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THE VERY GOOD FOOD COMPANY REPORTS SECOND QUARTER 2022 FINANCIAL RESULTS
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PR Newswire
VANCOUVER, BC, Aug. 15, 2022
Q2 2022 Wholesale Revenue Increased 117% Compared to Q2 2021
Q2 2022 General and Administrative Expense Decreased 57% Compared to Q2 2021
CEO Parimal Rana Provides Update on VERY GOOD's Refocused Strategy
VANCOUVER, BC , Aug. 15, 2022 /PRNewswire/ - The Very Good Food Company Inc. (NASDAQ: VGFC) (TSXV: VERY) (FSE: OSI) ("VERY GOOD" or the "Company"), a leading plant-based food technology company, today reported its financial results for the second quarter ended June 30, 2022.
Financial Highlights
- Revenue decreased $1,279,215 or 46% to $1,501,446 in Q2 2022, compared to $2,780,681 in the same period in 2021. The decrease in revenue was driven by a decrease of $1,825,436 in eCommerce sales, offset by an increase of $523,223 in wholesale revenue.
- Wholesale revenue increased 117% to $987,278 in Q2 2022 as compared to the same quarter last year due to an increase in the number of stores and distribution points as well as increased unit velocities on core and new items.
- eCommerce revenue decreased 83% to $380,967 in Q2 2022 as compared to the same period last year due to the Company's strategic decision to limit its eCommerce sales due to high digital marketing costs to acquire new customers, lowered production and headcount at some locations to manage inventory levels. VERY GOOD is focusing on its wholesale and foodservice channels and is evaluating potential exit plans for its eCommerce business.
- General and administrative expense ("G&A expense") decreased $3,899,256 or 57% to $2,935,624 in Q2 2022 compared to $6,834,880 in Q2 2021. Excluding share-based compensation and depreciation expense, adjusted general and administrative expense decreased $1,563,585 or 28% to $4,038,034 in Q2 2022 compared to $5,601,619 in Q1 2022. The decrease in adjusted general and administrative expense was primarily driven by a decrease in salaries and wages.
- Adjusted general and administrative expense ("Adjusted G&A Expense")1 increased $1,829,479 or 183% to $4,038,034 in Q2 2022, compared to $2,208,555 in Q2 2021. The increase in adjusted general and administrative expense was primarily driven by increased legal and professional fees of $1,036,165, increased insurance fees of $659,708 due to increases in director and officer insurance as a result of the Company's Nasdaq listing, increased wages and benefits of $616,539 due to higher head count and offset by a decrease in recruitment fees of $139,543.
- Net loss decreased 46% to $(6,699,130) in Q2 2022 compared to $(12,500,733) in Q2 2021.
- Adjusted EBITDA2 was a loss of $(7,028,270) in Q2 2022 compared to $(5,673,109) in Q2 2021, and $(9,991,892) in Q1 2022.
| __________________________________ 1 Adjusted general and administrative expense is a Non-IFRS measure calculated as total general and administrative expense less share-based compensation and depreciation. |
| 2 Management defines adjusted EBITDA as net loss before finance expense, tax, depreciation and amortization, share-based compensation, and other non-cash items, including impairment of goodwill, loss on disposal of equipment, loss on termination of leases, and shares, units and warrants issued for services. |
Cash and Liquidity Update
As of June 30, 2022, the Company had cash and cash equivalents of $6,156,414, a reduction of $15,819,239 from $21,975,653 as of December 31, 2021. This decrease is primarily related to the Company's greater than expected cash burn during the quarter. As of the date of this MD&A, the Company's cash balance is approximately $3.2 million to settle current accounts payable and accrued liabilities of approximately $4.3 million. The Company will need to seek additional financing by the end of September to fulfil its outstanding obligations and fund ongoing operations and will be required to obtain subsequent financings in future periods. To address its lack of necessary liquidity, the Company has reduced its cash outflow related to paying trade payables while it evaluates its financing options. The Company is also continually evaluating other alternatives of generating cash in the short term such as disposing of non-core equipment and certain raw material inventory to extend the current cash runway. There can be no assurance that disposing of non-core equipment and certain raw material inventory will be successful. While there is no assurance on the availability of the Company's future financings, on acceptable terms, or at all, the Company currently believes that it will be able to raise capital through financing in the near term to fund operations as it continues to implement its new refocused strategy.
Q2 2022 Operational and Corporate Strategy Update
As of August 15, 2022, the Company has ceased regular operations at the Victoria Facility, Fairview Facility, and Patterson Facility and consolidated operations into the Rupert Facility. The Company closed the Victoria Flagship Store in June 2022 and has terminated the lease for the planned location of the Mount Pleasant Flagship Store. The Company made these decisions in an effort to improve production efficiencies and reduce overhead.
During the six-month period ended June 30, 2022, VERY GOOD made the strategic shift to focus on sustainable growth and a path to profitability as opposed to solely focusing on top line growth. As part of this shift, VERY GOOD decided to limit its eCommerce sales due to high digital marketing costs to acquire new customers, lowered production, and headcount at some locations to manage inventory levels, implemented initiatives such as pausing non-critical capital expenditures and lowering general and administrative expenses.
VERY GOOD has reduced its work force to core management teams with plant staff and overall head count has decreased to approximately 100 from 260 during first half of 2022 as a result of both terminations and employee resignations. The Company has granted stock options as a retention tool to help reduce employee turnover. The Company will continue to review its departments to find efficiencies and will manage inventory levels to only purchase essential raw materials.
VERY GOOD intends to continue to focus on the wholesale and food service channels, particularly in the United States, which it views as critical to realizing its vision to scale the Company.
On June 2, 2022, VERY GOOD closed a private placement offering with an institutional investor for gross proceeds of $8,184,762 (US$6,500,000) consisting of 13,100,000 common shares, 19,400,000 common share equivalents, and 32,500,000 share purchase warrants. In connection with the offering, the Company incurred share issuance costs of $936,659.
On June 23, 2022, VERY GOOD increased U.S. retail expansion via a new agreement with superstore chain Meijer Inc. (Meijer). With 262 supercenters and grocery stores throughout Michigan, Illinois, Indiana, Ohio, and Wisconsin, Meijer's robust Midwest presence represents significant progress towards VERY GOOD's objective to extend its brand and offer products in every major city across the United States.
On July 7, 2022, VERY GOOD increased U.S. retail expansion via a new agreement with The Giant Company ("Giant"). With Giant's presence throughout Pennsylvania, Maryland, Virginia, and West Virginia as well as online shopping and delivery to New Jersey, this retail distribution significantly expands VERY GOOD'S product availability on the U.S. Eastern Seaboard.
On July 27, 2022, VERY GOOD announced further expansion into the Eastern U.S. retail environment with Weis Markets, Inc. ("Weis"). Weis owns and operates 196 supermarkets throughout Pennsylvania, Delaware, Maryland, New York, New Jersey, Virginia, and West Virginia and also offers online shopping and delivery to Pennsylvania. This additional retail distribution further extends VERY GOOD's product availability in the United States.
On August 15, 2022, VERY GOOD announced that the Company was awarded the Food Network Supermarket Award for our A Cut Above Pork in the "Most Noteworthy Vegan Newcomers" category.
Management Changes
On July 4, 2022, VERY GOOD announced that as part of its succession plan, Matthew Hall has stepped down as interim Co-Chief Executive Officer and as a director of the Company but will continue to support VERY GOOD in an advisory capacity. Parimal Rana, a seasoned food industry professional who had been serving as VERY GOOD's Vice President of Operations, assumed the role of Chief Executive Officer ("CEO") and joined VERY GOOD's board of directors ("Board").
On July 12, 2022, VERY GOOD announced the appointment of a new Chief Financial Officer ("CFO"), Pratik Patel, CPA, CGA. Pratik commenced employment as CFO of VERY GOOD on July 25, 2022. He has over fifteen years of experience as a senior accounting and finance professional, with expertise in integration and external report.
Effective August 19, 2022, Kevin Callaghan, Vice President of Sales – North America of VERY GOOD will be resigning from his position. With its existing sales team including Michael Hoeksema, Director of Foodservice Sales, VERY GOOD believes it is still well positioned to continue its planned market advancements in the immediate term – with potential augmentations or additions to the sales team as needed. VERY GOOD wishes Kevin the best in his future endeavors.
Nasdaq Listing Notification
On January 11, 2022, VERY GOOD received notification from the Listing Qualifications Department of Nasdaq that, for the previous 30 consecutive business days, the bid price of the Common Shares had closed below the minimum US$1.00 per share requirement for continued inclusion on the Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Rule"). On July 11, 2022, VERY GOOD was granted an additional 180-day period from Nasdaq's Listing Qualification Department or until January 9, 2023, to regain compliance with the minimum US$1 bid price requirement for continued listing on The Nasdaq Capital Market. The Nasdaq notification has no immediate effect on the listing of the Common Shares. VERY GOOD is also listed on the TSXV and the notification does not affect the Company's compliance status with such listing. Nasdaq informed VERY GOOD in the July 11 notification, that if compliance cannot be demonstrated by January 9, 2023, Nasdaq will provide written notification that VERY GOOD's securities will be delisted – at which time, the Company may appeal Staff's determination to a Hearings Panel (the "Panel").
Nasdaq's determination of VERY GOOD'S eligibility for an additional 180 calendar day period during which the Company can regain compliance, was based on VERY GOOD meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Capital Market with the exception of the bid price requirement, and the Company's written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.
Refocused Strategy
The Company continues to implement its three-prong approach to (1) Stabilize, (2) Right-Size, and (3) Optimize, first announced in May 2022. The Board and its strategic advisors are focused on the stabilization prong and the management team, led by the CEO Parimal Rana, are executing to Right-Size and Optimize. The Right-Sizing efforts have mostly been completed with the closure of the restaurant operations and consolidation of production facilities into the Rupert Facility. With the re-focusing of sales away from eCommerce and toward wholesale and food service the Company is also reviewing strategic private label and co-manufacturing opportunities to fill excess production capacity and increase revenue.
The Company's long-term strategy is anticipated to continue to center around establishing and maintaining strong relationships with its customers through differentiated products, categories and channels that build our commitment to long-term profitable growth
CEO Parimal Rana commented on VERY GOOD's second quarter results and the current state of the organization. "In Q2 2022 We made notable progress toward our initiative to stabilize, right-size and optimize the business. We recognize that the hard work is not over, and we are still completely focused on forging a path toward profitability and growth by leveraging our track record of innovation and our clean, plant-based products that are well received by vegan as well as flexitarian consumers. It's never easy to report a sequentially down quarter, but the growth we are seeing in wholesale revenue, as well as some of our more recent wins are encouraging validation of our new strategic initiative to focus on the wholesale and foodservice channels. We are positioning ourselves to be on the leading edge of the plant-based-foods market recovery and future growth opportunity."
The management's discussion and analysis for the period and the accompanying financial statements and notes will be available under the Company's profile on SEDAR at www.sedar.com and will be furnished on a Report on Form 6-K on EDGAR at www.sec.gov.
Q2 2022 Conference Call Details
VERY GOOD will host a conference call on Tuesday, August 16, 2022, at 5:00 pm Eastern Time/ 2:00 pm Pacific Time to discuss its financial results and business outlook.
Participant Dial-In Numbers:
Toll-Free: 1-877-425-9470
Toll / International: 1-201-389-0878
* Participants should request The Very Good Food Company Second Quarter Earnings Call.
The call will be available via webcast on VERY GOOD's investor page of the Company website at https://investor.theverygoodfood.co/ until September 16, 2022.
Financial Highlights
| | Three months June 30, | Three months March 31, | Three months June 30, | Six months ended June 30, | Six months ended June 30, |
| | 2022 | 2022 | 2021 | 2022 | 2021 |
| Revenue by channel | | | | | |
| eCommerce | $ 380,967 | $ 1,081,360 | $ 2,206,403 | $ 1,462,327 | $ 4,391,497 |
| Wholesale | 987,278 | 772,919 | 455,055 | 1,760,197 | 800,960 |
| Butcher Shop, Restaurant and Other | 133,201 | 164,065 | 119,223 | 297,266 | 231,307 |
| | $ 1,501,446 | $ 2,018,344 | $ 2,780,681 | $ 3,519,790 | $ 5,423,764 |
| Net loss | $(6,699,130) | $(9,573,309) | $(12,500,733) | $(16,272,439) | $(27,529,309) |
| Adjusted EBITDA net loss1 | $(6,828,270) | $(9,991,892) | $(5,673,109) | $(16,820,162) | $(11,065,045) |
| Loss per share – basic and diluted | $ (0.05) | $ (0.08) | $ (0.13) | $ (0.14) Werbung Mehr Nachrichten zur Vericity Aktie kostenlos abonnieren
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