GreenSpace Brands Inc. announced that it has filed its Condensed Consolidated Interim Financial Statements for the three-month period ended June 30, 2021

SUMMARY RESULTS OF QUARTER ONE FISCAL 2022:

Gross Revenue from continuing operations was $5.1 million, an 8% improvement versus the prior reported quarter ending March 31, 2021, representing the first quarter of sequential revenue growth in the past year1.  This growth is a result of improving inventory levels and better customer service throughout the quarter, but particularly in the second half of the quarter.  While revenue increased versus the previous quarter, revenue decreased versus the same quarter in the prior year.

The first quarter of fiscal 2021 had the highest revenues for any quarter in the year ended March 31, 2021. Working capital constraints in subsequent quarters impeded the Company’s ability to effectively service customers’ demand.  Revenue was also negatively impacted by portfolio simplification which was initiated as part of the previously announced Project FIT initiative that will reduce active stock keeping units (“SKUs”) across the business by approximately 60% this year.  While this initiative to reduce SKUs may result in some revenue softness in the short term, this effort will enable the Company to focus on its best-selling SKUs, ultimately increasing revenue while improving gross margins, lowering inventory holding costs and reducing waste. In addition, the suspension or de-prioritization of certain private label businesses in the United States and Canada resulted in lower revenues compared to the prior year.  These private label businesses added complexity and distracted resources from building the Company’s core brands.
Gross Profit Percentage increased to 23.6%, up from 21.7% in the prior year2, primarily due to: (i) lower listing fees as the Company focused on improving inventory levels on its core product portfolio; and (ii) price increase impacts starting in the later part of the quarter.  It is important to note that the impact of price increases announced to customers were modest in this three-month period and are expected to be stronger contributors to gross profit percentage improvement in subsequent quarters.   Gross profit percentage also increased substantially when compared to the quarter ended March 31, 2021.
Net Loss of $0.3 million was improved compared to a net loss of $0.9 million in the prior year2 with the impact of higher gross profit percentage, significantly lower General and Administrative costs, lower Storage and Delivery costs and lower Salaries and Benefits offsetting lower Revenue compared to the prior year.  Restructuring gains from the successful transition of the CENTRAL ROAST production model helped to fully offset foreign exchange gains reported in the prior year.

1   Quarter 1 2022 compared to Quarter 4 2021

2   Quarter 1 2022 compared to Quarter 1 2021

“Since April, we have made solid progress on embedding our new Focused Growth Strategy across all aspects of the business and heightening our drive towards profitable growth,” said Shawn Warren, President and CEO of GreenSpace Brands Inc.  “This quarter started to show encouraging progress on our transformation agenda. Project FIT cost savings efforts are progressing, in particular with the successful restructuring of the CENTRAL ROAST production model during the quarter that will yield ongoing benefits.  Revenue momentum is expected to improve as we move through the fiscal year with better inventory positions aiding our efforts to improve pricing, build consumption with wide-spread customer promotions, launch margin-accretive innovations and accelerate our channel expansion and route to market excellence initiatives.”

OUTLOOK:
Management believes that its new Vision, Strategic Plan and implementation of its Focused Growth Strategy will lead to significant improvements in adjusted EBITDA starting in the second half of the year ending March 31, 2022 and continuing into subsequent years.

Management is rebuilding required levels of inventory and improving customer service across all three of its branded businesses. Considerable progress has already been made, leading to the resumption of promotional activities with retailers which is expected to improve revenue as the year progresses.  In the current fiscal quarter, the Company has been able to regain distribution with certain strategic customers and has been able to accelerate its new channel growth across e-commerce platforms. Aligned with its Focused Growth Strategy, Management has prioritized improvements in gross profit and overall profitability through better product mix, price increases and enhanced cost management.

GreenSpace has been able to begin rebuilding credibility with its supplier base and renegotiate payment terms with a number of key suppliers across its ingredient and manufacturing network.  While rebuilding customer revenue momentum may take time after the working capital challenges of the two years just ended, Management expects that the foundational elements have been established to deliver improvements in both topline performance and profitability improvements, particularly moving into the second half of the current fiscal year.   Additional restructuring costs aligned with the Project FIT initiative are expected to come in the current fiscal quarter, which Management believes will lower fixed costs going into the second half of the current fiscal year and beyond.  Management believes that the rapid implementation of its Focused Growth Strategy will drive improvements in the operation over time, produce positive adjusted EBITDA and free cash flow to help finance the future growth opportunities available to the Company.