MONTRÉAL, Québec— GURU Organic Energy Corp. (TSX: GURU) (“GURU” or the “Company”), Canada’s leading organic energy drink brand1, announced its results for the fourth quarter and fiscal year ended October 31, 2023. All amounts are in Canadian dollars unless otherwise indicated.
Financial Highlights (in thousands of dollars, except per share data) | Three months ended October 31
| Twelve months ended October 31 | ||
| 2023 | 2022 | 2023 | 2022 |
| $ | $ | $ | $ |
Net revenue | 7,687 | 6,783 | 29,288 | 29,081 |
Gross profit | 4,106 | 3,533 | 15,437 | 15,693 |
Net loss | (3,686) | (3,871) | (11,962) | (17,565) |
Basic and diluted loss per share | (0.12) | (0.12) | (0.38) | (0.54) |
Adjusted EBITDA3 | (3,836) | (3,958) | (11,898) | (17,212) |
“Since the end of our transition period with our exclusive Canadian distributor in Q1, we have seen some solid progress in all sales channels, namely retail, club wholesale and online, in Canada and the US. This progress stems from our strategic investments to increase brand awareness and fine-tuning our approach to reach our target audiences more effectively and efficiently. We also made significant strides in fulfilling our commitment to return to profitability by reducing our net loss by $5.6 million from $17.6 million in fiscal 2022 to $12.0 million in fiscal 2023. This commitment continues to be a strategic priority going forward,” said Carl Goyette, President and CEO of GURU.
“This year’s performance was led by our two latest innovations, Fruit Punch and Tropical Punch, which ranked as the #1 innovation in Quebec in 2023 and 2022, respectively. We plan to build on this success with two new innovative energy drinks. Peach Mango Punch, a new addition to our very popular punch line, launched in January in the US on Amazon.com and is scheduled to be launched in Canada in the spring. A second innovation will be introduced in Quebec during the same period.”
“Q4 was another strong quarter with notable wins, including GURU’s ascent to become the 4th largest energy drink in British Columbia. We also added three rotational programs with a leading club wholesaler in Quebec in 2023 and in the US in early 2024 and achieved record online sales during Amazon’s Prime Day, Black Friday and Cyber Monday events. We firmly believe that these wins have the potential to generate even more business opportunities in 2024, especially with our exciting new product launches.“
“Looking ahead, we are very enthusiastic about the future. We will continue to focus on our three main sales channels, while we work towards our goal of efficient growth and a return to profitability. With a world-class partner, an authentic brand and a strong balance sheet, we are in a solid position to pursue our growth strategy and self-fund our marketing efforts to become the leading “better-for-you” energy drink in Canada and the US,” concluded Mr. Goyette.
Results of operations
Net revenue increased by 13% to $7.7 million in Q4 2023, compared to $6.8 million for the same quarter a year ago. The growth was driven by increased sales velocities in Canada and stronger revenue in the US in both the retail and online channels. In Canada, sales increased by 3% to $6.4 million from $6.2 million in Q4 2022. US sales grew by over 121% to $1.3 million from $0.6 million in Q4 2022, mainly due to continued online sales optimization. Excluding the one-time price discount of US$0.4 million to a club wholesaler in Q4 2022, US sales grew by 15% in Q4 2023. For fiscal 2023, net revenue grew to $29.3 million from $29.1 million a year ago, mainly due to stronger online sales in Canada and the US, offset by a reduction in inventory on hand by the Company’s exclusive Canadian distributor in Q1 2023, which had a negative impact of over $1.5 million on net revenue in fiscal 2023. The Company generated post-transition average net revenue growth of 12% for the last three quarters in Canada, showing positive sales momentum.
Gross profit totalled $4.1 million, compared to $3.5 million in Q4 2022. Gross margin, which is comprised of distribution, selling and merchandising fees, amounted to 53.4% in Q4 2023, compared to 52.1% for the same period a year ago. The improvement in gross margin was mainly due to stronger net revenues. For fiscal 2023, gross profit totalled $15.4 million, compared to $15.7 million a year ago. Gross margin in fiscal 2023 was 52.7%, compared to 54.0% last year. The decrease in gross margin was due to a rise in input costs and a change in product mix.
Selling, general and administrative expenses (“SG&A”), which include operational, sales, marketing and administration costs, amounted to $8.3 million in Q4 2023, compared to $7.8 million for the same period a year ago. Selling and marketing expenses increased to $5.7 million from $5.5 million in Q4 2022, as the Company made more targeted in-store investments, signed its first professional athlete deal and produced its first national social media campaign. General and administrative expenses increased to $2.6 million from $2.3 million in Q4 2022, as a result of year-end timing of operational costs, and professional and contractual fees. For fiscal 2023, SG&A decreased to $29.1 million, compared to $34.1 million a year ago, mainly due to the lower sales and marketing expenses coupled with cost control measures in general and administrative spend.
Net loss for the fourth quarter totalled $3.7 million or $(0.12) per share, compared to a net loss of $3.9 million or $(0.12) per share for the same quarter a year ago. The decrease in net loss primarily reflects the higher net revenue and gross profit realized in Q4 2023. Net loss for fiscal 2023 decreased to $12.0 million in 2023, or $(0.38) per share, from a net loss of $17.6 million or $(0.54) per share a year ago, mainly due to lower selling and marketing expenses and higher net financial income during the fiscal year.
Adjusted EBITDA3 amounted to a loss of $3.8 million in Q4 2023, compared to a loss of $4.0 million for the same quarter a year ago. The improvement in Adjusted EBITDA loss for the quarter was mainly due to stronger revenue and gross profit. Adjusted EBITDA for fiscal 2023 was a loss of $11.9 million, compared to a loss of $17.2 million in 2022.
As at October 31, 2023, the Company had cash, cash equivalents and short-term investments of $33.8 million, and unused Canadian- and US-dollar denominated credit facilities totalling $10 million.
Outlook
At this time, management currently expects the momentum in terms of net revenue growth and loss reduction to continue in the short to medium term.
1 Nielsen, 52-week period ended November 5, 2023, All Channels, Canada vs. same period year ago.
2 Nielsen, 12-week period ended November 5, 2023, All Channels, Canada vs. same period year ago.
3 Please refer to the “Non-GAAP and Other Financial Measures” section at the end of this release.
About GURU Products
GURU energy drinks are made from a short list of plant-based active ingredients, including natural caffeine, with zero sucralose and zero aspartame. These carefully sourced ingredients are crafted into unique blends that push your body to go further and your mind to be sharper.
About GURU Organic Energy
GURU Organic Energy Corp. (TSX: GURU) is a dynamic, fast-growing beverage company that launched the world’s first natural, plant-based energy drink in 1999. 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 ingredients, including natural caffeine, with zero sucralose and zero aspartame, which offer consumers Feel 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.
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