YTD Q2 2021 Revenue Increased 280% Year-over-Year to $5.4 Million
Production Units Sold Increased 226% Year-over-Year
YTD Q2 2021 eCommerce Revenue Increased by $3.4m, or 355% Year-over-Year
Fulfilled 47,206 eCommerce orders as of YTD Q2 2021, compared to a total of 40,322 in 2020
New brokerage and distribution partnerships to accelerate U.S. retail reach
Vancouver, British Columbia--(Newsfile Corp. - August 19, 2021) - The Very Good Food Company Inc. (TSXV: VERY) (OTCQB: VRYYF) (FSE: 0SI) ("VERY GOOD" or the "Company"), a leading plant-based food technology company, is pleased to announce its financial results for its second quarter ended June 30, 2021.
"The fact that we have achieved year-over-year triple digit growth in revenue is a direct result of the robust demand for our premium plant-based food products coupled with our expanding production capacity," said Mitchell Scott, co-founder and CEO of VERY GOOD. "While I am very proud of our progress over the past year, we still have a lot of runway in front us. Growing our production capabilities to meet the strong demand for our products continues to be a priority for us. In April, we commissioned Line 1 at the Rupert facility and started producing limited saleable product as we continued to test our SKUs ensuring that we reached our high standards of quality and taste. Production volume at our Rupert Facility is rapidly increasing week over week and later this year we will start to commission Line 2. Even with the changes in Apple's privacy settings and Facebook's advertising tools in April, both of which impacted the effectiveness of targeted ad campaigns, our eCommerce sales continue to steadily grow quarter over quarter. Wholesale sales are also increasing due to higher distribution points achieved. Just last week, we announced that The Very Good Butchers products are available in more than 750 outlets across North America as we are now listed in over 100 stores in the US. We expect to be on the shelves of many more stores by the end of the year, but more so in the first quarter of 2022, after the major retailers' fall 2021 product category review period."
Q2 2021 Financial Highlights
Revenue increased 156% to $2,780,681 in Q2 2021 compared to $1,087,790 in Q2 2020 and increased 5% from $2,643,083 in Q1 2021 primarily driven by increase in eCommerce sales and increase in wholesale revenue due to the Company's scaling of production and distribution to meet demand in both sales channels.
Product units sold increased 132% to 307,745 units in Q2 2021 compared to 132,869 units in Q2 2020 and from 265,702 units in Q1 2021.
eCommerce sales increased 161% to $2,206,403 in Q2 2021 compared to $846,134 in Q2 2020; and increased 1% from $2,185,095 in Q1 2021.
eCommerce sales as a percentage of revenue remained at ~80% in Q2 2021 compared to Q1 2021.
eCommerce orders fulfilled increased 115% to 24,025 in Q2 2021 compared to 11,194 orders fulfilled in Q2 2020 and increased 4% from 23,181 in Q1 2021.
Wholesale revenue increased 168% to $455,055 in Q2 2021 compared to $169,859 in Q2 2020; and increased 32% from $345,905 in Q1 2021.
Wholesale distribution points increased 147% to 1,869 at the end of Q2 2021 compared to 757 at the end of Q2 2020 and increased 38% from 1,356 in Q1 2021.
Adjusted Gross Margin(1) was 38% of revenue YTD Q2 2021 compared to 32% of revenue YTD Q2 2020.
Adjusted General and Administrative Expense(1) was $2,208,555 in Q2 2021 compared to $497,697 in Q2 2020 and remained relatively flat compared to $2,200,836 in Q1 2021. The increase in adjusted general and administrative expense year-over-year is due to the Company becoming public in June 2020 and the related expenses, and building out the team and functions to meet VERY GOOD's strategic growth objectives.
Adjusted EBITDA(1) was a loss of $(5,673,109) in Q2 2021 compared to $(1,197,813) in Q2 2020; and $(5,391,936) in Q1 2021.
| Three months ended June 30, | Three months ended March 31,(2) | Three months ended June 30, | Six months ended June 30, | Six months ended June 30, | |||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue by channel | |||||||||||||||||
| eCommerce | $ | 2,206,403 | $ | 2,185,095 | $ | 846,134 | $ | 4,391,497 | $ | 964,642 | |||||||
| Wholesale | 455,055 | 345,905 | 169,859 | 800,960 | 274,771 | ||||||||||||
| Butcher Shop, Restaurant and Other | 119,223 | 112,083 | 71,797 | 231,307 | 186,929 | ||||||||||||
| $ | 2,780,681 | $ | 2,643,083 | $ | 1,087,790 | $ | 5,423,764 | $ | 1,426,342 | ||||||||
| Gross Profit(1) | $ | 677,859 | $ | 590,837 | $ | 396,995 | $ | 1,268,696 | $ | 278,495 | |||||||
| Adjusted Gross Profit(1) | $ | 1,079,490 | $ | 979,008 | $ | 468,570 | $ | 2,058,496 | $ | 453,581 | |||||||
| Gross Margin(1) | 24% | 22% | 36% | 23% | 20% | ||||||||||||
| Adjusted Gross Margin(1) | 39% | 37% | 43% | 38% | 32% | ||||||||||||
| Adjusted general and administrative expense(1) | $ | 2,208,555 | $ | 2,200,836 | $ | 497,697 | $ | 4,409,391 | $ | 863,232 | |||||||
| Net Loss | $ | (12,500,733) | $ | (15,028,576) | $ | (2,418,655) | $ | (27,529,309) | $ | (3,548,641) | |||||||
| Adjusted EBITDA net loss(1) | $ | (5,673,109) | $ | (5,391,936) | $ | (1,197,813) | $ | (11,065,045) | $ | (1,926,256) | |||||||
| Loss per share - basic and diluted | $ | (0.13) | $ | (0.15) | $ | (0.05) | $ | (0.28) | $ | (0.07) | |||||||
| Weighted average number of shares outstanding - basic and diluted | 97,603,729 | 97,156,969 | 49,259,877 | 97,381,583 | 47,404,458 |
(1) See "Non-GAAP Financial Measures" below and in our Management's Discussion and Analysis for the six months ended June 30, 2021 and 2020 for further details concerning Gross Profit, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted general and administrative expense and Adjusted EBITDA including definitions and reconciliations to the relevant reported IFRS measures, which is available under our SEDAR profile at www.sedar.com.
(2) Certain operating expenses such as share-based compensation and wages from the March 31, 2021 period has been reclassified to conform to the change in presentation of expenditures adopted by the Company, which changed the Gross Profit from $534,120 to $590,837, Gross Margin from 20% to 22%, the Adjusted Gross Profit from $953,372 to $979,008, and the Adjusted Gross Margin from 30% to 37%.
| Three months ended June 30, | Three months ended March 31, | Three months ended June 30, | Six months ended June 30, | Six months ended June 30, | ||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | ||||||||
| For the period ended: | ||||||||||||
| Production volume sold by channel (units) | ||||||||||||
| eCommerce | 216,121 | 198,170 | 92,381 | 414,291 | 113,939 | |||||||
| Wholesale | 91,624 | 67,532 | 40,488 | 159,156 | 61,829 | |||||||
| 307,745 | 265,702 | 132,869 | 573,447 | 175,768 | ||||||||
| Number of eCommerce orders | 24,025 | 23,181 | 11,194 | 47,206 | 13,635 | |||||||
| As at period end: | ||||||||||||
| Number of product SKUs manufactured | 20 | 19 | 13 | 20 | 13 | |||||||
| Number of wholesale distribution points(1) | 1,869 | 1,356 | 757 | 1,869 | 757 |
(1) Wholesale distribution points are defined as the number of retail stores multiplied by the number of SKUs.
Corporate and Operational Highlights
Enhanced Production Capabilities & Scaled Distribution
Completed the commissioning of Line 1 at our Vancouver-based production facility, the Rupert Facility. The Line 1 will initially produce 7+ SKUs of its popular The Very Good Butcher's product line, including "The Very Good Burger", "A Very British Banger", "Pepperoni", "Smokin' Burger", "Smokin' Banger", "Very Good Dog", "The Very Good Steak", which are already being sold in the market. The Company began testing these initial 7 SKUs in May 2021. While the production of saleable product is now underway, during this testing phase, saleable product was manufactured in limited quantities in Q2 2021. Over the course of the next few months, the production team will continue to ramp up the production from Line 1 and will be targeting 40,000 lbs per day on average starting in Q4 2021; gradually increasing to an average of 60,000 lbs per day in early Q1 2022 assuming we are able to get the production labour needed which has been challenging due to COVID restrictions lighting creating a highly competitive environment for hiring. The capacity targets will support the increasing demand for VERY GOOD's products which have an average sales price of CDN$14 per lb in e-Commerce and CDN$7 per lb in wholesale.
Commissioning update on Line 2 at the Rupert Facility. Line 2 is planned to be commissioned in Q4 2021 with food production starting in early Q1 2022 and will initially produce 6+ SKUs of our newly announced gluten-free and soy-free Butcher's Select Line of plant-based meat alternatives meant to compete on taste and texture with the likes of some of our competitors. Select SKUs of the Butcher's Select line will be available this summer online with the full suite hitting retailers' shelves in the months to follow.
New Wholesale Retail Distribution Points & Growth Opportunities
Expanded product placement with Horizon Grocery + Wellness, where the Company signed on with Save-On-Foods, Canada's largest Western-based grocery retailer, to carry The Very Good Butchers suite of products in 184 of its retail stores across Canada.
New wholesale brokerage selected to expand U.S. retail. During the second quarter of 2021, VERY GOOD entered into a contract with Boulder, Colorado-based natural food and beverage brokerage, Green Spoon Sales ("Green Spoon"), to accelerate the Company's reach into grocery and retail across the US.
New wholesale distribution partnerships with United Natural Foods and KeHE Distributors to accelerate US retail reach. During the second quarter, we entered into two new distribution agreements with United Natural Foods ("UNFI"), the largest publicly traded wholesale distributor of health and specialty food in North America, and KeHE Distributors, LLC ("KeHE"), a top pure play U.S. wholesale food distributor of natural, organic, specialty and fresh food brands across North America. Together, these two distribution partners represent over 15,000 food suppliers and distribute to more than 60,000 natural food stores, chain and independent grocery stores, ecommerce retailers and other specialty product retailers throughout North America.
Entry into Food Services and Meal Kit Services. In early June 2021, we announced a collaboration with Vancouver-based homegrown meal kit company, Fresh Prep, to add VERY GOOD's innovative plant-based food products to its extensive menu of recipes and meal kits. The partnership with Fresh Prep marks VERY GOOD's entry into the food service and meal kit space representing the latest milestone in its growth strategy, which focuses on making its diversified line of minimally processed, high-quality plant-based foods easily accessible to its growing consumer base. Later that same month, we also announced a business venture with Copper Branch, the world's largest plant-based restaurant franchise with over 40 locations across North America. Copper Branch will make The Very Good Butchers' delicious and nutritious plant-based products available to its customers to purchase from branded in-store freezers.
New 3PL distribution partner to facilitate U.K. eCommerce launch. We announced a distribution partnership with Peter Green Chilled, a leading 3PL logistics provider with over 19,000 points of distribution throughout the UK and Europe, to support the Company's recent UK eCommerce launch in August 2021.
New Brand Launch
- VERY GOOD announced its new brand, The Very Good Cheese Co., and its lineup of five newly re-introduced plant-based cheese products from its acquisition of The Cultured Nut, Inc. in February 2021. These new SKUs will initially consist of: "Bold Cheddah", a white cheddar style vegan cheese; "Cheedah", a medium cheddar style vegan cheese; "Dill'ish", a garlic and dill-havarti style vegan cheese; "Goud AF*", a smoky gouda style vegan cheese; "Pepper Jack", a monterey jack style vegan cheese and "Sharp and Sassy", a sharp flavor white cheddar style vegan cheese. The Very Good Cheese Co. products were made available in the U.S. and Canada in June 2021 through the Company's eCommerce platforms and will be available in retail stores in Q4 2021.
Debt Financing
- The Very Good Food Company Inc. Closes C$70 Million Credit Facility With Waygar Capital and Ninepoint Partners. On June 7, 2021, the Company announced that it has entered into a loan agreement for a senior secured credit facility (the "Credit Facility") with Waygar Capital Inc., an agent for Ninepoint Canadian Senior Debt Master Fund L.P. ("Ninepoint Partners" or the "Lender"). The Credit Facility consists of a C$20 million revolving line of credit and a C$50 million senior secured asset-backed term loan. All mounts drawn under the Credit Facility are subject to specific borrowing requirements and will pay interest at a rate of 9.95% per annum and will be repaid in full upon maturity. The Credit Facility has a term of 24 months with an option to renew, upon mutual consent, for another 12 months and is primarily secured by the Company's current and planned production equipment.
The management's discussion and analysis for the period and the accompanying financial statements and notes are available under the Company's profile on SEDAR at www.sedar.com.
Second Quarter 2021 Conference Call Details
VERY GOOD will host a conference call today, Thursday, August 19, 2021 at 11:00 am Eastern Time/ 8:00 am Pacific Time to discuss the financial results and business outlook.
Participant Dial-In Numbers:
Toll-Free: 1-888-664-6392
Toll / International: 1-416-764-8659
* Participants should request The Very Good Food Company Second Quarter Earnings Call.
The call will be available via webcast on Very Good's investor page of the Company website at www.verygoodfood.com/investors or at this link.
Please visit the website at least 15 minutes before the call to register, download, and install any necessary audio software. A replay of the call will be available on VERY GOOD's investor page approximately two hours after the conference call has ended. About The Very Good Food Company Inc.
About The Very Good Food Company Inc.
The Very Good Food Company Inc. is an emerging plant-based food technology company that produces nutritious and delicious plant-based meat and cheese products under VERY GOOD's core brands: The Very Good Butchers and The Very Good Cheese Co. www.verygoodfood.com.
OUR MISSION IS LOFTY, BADASS BUT BEAUTIFULLY SIMPLE: GET MILLIONS TO RETHINK THEIR FOOD CHOICES WHILE HELPING THEM DO THE WORLD A WORLD OF GOOD. BY OFFERING PLANT-BASED FOOD OPTIONS SO DELICIOUS AND NUTRITIOUS, WE'RE HELPING THIS KIND OF DIET BECOME THE NORM.
The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Forward-Looking Information
This news release contains forward-looking information for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any such forward-looking information may be identified by words such as "proposed", "expects", "intends", "may", "will", and similar expressions. Forward-looking information contained or referred to in this news release includes, but is not limited to, statements relating to: the Company's business strategy and growth plans; the Company's capital expenditures and operations; the scale and timing of the anticipated production capacity increases at its production facilities; the continued strong and increasing demand for VERY GOOD's products; the timing for the launch of new product lines including the Butcher's Select line and the benefits VERY GOOD expects to derive from any new product launches; the attributes of VERY GOOD's products and their ability to compete; VERY GOOD's retail expansion in North America, the potential for future expansion into retail and foodservice, and plans to extend its global footprint; VERY GOOD's acquisition strategy; and the impact of the COVID-19 pandemic on VERY GOOD's business. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information, but which may prove to be incorrect including, but not limited to, material assumptions with respect to the availability of sufficient financing on reasonable terms to fund VERY GOOD's capital and operating requirements, the continued strong demand for VERY GOOD's products, the successful placement of VERY GOOD's products in retail stores and e-Commerce growth, VERY GOOD's ability to successfully enter new markets and manage its international expansion, VERY GOOD's ability to increase production capacity and obtain the necessary production equipment, the availability of labour as well as the accuracy of construction schedules and cost estimates for the commissioning of production lines at VERY GOOD's Rupert and Patterson facilities and the timely receipt of required permits, VERY GOOD's relationship with its suppliers, distributors and third-party logistics providers, and the Company's ability to position VERY GOOD competitively. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because VERY GOOD can give no assurance that such expectations will prove to be correct. Risks and uncertainties that could cause actual results, performance or achievements of VERY GOOD to differ materially from those expressed or implied in such forward-looking information include, among others, negative cash flow and future financing requirements to sustain and grow operations, limited history of operations and revenues and no history of earnings or dividends, expansion of facilities, competition, availability of raw materials, dependence on senior management and key personnel, general business risk and liability, regulation of the food industry, change in laws, regulations and guidelines, compliance with laws, unfavourable publicity or consumer perception, product liability and product recalls, risks related to intellectual property, difficulties with forecasts, management of growth and litigation, as well as the impact of, uncertainties and risks associated with the ongoing COVID-19 pandemic, many of which are beyond the control of VERY GOOD. For a more comprehensive discussion of the risks faced by VERY GOOD, please refer to VERY GOOD's most recent Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, VERY GOOD disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. The forward- looking information contained in this news release is expressly qualified by this cautionary statement.
The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
For further information, please contact:
Mitchell Scott
Chief Executive Officer
The Very Good Food Company Inc.
Sabina Srubiski
Director, Investor Relations
The Very Good Food Company Inc.
Email: invest@verygoodfood.com
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