Good natured Products Inc. Announces Quarterly Financial Results

For Q2 2022, the Company delivered another quarter of positive adjusted EBITDA1 coupled with strong growth in revenues. Gross margins remained in the targeted range despite continued inflationary pressure, while growth in revenue and gross profit outpaced increases in operating expenses.

Revenue in Q2 2022 grew on a year-over-year basis by 106% to $25.5 million, driven by strong organic growth, increases in average selling price per unit and contribution from strategic acquisitions. The Company’s active business-to-business (“B2B”) customer accounts grew to over 1,400 as at June 30, 2022.

“I remain incredibly proud of our team’s unwavering commitment to serving our customers while navigating challenging market conditions and inflationary pressures over the last few quarters. We’ve delivered another solid quarter of growth by focusing on strong execution and leveraging our investments in production capability, like with our recent acquisition of FormTex Plastics in Houston,” stated Paul Antoniadis, CEO of good natured®. “In future quarters, you’ll continue to see our commitment to strong execution and productivity improvements that are laying the foundation to profitably scale our business and the associated positive environmental impact that comes with our growth.”

Key Highlights

Revenues for Q2 2022 increased 106% to $25.5 million compared to $12.4 million for the three months ended June 30, 2021 (“Q2 2021”). H1 2022 revenues increased 154% to $51.5 million compared to $20.3 million for the six-month period ended June 30, 2021 (“H1 2021”).

Variable gross profit1 for Q2 2022 increased 97% to $8.5 million, representing a variable gross margin1 of 33.1%, compared to $4.3 million and 34.7% for Q2 2021. Variable gross profit for H1 2022 increased 122% to $16.7 million, 32.4% of sales, compared to $7.5 million, 37.1% of sales, in H1 2021.

Gross profit for Q2 2022 increased 92% to $6.7 million representing a gross margin of 26.4%, compared to $3.5 million and 28.3% respectively for Q2 2021. Gross profit for H1 2022 increased 113% to $13.4 million, 26.0% of sales, compared to $6.3 million, 31.1% of sales, in H1 2021.

Selling, general and administrative (“SG&A”) expenses, excluding acquisition activity and one-time charges,1 for Q2 2022 and H1 2022 were $4.0 million and $7.5 million compared to $2.2 million and $3.8 million for Q2 2021 and H1 2021. As a percent of sales, SG&A expenses, excluding acquisition activity and one-time charges,1 declined to 16% for Q2 2022 and 15% for H1 2022 compared to 18% in Q2 2021 and 19% in H1 2021.

SG&A expenses for Q2 2022 and H1 2022, including acquisition activity and one-time charges, were $4.6 million and $8.4 million compared to $3.2 million and $4.9 million for Q2 2021 and H1 2021. As a percent of sales, SG&A expenses declined to 18% for Q2 2022 and 16% for H1 2022 compared to 26% in Q2 2021 and 24% in H1 2021.

The Company’s adjusted EBITDA1 for Q2 2022 and H1 2022 was $1.0 million and $2.2 million respectively, compared to a loss of $0.2 million for Q2 2021 and break-even for H1 2021.

In Q2 2022, the Company incurred a net loss of $3.0 million compared to a net loss of $3.7 million in Q2 2021. Net loss for H1 2022 was $4.6 million compared to a net loss of $5.6 million in H1 2021.

Subsequent to quarter end, on August 26, 2022, the Company announced that it had completed a senior secured revolving credit facility with Wells Fargo Bank, N.A., through its wholly owned subsidiary Well Fargo Capital Finance Corporation Canada, of up to USD $55 million and closed a $6.6 million mortgage financing with Business Development Bank of Canada. Further details regarding these announcements can be found in the Company’s press release dated August 26, 2022.