MONTREAL, Quebec – GURU Organic Energy Corp., Canada’s leading organic energy drink brand, is pleased to announce its results for the first quarter ended January 31, 2022. All amounts are in Canadian dollars unless otherwise indicated.
“In the first quarter, we posted a record Q1 top line performance, while continuing to build our partnership with our exclusive distributor in Canada and working actively on the execution of our ambitious, long-term pan-Canadian growth strategy aimed at driving brand awareness and trial throughout 2022,” said Carl Goyette, President and CEO of GURU. “Our strong Q1 results were mainly driven by the increase in new doors obtained with the help of our exclusive partner and its vast distribution network, which allowed us to increase sales volume by 22% in the first quarter.”
“After a strong fall back-to-university campaign in key Canadian markets, which generated solid brand awareness results in Q4 2021, we moderated our marketing activations during Q1 and the first half of Q2 in the context of increased lockdown restrictions across Canada due to the Omicron variant. Now that those sanitary restrictions have been lifted, we are in full execution mode in the roll-out of our targeted marketing campaigns, including the national launch of our latest innovation, GURU Guayusa Tropical Punch, across Canada. With our growing point-of-sale base, strong financial position, increasing brand awareness in Canada and strong partners, we are in an excellent position to increase brand awareness over time and reach new GURU consumers.”
“In the U.S., we are continuing to show improved results quarter over quarter, with increased gains of doors in leading and specialty grocery, drug, natural and independent retail chains. We are strengthening our direct to store delivery (or DSD) network in the Western U.S. market by partnering with leading regional players, enabling us to significantly increase our points of sale, particularly in California. In the coming quarters, we will continue to be methodical in the execution of our U.S. growth strategy, by favouring this distribution strategy and focusing our sales efforts in California, the state with the highest population of natural product consumers in the country,” concluded Mr. Goyette.
Results of operations
Net revenue in the first quarter increased by 5% to $7.0 million, compared to $6.6 million for the same period a year ago. The increase is reflected by sales growth in Canada and the U.S. driven by a 22% increase in volume overall as a result of higher velocities and increased points of sale, partially offset by the cost of the new exclusive Canadian distribution agreement. Sales in Canada grew by 5% compared to the same period last year, reflecting the change in the Company’s business model in Canada as a result of the new exclusive Canadian distribution agreement launched on October 4, 2021. U.S. sales grew by 9% in U.S. dollars, or 7% in Canadian dollars, during Q1 2022, compared to the same period last year. According to SPINS4, which measures U.S. retail sales of GURU energy drinks, GURU experienced 27% growth nationally in Q1 2022 versus Q1 2021, and 49% growth in California for the same period, showing continued strength in the U.S. market.
Gross profit totalled $3.8 million, compared to $4.1 million in Q1 2021. Gross margin was 55%, compared to 62% for the same period a year ago. The decrease in gross margin was mainly due to a change in the Company’s business model for the Canadian market since Q4 2021 as a result of the new exclusive Canadian distribution agreement, which became effective on October 4, 2021, and comprises distribution, selling and merchandizing fees (a portion of which was previously categorized as SG&A expenses) and a one-time set-up cost. The lower gross margin was also slightly impacted by rising product costs driven by higher input and transportation costs since the onset of the COVID-19 pandemic.
Selling, general and administrative expenses (“SG&A”), which include operational, sales, marketing, and administration costs amounted to $7.1 million in the first quarter, compared to SG&A of $4.7 million for the same period a year ago. Selling and marketing expenses accounted for $2.0 million of the increase in SG&A as the Company invested in targeted sales and marketing campaigns during the quarter, notably the fall Quebec marketing campaign with ‘Occupation Double’ that ended in December 2021, which was more extensive in fiscal 2021 than in 2020, the start of partnerships with ski resorts as well as continued field and trade marketing investments in Ontario, Western and Atlantic Canada. However, due to COVID-19 Omicron variant restrictions and lockdowns, the Company moderated its marketing activities during the quarter.
Adjusted EBITDA3 amounted to $(3.0) million compared to $(0.4) million last year. The decrease in adjusted EBITDA was mainly due to higher selling and marketing expenses, and to a lesser extent to lower gross margins.
Net loss for the first quarter totalled $3.2 million or $(0.10) per share (basic and diluted), compared to a net loss of $0.6 million or $(0.02) per share (basic and diluted) for the same period a year ago. The increase in net loss reflects the lower margins and the additional costs associated with brand, field and trade marketing activities.
As of January 31, 2022, the Company had cash and cash equivalents of $61.7 million and unused $CA and $US denominated credit facilities totalling $10 million.
1 Nielsen Last 52 weeks, period ending January 22, 2022 – All Channels, Canada
2 Nielsen Last 12 weeks, period ending February 26, 2022 – Convenience and Gas (C&G) channel, Quebec
3 Please refer to the “Non-GAAP financial measure” section for additional information on reconciliation of net loss to adjusted EBITDA at the end of this release.
4 SPINS IRI data, Total Multi-Outlet (MULO) and Natural channels, period ending January 31, 2022.
About GURU
GURU Organic Energy Corp. is a dynamic, fast-growing beverage company launched in 1999, when it pioneered the world’s first natural, plant-based energy drink. The Company markets organic energy drinks in Canada and the United States through an estimated distribution network of over 25,000 points of sale, and through guruenergy.com and Amazon. GURU has built an inspiring brand with a clean list of organic plant-based ingredients. Its drinks offer consumers good energy that never comes at the expense of their health. The Company is committed to achieving its mission of cleaning the energy drink industry in Canada and the United States.
For More Information:
https://www.guruenergy.com