Jamieson Wellness Inc. Reports Second Quarter 2021 Financial Results

Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX: JWEL) today reported financial results for its second quarter ended June 30, 2021. All amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures. See “Non-IFRS Financial Measures” below.

Highlights of Second Quarter 2021 Results versus Second Quarter 2020 Results

• Revenue increased 18.6% to $110.6 million;
• Jamieson Brands revenue increased by 10.9%;
• Adjusted EBITDA increased 17.6% to $22.3 million;
• Net earnings was $11.5 million and adjusted net earnings increased 21.8% to $12.0 million; and
• Earnings per diluted share were $0.28 and adjusted earnings per diluted share were $0.29.

“We are pleased to report another outstanding quarter of growth across our business as consumers globally continue to be highly engaged in improving their health and wellness,” said Mike Pilato, President and Chief Executive Officer of Jamieson Wellness. “Our branded revenue grew by 11% in the quarter, as a result of continued demand from our expanded consumer base. Our tablet compression and packaging capacity expansion projects are on track and have allowed us to improve our domestic customer and international distributor inventories ahead of our third quarter seasonal demand and promotional calendar. Consumer data continues to indicate that health and wellness, which was a growing trend before the pandemic, has become firmly embedded in consumer behaviour for the long-term. We remain confident in our plans for continued growth, and as such, have increased the midpoint of our outlook for revenue, adjusted EBITDA and adjusted net earnings. We are pleased that this earnings growth further enables us to support our strategic priorities and has allowed us to increase our quarterly dividend.”

Second Quarter 2021 Results

Revenue increased 18.6% to $110.6 million in the second quarter of 2021 compared with $93.2 million in the second quarter of 2020 driven by 10.9% growth in Jamieson Brands and 48.9% growth in Strategic Partners.

Revenue in the Jamieson Brands segment increased by 10.9% or $8.1 million to $82.4 million. The Company’s domestic branded sales increased by 11.7% in the second quarter of 2021, primarily due to inventory replenishment supporting consumer demand, pricing, and timing of orders from retailer and distributor partners ahead of third quarter seasonal demand and promotional calendar. The Company’s international branded business increased by 21.6% on a constant currency basis, or 7.8% on a reported basis, compared with the second quarter of 2020 due to higher volumes in preparation for seasonal demand in the second half of 2021 and timing of non-immunity product order fulfillment.

Revenue in the Strategic Partners segment increased 48.9%, or $9.3 million to $28.2 million in the second quarter of 2021 mainly due to production timing of customer branded products throughout the year.

Gross profit increased by $5.4 million to $38.3 million in the second quarter of 2021 mainly driven by revenue growth. Gross profit margin decreased by 60 basis points to 34.7%, reflecting margin improvements in both segments, offset by the impact of the proportional sales growth in the Strategic Partners segment due to timing. Gross profit margin in the Jamieson Brands segment increased by 70 basis points to 41.8% due to revenue growth and volume driven efficiencies, partially offset by ongoing operating costs of using a third-party logistics provider and additional safety and business continuity costs while operating under a COVID-19 environment. Gross profit margin in Strategic Partners increased by 100 basis points to 13.7% mainly due to volume driven efficiencies.

Selling, general and administrative (“SG&A”) expenses increased by $0.2 million to $21.2 million in the second quarter of 2021. On a normalized basis, SG&A expenses increased $2.8 million to $19.7 million in the second quarter of 2021 due to additional resources to support strategic initiatives, along with domestic marketing and international investments to promote brand presence in China.

Earnings from operations increased by $5.4 million, or 50.3%, to $16.0 million in the second quarter of 2021 and operating margin increased by 300 basis points to 14.5% as a result of higher revenue and gross profit. On a normalized basis, earnings from operations increased by $3.0 million, or 19.9% in the second quarter of 2021 and operating margin was 16.1% compared with 15.9% in second quarter of 2020.

Adjusted EBITDA increased by 17.6% to $22.3 million in the second quarter of 2021 and adjusted EBITDA margin was 20.2% compared with 20.4% in the second quarter of 2020.

Interest expense and other financing costs remained consistent at $1.4 million compared with the second quarter of 2020.

Net earnings for the second quarter of 2021 was $11.5 million compared with $6.0 million in the second quarter of 2020. Adjusted net earnings, which excludes all non-operating expenses and foreign exchange, increased by $2.2 million, or 21.8%, to $12.0 million in the second quarter of 2021.

Adjusted net earnings excludes costs associated with share-based compensation relating to one-time grants to certain employees and the tax benefit realized on the vesting of certain share-based awards, foreign exchange loss, business integration, COVID-19 related costs, other non-recurring earnings or expenses net of related tax effects. A detailed reconciliation of reported net earnings to non-IFRS adjusted net earnings is included in the tables accompanying this release under the heading “Non-IFRS Financial Measures”.

Balance Sheet & Cash Flow

The Company generated $5.1 million in cash from operations during the second quarter of 2021 compared with $14.4 million in the second quarter of 2020. Cash from operating activities before working capital considerations of $16.1 million was $6.3 million higher due to increased earnings in the current quarter. Cash invested in working capital increased by $15.6 million driven by higher international branded and Strategic Partner sales which carry longer terms and timing of tax installments, partially offset by accelerated inventory purchases earlier in the year resulting in lower purchases in Q2 2021. The Company’s cash as at June 30, 2021 was $4.6 million compared with $1.2 million on December 31, 2020 and $6.8 million at the end of the second quarter of 2020. The Company ended the quarter with approximately $109.4 million in cash and available operating lines and net debt of $165.6 million.

Declaration of Second Quarter Dividend

The board of directors of the Company authorized a 2.5 cent or a 20% increase in the quarterly dividend and declared a cash dividend for the second quarter of 2021 of $0.15 per common share, or approximately $6.0 million in the aggregate. The dividend will be paid on September 15, 2021 to all common shareholders of record at the close of business on August 31, 2021. The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (Canada).

Board of Directors Transition

Jamieson Wellness director Jason Tafler has resigned from the Company’s board of directors effective August 4th, 2021, due to personal and family health reasons. Director Mei Ye has been appointed to replace Mr. Tafler on the Company’s Audit Committee. “We are grateful for Jason’s valued contribution to the board and the Company, in particular his insight and strategic thinking in the area of digital retailing and marketing,” said David Williams, Chair of the board of Jamieson Wellness. “We wish him and his family the very best as they take this time to prioritize their own personal health and wellness.”

Fiscal 2021 Outlook

The Company is increasing its outlook for fiscal 2021 and anticipates revenue in a range of $435.0 to $445.0 million, compared with $421.0 to $438.0 million previously, which represents annual growth of 7.8% to 10.2%. The Company anticipates adjusted EBITDA in a range of $97.0 to $100.0 million, narrowed from a previous range of $95.0 to $100.0 million, and now anticipates adjusted diluted earnings per share in a range of $1.27 to $1.32 compared with $1.24 to $1.32 previously. The increase in the Company’s outlook reflects strong growth in domestic branded and Strategic Partners revenues while international branded volume growth will be impacted by the strengthening of the Canadian dollar. Higher temporary operating and logistics costs are anticipated as the Company continues to operate in a COVID-19 pandemic environment, with enhanced measures implemented as a result of the third wave of the pandemic in Canada and supply chain premiums experienced globally.

This outlook reflects the following assumptions:

• Jamieson Brands segment growth of 3.7% to 7.1%, including the impact of a strengthened Canadian dollar on international sales and reflecting the following:
  • 3% to 6% domestic growth, and
  • 20% to 25% international growth in U.S. dollars, while reported revenues in Canadian dollars will be impacted by a strengthened currency compared to the prior year and foreign exchange volatility on the conversion of U.S. dollars to Canadian dollars.
• Strategic Partners segment growth of between 20% to 25%
• Normalized SG&A expense increases of 8% to 12%, lowered from our previous range of between 9% to 13% due to COVID-19 restrictions impacting travel and entertainment

For additional details on the Company’s fiscal 2021 outlook, including guidance for the third quarter of 2021, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the three months ended June 30, 2021.

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s unaudited condensed consolidated interim financial statements and accompanying notes as at and for the three months ended June 30, 2021 and related MD&A are available under the Company’s profile on SEDAR at www.sedar.com and on the Investor Relations section of the Company’s website at https://investors.jamiesonwellness.com.

Conference Call

Management will host a conference call to discuss the Company’s second quarter 2021 results at 5:00 p.m. ET today, August 5, 2021. The call can be accessed live over the telephone by dialing 1-800-437-2398 from Canada and the U.S. or 1-323-289-6576 from international locations. Due to increased volumes of conference calls this quarter, please dial the conference call number 15 minutes prior to the start time. A replay will be available shortly after the call and can be accessed by dialing 1-844-512-2921 from Canada and the U.S. or 1-412-317-6671 from international locations. The passcode for the replay is 6014317 and it will be available until Thursday, August 19, 2021.

Interested parties may listen to a simultaneous webcast of the conference call by logging on via the Investor Relations section of the Company's website at https://investors.jamiesonwellness.com or directly at http://public.viavid.com/index.php?id=145686. A replay of the webcast will be available for approximately 30 days following the call.

About Jamieson Wellness

Jamieson Wellness is dedicated to improving the world's health and wellness with its portfolio of innovative natural health brands. Established in 1922, Jamieson is the Company's heritage brand and Canada's #1 consumer health brand. Jamieson Wellness manufactures and markets sports nutrition products and specialty supplements under its Progressive, Precision and Iron Vegan brands. The Company also markets Smart Solutions, the #1 women's natural health focused brand in Canada. For more information, please visit jamiesonwellness.com.

Jamieson Wellness’ head office is located at 1 Adelaide Street East Suite 2200, Toronto, Ontario, Canada.

Forward-Looking Information

This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company’s anticipated results and its outlook for its 2021 revenue, adjusted EBITDA and adjusted diluted earnings per share. Words such as “expect”, “anticipate”, “intend”, “may”, “will”, “estimate” and variations of such words and similar expressions are intended to identify such forward-looking information. This information reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated March 30, 2021 and under the “Risk Factors” section in the Company’s MD&A filed today, August 5, 2021. This information is based on the Company’s reasonable assumptions and beliefs in light of the information currently available to it and the statements are made as of the date of this press release. The Company does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law or regulatory authority.

The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company’s results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “Forward-looking Information” and “Risk Factors” within the Company’s MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.

Non-IFRS Financial Measures

This press release makes reference to certain non-IFRS measures. Management uses these non-IFRS financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing the Company’s business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. We use non-IFRS measures, including “gross profit”, “gross profit margin”, “operating margin”, “EBITDA”, “adjusted EBITDA”, “adjusted EBITDA margin”, “adjusted net earnings” and “adjusted diluted earnings per share” to provide supplemental measures of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non-IFRS measures in order to prepare annual operating budgets and to determine components of management compensation. Definitions of non-IFRS measures can be found in the Company’s MD&A.

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Investor and Media Contact Information:

Jamieson Wellness
Ruth Winker
416-705-5437
[email protected]