Transformation of Aegis into a consolidator in
the food and beverage space continues
TORONTO, Nov. 8, 2021 /CNW/ - Today, Aegis Brands
Inc. (TSX: AEG) is reporting financial results for the third
quarter ended September
- Aegis closed the strategic transaction with Kiaro on
September 24th, 2021,
resulting in a gain of $5,295,000.
- Aegis' Total Comprehensive Income in the quarter was
$2,096,000 or $0.09 per share compared to a Loss of
$751,000 or $0.03 per share last year.
- Aegis' Net Loss from continuing operations was $1,810,000 compared to a Loss of $1,052,000 in the same quarter last year.
- Bridgehead's Same Store Sales (SSS) for the quarter and year to
date were +19% and +17% respectively over the same periods in 2020.
Comparing to pre-pandemic levels in 2019, SSS are down 32%.
- Bridgehead's EBITDA for the quarter and year to date was
$590,000 and $2,047,000 respectively, compared with
$1,491,000 and $1,032,000 last year.
Sales at Bridgehead coffeehouses improved
throughout the third quarter, with the fourth wave of the COVID-19
pandemic not being as severe as feared. Q3 Same Store Sales (SSS)
rose by 19% and were down 32% compared to 2019. This is an
improvement over being down 46% in the previous quarter. Due to the
lower sales compared to pre-pandemic times, the coffeehouses are
reliant on the continued government subsidies until sales approach
2019 levels. Total revenues and bottom-line improvement are
due to the emergence of Bridgehead's e-commerce and wholesale
business. Year to date Bridgehead has Net Loss of $209,000 compared with $937,000 last
As the leadership team at Bridgehead continues to innovate,
reposition and expand, they remain focused on the growth
of three key distribution channels: online, wholesale and
coffeehouses. The most recent coffeehouse opening at Carleton University in August 2021 has quickly become one of the best
performers in the company.
Bridgehead's e-commerce and wholesale business segments
represent 19% of YTD sales. These sales produce 44% and 37%
respectively in EBITDA contribution while requiring relatively
little capital and additional overhead expense.
Bridgehead is focused on expanding Bridgehead's
asset-light e-commerce and wholesale
business segments, as they have the potential
to contribute strong profitability looking forward.
On September 24, 2021, Aegis
closed a strategic transaction with Kiaro Holdings Corp.
("Kiaro"), a TSX-V-listed cannabis retailer and wholesale
distributor, and sold its Hemisphere subsidiary in consideration
for a ~25% equity stake in Kiaro. "We believe in Kiaro's
ability to be successful in a highly competitive space, growing in
size through both organic growth and M&A activities to become
one of the leaders in the cannabis space" said Steven Pelton, President and CEO of Aegis Brands
Inc. Aegis is currently the largest shareholder with
68,000,000 Kiaro common shares. Aegis CEO Steven Pelton sits on the board of Kiaro.
Aegis Brands Inc.
With the sale of Second Cup and the Hemisphere transaction with
Kiaro both complete, the transformation of Aegis is well
underway. As North America starts to return to
pre-pandemic activities, Aegis is eager
to expand its presence in the food and beverage
sector through acquisitions and partnerships with great
Consumers are enthusiastically returning to food
service locations following a period of growing household
savings, and with fewer options to choose from. As
restrictions continue to loosen from a fourth wave that was not as
impactful as feared, Canadians are excited about visiting their
favourite restaurants. The hospitality industry is expected to make
a strong comeback with full service restaurant sales expected to
grow from $25.6 billion in 2021 to
$35.2 billion in 2022, according to
Restaurants Canada. Meanwhile many Quick service brands have seen
steady or increasing revenue since the middle of 2020. The outlook
for Fast Casual and QSR brands that have embraced delivery, order
ahead and other digital enhancements adopted during the pandemic
"We believe that the environment is right to start expanding our
presence in the food and beverage space," said Pelton. "The
conditions have created a great opportunity for Aegis to acquire
and consolidate great restaurant brands and support the
entrepreneurs behind them."
Aegis measures the success of its business in part by employing
several key performance indicators referenced herein that are not
recognized under IFRS, including Same Store Sales and EBITDA. These
indicators should not be considered an alternative to IFRS
financial measures, such as net income, and are presented in this
presentation because management of Aegis believes that such
measures are relevant in interpreting the performance of its
business. As non–IFRS financial measures do not have standardized
definitions prescribed by IFRS, they are less likely to be
comparable with other issuers or peer companies. A description of
the non–IFRS measures used by Aegis in measuring its performance
and a reconciliation of certain non–IFRS measures to the
nearest IFRS measure is included in Aegis' management's discussion
and analysis for the third quarter ended September 25, 2021 available on SEDAR at
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of Canadian securities laws. These forward-looking
statements contain statements of intent, belief or current
expectations of Aegis. Forward-looking information is often, but
not always identified by the use of words such as "anticipate",
"believe", "expect", "plan", "intend", "forecast", "target",
"project", "may", "will", "should", "could", "estimate", "predict"
or similar words suggesting future outcomes or language suggesting
The forward-looking statements included in this press release,
including statements regarding the nature of Aegis'
growth strategy going forward, the ability of Kiaro to grow
organically and through M&A, Aegis' execution of its
potential plans (including with respect to the growth and
development of Bridgehead Coffee and identification of future
acquisition targets and partnership candidates) and the expected
comeback of the hospitality industry, are not guarantees of future
results and involve risks and uncertainties that may cause actual
results to differ materially from the potential results discussed
in the forward-looking statements.
Risks and uncertainties that may cause such differences include
but are not limited to: risks that the sale of Hemisphere
may have a negative impact on the market price and liquidity
of Aegis' common shares; risks related to the
company's strategy going forward; risks related to the COVID-19
pandemic; and other risks inherent in the industry in which Aegis
operates. Accordingly, readers should not place undue reliance on
the forward-looking statements and information contained in this
news release. Additional information on these and other
factors that could affect Aegis' operations or financial results
are included in reports on file with applicable securities
regulatory authorities and may be accessed through the SEDAR
In respect of the forward-looking statements and information
included in this press release, Aegis has provided such in reliance
on certain assumptions that it believes are reasonable at this
time, including the ability of the company to manage the risks
(economic, operational, financial, and other risks) associated with
the COVID-19 pandemic, the ability of the company to identify new
acquisition opportunities and to successfully integrate past and
future acquisition targets into the company's business, and the
company's ability to generally execute on its strategy going
The forward-looking statements in this press release are made as
of the date it was issued and Aegis does not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
About Aegis Brands Inc.
Aegis Brands Inc. currently owns and operates
Bridgehead Coffee. The company's vision is to build a portfolio of
amazing brands that can grow and flourish with access to Aegis'
resources and expertise. The company is committed to letting each
brand operate independently while providing shared expertise to
help them thrive.
For more information, please visit aegisbrands.ca.
SOURCE Aegis Brands Inc.