Q2 2022 LTM Total Net Revenue of
Q2 2022 Total and E-commerce Net Revenue Up 36% and 30%, Respectively.
Generated Break-even Cash Earnings1 in Q2 2022.
AOV increased 14% to
For the last twelve-month period ("LTM") ending
"In Q2, a generally slower quarter in the year for us, we posted a respectable growth rate of over 30% for total and e-commerce net revenue, we drove AOVs higher and we maintained our gross margins at over 35%. For the second time in the last three quarters, Cash Earnings1 came in at a break-even or better level, with Q2 2022 Cash Earnings coming in at a break-even level as compared to a loss of
"While we are cautious about the economic prospects for the second half of the year, our total net revenue guidance for 2022 remains unchanged at
Provided below are the financial highlights and a discussion of our financial results for the three–months period ended
Overview of Results for Q2 2022, compared to Q2 2021
- In Q2 2022, total net revenue increased 36.1% to
$5.5 million from$4.0 million . - E-commerce net revenue increased 29.6% to
$3.3 million , and e-commerce average order value ("AOV") increased 14.1% to$1,128 per transaction. E-commerce net revenue as a proportion of total net revenue ("E-commerce penetration") was 59.6.%. - Retail net revenue was
$2.2 million versus$1.5 million , an increase of 47.2%. At quarter-end, we had nine stores in operation as compared to eight in Q2 2021. - Gross profit margin was stable at 35.5% compared to 35.7% in Q2 2021.
- Selling, general and administrative ("SG&A") expenses increased by 6.6% to
$2.7 million , representing 50.0% of total net revenue, from$2.6 million , or 63.9% of total net revenue. SG&A expenses in Q2 2021 included the benefits of pandemic-related government wage subsidies. Excluding the benefit of these subsidies, Q2 2022 SG&A increased 5.8% versus Q2 2021. - Adjusted Net loss (a non-IFRS measure) improved to a loss of
$0.7 million versus a loss of$1.1 million . - Adjusted EBITDA (a non-IFRS measure) improved to a loss of
$0.5 million versus a loss of$0.9 million . - Free Cash Flow (a non-IFRS measure) was negative
$0.7 million an improvement as compared to negative$1.2 million . - For the second time in the last three quarters Cash Earnings1came in at break-even or better, with Q2 2022 Cash Earnings coming in at
$778 as compared to a loss of$0.7 million in Q2 2021. - Cash availability at the end of Q2 2022 was
$2.9 million as compared to$3.8 million in Q4 2021, the decline attributed primarily to increased investments in working capital and the partial repayment of debt.
_________________________ |
1 Cash Earnings (a non IFRS measure) means Net Profit/(Loss) plus non-cash items. |
Discussion of the Three-Month Periods Ended
Unless otherwise indicated, all amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures. See "Non-IFRS Measures" further below. For a reconciliation of non-IFRS measures to their most directly comparable measure calculated in accordance with IFRS, see "Select Consolidated Financial Information" further below.
Total Net Revenue
For Q2 2022, total net revenue increased by 36.1% to
During this period, approximately 69.2% of our net revenue was generated in the
E-commerce
E-commerce net revenue during Q2 2022 was
Retail
Retail net revenue during Q2 2022 was
Our store network consisted of nine stores, of which all were open in Q2 2022, compared to ten stores as at
Gross Profit & Gross Profit Margin
Gross profit in Q2 2022 increased 35.4% to
Gross margin in Q2 2022, remained consistent at 35.5% compared to 35.7% in Q2 2021, primarily due the ability to maintain effective inventory management and product sourcing.
SG&A Expenses
In Q2 2022, SG&A expenses increased by 6.6% to
On
Net Loss
Despite an increase in gross profit to
Adjusted Net Loss
In Q2 2022, Adjusted Net Loss was
Adjusted EBITDA
In Q2 2022, Adjusted EBITDA improved by 43.3% to a loss of
Cash earnings and Free Cash Flow
As set forth below, for the second time in the last three quarters, Cash Earnings (or net cash generated before changes in non-cash working capital) for Q2 2022 came in at a significantly improved break-even level (
($000s) | Net profit / | Add: Non-cash | Cash Earnings | Add: Changes | Less: Capital | Free cash flow |
Q3-2020 | (2,786) | 1,136 | (1,650) | 1,712 | - | 62 |
Q4-2020 | (2,209) | 138 | (2,071) | 1,436 | (17) | (652) |
Q1-2021 | (884) | (95) | (979) | (629) | (15) | (1,623) |
Q2-2021 | (1,581) | 391 | (1,190) | (32) | (10) | (1,232) |
Q3-2021 | 59 | 87 | 146 | (2,322) | (15) | (2,191) |
Q4-2021 | (493) | 724 | 231 | 1,221 | (4) | 1,448 |
Q1-2022 | (924) | (11) | (935) | 394 | (4) | (545) |
Q2-2022 | (354) | 354 | - | (646) | (6) | (652) |
In Q2 2022, we generated negative Free Cash Flow of
Selected Consolidated Financial Information
The following table summarizes LXR's recent results for the periods indicated:
For the three-months ended | For the six-months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Net revenue | 5,481,267 | 4,026,028 | 9,776,783 | 6,628,099 | |
Cost of sales | 3,537,665 | 2,590,265 | 6,317,470 | 4,332,552 | |
Gross profit | 1,943,602 | 1,435,763 | 3,459,313 | 2,295,547 | |
Operating expenses | |||||
Selling, general and administrative expenses | 2,743,075 | 2,574,011 | 4,745,527 | 3,815,285 | |
Depreciation of property and equipment | 81,702 | 63,865 | 150,466 | 135,937 | |
Amortization of intangible assets | 4,407 | 12,142 | 8,814 | 31,870 | |
Loss from operating activities | (885,582) | (1,214,255) | (1,445,494) | (1,687,545 | |
Other income and expenses | |||||
Finance costs | 116,745 | 133,596 | 258,419 | 314,238 | |
Foreign exchange loss (gain) | (656,101) | 214,214 | (433,721) | 444,316 | |
Loss before income taxes | (346,226) | (1,562,065) | (1,270,192) | (2,446,099) | |
Income tax expense | |||||
Current | 7,326 | 18,570 | 7,326 | 18,570 | |
Net loss | (353,552) | (1,580,635) | (1,277,518) | (2,464,669) |
The following table provides a reconciliation of Net Loss to Adjusted Net Income or Adjusted Net Loss and Net Loss to EBITDA and Adjusted EBITDA for the periods indicated:
For the three-months ended | For the six-months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Reconciliation of Net Loss to Adjusted Net Loss | |||||
Net Loss | (353,552) | (1,580,635) | (1,277,518) | (2,464,669) | |
Adjustments to Net Loss: | |||||
Foreign exchange loss (gain) | (656,101) | 214,214 | (433,721) | 444,316 | |
Government wage subsidy program | — | (18,254) | (173,023) | ||
Gain on disposal of property and equipment | — | (1,250) | — | (1,250) | |
Stock-based compensation expense | 250,750 | 299,988 | 162,027 | 99,237 | |
Information technology non-recurring expense | 62,479 | — | 62,479 | — | |
Adjusted Net Loss | (696,424) | (1,085,937) | (1,486,733) | (2,095,389) | |
For the three-months ended | For the six-months ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Reconciliation of Net Loss to Adjusted EBITDA | |||||
Net Loss | (353,552) | (1,580,635) | (1,277,518) | (2,464,669) | |
Adjustments to Net Loss: | |||||
Amortization and depreciation expenses | 86,109 | 76,007 | 159,280 | 167,807 | |
Finance costs | 116,745 | 133,596 | 258,419 | 314,238 | |
Income Tax Expense | 7,326 | 18,570 | 7,326 | 18,570 | |
EBITDA | (143,372) | (1,352,462) | (852,493) | (1,964,054) | |
Adjustments to EBITDA: | |||||
Foreign exchange loss (gain) | (656,101) | 214,214 | (433,721) | 444,316 | |
Government wage subsidy program | — | (18,254) | (173,023) | ||
Gain on disposal of property and equipment | — | (1,250) | — | (1,250) | |
Stock-based compensation | 250,750 | 299,988 | 162,027 | 99,237 | |
Information technology non-recurring expense | 62,479 | — | 62,479 | — | |
Adjusted EBITDA | (486,244) | (857,764) | (1,061,708) | (1,594,774) |
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 COVID-19 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.
($) | ||||||||
Consolidated statements of loss | Q2-2022 | Q1-2022 | Q4-2021 | Q3-2021 | Q2-2021 | Q1-2021 | Q4-2020 | Q3-2020 |
Total net revenue | 5,481,267 | 4,295,516 | 6,415,527 | 4,987,628 | 4,026,028 | 2,602,071 | 3,391,813 | 2,857,718 |
E-commerce revenue | 3,268,570 | 3,149,395 | 3,958,670 | 2,506,850 | 2,522,682 | 1,572,640 | 1,715,804 | 880,373 |
E-commerce revenue % of total net revenue | 59.6 % | 73.3 % | 61.7 % | 50.3 % | 62.7 % | 60.4 % | 50.6 % | 30.8 % |
Gross margin | 35.5 % | 35.3 % | 37.3 % | 35.2 % | 35.7 % | 33.0 % | 32.7 % | 28.2 % |
Adjusted Net (Loss) Income | (696,424) | (790,309) | 123,230 | (190,094) | (1,085,937) | (1,009,452) | (886,788) | (746,691) |
Adjusted EBITDA | (486,244) | (575,464) | 298,025 | 6,172 | (857,764) | (737,010) | (708,297) | (372,369) |
Adjusted EBITDA % of total net revenue | (8.9 %) | (13.4 %) | 4.6 % | 0.1 % | (21.3 %) | (28.3 %) | (20.9 %) | (13.0 %) |
Run rate metrics and growth: | ||||||||
Total net revenue – last 12 months | 21,179,938 | 19,724,699 | 18,031,254 | 15,007,540 | 12,877,630 | 10,281,886 | 13,777,419 | 24,825,779 |
E-commerce revenue – last 12 | 12,883,485 | 12,137,597 | 10,560,842 | 8,317,976 | 6,691,499 | 4,976,771 | 4,379,723 | 3,839,571 |
Free Cash Flow: | ||||||||
Net loss | (353,552) | (923,966) | (492,803) | 59,223 | (1,580,635) | (884,034) | (2,208,618) | (2,786,350) |
Add: non-cash items | 354,340 | (11,095) | 724,391 | 87,287 | 390,704 | (94,643) | 137,960 | 1,135,973 |
Cash Earnings | 788 | (935,061) | 231,588 | 146,510 | (1,189,931) | (978,677) | (2,070,658) | (1,650,377) |
Add: Net change in non-cash working | (646,138) | 393,568 | 1,221,311 | (2,322,046) | (32,427) | (628,959) | 1,435,622 | 1,712,028 |
Cash flows provided/(used) in | (645,350) | (541,493) | 1,452,899 | (2,175,536) | (1,222,358) | (1,607,636) | (635,036) | 61,651 |
Less: acquisition of property and | (6,062) | (4,435) | (4,283) | (15,436) | (9,998) | (14,593) | (17,273) | - |
Free Cash Flow | (651,412) | (545,928) | 1,448,616 | (2,190,972) | (1,232,356) | (1,622,229) | (652,309) | 61,651 |
Liquidity: | ||||||||
Cash availability | 2,934,437 | 3,662,768 | 3,810,767 | 2,640,169 | 4,481,560 | 4,775,470 | 7,334,425 | 1,213,542 |
Working capital | (59,214) | 6,833,114 | 7,052,502 | 7,083,280 | 7,033,183 | 7,133,717 | 8,949,997 | 2,877,864 |
Capitalization: | ||||||||
Shares outstanding | 91,425,499 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 | 92,783,155 | 32,783,145 |
Closing share price | 0.11 | 0.11 | 0.14 | 0.10 | 0.13 | 0.12 | 0.25 | 0.20 |
Market capitalization | 10,056,805 | 10,206,147 | 12,989,642 | 9,278,316 | 12,061,810 | 11,133,979 | 22,731,873 | 6,556,629 |
Add: Total debt | 6,619,796 | 6,526,453 | 5,999,440 | 6,272,286 | 5,758,443 | 4,814,459 | 5,733,129 | 5,173,259 |
Less: Cash | 2,884,427 | 3,570,681 | 3,695,677 | 2,603,395 | 4,315,918 | 4,653,792 | 7,289,957 | 501,033 |
Enterprise value (EV) | 13,792,174 | 13,161,919 | 15,293,405 | 12,947,207 | 13,504,335 | 11,294,646 | 21,175,045 | 11,228,855 |
Multiple of EV/Last 12 months | 0.65x | 0.67x | 0.85x | 0.86x | 1.05x | 1.10x | 1.54x | 0.45x |
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", "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 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 in order 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, 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 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" or "continue", or similar expressions suggesting future outcomes or events and the negative of any of these terms. Forward-looking statements in this news release include, but are not limited to, statements concerning future objectives and strategies to achieve those objectives, including, without limitation, store openings and closures, 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 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, including the Company's capacity to secure additional financing, 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 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, entering into new and/or expanded retail partnerships, the Company's ability to source products, the Company's competitive position in the vintage luxury industry, and beliefs and intentions regarding the ownership of material trademarks and domain names used in connection with the marketing, distribution and sale of the Company's products as well as assumptions concerning general economic and market growth rates, currency exchange and interest rates and competitive intensity, notably in the context of the current COVID-19 outbreak.
Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur.
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.
Readers are cautioned that the actual results achieved will vary from the information provided herein and that such variations may be material. Consequently, there are no representations by LXR that actual results achieved will be the same in whole or in part as those set out in the forward-looking statements.
SOURCE
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