Else Nutrition Reports 23% Sequential Revenue Growth in the First Quarter of 2023
7:30 AM ET 5/15/23 | GlobeNewswire
Else Nutrition Reports 23% Sequential Revenue Growth in the First Quarter of 2023
Conference call will be held on Monday, May 15 at 10 AM ET
VANCOUVER, British Columbia, May 15, 2023 (GLOBE NEWSWIRE) -- ELSE NUTRITION HOLDINGS INC (BABY) (BABYF) (0YL.F) ("Else" or the "Company") the Plant-Based baby, toddler, and children nutrition company, today reported first quarter 2023 financial results for the period ending March 31, 2023. The financial statements and MD&A are available on SEDAR under the Company's profile.
First Quarter 2023 Financial Highlights
-- 1Q23 total revenues were $2.9M, an 82% increase versus $1.6M in 1Q22, and
a 23% increase versus $2.3M in 4Q22. Revenue growth continued to be
hampered by product shortages. While the company increased its production
pace, the demand for its products also continued to grow, a combination
that challenged available supply, especially in the first half of the
quarter. Management estimates the revenue loss from inventory constraints
was roughly $1M in 1Q23.
-- Sales to brick-and-mortar retailers in the US and Canada during 1Q23
increased by 105% versus 4Q22. As of 1Q23, Else products were listed in
nearly 12,000 stores in North America, compared with 1,200 stores in
1Q22. Management expects to reach 20,000 listed stores and 50,000 points
of distribution by the end of 2023.
-- Sales in Canada, via Amazon and brick-and-mortar retailers increased over
240% in 1Q23 versus 4Q22 and represented over 28% of the Company's
formula sales.
-- Retail sales velocity is growing, and as additional products are added to
existing accounts, annual revenue per store is improving as well.
-- Cash balance as of March 30, 2023, was $10.1M CAD, including restricted
cash and short-term bank deposit.
Recent Business Highlights
-- Expanded distribution to more than 7,000 CVS stores, more than 750
Walmart stores, over 440 Loblaws stores, over 600 Sobey's stores and to
161 Giant Food Stores.
-- Else products were listed in nearly 12,000 stores in North America,
compared with 1,200 stores in 1Q22 reflecting 10 times growth.
-- Significantly increased in-store sales velocity. For example, according
to Spins data, the sales velocity of our Toddler Organic product in
natural food stores grew by more than 50% in the last year (measured in
12-week periods).
-- Expanded production capacity by adding a second manufacturing facility in
the US and launching its first production facility in Europe. The
additional facilities will increase the Company's production capacity by
about three times, greatly reducing the risk of future out of stock
situations. The Company anticipates the new scaled manufacturing capacity
to significantly decrease its manufacturing costs, beginning in 2H23.
-- Entered the Canadian market with the launch on Amazon.ca and in
brick-and-mortar stores. The success of the launch exceeded expectations
given a fast entry into major retailers across the country and the strong
demand for Else's products. The Company expects to be listed in more than
3,000 Canadian stores by the end of 2023.
-- The Company plans to enter Western Europe in 2H2023. The initial launch
will be in the UK via Amazon and natural food distributors, with other
European countries to follow.
-- The Company plans to enter Australia in 2H2023. The initial launch will
be via Amazon to be followed by drug and grocery chains.
-- Received critical approval by the Institutional Review Board (IRB) of the
infant growth study protocol for the testing of the Else Infant Formula.
Management Commentary
Hamutal Yitzhak, CEO of Else Nutrition, commented, "In 1Q23, Else returned to strong sequential growth, after two quarters in which we experienced severe product shortages. Over the past months we secured two additional manufacturing facilities in the US and Europe. The two new facilities have more than tripled our current production capacity, mitigating the risk of future out-of-stock situations.
Although our manufacturing facilities are fully operational, out of stock and product shortages were still a limiting factor for sales growth in the first quarter. Limited inventory continued to force us to prioritize retails orders over Amazon and our E-store orders. We estimate the revenue impact due to the product shortage to be approximately $1M in 1Q23, mostly in January and February. In March and April, we have begun to see a rebound in our ecommerce sales as we have been building inventory to meet the growing demand.
Our sales to retail stores accelerated in 1Q23 as retailers are seeing strong sales of our products and we continue to grow our store count. Else is becoming a recognized national brand in the US, carried by major grocery and drug retailers. Our customers now include prominent retailers such as CVS and Walmart, as well as leading e-commerce sites such as Amazon and Walmart.com. We expect to reach 20,000 retail locations by end of 2023.
Our international expansion remains strong, growing over 200% in 1Q23 versus 4Q22. Our launch into the Canadian market in 3Q22 was above our expectations, and the consumer enthusiasm has continued. In recent months we entered the Chinese market, and while our presence is currently nascent, we are continuing to make inroads.
As we look out over next few months, we remain focused on our growth objectives to become a global leader in the plant-based nutrition arena. We plan to increase the number of retailers we sell in and expand our shelf space in those stores. We remain enthusiastic about our international expansion. Our entry into Canada in August had a much greater than-anticipated start, and we expect to reach 3,000 stores in Canada in 2023. Furthermore, we are excited to enter the UK and Australia in the second half of 2023, and to continue our journey into the large Chinese market.
In 2023 we remain on track to begin our infant growth clinical study for the FDA and European permits. Receiving FDA approval is a very high priority for Else Nutrition, as we believe that becoming the first non-dairy and non-soy FDA-approved infant formula will be transformational for the valuation of the Company.
FDA Update
As part of the pathway to bring its infant formulation to market under FDA and other authorities' approvals, Else concluded two successful preclinical safety studies during 2021 and 2022 on its plant-based infant formula, to demonstrate safety and nutrient bioavailability of the infant formula and its ingredients. The results demonstrated proper growth, similar to dairy-based infant formula, in a neonatal preclinical model, as well as the infant formula protein efficiency and quality. Those are the key two steps out of three, on the path to obtaining the FDA and other regulatory permits to bring the product to market.
In February 2023, the Company announced that the Institutional Review Board (the ethical committee) approved the infant growth study protocol for the testing of the Else Infant Formula.
As a final step before initiating the study, the Company has now submitted the infant growth study protocol to the FDA for review and is awaiting the FDA confirmation, in parallel to continuously seeking for a comparator formula which is currently unavailable due to the continuous infant formula shortage followed by several recent product recalls in the US.
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