good natured Products Inc. Announces Preliminary Unaudited Results for the Third Quarter Ended September 30, 2022
VANCOUVER, BC, Oct. 27, 2022 /CNW/ - good natured Products Inc. (the "Company" or "good natured®") (TSXV: GDNP) (OTCQX: GDNPF), a North American leader in plant-based products, today announced preliminary revenue and gross margin estimates for the three months ended September 30, 2022 ("Q3 2022").
Preliminary revenue for Q3 2022 is anticipated to be $25 million to $27 million, an increase of between 40% to 50% compared to $18 million for the three months ended September 30, 2021 ("Q3 2021"). Variable gross margin, a non-GAAP measure1, for Q3 2022 is anticipated between 33% and 35% compared to 28.6% for Q3 2021. Gross margin is estimated between 26% and 28% for Q3 2022 compared to 22.3% for Q3 2021.
Revenue in Q3 2022 was driven by strong organic growth in the Company's Packaging business group, increases in average selling price, and contribution from the recent acquisition of FormTex Plastics based in Houston, Texas. Revenue growth was partially offset by a reduction in gross revenue from third-party industrial thermoformers, as the Company used more of its industrial rollstock production capacity to satisfy the requirements of its own thermoformed packaging manufacturing facilities. This is in line with the Company's strategy to drive a higher percentage of revenue from its Packaging business group, which is designed to deliver more robust gross margin.
In addition, later in the quarter, there was a general reduction in demand for products from the Company's Industrial customers, as softening macro-economic conditions led to lower order volumes as these customers work through inventory that was built up to avoid widespread supply chain disruptions that were prevalent in prior quarters.
Gross margin performance remained strong in Q3 2022, which was driven by a higher mix of Packaging business group revenue, increases in average selling price, and productivity improvements.
The Company plans to release full Q3 2022 results in November 2022.
"Our Q3 2022 revenue growth and gross margin rates are at the high end of the targeted ranges which reflects our continued focus on delivering more revenue mix contribution from our Packaging business group," stated Paul Antoniadis, CEO of good natured®. "We anticipate customer demand for sustainable, earth-friendly products, especially within staple goods categories like food packaging, to remain resilient. However, we also recognize that further deterioration in macro-economic conditions in the fourth quarter could lead to reductions in our average selling price and lower demand for industrial products as packaging converters adjust to new demand levels. We believe our commitment to prioritizing customer service, tightly managing our supply chain, and striving to self-fund our operations during this period of macro uncertainty is what will set us apart from our competition."
The preliminary results set forth above are based on an initial review of the Company's operating and financial results for Q3 2022 and are subject to change. Final reported results could differ from these preliminary results following the completion of quarter-end accounting procedures, final adjustments and other developments arising between now and the time that the Company's financial results are finalized, and such changes could be material. The Company's independent auditor, Deloitte LLP, has not audited, reviewed, or performed any procedures with respect to the accompanying preliminary financial results and other data, and accordingly does not express an opinion or any other form of assurance with respect thereto. The preliminary results have been prepared by, and are the responsibility of, the Company's management, and were approved by management on October 26, 2022. In addition, these preliminary results are not a comprehensive statement of the Company's financial results for Q3 2022. They should not be viewed as a substitute for audited financial statements prepared in accordance with International Financial Reporting Standards and are not necessarily indicative of the Company's results for any future period.
The good natured® corporate profile can be found at: investor.goodnaturedproducts.com
good natured® is passionately pursuing its goal of becoming North America's leading earth-friendly product company by offering the broadest assortment of plant-based products made from rapidly renewable resources instead of fossil fuels. The Company is focused on making it easy and affordable for business owners and consumers to shift away from petroleum to better everyday products® that use more renewable materials, less fossil fuel, and no chemicals of concern.
good natured® offers over 400 products and services through wholesale, direct to business, and retail channels. From plant-based home organization products to certified compostable food containers, bio-based industrial supplies and medical packaging, the Company is focused on making plant-based products more readily accessible to people as a means to create meaningful environmental and social impact.
For more information: goodnaturedproducts.com
On behalf of the Company:
Paul Antoniadis – Executive Chair & CEO
Contact: 1-604-566-8466
Investor Contact:
Spencer Churchill
Investor Relations
1-877-286-0617 ext. 113
[email protected]
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Non-GAAP financial measures
We have included in this press release a discussion of the Company's variable gross margin, a non-GAAP measure, for Q3 2022, and Q3 2021, to provide, what management believes, is a meaningful comparison of the Company's performance in Q3 2022. In this news release, variable gross margin is gross margin excluding fixed production costs such as depreciation, repairs and maintenance, utilities, and similar overhead items. The use of variable gross margin by management allows for evaluation of the core aspects of the Company's profit margin as certain fixed production costs that are outside the Company's control are excluded. Variable gross margin does not have a standardized meaning, and therefore may not be comparable to similar measures presented by other issuers.
The following table provides a reconciliation of preliminary and historic gross margin to preliminary and historic variable gross margin (expressed in thousands of dollars)
Q3 2022 |
Q3 2021 |
|||
Low end |
Upper end |
|||
Revenue |
25,000 |
27,000 |
18,005 |
|
Cost of product revenue |
||||
Variable cost of product |
(16,750) |
(17,550) |
(12,826) |
|
Variable gross profit |
8,250 |
9,450 |
5,179 |
|
Variable gross margin % |
33.0 % |
35.0 % |
28.8 % |
|
Factory overhead and depreciation |
(1,750) |
(1,890) |
(1,165) |
|
Gross profit |
6,500 |
7,560 |
4,014 |
|
Gross margin % |
26.0 % |
28.0 % |
22.3 % |
|
Cautionary Statement Regarding Forward-Looking Information
Information regarding the release of Q3 2022 preliminary revenue and gross margin results and the anticipated deterioration of macro-economic conditions contained in this press release may constitute forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
The financial outlook provided in this press release is provided to provide early guidance on the third quarter financial performance of the Company and readers are cautioned that this information may not be appropriate for any other purpose. In preparing the financial outlook, the Company completed an initial review of operations for the three months ended September 30, 2022, however actual results may differ materially from the financial outlook provided in this press release as the financial outlook has not been audited or reviewed. When relying on the Company's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to herein will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
Forward-looking information contained in this news release is based on our current estimates, expectations, and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
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SOURCE Good Natured Products
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