GreenSpace Brands Inc. Reports Third Quarter Revenue Growth of 262% with Significant Gross Profit Improvement

TORONTO, Feb. 29, 2016 /CNW/ - GreenSpace Brands Inc. ("GreenSpace" or "the Company") (TSXV: JTR) today reported its third quarter financial results for the three and nine month periods ended December 31, 2015.

Consolidated Performance Summary

	Three months ended		Nine months ended
	December 31		December 31
(Amounts in thousands of Cdn dollars, except per share amounts)	2015	2014	2015	2014
	$	$	$	$
Revenue	2,993	827	6,173	2,201
Gross profit	645	21	1,164	320
Gross profit margin	21.5%	2.5%	18.9%	14.5%
SG&A expenses	1,932	457	3,787	1,101
Reverse take-over listing fee			991
Interest and accretion expense	52	23	72	68
Change in fair value of derivative liability		8		5
Net loss from continuing operations	1,339	467	3,686	854
Net loss from discontinued operations, net of tax				2
Net loss	1,339	467	3,686	856
Net loss per share (basic and diluted)	(0.06)	(0.04)	(0.20)	(0.07)
Adjusted EBITDA^1	(683)	(445)	(1,824)	(786)
Adjusted EBITDA Margin^1	(22.8%)	(53.8%)	(29.5%)	(35.7%)
1 – These are not measures of financial performance under IFRS. These measures are not necessarily comparable to similarly titled measures used by other companies and should not be construed as an alternative to net income or cash flow from operating activities as determined in accordance with IFRS. See the discussion included in the Company's third quarter MD&A available on www.sedar.com on non-IFRS disclosure for further details, including reasons for presentation of these financial measures.

The third quarter revenue results for the Company continued to be strong, showing a 262.1% increase in the quarter compared to the prior year quarter, achieving its largest quarter in sales by a significant amount. The strong revenue results were primarily from the acquisition of Love Child and continued strong internal growth from all existing GreenSpace brands.

Gross profit margins in the third quarter improved considerably compared to the same quarter in prior year. The profit margin improvements were primarily due to; i) the acquisition of Love Child, which has traditionally earned higher margins, ii) gaining the consistency expected in the Rolling Meadow customer order patterns which reduced the amount of dairy inventory write-offs and iii) proportionately reduced the amount of retailer incentives as the Company gained scale and leveraged its ability to provide retailers with multiple product offerings.

As the Company continues to grow, developing new brands, launching new products and generally building its presence in the North American organic and natural food market, it continues to see, as expected, higher SG&A expenses in the third quarter and year-to-date in fiscal 2016.

After the acquisition of Love Child, the Company started to implement a number of cost saving initiatives whose benefits were not fully realized in the quarter. As expected, with the acquisition of Love Child doubling the Company's inventory size, along with GreenSpace gaining national distribution on new brands, storage and delivery expenses increased in the third quarter and year-to-date in fiscal 2016. A partial offset to this was the fact that advertising and promotional expenses in the third quarter and year-to-date were lower as a percentage of net revenue due to the Company cross marketing multiple brands under the GreenSpace umbrella. As well, the Company incurred significant professional service costs in the current quarter and year-to-date as a result of a number of completed equity financings, the acquisitions of both Love Child and Central Roast and the Company`s going-public qualifying transaction. These incremental professional service costs are not expected to reoccur under normal operations in future periods and consequently they have been excluded in calculating Adjusted EBITDA.

Outlook

Management continues to believe that there are a number of fundamental trends occurring within both the global and North American food market, which will inevitably drive demand for the Company's brands and products in future periods. As reported by the 2014 NPN Journal Industry Report, organic food sales are growing at an annual rate of 14% as compared to conventional food sales growing at an annual rate less than 2%. Presently, organic food sales make up only 6% of consumer food purchases but with these varying growth rates, it is expected that organic and natural sales will take a much larger portion of consumer food purchases over the next five years. Considering this, the 2014 NPN Journal Industry Report expects that the Global organic food market will reach $210 billion by the year 2020, and over the next five years that market will have a cumulative average growth rate of 15.7%.

With these trends in mind, Management continues to be optimistic that this anticipated growth in the organic and natural food market will continue to drive demand for the Company's developed products and provide a lot of opportunity for further expansion into new product offerings within acquired and existing brands. In particular, Management believes it is one of the very few companies positioned to capitalize on the emerging grass-fed trend in Canada. Through its dairy brand, Rolling Meadow, and the Life Choices brand, the Company has carved out a niche in the Canadian grass-fed market, which it hopes to exploit with continued product and brand launches. 

The Company intends to continues to grow through a two-pronged growth strategy. Firstly, the Company expects to have strong and on-going internal brand and product development. There are currently a number of new product offerings in various stages of development that the Company expects to release to the market by the middle of the up-coming fiscal year. Secondly, the Company expects to grow through acquisition by making strategic investments in strong, simple ingredient businesses. Both the Love Child acquisition, completed in the quarter, and Central Roast acquisition, completed subsequent to quarter-end, are great examples of the type of business that the Company is looking to acquire. After these acquisitions the Company has a pro-forma annualized revenue run-rate of $24.5 million consolidating the historical financial results of the acquired businesses. With this larger revenue base, Management expects to leverage its strong customer relationships, utilize its distribution networks and realize on a number of synergistic cost savings through its up-coming fiscal year to generate positive EBITDA and positive operating cash-flow results. Management continues to feel it is in a strong position to be one of the principle consolidators in the North American natural and organic food market, due to its industry position and accumulated goodwill.

As it grows, the Company will focus on cost containment, margin enhancement and cash-flow management. By integrating various brands and strategic acquisitions, GreenSpace aims to achieve economies of scale, become EBITDA and operating cash-flow positive and continue to enhance its overall market penetration.

About GreenSpace Brands Inc.

GreenSpace is a Canadian-based brand ideation team that develops, markets and sells premium natural food products to consumers across Canada. GreenSpace owns Rolling Meadow Dairy, Canada's first grass fed dairy product line that has built upon the founding values of Greenspace's original brand, Life Choices. Life Choices features premium convenience meat products made with grass fed and pasture raised meats without the use of added hormones and antibiotics. GreenSpace owns Holistic Choice, a premium natural pet food line and Nudge, a line of family favorite foods made better. GreenSpace also owns Love Child (Brands) Inc. a producer of 100% organic food for infants and toddlers made with the purest, natural and most nutritionally rich ingredients. All brands are wholly owned and retail in a variety of natural and mass retail grocery locations across Canada.

For more information, visit www.greenspacebrands.ca. GreenSpace's filings are also available at www.SEDAR.com.

Forward-Looking Statements

Certain statements in this press release constitute forward-looking statements within the meaning of applicable securities laws.  Forward-looking statements include, but are not limited to, statements made under the heading "Outlook" and other statements concerning the Company's 2016 objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or "continue", or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements and there can be no assurance that actual results will be consistent with these forward-looking statements. Factors that could cause such differences include the cyclical nature of the construction and agriculture industries, changes in general economic conditions and interest rates, adverse weather, cost and availability of materials used to manufacture the Company's products, competitive developments, legislative and government policy changes, as well as other risk factors included in the Company's Annual Information Form dated November 9, 2015 under the heading "Risks and Uncertainties Related to the Business" and as described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions.  This list is not exhaustive of the factors that may impact the Company's forward-looking statements.  These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. As a result of the foregoing and other factors, no assurance can be given as to any such future results, levels of activity or achievements or levels of dividends and neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward looking statements. The factors underlying current expectations are dynamic and subject to change. Certain statements included in this press release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for all purposes. All forward-looking statements in this press release are qualified by these cautionary statements. 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 undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE GreenSpace Brands Inc.

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Matthew von Teichman, President & Chief Executive Officer, GreenSpace Brands Inc., Tel: [phone] Ext. 200; Mathew Walsh, Chief Financial Officer, GreenSpace Brands Inc., Tel: [phone] Ext. 201