Gross Margin Improved 300 basis points to 31% Year-Over-Year
Adjusted EBITDA Grew 30% Year-Over-Year
EPS Grew 45% Year-Over-Year
FOURTH QUARTER 2023 FINANCIAL HIGHLIGHTS
- Operating loss improved 47% YOY to
$(12.7) million - Operating margin improved 3,800 basis points (“bps”) YOY to (-223%)
- Net loss improved 40% YOY to
$(14.7) million - Earnings (loss) per share (“EPS”) improved 40% YOY to (
$20.84 ) - Adjusted EBITDA improved 30% YOY to
$(3.4) million 1
FULL YEAR 2023 FINANCIAL HIGHLIGHTS
- Gross margin improved 300 bps YOY to 31%
- Operating loss improved 45% YOY to
$(21.2) million - Operating margin improved 1,600 bps YOY to (-55%)
- Net loss improved 42% YOY to
$(22.8) million - EPS improved 45% YOY to (
$32.29 ) - Adjusted EBITDA improved 32% YOY to
$(8.0) million 1
Unaudited Condensed Consolidated Statements of Operations (Dollars in thousands, except share and per share amounts) | |||||||
Year Ended | |||||||
2023 | 2022 | ||||||
Net sales | $ | 38,592 | $ | 54,660 | |||
Cost of goods sold | 26,795 | 39,399 | |||||
Gross profit | 11,797 | 15,261 | |||||
Operating expenses: | |||||||
Selling, general and administrative | 24,444 | 35,430 | |||||
Impairment of goodwill | — | 18,614 | |||||
Impairment of intangible assets | 8,532 | ||||||
Total operating expenses | 32,976 | 54,044 | |||||
Loss from operations | (21,179 | ) | (38,783 | ) | |||
Other expenses: | |||||||
Interest expense, net | (1,353 | ) | (551 | ) | |||
Change in fair value of warrant liability | (236 | ) | — | ||||
Total other expense, net | (1,589 | ) | (551 | ) | |||
Net loss before income taxes | (22,768 | ) | (39,334 | ) | |||
Income tax expense (benefit) | 2 | (18 | ) | ||||
Net loss available to common stockholders | $ | (27,770 | ) | $ | (39,316 | ) | |
Weighted average number of shares outstanding, basic | 705,185 | 667,114 | |||||
Weighted average number of shares outstanding, diluted | 705,185 | 667,114 | |||||
Net loss per share available to common stockholders, basic | $ | (32.29 | ) | $ | (58.93 | ) | |
Net loss per share available to common stockholders, diluted | $ | (32.29 | ) | $ | (58.93 | ) | |
All share and per share amounts related to the Company's common stock for all periods presented herein have been retroactively adjusted, where applicable, to reflect the Reverse Stock Split. | |||||||
Unaudited Condensed Consolidated Balance Sheets (Dollars in thousands, except share and per share amounts) | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 4,455 | $ | 3,173 | |||
Restricted cash | — | 6,300 | |||||
Accounts receivable, net | 4,354 | 6,744 | |||||
Inventories, net | 6,611 | 10,257 | |||||
Prepaid expenses and other current assets | 812 | 1,051 | |||||
Total Current Assets | 16,232 | 27,525 | |||||
Fixed assets, net | 230 | 375 | |||||
Right-of-use assets, operating leases | 120 | 173 | |||||
Intangible assets, net | — | 10,059 | |||||
Other assets | 155 | 544 | |||||
Total Assets | $ | 16,737 | $ | 38,676 | |||
Liabilities & Stockholders’ Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 6,928 | $ | 2,932 | |||
Accrued and other liabilities | 2,085 | 2,596 | |||||
Line of credit | 1,741 | – | |||||
Term loan, net | 2,881 | – | |||||
Operating lease liability | 57 | 52 | |||||
Total Current Liabilities | 13,692 | 5,580 | |||||
Non-current Liabilities | |||||||
Line of credit, net | — | 11,444 | |||||
Operating lease liability | 67 | 124 | |||||
Total Non-current Liabilities | 67 | 11,568 | |||||
Total Liabilities | 13,759 | 17,148 | |||||
Stockholders’ Equity | |||||||
Common Stock, | 32 | 29 | |||||
Additional paid-in capital | 324,288 | 320,071 | |||||
Accumulated deficit | (313,342 | ) | (298,572 | ) | |||
Total Stockholders’ Equity | 2,978 | 21,528 | |||||
Total Liabilities and Stockholders’ Equity | $ | 16,737 | $ | 38,676 | |||
Non-GAAP Measures |
Adjusted EBITDA
We define Adjusted EBITDA as EBITDA further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operations. Adjusted EBITDA is determined by adding the following items to net (loss) income: interest expense, tax expense, depreciation and amortization, share-based compensation, loss on disposal of assets, impairment of goodwill and intangible assets, change in fair value of warrant liabilities, strategic branding initiatives and product launch expenses, co-manufacturing partner transition, and other non-recurring expenses.
We present Adjusted EBITDA as it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. We believe that the disclosure of Adjusted EBITDA is useful to investors as this non-GAAP measure forms the basis of how our management team reviews and considers our operating results. By disclosing this non-GAAP measure, we believe that we create for investors a greater understanding of and an enhanced level of transparency into the means by which our management team operates our company. We also believe this measure can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items that do not directly affect our ongoing operating performance or cash flows.
Adjusted EBITDA does not represent cash flows from operations as defined by GAAP. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net (loss) income, gross margin, and our other GAAP results.
The following table presents a reconciliation of net loss, the closest GAAP financial measure, to EBITDA and Adjusted EBITDA for each of the periods indicated (in thousands):
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (Dollars in thousands) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net loss available to common stockholders | $ | (14,701 | ) | $ | (24,362 | ) | $ | (22,770 | ) | $ | (39,316 | ) | ||||
Interest expense, net | 433 | 227 | 1,353 | 551 | ||||||||||||
Income tax expense | 2 | (22 | ) | 2 | (18 | ) | ||||||||||
Depreciation and amortization | 417 | 425 | 1,678 | 1,690 | ||||||||||||
EBITDA | (13,849 | )) | (23,732 | ) | (19,737 | ) | (37,093 | ) | ||||||||
Non-cash share-based compensation (a) | 157 | 515 | 1,775 | 2,969 | ||||||||||||
Impairment of goodwill | — | 18,614 | — | 18,614 | ||||||||||||
Impairment of intangible assets | 8,532 | — | 8,532 | — | ||||||||||||
Change in fair value of warrant liabilities | 1,575 | — | 236 | — | ||||||||||||
Loss on disposal of assets | 1 | 3 | 12 | 29 | ||||||||||||
Strategic branding initiatives and product launches (b) | 44 | (480 | ) | 128 | 1,046 | |||||||||||
Transaction related (c) | 137 | — | 935 | — | ||||||||||||
Other single occurrence expenses (d) | 46 | 264 | 149 | 2,654 | ||||||||||||
Adjusted EBITDA | $ | (3,359 | ) | $ | (4,819 | ) | $ | (7,973 | ) | $ | (11,781 | ) | ||||
(a) Non-cash expenses related to equity compensation awards. Share-based compensation is an important part of the Company's compensation strategy and without our equity compensation plans, it is probable that salaries and other compensation related costs would be higher. | ||||||||||||||||
(b) Single occurrence expenses related to marketing agency and design, strategic re-branding initiatives, Elevate® launch, product innovation and reformulations. | ||||||||||||||||
(c) Transaction-related legal fees and professional fees related to single occurrence business matters. | ||||||||||||||||
(d) Reflects non-recurring launch expenses related to the Elevate® launch. | ||||||||||||||||
(e) Other single occurrence expenses such as legal settlements, employee severance, executive recruitment, transition of our dry kibble co-manufacturing supplier, and other non-recurring fees. | ||||||||||||||||
About
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. The Company has based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Some or all of the results anticipated by these forward-looking statements may not be achieved. Further information on the Company’s risk factors is contained in our filings with the
Company Contact:
Investor Contact:
T: 212-896-1254
Valter@KCSA.com
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