good natured Products Inc. Announces Quarterly Financial Results for the Three Months Ended March 31, 2022

VANCOUVER, BC, May 31, 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 its financial results for the three months ended March 31, 2022 ("Q1 2022").

In Q1 2022, the Company reached a significant milestone by achieving its second consecutive quarter of positive adjusted EBITDA.¹ Continued growth in  revenue and gross profit in Q1 2022 outpaced the quarter-over-quarter increases in operating expenses, including fulfilment costs that were upwardly influenced by global macro inflationary pressures.

Revenue in Q1 2022 grew on a year-over-year basis by 228% to a record high of $25.9 million. These results were driven by recent strategic acquisitions and strong organic growth, along with increases in average selling price per unit. The Company continues to serve over 1,200 active business-to-business ("B2B") customer accounts across its sales and e-commerce channels.

"Our Q1 2022 growth in revenue and adjusted EBITDA is the result of our collective team across North America working together to achieve an incredible outcome in very challenging macro economic operating conditions," stated Paul Antoniadis, CEO of good natured^®. "I want to sincerely thank our team members and partners for their passionate commitment to our customers. This commitment will serve us well to capitalize on the robust demand for environmentally friendly products and the growing trend of re-shoring supply chains to North America."

__________________________________
^1	A non-GAAP financial measure. Please refer to "Non-GAAP financial measures" below for additional information.

Key Highlights:

• Revenues for Q1 2022 increased 228% to a record $25.9 million compared to $7.9 million for the three months ended March 31, 2021 ("Q1 2021").
  
  
• Variable gross profit1 for Q1 2022 increased 155% to $8.2 million, representing a variable gross margin¹ of 31.7%, compared to $3.2 million and 40.8% for Q1 2021. Gross profit for Q1 2022 increased 138% to $6.6 million representing a gross margin of 25.6%, compared to $2.8 million and 35.3% respectively for Q1 2021.
  
  
• Selling, general and administrative ("SG&A") expenses, excluding acquisition activity and one-time charges,¹ for Q1 2022 were $3.5 million compared to $1.6 million for Q1 2021. As a percent of sales, SG&A expenses, excluding acquisition activity and one-time charges,¹ declined to 14% compared to 20% in Q1 2021.
  
  
• SG&A expenses for Q1 2022, including acquisition activity and one-time charges, were $3.8 million compared to $1.7 million for Q1 2021, representing an increase of 123%. As a percent of sales, SG&A expenses declined to 15% compared to 22% in Q1 2021.
  
  
• The Company's adjusted EBITDA¹ for Q1 2022 showed a gain of $1.2 million compared to a gain of $0.2 million for Q1 2021, representing an increase of 646%.
  
  
• In Q1 2022, the Company incurred a net loss of $1.6 million compared to a net loss of $1.9 million in Q1 2021.

The Company's Q1 2022 financial statements and Management's Discussion and Analysis are available on SEDAR at sedar.com and on the Company's investor website at investor.goodnaturedproducts.com.

Q1 2022 Results Conference Call
The Company will hold a conference call to discuss its financial results for Q1 2022, hosted by Paul Antoniadis, Executive Chair & CEO, and Kevin Leong, Chief Financial Officer, on May 31, 2022 at 11:00 AM Eastern / 8:00 AM Pacific time.

Date: May 31, 2022
Time: 11:00 AM ET / 8:00 AM PT
Toll-Free: 1-888-396-8049 International: [phone]
Conference ID: 90874847

Participants are asked to dial in 10 minutes prior to the start of the call. 

A replay of the call will be available approximately two hours after its completion through to June 30, 2022. The replay will be available by dialing
1-877-674-7070 or 1-416-764-8692.

The good natured^® corporate profile can be found at: investor.goodnaturedproducts.com

About good natured Products Inc.
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 profit, variable gross margin, SG&A excluding acquisition activity and one-time charges, and adjusted EBITDA, all non-GAAP measures, for Q1 2022 and Q1 2021 to provide, what management believes, is a meaningful comparison of the Company's performance in Q1 2022. In this news release, variable gross profit is gross profit excluding fixed production costs such as depreciation, repairs and maintenance, utilities and similar overhead items, and variable gross margin is variable gross profit divided by revenue; SG&A excluding acquisition activity and one-time charges is SG&A expenses but excluding acquisition costs and certain one-time charges and adjusted EBITDA is earnings before interest and finance costs, taxes, depreciation and amortization, other non–cash items and one–time gains and losses. Variable gross profit, SG&A excluding acquisition activity and one-time charges and Adjusted EBITDA do not have standardized meanings, and therefore may not be comparable to similar measures presented by other issuers. The use of variable gross profit and variable gross margin provides deeper insight into normalized product margins related to variable material input costs, inbound freight and labour costs associated with producing the goods being sold. Variable gross margin also removes gross margin percentage fluctuations due to changes in revenue from factors such as mix of insourced versus outsourced manufacturing to respond to specific customer requirements for multiple-facility production, depreciation from facility capital investments and the addition of manufacturing facility acquisitions with factory overhead charges. The use of SG&A excluding acquisition activity and one-time charges allows for an evaluation of Company's expenses disregarding the expenses associated with the Company's voluntary execution of Its growth through acquisition strategy. The use of the adjusted EBITDA by management allows for evaluation of the Company's principal business activities as certain non–core items such as interest and finance costs, taxes, depreciation and amortization, and other non–cash items and one–time gains and losses are removed.

The following table provides a reconciliation of net loss to adjusted EBITDA for the periods ended:

						3 months ended Mar. 31
						2022		2021
Income (loss) for the period				$		(1,592)	$	(1,903)
Share-based compensation						601		270
Depreciation						671		236
Depreciation in COGS and SG&A						304		135
Financing costs						975		1,034
Foreign exchange loss (gain)						(26)		71
Loss on debt repayment and conversion						-		166
Gain on interest-free loan						-		-
Acquisition related activity and One-time charges						278		146
Deferred income taxes						(54)		-
Adjusted EBITDA^1				$		1,157	$	155

The following table provides a reconciliation of variable gross profit to gross profit and gross margin to variable gross margin for the periods ended:

									3 months ended Mar. 31
												2022		2021
Revenue									$			25,936	$	7,900
Variable cost of product												(17,715)		(4,678)
Variable Gross Profit^1											8,221			3,222
Variable Gross Margin %											31.7%			40.8%
Fixed factory overhead											(1,283)			(298)
Depreciation												(304)		(135)
Gross profit									$			6,634	$	2,789
Gross margin %												25.6%		35.3%

The following table provides a reconciliation of selling, general and administrative expense excluding acquisition activity and one-time charges:

															3 months ended Mar 31
															2022				2021		+/-
SG&A Wages															2,086				889		135%
SG&A Other														1,250				573		118%
Product Development														192				99		94%
Acquisition related activity & One-Time Charges															278				146		90%
SG&A													$		3,806		$		1,707		123%
SG&A % of Revenue															15%				22%
SG&A excluding acquisition activity & One-Time Charges													$		3,528		$		1,561		126%
SG&A % of Revenue excluding acquisition related & One-Time charges															14%				20%

Cautionary Statement Regarding Forward-Looking Information

This news release contains forward-looking information within the meaning of securities laws including statements related to Company plans and focuses for 2022, the upcoming results conference call and management's outlook for 2022. 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.

By their nature, forward-looking statements involve known and unknown risks, uncertainties, changes in circumstances and other factors that are difficult to predict and many of which are outside of the Company's control 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. Forward-looking information contained in this news release is based on our current estimates, expectations and projections regarding, among other things, sales volume and pricing 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.

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.

All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.

GOOD NATURED PRODUCTS INC.
Consolidated Statements of Financial Position
(In thousands) (Unaudited)
			31-Mar		31-Dec
			2022		2021
Assets
Current assets:
	Cash and cash equivalents	$	12,374	$	10,655
	Trade and other receivables		13,685		13,689
	Inventory (Note 4)		18,043		16,036
	Prepaid expenses		993		987
			45,095		41,367
Non-current assets:
	Property and equipment (note 5)		31,242		30,463
	Right-of-use assets (note 6)		4,046		2,165
	Customer relationships (note 7)		5,601		5,725
	Intangible and other assets (note 7)		3,153		3,125
	Goodwill (note 7)		7,684		7,684
		$	96,821	$	90,529
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities	$	22,473	$	17,699
	Credit line (note 8)		-		-
	Current portion of long-term debt (note 9)		41,289		39,681
			63,762		57,380
Non-Current liabilities:
	Long-term debt (note 9)		7,497		6,674
	Contingent consideration liability		1,926		1,890
	Deferred income tax liabilities		3,439		3,493
			12,862		12,057
Shareholders' Equity:
	Common share capital		57,497		57,083
	Contributed surplus		6,352		5,883
	Foreign currency translation reserve		686		872
	Deficit		(44,338)		(42,746)
			20,197		21,092
Total Liabilities and Shareholders' Equity		$	96,821		90,529

GOOD NATURED PRODUCTS INC.
Consolidated Statements of Net Loss and Comprehensive Loss
(In thousands except per share amounts) (Unaudited)
			Three months ended March 31
			2022			2021
Product revenue		$	25,936		$	7,900
Cost of product revenue (note 12)			(19,302)			(5,111)
Gross profit			6,634			2,789
Other (Expenses) Income:
Selling, general, and administrative (note 13)			(3,806)			(1,707)
Fulfilment and logistics			(2,253)			(1,208)
Share-based compensation (note 10 (b))			(601)			(270)
Depreciation and amortization			(671)			(236)
Financing costs			(975)			(1,034)
Foreign exchange gain (loss)			26			(71)
Loss on debt repayment and conversion (note 9 (b))			-			(166)
Net loss before taxes		$	(1,646)		$	(1,903)
Deferred income tax recovery			54			-
Net loss for the period			(1,592)			(1,903)
Other comprehensive gain (loss), net of tax
Items that may be reclassified subsequently to profit or loss:
Unrealized currency gain on translation of foreign operations			(186)			462
Other comprehensive loss for the period		$	(1,778)		$	(1,441)
Basic and diluted loss per share		$	(0.01)		$	(0.01)
Weighted average shares outstanding – basic and diluted			222,223			192,575

                                                             

GOOD NATURED PRODUCTS INC.
Consolidated Statements of Cash Flow
(In thousands) (Unaudited)
					Three months ended March 31
					2022		2021
Cash provided by (used in):
Operations:
Net loss				$	(1,592)	$	(1,903)
Items not involving cash:
Depreciation and amortization					813		356
Unrealized foreign exchange loss					273		86
Amortization of right of use assets					168		63
Share based compensation (note 10(b))					601		270
Loss on debt repayment and conversion (note 10 (b))					1,148		166
Financing costs					975		1,034
Deferred income tax					(54)		-
					1,184		72
Changes in non-cash operating working capital:
Trade and other receivables					4		(20)
Inventory					(2,071)		(2,510)
Prepaid expenses					(26)		(289)
Accounts payable and accrued liabilities					4,774		793
					2,681		(2,026)
Finance costs paid					(725)		(883)
Cash provided by (used in) operating activities					3,140		(2,837)
Financing:
Issuance of common shares, net of
issuance costs (note 10)					-		21,184
Exercise of warrants for common shares					254		1,931
Exercise of options for common shares					28		31
Credit line advance, net of
repayments (note 8)					-		(800)
Proceeds from long-term debt, net of issuance costs (note 9(b,c))					700		178
Repayment of other long-term debt (note 9(a))					(568)		(1,376)
Cash provided by financing activities					414		21,130
Investments:
Purchase of equipment					(1,466)		(1,123)
Purchase of other assets					(227)		(130)
Cash used in investing activities					(1,693)		(1,253)
Effect of foreign exchange rate changes on cash							(41)
Increase (decrease) in cash					1,719		16,999
Cash and cash equivalents, beginning of period					10,655		8,114
Cash and cash equivalents, end of period					12,374		25,113

SOURCE Good Natured Products