Greenspace Brands Inc. reports fiscal 2022 results

GreenSpace Brands Inc, announces that it has filed its annual audited Consolidated Financial Statements for the year ended March 31, 2022, its related Management Discussion and Analysis and its Chief Executive Officer and Chief Financial Officer certifications.

SUMMARY RESULTS OF FISCAL 2022:
Gross Revenue from continuing operations was $18.3 million, representing a (37.8%) decrease compared to the same prior-year period

1 This year-over-year decline is largely attributable to: i) the decision by certain customers, primarily during the prior fiscal year, to stop doing business with the Company or to reduce their product assortment due to poor customer service levels at that time, resulting from the Company’s then working capital constraints. With improvements in customer service levels, some of these customers have chosen to relist certain products and the Company will continue to seek to expand its customer base amongst former and new customers; and ii) the portfolio simplification initiated as part of the Project FIT initiative, which has reduced active stock keeping units (“SKUs”) across the business by approximately 69%.

Gross Profit Percentage increased 4.1 percentage points to 17.0% compared to 12.9% in the prior year1, largely attributable to better net pricing and mix, driven in part by price increases, reduced listing fees and the prioritization of higher-margin items within the portfolio. Although the gross profit percentage improved in the year ended March 31, 2022, the extent of the improvement fell short of management’s expectations largely due to higher clearance costs on aged inventories. With the simplification of its operating model and improved forecasting and replenishment disciplines firmly embedded across the organization, Management expects to reduce aged inventory clearance costs, which is expected to drive gross profit percentage improvements in the coming year.

Selling, General and Administrative (“SG&A”) expenses of $6.6 million improved by 43.0% or $5.1 million compared to $11.7 million in the prior year1 with significant reductions in general and administrative expenses, salaries and benefits, storage and delivery expenses and professional fees. These improvements reflect the Company’s progress on significantly reducing SG&A expenses as it executes its Project FIT initiatives.

Net Loss of ($10.2) million, compared with ($20.8) million in the prior year1, primarily reflects significantly reduced SG&A expenses (by $5.1 million), lower non-cash impairment charges (by $6.2 million) and a restructuring gain (of $0.6 million) partially offset by increased interest and accretion expense (by $0.6 million) and lower foreign exchange gains (by $0.7 million).

Adjusted EBITDA of ($3.8) million was improved 41.1% or $2.6 million compared to the prior year1, reflecting the matters described above.

__________________________________________
1.
Twelve-month period ended March 31, 2022 compared to the twelve-month period ending March 31, 2021.

“This past year we have been implementing our new Focused Growth Strategy across the business and heightening our drive towards profitable growth,” said Shawn Warren, President and CEO of GreenSpace Brands Inc.  “We are seeing encouraging progress with stronger service levels, broader retailer support, new distribution wins with large retailers and continued momentum from Project FIT cost savings initiatives.  Better inventory levels are supporting our efforts to improve pricing, build consumption with customer promotions, expand margin-accretive innovations and accelerate our route-to-market excellence initiatives.  To address inflationary pressures across our industry, we have announced a series of additional pricing actions to retail and foodservice customers.  Overall, Management is optimistic that Fiscal 2023 will see continued adjusted EBITDA improvements with improved topline growth and better gross profit percentages.”

OUTLOOK:
Management believes that its new Vision, Strategic Plan and implementation of its Focused Growth Strategy will lead to improvements in adjusted EBITDA that will continue into subsequent years.  The Company has improved customer service levels across all three of its branded businesses, leading to the resumption of widespread promotional activities with select retailers. The Company has been able to regain distribution with certain strategic customers and has been able to make inroads into launching margin-accretive new products and new channel growth across e-commerce platforms.  Aligned with its Focused Growth Strategy, Management has prioritized improvements in gross profit percentage and overall profitability through better product mix, price increases and enhanced cost management at all levels.

GreenSpace has been able to rebuild 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 previous two years, Management expects that the foundational elements have been established to deliver improvements in both topline performance and profitability.  Management believes that the continued implementation of its Focused Growth Strategy will drive improvements in the operation over time and remains optimistic that this initiative will improve adjusted EBITDA to help finance the future growth opportunities available to the Company.