Better Choice Company Inc. (BTTR) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows positive financial performance, with significant revenue growth and improved EBITDA. Strategic initiatives like the acquisition of SRx Health and a royalty distribution plan are expected to drive future growth. Despite some risks, the overall sentiment is positive, especially with improved margins and shareholder returns. The lack of questions in the Q&A suggests no major concerns from analysts.
Key Financial Performance
Annual Net Revenues $35 million, down 9% year-over-year due to strategic exit from non-core sales channels.
Gross Profit Margin 37%, increased by over 650 basis points year-over-year, driven by volume discounts and effective management of trade spend and COGS.
Adjusted EBITDA Loss $1.9 million, improved 78% year-over-year from $8.4 million loss in 2023, due to increased gross profit and reduced operating expenses.
Q4 Revenue Growth $7.2 million, up 26% year-over-year, driven by 32% growth across key digital platforms.
Operating Expenses (SG&A) Reduced by 22% year-over-year, resulting from strategic initiatives focused on sustainable growth.
Net Loss $168,000, improved by 99% year-over-year from $23 million loss in 2023, driven by increased gross profit and reduced operating expenses.
Earnings Per Share (EPS) Loss of $0.11 per share, significantly improved from a loss of $32 per share in 2023.
Cash and Cash Equivalents $3 million as of December 31, 2024.
Net Working Capital Position $7.9 million, increased over 200% from $2.5 million in 2023.
Net Cash Used in Operations $4.4 million, driven by pay down of supplier obligations.
Net Cash Used in Investing Activities $2.3 million, due to investments into SRx Health Solutions.
Net Cash Provided by Financing Activities $5.5 million, driven by $4.7 million in net proceeds from an equity offering.
Operating Highlights
Halo Brand Performance: Halo continues to offer a unique brand position for health-conscious consumers, achieving a 26% revenue growth year-over-year in Q4 2024.
Launch on Chewy Canada: Successfully launched Halo on Chewy Canada in November 2024.
E-commerce Growth: Increased focus on e-commerce channels, with 32% growth across Amazon and Chewy.
International Growth: Achieved 18% growth internationally, with significant volume increase in Asia Pacific.
Operational Efficiencies: Reduced SG&A by 22% year-over-year and improved service levels above 95%.
Inventory Management: Achieved over 40% reduction in inventory while improving direct cost per pound by 4%.
Debt Management: Successfully extinguished $6.2 million in debt, improving balance sheet health.
Royalty Agreements: Signed agreements for future royalties from Halo brand sales in Asia, ensuring consistent returns to shareholders.
Risk or Challenges
Geopolitical and Tariff Risks: Consumer uncertainty surrounding geopolitical and potential tariff impacts on the cost of everyday goods.
Supply Chain Challenges: Challenges related to managing supply terms and ensuring service levels above 95% while reducing inventory by over 40%.
Market Competition: Competitive pressures in the pet food industry, particularly as consumer buying habits shift to e-commerce.
Financial Performance Risks: Despite improvements, the company reported a net loss of $1.9 million and a decline in annual net revenues by 9% due to strategic exits from non-core sales channels.
Regulatory Risks: Potential regulatory challenges associated with the pet food industry and international operations.
Economic Factors: Overall economic conditions affecting consumer spending and the pet food market.
Guidance & Outlook
Gross Profit Margin: For the full year, we delivered gross profit margin of 37%, representing an increase of over 600 basis points.
Adjusted EBITDA Loss: Our adjusted EBITDA loss of approximately $1.9 million improved 78% year-over-year.
Revenue Growth: Fourth quarter revenue growth of 26% year-over-year, driven by 32% growth across Amazon and Chewy.
Debt Management: Achieved a $6.2 million gain from extinguishing debt and accounts payable.
Royalty Distribution Plan: The Board approved a royalty distribution plan of up to 55% of annual royalties generated by the Halo brand to be distributed to stockholders.
Acquisition of SRx Health: We expect to close the acquisition of SRx Health in April, which will yield operational efficiencies and growth opportunities.
Revenue Expectations: We expect our financial health to fuel continued top line momentum as e-commerce emphasis continues through 2025 and beyond.
Profitability Focus: Our focus will remain on profitable revenue growth, expanding margins, and strengthening our working capital position.
Future Growth Opportunities: The combination with SRx Health is expected to provide near- and long-term growth opportunities.
Shareholder Return Plan
Royalty Distribution Plan: The Board of Directors has approved a royalty distribution plan of up to 55% of the annual royalties generated by the Halo brand to be distributed annually to stockholders of record as of December 31 of the given year.
Sale of Halo Asia: A definitive agreement was signed to sell Halo Asia for $6.5 million in cash at closing, along with a 3% royalty on sales over the next 5 years, guaranteed by a minimum royalty payment of $330,000 per year or $1.65 million in total.
Royalty Agreement: An agreement in principle for a 5.5% royalty on all sales of the Halo Elevate brand in Asia with an existing partner.
Key Q&A
Earnings Word Cloud
BTTR Transcript
The earnings call revealed strong financial performance with significant revenue growth and improved profit margins. Despite a slight annual revenue decline due to strategic changes, the company showed improved debt management and operational efficiency. The acquisition plans and royalty distribution indicate positive shareholder returns. Although there are risks, the overall sentiment is positive, supported by strategic initiatives and a focus on long-term growth. The lack of analyst questions during the Q&A session suggests no immediate concerns.
The earnings call shows positive financial performance, with significant revenue growth and improved EBITDA. Strategic initiatives like the acquisition of SRx Health and a royalty distribution plan are expected to drive future growth. Despite some risks, the overall sentiment is positive, especially with improved margins and shareholder returns. The lack of questions in the Q&A suggests no major concerns from analysts.
The earnings call summary highlights strong financial performance, including significant sales growth and a positive adjusted EBITDA for the first time in years. Strategic initiatives such as the acquisition of SRx Health and operational improvements are expected to drive future growth. Despite competitive pressures and regulatory risks, the company's focus on profitability and cash generation is promising. The lack of significant concerns in the Q&A session further supports a positive sentiment. The recent public offering may slightly temper the reaction, but overall, a positive stock price movement is anticipated.
BTTR Report
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