- Net revenue in FY 2021 increased 86% to $42.7 million
- Gross margin in FY 2021 increased to 26% compared to 6% for FY
2020
- Net revenue in Q4 2021 increased 74% to $10.4 million
- Gross margin in Q4 2021 increased to 21% compared to 4% for Q4
2020
- FY 2022 outlook for Flow branded product net revenue growth
increased to 45% - 55%
Flow Beverage Corp. (TSX:FLOW; OTCQX:FLWBF) (the “Company” or
“Flow”), today announced its financial results for the three-month
period and fiscal year ending October 31, 2021 (“Q4 2021” and “FY
2021”, respectively).
Maurizio Patarnello, Chief Executive Officer of Flow, stated:
“We are very encouraged with our efforts at increasing velocity in
target distribution channels and maintaining industry-leading
growth. We remain fully committed to accelerating the profitable
growth of Flow branded products and aligning with the needs and
aspirations of our consumers. Combined with a continued focus in
our disciplined approach to cost management, we are confident that
we can drive higher net revenue while significantly improving our
EBITDA.”
Company Outlook and Strategic Framework for FY 2022
- Increasing net revenue target for Flow branded product growth
to 45% - 55%
- Reiterating target to reduce overall EBITDA losses by 45% -
50%
The Company’s strategy is focused on the profitable growth of
the Flow brand, which remains one of the fastest growing brands in
the premium water category.1
We will continue to utilize co-packing opportunistically to
optimize capacity and absorb fixed costs.
The Flow brand continues to benefit from favourable industry
trends for premium, sustainable and enhanced water. In FY 2021, the
velocity of sales performed particularly well.1 This acceleration
was due to increased brand awareness, successful activation
programs and the distribution of multi-serve SKUs. Flow also
benefited from increasing its points of distribution to over 24,600
locations. As a result, the Company is increasing its net revenue
target for Flow branded products in FY 2022 to 45% - 55%, from 35%
- 45% previously.
Concurrently, EBITDA losses are expected to decrease by 45% -
50% in FY 2022 as compared to FY 2021 as the Company generates
increased gross profit from higher net revenue, and maintains its
disciplined approach to cost management.
The Company is also prioritizing asset optimization. This
includes both improving its working capital position and
significantly reducing capital expenditures.
Financial Results for FY 2021
Consolidated net revenue increased by 86% for FY 2021 to $42.7
million, compared to $23.0 million for FY 2020. Net revenue for
Flow branded products increasing 47% in Retail and in E-commerce
channels. The Company also benefited from significant co-packing
revenue, particularly in Q2 2021.
Gross margin increased to 26% of revenue for FY 2021, compared
to 6% for FY 2020. The improvement in gross margin is the result of
increased utilization of the installed lines, efficiency on
production runs, and consistent costs of raw materials and
packaging on a per unit basis.
Flow reported an adjusted EBITDA loss of $27.0 million for FY
2021, as compared to a loss of $27.3 million in the prior year. The
variance in adjusted EBITDA is attributable to higher gross profit,
offset by increased sales and marketing to support the growth of
the Flow brand, general and administration expenses attributable to
professional services, and an increased headcount.
Financial Results for Q4 2021
Consolidated net revenue increased by 74% in Q4 2021 to $10.4
million, compared to $6.0 million in Q4 2020. Net revenue for Flow
branded products increasing 69% in Retail and E-commerce. The
Company also benefited from higher co-packing net revenue as
compared to the prior year, though at a lower rate of growth than
prior quarters due to certain customers reducing demand.
Gross margin increased to 21% of net revenue in Q4 2021,
compared to 4% in Q4 2020. The improvement in gross margin is the
result of increased utilization of the installed lines, on
production runs, and consistent costs of raw materials and
packaging on a per unit basis. Q4 2021 gross margin was also
impacted by higher relative shipping costs to service COVID-related
re-openings of certain customers.
Flow reported an adjusted EBITDA loss of $7.9 million in Q4
2021, as compared to a loss of $5.5 million in Q4 2020. The
variance in adjusted EBITDA is attributable to higher gross profit,
offset by increased sales and marketing to support the growth of
the Flow brand, general and administration expenses attributable to
professional services, increased insurance costs and expenses
related to operating as a public company and salaries and benefits
due to the increased headcounts.
In Canadian Dollars
Three-month periods ended
Twelve-month periods ended October 31, 2021
October 31, 2020 October 31, 2021 October 31,
2020 $ % of $ % of $ %
of $ % of Revenue Revenue
Revenue Revenue Net revenue
10,371,339
100
%
5,955,474
100
%
42,697,547
100
%
22,962,308
100
%
Cost of revenue
8,225,593
79
%
5,709,575
96
%
31,390,486
74
%
21,671,279
94
%
Gross profit
2,145,746
21
%
245,899
4
%
11,307,061
26
%
1,291,029
6
%
Operating expenses Sales and marketing
2,678,693
26
%
1,568,309
26
%
9,910,992
23
%
5,306,210
23
%
General and administrative
4,639,547
45
%
2,920,571
49
%
15,700,421
37
%
16,128,324
70
%
Salaries and benefits
3,984,031
38
%
2,171,359
36
%
15,624,183
37
%
9,728,546
42
%
Amortization and depreciation
478,743
5
%
519,451
9
%
1,962,881
5
%
2,077,905
9
%
Share-based compensation
2,575,035
25
%
3,116,279
52
%
18,290,947
43
%
7,570,596
33
%
14,356,049
138
%
10,295,969
173
%
61,489,424
144
%
40,811,581
178
%
Loss before the following
(12,210,303
)
-118
%
(10,050,070
)
-169
%
(50,182,363
)
-118
%
(39,520,552
)
-172
%
Other income
(7,031
)
0
%
(455,704
)
-8
%
(87,829
)
0
%
(685,750
)
-3
%
Finance expense, net
2,195,475
21
%
1,925,550
32
%
6,267,941
15
%
6,738,718
29
%
Foreign exchange loss (gain)
(89,488
)
-1
%
93,335
2
%
508,411
1
%
(16,698
)
0
%
Reverse take-over costs
190,000
2
%
—
0
%
2,588,786
6
%
—
0
%
Restructuring and other costs
278,500
3
%
969,262
16
%
2,793,793
7
%
2,592,525
11
%
Loss before income taxes
(14,777,759
)
-142
%
(12,582,513
)
-211
%
(62,253,465
)
-146
%
(48,149,347
)
-210
%
Income tax expense
—
0
%
—
0
%
—
0
%
—
0
%
Net loss for the period
(14,777,759
)
-142
%
(12,582,513
)
-211
%
(62,253,465
)
-146
%
(48,149,347
)
-210
%
EBITDA loss(1)
(10,988,586
)
-106
%
(9,570,661
)
-161
%
(50,711,485
)
-119
%
(37,483,623
)
-163
%
Adjusted EBITDA loss(1)
(7,945,051
)
-77
%
(5,485,120
)
-92
%
(27,037,959
)
-63
%
(27,320,502
)
-119
%
Adjusted net loss(1)
(10,699,882
)
-103
%
(8,496,972
)
-143
%
(37,118,097
)
-87
%
(37,986,226
)
-165
%
(1) Non-IFRS measures as defined in MD&A
In Canadian dollars
October 31, 2021 October 31, 2020
October 31, 2021 October 31, 2020 Consolidated net
loss:
(14,777,759
)
(12,582,513
)
(62,253,465
)
(48,149,347
)
Income tax expense
—
—
—
—
Finance expense, net
2,195,475
1,925,550
6,267,941
6,738,718
Amortization and depreciation
1,593,698
1,086,302
5,274,039
3,927,006
EBITDA loss
(10,988,586
)
(9,570,661
)
(50,711,485
)
(37,483,623
)
Restructuring and other costs
278,500
969,262
2,793,793
2,592,525
Share-based compensation
2,575,035
3,116,279
18,290,947
7,570,596
Reverse take-over costs
190,000
—
2,588,786
—
Adjusted EBITDA loss
(7,945,051
)
(5,485,120
)
(27,037,959
)
(27,320,502
)
Three-month periods ended Twelve-month periods
ended In Canadian dollars
October 31, 2021 October
31, 2020 October 31, 2021 October 31, 2020
Consolidated net loss:
(14,777,759
)
(12,582,513
)
(62,253,465
)
(48,149,347
)
Restructuring and other costs
278,500
969,262
2,793,793
2,592,525
One-time debt settlement costs
1,034,342
—
1,461,842
—
Share-based compensation
2,575,035
3,116,279
18,290,947
7,570,596
Reverse take-over costs
190,000
—
2,588,786
—
Adjusted net loss
(10,699,882
)
(8,496,972
)
(37,118,097
)
(37,986,226
)
Conference Call Information
Date:
January 31, 2022
Time:
10:00 a.m. EST
Conference ID:
8486741
Dial-in:
(866) 941-1098 or (873) 415-0295
Webcast:
https://onlinexperiences.com/Launch/QReg/ShowUUID=C9259786-4B20-443B-A5FF-FFE450A21CC6
Replay:
(800) 585-8367 or (416) 621-4642;
available until March 3, 2022
Proposed Amendment to Outstanding Debentures
Flow has $9,476,000 of unsecured debentures maturing on February
28, 2022 (the "Debentures"). Flow has received the consent of
holders representing over 75% of the outstanding principal amount
and unpaid interest payments of the Debentures to, among other
things, amend the maturity date to February 29, 2024. The amendment
of the Debentures is subject to the approval of The Toronto Stock
Exchange and the Corporation has applied to The Toronto Stock
Exchange seeking such approval. If approved, Flow intends to extend
the maturity date of all of the Debentures to February 29,
2024.
About Flow
Flow is one of the fastest-growing premium water companies in
North America. Founded in 2014, Flow’s mission since day one has
been to reduce environmental impacts by providing sustainably
sourced naturally alkaline spring water in a sustainable, 100%
recyclable and up to 75% renewable, plant-based pack. Today, the
brand is B-Corp Certified with a best-in-class score of 126.5,
offering a diversified line of health and wellness-oriented
beverage products: original naturally alkaline spring water,
award-winning organic flavours, and collagen-infused flavours in
sizes ranging from 330-ml to 1-litre. All products contain
naturally occurring electrolytes and essential minerals and support
Flow’s overarching purpose to “bring wellness to the world through
the positive power of water.” Flow beverage products are available
online at flowhydration.com and are sold at over 24,650 stores
across North America.
For more information on Flow, please visit Flow’s investor
relations site at: investors.flowhydration.com.
Cautionary Statement
This press release may contain “forward-looking statements”
within the meaning of applicable Canadian securities legislation.
Such forward-looking statements include, but are not limited to,
information with respect to our objectives and the strategies for
achieving those objectives, as well as information with respect to
our beliefs, plans, expectations, anticipations, estimates and
intentions. Forward-looking statements are typically identified by
the use of words such as “may”, “would”, “should”, “could”,
“expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”,
“believe”, or “continue”, although not all forward-looking
statements contain these words. Forward-looking statements are
provided for the purposes of assisting the reader in understanding
Flow and its business, operations, prospects, and risks at a point
in time in the context of historical and possible future
developments, and the reader is therefore cautioned that such
information may not be appropriate for other purposes.
Forward-looking statements are based on assumptions and are subject
to a number of risks and uncertainties, many of which are beyond
our control, which could cause actual results to differ materially
from those that are disclosed in or implied by such forward-looking
statements. Those risks and uncertainties include the following:
impact and spread of COVID-19; ability to achieve and manage
growth; failure to expand sales capabilities; changes in consumer
preferences; criticism of packaged water; maintain brand image and
product quality; constrained or unavailable spring water sources;
inability to package products; increased competition; accurately
estimating demand; maintaining relationships with distributors and
vendors; changing retail landscape; incorrect product design or
development; product information misrepresentation; revenues
derived entirely from packaged beverages; increases in costs or
shortages of materials; fluctuation of quarterly operating results;
no assurance of profitability; fluctuations in foreign currency;
changes in government regulation; contamination or recalls of
ingredients or end products; loss of intellectual property rights;
litigation; future tax rates; catastrophic events; climate change;
seasonal business; dependence on key information systems and
third-party service providers; ability to securely maintain
confidential information; maintaining and upgrading information
technology systems; conflict of interest; dual class share
structure; potential volatility of share price; no assurance of
active market for shares; lack of dividends; global financial
condition; publication of inaccurate or unfavourable research and
reports; operating history; and management and conflict of
interests. Consequently, all of the forward-looking statements
contained herein are qualified by the foregoing cautionary
statements, and there can be no guarantee that the results or
developments that we anticipate will be realized or, even if
substantially realized, that they will have the expected
consequences or effects on our business, financial condition or
results of operation. Unless otherwise noted or the context
otherwise indicates, the forward looking. statements contained
herein are provided as of the date hereof, and we do not undertake
to update or amend such forward-looking statements whether as a
result of new information, future events or otherwise, except as
may be required by applicable law.
Non-IFRS Measures
This press release makes reference to certain non-IFRS measures.
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 our results of operations from management’s
perspective. Accordingly, these measures should not be considered
in isolation nor as a substitute for analysis of our financial
information reported under IFRS. We use non-IFRS measures including
“Adjusted EBITDA”, “Adjusted Net Loss”, and “EBITDA”. These
non-IFRS measures are used to provide investors with supplemental
measures of our operating performance and thus highlight trends in
our core business that may not otherwise be apparent when relying
solely on IFRS financial measures. We also believe that securities
analysts, investors and other interested parties frequently use
non-IFRS measures in the evaluation of issuers. Our management also
uses non-IFRS measures in order to facilitate operating performance
comparisons from period to period, to prepare annual operating
budgets and to determine components of management compensation. For
definitions and reconciliations of these non-IFRS measures to the
relevant reported measures, please see “How We Assess the
Performance of Our Business” and “Selected Consolidated Financial
Information” sections of the Company’s Management Discussion &
Analysis available on sedar.ca and investors.flowhydration.com.
1 US SPINS MULO, Natural Channel Shelf-stable Non-Carbonated
Water. Nielsen CA, Food Drug Mass, and Convenience & Gas
Channel, Brand and Item Report. 52 Weeks Ending December 2021 (US
MULO + Natural); 52 Weeks Ending December 2021 (CA FDM +
C&G).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220131005311/en/
Devan Pennell, Chief Financial Officer 1-844-356-9426
investors@flowhydration.com
US investors: Lynne Collier Lynne.collier@icrinc.com
Canadian investors: Marc Charbin investors@flowhydration.com
Media: Natasha Koifman nk@nkpr.net
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