163,272) | ||||||||
Store closing costs | — | 9,508 | — | 9,508 | ||||||||
Adjusted EBITDA | (50,159) | 298,025 | (1,429,301) | (1,467,938) | ||||||||
The following tables provide a reconciliation of Net Profit or Loss to Cash Earnings and Free Cash Flow for the periods indicated:
For the three-month periods ended | |||||
($) | 2022 | 2021 | Increase | ||
Reconciliation of Net Loss to Cash Earnings and Free Cash Flow | |||||
Net Loss | (739,531) | (492,803) | (246,728) | ||
Non-cash items: | |||||
Depreciation of property and equipment | 80,435 | 68,471 | 11,964 | ||
Amortization of intangible assets | 2,034 | 4,674 | (2,640) | ||
Amortization of deferred financing costs | 7,202 | 7,202 | - | ||
Stock-based compensation expense | 210,316 | 643,057 | (432,741) | ||
Unrealized foreign exchange loss (gain) | (71,931) | 987 | (72,918) | ||
228,056 | 724,391 | (496,335) | |||
Cash Earnings | (511,475) | 231,588 | (743,063) | ||
Net change in non-cash working capital balances3 | 500,609 | 1,221,311 | (720,702) | ||
Cash flows (used) generated in operating activities | (10,866) | 1,452,899 | (1,463,765) | ||
Less: Acquisitions of property and equipment | (2,150) | (4,283) | 2,133 | ||
Free cash flow | (13,016) | 1,448,616 | (1,461,632) | ||
For the years ended | ||||||
($) | 2022 | 2021 | Increase | |||
Reconciliation of Net Loss to Cash Earnings and Free Cash Flow | ||||||
Net loss | (1,646,839) | (2,898,249) | 1,251,410 | |||
Non-cash items: | ||||||
Depreciation of property and equipment | 311,786 | 277,506 | 34,280 | |||
Amortization of intangible assets | 12,882 | 42,482 | (29,600) | |||
Amortization of deferred financing costs | 28,575 | 28,575 | 0 | |||
Stock-based compensation expense | 520,824 | 748,838 | 228,014 | |||
Gain on disposal of property and equipment | - | (1,250) | 1,250 | |||
Unrealized foreign exchange loss | 44,037 | 11,588 | 32,449 | |||
918,104 | 1,107,739 | (189,635) | ||||
Cash Earnings | (728,735) | (1,790,510) | 1,061,775 | |||
Net change in non-cash working capital balances4 | 718,865 | (1,762,121) | 2,480,986 | |||
Cash flows used generated in operating activities | (9,870) | (3,552,631) | 3,542,761 | |||
Less: Acquisitions of property and equipment | (16,697) | (44,310) | 27,613 | |||
Free Cash flow | (26,567) | (3,596,941) | 3,570,374 | |||
3 including unrealized foreign exchange loss of |
4 including unrealized foreign exchange of |
Selected Quarterly Financial Information
The following table summarizes certain of our financial results for the most recently completed eight quarters for which financial statements have been prepared by us as a reporting issuer. This unaudited quarterly information has been prepared in accordance with IFRS. Due to the impact of the COVID-19 pandemic and other factors such as seasonality, the results of operations for any quarter are not necessarily indicative of the results of operations for the full year.
($) | FY 2022 | FY 2021 | ||||||
Consolidated statements of loss | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
Total net revenue | 5,223,973 | 5,006,612 | 5,481,267 | 4,295,516 | 6,415,527 | 4,987,628 | 4,026,028 | 2,602,071 |
E-commerce revenue | 3,028,134 | 2,669,366 | 3,268,570 | 3,149,395 | 3,958,670 | 2,506,850 | 2,522,682 | 1,572,640 |
E-commerce revenue % of total net revenue | 58.0 % | 53.9 % | 59.6 % | 73.3 % | 61.7 % | 50.3 % | 62.7 % | 60.4 % |
Gross margin | 44.0 % | 37.5 % | 35.5 % | 35.3 % | 40.0 % | 38.4 % | 35.7 % | 33.0 % |
Adjusted Net (Loss) Income | (317,620) | (562,799) | (696,424) | (790,309) | 123,230 | (367,455) | (1,085,937) | (1,009,452) |
Adjusted EBITDA | (50,159) | (317,434) | (486,244) | (575,464) | 298,025 | (171,149) | (857,764) | (737,010) |
Adjusted EBITDA % of total net revenue | (1.0 %) | (6.3 %) | (8.9 %) | (13.4 %) | 4.6 % | (3.4 %) | (21.3 %) | (28.3 %) |
Run rate metrics and growth: | ||||||||
Total net revenue – last 12 months revenue run-rate | 20,007,368 | 21,198,922 | 21,179,938 | 19,724,699 | 18,031,254 | 15,007,540 | 12,877,630 | 10,281,886 |
E-commerce revenue – last 12 months revenue run-rate | 12,145,465 | 13,076,001 | 12,883,485 | 12,137,597 | 10,560,842 | 8,317,976 | 6,691,499 | 4,976,771 |
Free Cash Flow: | ||||||||
Net loss | (739,531) | 370,210 | (353,552) | (923,966) | (492,803) | 59,223 | (1,580,635) | (884,034) |
Add: non-cash items | 228,056 | 346,803 | 354,340 | (11,095) | 724,391 | 87,287 | 390,704 | (94,643) |
Cash Earnings | (511,475) | 717,013 | 788 | (935,061) | 231,588 | 146,510 | (1,189,931) | (978,677) |
Add: Net change in non-cash working capital5 | 500,609 | 470,826 | (646,138) | 393,568 | 1,221,311 | (2,322,046) | (32,427) | (628,959) |
Cash flows provided/(used) in operating activities | (10,866) | 1,187,839 | (645,350) | (541,493) | 1,452,899 | (2,175,536) | (1,222,358) | (1,607,636) |
Less: acquisitions of property and equipment | (2,150) | (4,050) | (6,062) | (4,435) | (4,283) | (15,436) | (9,998) | (14,593) |
Free Cash Flow | (13,016) | 1,183,789 | (651,412) | (545,928) | 1,448,616 | (2,190,972) | (1,232,356) | (1,622,229) |
Liquidity: | ||||||||
Cash availability | 2,868,350 | 2,231,325 | 2,934,437 | 3,662,768 | 3,810,767 | 2,640,169 | 4,481,560 | 4,775,470 |
Working capital | (949,149) | (551,302) | (59,214) | 6,833,114 | 7,052,502 | 7,083,280 | 7,033,183 | 7,133,717 |
Capitalization: | ||||||||
Shares outstanding | 91,425,499 | 91,425,499 | 91,425,499 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 |
Closing share price | 0.105 | 0.11 | 0.11 | 0.11 | 0.14 | 0.10 | 0.13 | 0.12 |
Market capitalization | 9,599,677 | 10,056,805 | 10,056,805 | 10,206,147 | 12,989,642 | 9,278,316 | 12,061,810 | 11,133,979 |
Add: Total debt | 5,252,143 | 4,645,115 | 6,619,796 | 6,526,453 | 5,999,440 | 6,272,286 | 5,758,443 | 4,814,459 |
Less: Cash | 2,586,237 | 2,007,396 | 2,884,427 | 3,570,681 | 3,695,677 | 2,603,395 | 4,315,918 | 4,653,792 |
Enterprise value (EV) | 12,265,583 | 12,694,524 | 13,792,174 | 13,161,919 | 15,293,405 | 12,947,207 | 13,504,335 | 11,294,646 |
Multiple of EV/Last 12 months revenue | 0.61x | 0.60x | 0.65x | 0.67x | 0.85x | 0.86x | 1.05x | 1.10x |
Subsequent Events
On
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About LXR
LXR is a socially responsible, digital-first omni-channel retailer of authenticated pre-owned handbags and personal accessories. Since 2010, we have been providing consumers with authenticated branded luxury products from Hermès,
Non-IFRS Measures
This press release refers to certain non-IFRS measures. These measures are not recognized 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 IFRS measures by providing further understanding of LXR's performance and results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of LXR's financial information reported under IFRS. Management uses non-IFRS measures including: "EBITDA," "Adjusted EBITDA," "Adjusted Net Loss", "Cash Earnings","Free Cash Flow", "LTM Total Net Revenue", "LTM E-commerce Net Revenue" and "Inventory Turns".
These non-IFRS measures are used to provide investors with supplemental measures of LXR's operating performance and thus highlight trends in LXR's core business that may not otherwise be apparent when relying solely on IFRS measures. Management believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of company performance. Management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. For a definition of EBITDA, Adjusted EBITDA, and Adjusted Net Loss, Cash Earnings, Free Cash Flow, and a reconciliation of these non-IFRS measures to IFRS measures, see the above tables presented.
Caution Regarding Forward-Looking Statements
Certain statements in this press release are prospective in nature and constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements include, but are not limited to, statements concerning the financial results and condition of the Company, expectations regarding market trends, overall market growth rates and the Company's growth rates, future objectives and strategies to achieve those objectives, including, without limitation, e-commerce growth and penetration, the state of wholesale demand, new store openings, store productivity, margin improvements, and future acquisitions, as well as other statements with respect to management's beliefs, plans, estimates and intentions, and similar statements concerning anticipated future events, results, outlook, circumstances, performance or expectations that are not historical facts.
Forward-looking statements generally, but not always, can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "could", "would", "will", "expect", "intend", "estimate", "forecasts", "project", "seek", "anticipate", "believes", "should", "plans", "continue" or similar expressions suggesting future outcomes or events and the negative of any of these terms.
Forward-looking statements reflect management's current beliefs, expectations and assumptions and are based on information currently available to management, which includes assumptions about continued revenues based on historical past performance, management's historical experience, perception of trends and current business conditions, expected future developments and other factors which management considers appropriate. With respect to the forward-looking statements included in this press release, management has made certain assumptions with respect to, among other things, the Company's ability to renew successfully the line of credit and the long-term debt facilities, the Company's ability to meet its future objectives and strategies, the Company's ability to achieve its future projects and plans and that such projects and plans will proceed as anticipated, the expected growth of the Company's e-commerce revenue, the expected number and timing of store openings or closings in
Given the recent rise in global interest rates and inflationary expectations, our results in the future may be materially affected by the overall state of economic growth, customer demand and spending (including the impact of recessionary fears), the level of inflation, interest rates, regional labor market and global supply chain constraints, world events, the rate of growth of online commerce, and cloud services, and various other related factors.
Generally, and especially given this unprecedented period of uncertainty brought about by the geo-political events or acts of terrorism (such as the military conflict between
All forward-looking statements included in and incorporated into this press release are qualified by these cautionary statements. Unless otherwise indicated, the forward-looking statements contained herein are made as of the date of this press release, and except as required by applicable law, the Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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