MAV Beauty Brands Reports First Quarter 2021 Financial Results

• Total revenue of $28.6 million versus $31.4 million in Q1 2020
• Strong year-over-year velocity growth driven by new planogram resets
• Adjusted EBITDA of $6.4 million and Adjusted Free Cash Flow of $1.6 million
• Net income increases to $1.6 million; Adjusted Net Income of $2.6 million

VAUGHAN, ON, May 10, 2021 /CNW/ - MAV Beauty Brands Inc. ("MAV Beauty Brands" or the "Company"), a global personal care company, today announced its financial results for the three months ended March 31, 2021. Unless otherwise indicated, all amounts are expressed in U.S. dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures (see "Non-IFRS Measures" below).

"The year has started strong with double-digit velocity growth and better than category point of sale growth in North America. This translated into meaningful sequential improvements in quarterly revenue, gross margins and Adjusted EBITDA over Q4 2020, while year-over-year sales were stable after adjusting for the effect of the pantry loading that happened in March 2020 at the onset of the COVID-19 pandemic," said Tim Bunch, President & CEO of MAV Beauty Brands. "In addition, sales from e-commerce channels continued to increase in the first quarter over the prior year, led by strong performance on Amazon of several of the Company's brands." 

Mr. Bunch added: "We anticipate that sales momentum will accelerate throughout the year as economies open up and consumer behavior begins to normalize post-COVID. With strong brand fundamentals, we will look to continue above-category performance from our portfolio with growth across digital channels and our traditional retailer relationships in food, drug and mass."

Selected Financial Highlights⁽¹⁾⁽²⁾ 

(in thousands of US dollars except per share amounts) (unaudited)		Q1 2021	Q1 2020
Revenue		28,642	31,382
Gross profit		13,596	14,394
Net income for the period		1,575	1,235
Earnings per share (basic)		0.04	0.03
Adjusted EBITDA		6,433	8,314
Cash flow from (used in) operations		1,730	(2,647)
Adjusted Free Cash Flow		1,635	(2,925)
Adjusted Net Income		2,619	3,619
Adjusted Earnings per Share (diluted)		0.06	0.09

(1)	See "Non-IFRS Measures"
(2)	Earnings per share (basic) calculation does not include the impact of 2,463,963 common shares of the Company issuable upon the exchange of the units issued as part of The Mane Choice acquisition.

Q1 2021 Business and Financial Review 

Q1 2021 revenue decreased by 8.7% to $28.6 million, compared to $31.4 million in Q1 2020. The decrease in total revenue largely reflects the year-over-year impact of pantry loading in March 2020 at the onset of the COVID-19 pandemic. For the Canada/US region, revenue decreased by 9.8% to $27.2 million, compared to $30.2 million in Q1 2020. For the International region, revenue increased by 18% to $1.4 million, compared to $1.2 million in Q1 2021. The Q1 2021 results were bolstered by the Company's sales from e-commerce channels, which increased over the prior year, led by strong Amazon sales of several of the Company's brands.

Gross profit decreased to $13.6 million in Q1 2021, compared to $14.4 million in Q1 2020 (or $16.1 million excluding the impact of purchase accounting adjustments from The Mane Choice acquisition) primarily as a result of the lower net sales and some sales mix variations. Gross profit margin was 47.5% in Q1 2021, compared to 51.1% (excluding the purchase accounting adjustments) in Q1 2020. The decline in gross profit margin in the current year reflected product sales mix and a modest near-term increase in cost of sales due to COVID-related factors.

Adjusted EBITDA decreased by 22.6% to $6.4 million in Q1 2021, from $8.3 million in Q1 2020, due to lower net revenues and the factors discussed above, including sales mix and COVID-related impacts.

In Q1 2021, the Company reported net income of $1.6 million, up from net income of $1.2 million in Q1 2020. Adjusted Net Income decreased to $2.6 million, compared with Adjusted Net Income of $3.6 million in Q1 2020. Adjusted earnings per share (diluted) was $0.06 per share in Q1 2021, compared with $0.09 per share in Q1 2020, reflecting the factors discussed above (see "Non-IFRS Measures" below).

Adjusted Free Cash Flow increased to $1.6 million in Q1 2021, compared to ($2.9) million in Q1 2020 (see "Non-IFRS Measures" below). Q1 2020 free cash flow was impacted by delays in customer invoicing related to the ERP implementation. During the quarter, the Company made earnout payments of $2.5 million in relation to the Cake and The Mane Choice acquisitions. There are no further earnout payments scheduled for fiscal 2021. 

Q1 2021 Financial Statements and Management's Discussion and Analysis

The Company's unaudited consolidated financial statements for the three-month period ended March 31, 2021 and Management's Discussion and Analysis are available under the Company's profile on SEDAR at www.sedar.com and on MAV Beauty Brands' investor relations website at investors.mavbeautybrands.com.

Conference Call & Webcast

MAV Beauty Brands will host a conference call to discuss its Fiscal 2021 first quarter financial results at 8:30 a.m. EDT on May 10, 2021. To participate in the call, dial [phone] or [phone] using the conference ID 63048611. The audio webcast can be accessed at investors.mavbeautybrands.com. Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected.

About MAV Beauty Brands (TSX:MAV)

MAV Beauty Brands is a global personal care platform focused on acquiring great independent brands and helping these brands to scale and win market share. We have built an operating platform to build brands through expanded distribution, innovation, and marketing. Today, we have a diversified portfolio of four complementary personal care brands – Marc Anthony, Renpure, Cake Beauty and The Mane Choice – offering premium quality hair care, body care and beauty products. These products are sold in over 25 countries around the world and in more than 100 of the world's largest retailers.

Non-IFRS Measures 

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures 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 those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures including "Adjusted Earnings Per Share (diluted)", "Adjusted EBITDA", "Adjusted Free Cash Flow", "Adjusted Net Income", "EBITDA", and "Free Cash Flow". These non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation. Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our Management's Discussion and Analysis. Such reconciliations can also be found in this press release under the headings "Q1 2021 Compared to Q1 2020".

"Adjusted Earnings Per Share (Diluted)" is computed similarly to basic earnings per share except that the weighted average number of shares outstanding is increased to include additional shares for the assumed conversion of preference shares, proportionate voting shares, and exchangeable shares and exercise of stock options, if dilutive. The average number of shares is calculated by assuming that outstanding conversions were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting period.

"Adjusted EBITDA" represents, for the applicable period, EBITDA before certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii) purchase accounting adjustments; (iii) share-based compensation; and (iv) unrealized foreign exchange (gain) loss.

"Adjusted Free Cash Flow" is calculated as free cash flow adjusted to add back acquisition related costs which are included in cash provided by operating activities. We believe Adjusted free cash flow is a useful measure to assess the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares. It also facilitates period-to-period comparisons.

"Adjusted Net Income" represents, for the applicable period, net income (loss) as adjusted to add back or deduct, as applicable, certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii)  purchase accounting adjustments; (iii) share-based compensation; (iv) unrealized foreign exchange loss (gain); and (v) tax impacts of the aforementioned adjustments (based on annual effective tax rate).

"EBITDA" represents net income (loss) for the period before: (i) income tax expense (recovery); (ii) interest and accretion; and (iii) amortization and depreciation.

''Free Cash Flow'' represents, for the applicable period, cash provided by operating activities less cash used to purchase property and equipment. Free cash flow is a key metric that measures the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares.

Forward-Looking Information
Certain information in this press release, including trends and expectations regarding sales in  2021, statements regarding the 2021 operating environment, expectations regarding the Company's growth, and ongoing factors related to the COVID-19 pandemic that may affect the performance of the Company, , constitutes forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by MAV Beauty Brands as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the "Risk Factors" section of the Company's Annual Information Form dated  March 30, 2021 for the year ended December 31, 2020 and the Company's other periodic filings made available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect MAV Beauty Brands; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and MAV Beauty Brands expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.    

Q1 2021 Compared to Q1 2020

(in thousands of US dollars) (unaudited)		Q1 2021			Q1 2020			$ Change			% Change
Consolidated statements of operations:
Revenue			28,642			31,382			(2,740)			(8.7%)
Cost of sales			15,046			16,988			(1,942)			(11.4%)
Gross profit			13,596			14,394			(798)			(5.5%)
Expenses
Selling and administrative			7,365			8,291			(926)			(11.2%)
Amortization and depreciation			1,079			1,029			50			4.9%
Interest and accretion			1,778			2,042			(264)			(12.9%)
Foreign exchange loss (gain)			133			(471)			604			nmf
Integration, restructuring, and other			1,067			1,460			(393)			(26.9%)
			11,422			12,351			(929)			(7.5%)
Income before income taxes			2,174			2,043			131			6.4%
Income tax expense
Current			73			84			(11)			(13.1%)
Deferred			526			724			(198)			(27.3%)
			599			808			(209)			(25.9%)
Net income for the period			1,575			1,235			340			27.5%
EBITDA ^(1)			5,031			5,114			(83)			(1.6%)
Adjusted EBITDA ^(1)			6,433			8,314			(1,881)			(22.6%)
Adjusted Net Income ^(1)			2,619			3,619			(1,000)			(27.6%)

^(1)	See "Non-IFRS Measures".

(in thousands of US dollars) (unaudited)		Q1 2021				Q1 2020
Consolidated net income:			1,575				1,235
Income tax expense			599				808
Interest and accretion			1,778				2,042
Amortization and deprecation			1,079				1,029
EBITDA			5,031				5,114
Integration, restructuring, and other	(1)		1,067				1,460
Purchase accounting adjustments	(2)		—				1,657
Share-based compensation	(3)		303				629
Unrealized foreign exchange loss (gain)			32				(546)
Adjusted EBITDA			6,433				8,314

(in thousands of US dollars) (unaudited)		Q1 2021				Q1 2020
Consolidated net income:			1,575				1,235
Integration, restructuring, and other	(1)		1,067				1,460
Purchase accounting adjustments	(2)		—				1,657
Share-based compensation	(3)		303				629
Unrealized foreign exchange loss (gain)			32				(546)
Tax impact of the above adjustments			(358)				(816)
Adjusted Net Income			2,619				3,619

Note:
	(1)	Refer to Note 9 to the unaudited condensed consolidated interim financial statements for further details.
	(2)	In conjunction with the 2019 Acquisition, the fair value adjustment of inventory as part of the initial purchase price allocation was expensed to cost of sales as the inventories were sold.
	(3)	Represents recognition of share-based payments, which have been accounted for as selling and administrative expenses.

(in thousands of US dollars) (unaudited)		Q1 2021			Q1 2020
Cash provided by operating activities			1,745			(2,647)
Less: purchase of property and equipment			(110)			(278)
Free cash flow and adjusted free cash flow			1,635			(2,925)

^(1)	See "Non-IFRS Measures".

SOURCE MAV Beauty Brands

Craig Armitage, Investor Relations, [email protected], [phone]

Related Links

http://www.mavbeautybrands.com/