- Net sales were $35 million in the first quarter of 2025, with gross margin2 reaching 39.6% for a gross profit of $14 million
- Net loss of $2 million, adjusted EBITDA margin1 of 4.7% and adjusted EBITDA1 of $2 million for the quarter
- Cash flows provided by operating activities of $2 million and adjusted free cash flow1 of $2 million for the first quarter of 2025
- Healthy cash balance of $21 million after cash deployed for the acquisition of Genuine Tea and repayment of the term loan in full, with total net debt to adjusted EBITDA1 at 2.64
"We are pleased to continue delivering positive adjusted EBITDA1 and adjusted free cash flow1 for another quarter, as we navigate the challenging consumer demand environment in Canada. Our focus on operational efficiencies, disciplined cost management, and product innovation has allowed us to maintain adjusted EBITDA1 profitability for an eighth consecutive quarter, overcoming a weak economic environment. We have now also achieved positive adjusted free cash flow1 five out of the last eight quarters, a testament to our team's relentless commitment to executing our strategic priorities and delivering long-term value to our customers and shareholders. We remain confident that our approach to enhancing the customer experience, optimizing unit economics, and focusing on high-quality meal solutions will position us well for future growth,” said Jonathan Ferrari, Chief Executive Officer of Goodfood.
"Late this quarter, we also completed the acquisition of Genuine Tea, marking an important milestone in our evolution as we look to diversify our offerings and build a portfolio of next-generation brands that resonate with Canadians. Combined with our ongoing investment in digital capabilities and product enhancements to drive improvements in customer acquisition and retention, we enter 2025 focused on achieving sustainable cash flow generation and growth,” concluded Mr. Ferrari.
RESULTS OF OPERATIONS - FIRST QUARTER OF FISCAL 2025 AND 2024
The following table sets forth the components of the Company's interim condensed consolidated statement of loss and comprehensive loss:
(In thousands of Canadian dollars, except per share and percentage information)
| For the 13 weeks periods ended | December 7, 2024 | December 2,
2023 | ($) | (%) | ||||||||
| Net sales | $ | 34,662 | $ | 40,459 | $ | (5,797 | ) | (14)% | ||||
| Cost of goods sold | 20,941 | 24,530 | (3,589 | ) | (15)% | |||||||
| Gross profit | $ | 13,721 | $ | 15,929 | $ | (2,208 | ) | (14)% | ||||
| Gross margin | 39.6 | % | 39.4 | % | N/A | 0.2 p.p. | ||||||
| Selling, general and administrative expenses | 12,396 | 14,488 | (2,092 | ) | (14)% | |||||||
| Depreciation and amortization | 1,581 | 1,955 | (374 | ) | (19)% | |||||||
| Reorganization and other related costs | - | 3 | (3 | ) | (100)% | |||||||
| Net finance costs | 1,431 | 1,456 | (25 | ) | (2)% | |||||||
| Net loss, being comprehensive loss | $ | (1,687 | ) | $ | (1,973 | ) | $ | 286 | (14)% | |||
| Basic and diluted loss per share | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.01 | (33)% | |||
- The decrease in net sales is driven by the decrease in active customer driving lower orders as well as an increase in credits and incentives compared to the same quarter last year. This decrease was partially offset by an increase in average order value.
- The decrease in gross profit is driven mainly by a decrease in net sales as well as an increase in credits and incentives compared to the same quarter last year. This decrease was partially offset by lower food, labour and shipping costs. Gross margin increased slightly by 0.2 percentage points due to cost of good sold efficiencies.
- The decrease in selling, general and administrative expenses is primarily due to lower marketing spend and wages and salaries. Selling, general and administrative expenses as a result of percentage of net sales remained stable at 35.8% compared to same quarter last year.
- The slight improvement in net loss is mainly the result of lower selling, general and administrative expenses as well as operational efficiencies reducing production and shipping costs. This improvement was mostly offset by a lower net sales base.
EBITDA1, ADJUSTED EBITDA1 AND ADJUSTED EBITDA MARGIN1
The reconciliation of net loss to EBITDA, adjusted EBITDA and adjusted EBITDA margin is as follows:
(In thousands of Canadian dollars, except percentage information)
| For the 13 weeks ended | ||||||||
| December 7, 2024 | December 2, 2023 | |||||||
| Net loss | $ | (1,687 | ) | $ | (1,973 | ) | ||
| Net finance costs | 1,431 | 1,456 | ||||||
| Depreciation and amortization | 1,581 | 1,955 | ||||||
| EBITDA | $ | 1,325 | $ | 1,438 | ||||
| Share-based payments expense | 219 | 13 | ||||||
| Reorganization and other related costs | - | 3 | ||||||
| Acquisition costs | 99 | - | ||||||
| Adjusted EBITDA | $ | 1,643 | $ | 1,454 | ||||
| Net sales | $ | 34,662 | $ | 40,459 | ||||
| Adjusted EBITDA margin (%) | 4.7 | % | 3.6 | % | ||||
FREE CASH FLOW1 AND ADJUSTED FREE CASH FLOW1
The reconciliation of net cash flows from operating activities to free cash flow and adjusted free cash flow is as follows:
(In thousands of Canadian dollars)
| For the 13 weeks ended | ||||||||
| December 7, 2024 | December 2, 2023 | |||||||
| Net cash provided by operating activities | $ | 2,189 | $ | 3,837 | ||||
| Additions to fixed assets | (188 | ) | (32 | ) | ||||
| Additions to intangible assets | (174 | ) | (128 | ) | ||||
| Free cash flow | $ | 1,827 | $ | 3,677 | ||||
| Payments made to reorganization and other related costs | - | 330 | ||||||
| Payments made to acquisition costs | 27 | - | ||||||
| Adjusted free cash flow | $ | 1,854 | $ | 4,007 | ||||
TOTAL NET DEBT TO ADJUSTED EBITDA1
(In thousands of Canadian dollars, except ratio information)
| December 7, 2024 | December 2, 2023 | |||||
| Debt | $ | - | $ | 2,075 | ||
| Convertible debentures, liability component, including current portion | 45,683 | 42,597 | ||||
| Total debt | 45,683 | 44,672 | ||||
| Cash and cash equivalents | 21,263 | 24,862 | ||||
| Total net debt | 24,420 | 19,810 | ||||
| Adjusted EBITDA (last four quarters)1 | 9,252 | 8,452 | ||||
| Total net debt to adjusted EBITDA1 | 2.64 | 2.34 | ||||
FINANCIAL OUTLOOK
Goodfood's core purpose is to create experiences that spark joy and help our community live longer on a healthier planet. As a food brand with a strong following from Canadians coast to coast, we are focused on growing the Goodfood brand through our meal solutions including meal kits and prepared meals, with a range of exciting Goodfood branded add-ons to complete a unique food experience for customers.
We believe there is runway for additional penetration of meal kits into Canadian households, as evidenced by 2024 industry research estimating Canadian meal kit household penetration to reach 4.2% by 2029 (up from current 3.5%), implying a compound annual gross rate (CAGR) in the high single digit percentage points through 2029 (See Goodfood's 2024 Annual Information Form for additional information and details).
Before scaling our efforts to capture an outsized share of the Canadian meal solutions market, our focus continues to be on further growing cash flows. We are pleased to have now reported eight consecutive quarters of positive adjusted EBITDA1, which on a last four quarters basis amounts to $9.3 million. The consistent adjusted EBITDA1 generated has led to significant adjusted free cash flow1 improvement which has now been positive in five of our last eight quarters. These results help position Goodfood to fund its growth with internally generated cash flows.
To grow our customer base, we first aimed to build customer acquisition cost efficiencies. We have also made and continue to make investments in our digital product to elevate the customer experience by reducing friction and enhancing ease of use. Combined with reactivations of previous Goodfood members, these initiatives have driven a double-digit percentage reduction of our customer acquisition costs year-over-year and improved the profitability and unit economics of customers.
To capture more of Canadian's food wallet, we have increasingly enhanced product variety as a driver of order frequency. We have increased the diversity of our recipe and ingredient offering to provide additional choices to enhance order rate. With a focus on Better-for-You products like organic chicken breasts, organic lean ground beef, wild-caught cod, bison, sustainably raised steelhead trout, ground turkey and paleo and keto meals, combined with exciting partnerships with first-rate restaurants and chefs, we plan on offering a growing and mouth-watering selection to customers to drive consistently increasing order frequency. Also, to capture customers increasingly looking for value, we have launched a new Value plan, starting at $9.99 a portion and we are testing various plan adjustments to attract a broader set of customers to our delicious meals.
As a result, the dollar-value of the baskets our customers are building is also increasing compared to last year and we are building a differentiated set of meal kits, ready-to-eat meals and grocery add-ons to provide Canadians with an exciting online meal solutions option and increasingly capture a larger share of their food wallet. In addition, we have provided and continue to provide more choice of proteins to our customers, with the launch of upsells and customization within our meal-kit recipes allowing customers to swap or double the proteins included in their chosen recipes. With these initiatives, we aim to provide customers with an array of options to easily make their meals better and their baskets bigger.
We are also continuously looking to enhance our sustainability initiatives by prioritizing planet-friendly options. Not only do we offer perfectly portioned ingredients to reduce food waste, we also constantly look to simplify our supply chain by removing middlemen from farm to kitchen table. This year, we are also aiming to offset carbon emissions on deliveries and introducing packaging innovations that have helped us to remove the equivalent of 2.4 million plastic bags annually from our deliveries. Our goal is clear, build a business that helps our customers live healthier lives on a healthier planet. (See Goodfood's 2024 Annual Information Form for additional information and details on Goodfood's partnership with Carbonzero and its Fiscal 2023 Greenhouse Gas Emissions Inventory).
In addition to focusing on these key pillars of top-line growth, we are increasingly considering various other growth avenues, incl