- The sale of the Verona Facility allows Flow to focus on the
profitable growth of the Flow brand, simplifying its operating
structure and improving its balance sheet
- BioSteel's purchase of the Verona production facility enables
vertical integration in support of BioSteel's rapid growth
strategy
- BioSteel and Flow enter into co-manufacturing agreement to
support an efficient transition while maximizing facility
utilization
- Flow maintains ownership of the 144-acre Verona, Virginia spring water source
TORONTO, Nov. 9, 2022
/PRNewswire/ - Flow Beverage Corp. (TSX: FLOW) (OTCQX: FLWBF)
(the "Company" or "Flow") today announced that it has reached a
definitive agreement with an affiliate of BioSteel Sports Nutrition
Inc. ("BioSteel") whereby BioSteel has purchased all the assets of
the Company's production facility located in Verona, Virginia (the "Verona Facility") for a
purchase price of US$19.5 million,
comprised of US$13.2 million in cash
and US$6.3 million for the repayment
of debt and the retirement of lease obligations (the
"Transaction").
To support Verona Facility utilization and an efficient
transition for both parties, Flow and BioSteel have also entered
into a co-manufacturing agreement (the "CMA") whereby BioSteel will
produce Flow's portfolio of branded water at the Verona
Facility, in addition to the production of BioSteel-branded sports
hydration drinks on site. All active employees at the Verona
Facility will become employees of BioSteel following a post-closing
transition period.
Nicholas Reichenbach, Founder
and Chief Executive Officer of Flow, stated: "The sale of the
Verona production facility is a major milestone towards achieving
profitable growth of the Flow brand. Through a significant
reduction in our operating expenses associated with operating
Verona and a material reduction in related future lease
obligations, we have meaningfully improved our financial position
and streamlined our organization. By maintaining ownership of our
Virginia artesian spring and securing a
co-manufacturing agreement with BioSteel, we expect continuity in
our supply chain as we invest in continued revenue growth in the
U.S."
Bruce Jacobson, President of
BioSteel, stated: "BioSteel is growing at a record pace,
with thousands of new points of distribution added since the
beginning of the year, and this acquisition allows us to unlock
greater efficiency in our business as we achieve full vertical
integration of our U.S. operations. As we move toward the top of
the sports drink category, this agreement also supports our ability
to consistently supply our premium ready-to-drink sports drinks,
packaged in environmentally friendly Tetra Paks, which is a
competitive advantage, and support our consumers with the Clean.
Healthy. Hydration. that the next generation of athletes
demands."
Strategic Rationale for Flow:
- Accelerating profitability for the Flow brand –
the Transaction allows Flow to focus its investments on sales and
marketing, accelerating the path towards profitable growth of the
Flow brand.
- Improved operating cash flow – the Transaction
simplifies Flow's operating model in the U.S., providing consistent
cost of goods sold and improving its balance sheet.
- CMA provides continuity in operations – the
long-term CMA helps ensure continuity in the production of Flow's
portfolio of branded water at the production facility.
- Flow retains spring water source – Flow maintains
its ownership of the 144-acre Virginia
spring, securing local supply of naturally alkaline water from an
artesian spring and allowing the Company to maintain its world
class ESG practices.
Strategic Rationale for BioSteel:
- Supports rapid growth strategy and expansion of U.S.
footprint – as BioSteel continues to grow its distribution
in the U.S. at a record pace, this acquisition is a natural next
step and provides a unique opportunity to take more control of its
own supply chain while creating additional business value.
- Vertical integration – by taking full
control of BioSteel ready-to-drink production in the U.S., the
brand is taking its next critical step on its path to the top of
the sports hydration category. Additionally, the CMA with Flow also
facilitates effective facility utilization.
- Commitment to sustainable packaging as a competitive
differentiator – BioSteel will ensure security of supply of
its ready-to-drink sports drinks that are packaged in eco-friendly
Tetra Paks, which are recyclable and feature a plant-based cap, a
key differentiator in the sports drink category and a critical
element of BioSteel's better for you (and the planet) value
proposition.
About Flow
Flow is one of the fastest-growing premium
water companies in North America.
Founded in 2014, Flow's mission since day one has been to reduce
environmental impacts by providing sustainably sourced naturally
alkaline spring water in a recyclable and up to 75% renewable,
plant-based pack. Today, the brand is B-Corp Certified with a
best-in-class score of 126.5, offering a diversified line of health
and wellness-oriented beverage products: original naturally
alkaline spring water, award-winning organic flavours,
collagen-infused and vitamin-infused flavours in sizes ranging from
330-ml to 1-litre. All products contain naturally occurring
electrolytes and essential minerals and support Flow's overarching
purpose to "bring wellness to the world through the positive power
of water." Flow beverage products are available online at
flowhydration.com and are sold at over 36,000 stores across
North America.
For more information on Flow, please visit Flow's investor
relations site at: investors.flowhydration.com.
About BioSteel
BioSteel is a North American beverage
brand committed to delivering premium Clean. Healthy. Hydration™.
to consumers and athletes across the globe. Each BioSteel sports
drink is sugar-free and comes in an eco-friendly Tetra Pak filled
with premium ingredients, natural flavors and essential nutrients
needed to support physical activity. Perfect for everyone from
health and environmentally conscious consumers to world class
athletes, BioSteel hydration products are currently readily
available across North America,
globally with select retail partners, and direct to consumers
online through www.biosteel.com.
Cautionary Statement
This press release may contain
"forward-looking statements" within the meaning of applicable
Canadian securities legislation. Such forward-looking statements
include, but are not limited to, information with respect to our
objectives and the strategies for achieving those objectives,
including profitable growth of the Flow brand and
improved operating cash flow as well as information with respect to
our beliefs, plans, expectations, anticipations, estimates and
intentions. Forward-looking statements are typically identified by
the use of words such as "may", "would", "should", "could",
"expect", "intend", "estimate", "anticipate", "plan", "foresee",
"believe", or "continue", although not all forward-looking
statements contain these words. Forward-looking statements are
provided for the purposes of assisting the reader in understanding
Flow and its business, operations, prospects, and risks at a point
in time in the context of historical and possible future
developments, and the reader is therefore cautioned that such
information may not be appropriate for other purposes.
Forward-looking statements are based on assumptions and are subject
to a number of risks and uncertainties, many of which are beyond
our control, which could cause actual results to differ materially
from those that are disclosed in or implied by such forward-looking
statements. Those risks and uncertainties include the following:
impact and spread of COVID-19; ability to achieve and manage
growth; failure to expand sales capabilities; changes in consumer
preferences; criticism of packaged water; maintain brand image and
product quality; constrained or unavailable spring water sources;
inability to package products; increased competition; accurately
estimating demand; maintaining relationships with distributors and
vendors; changing retail landscape; incorrect product design or
development; product information misrepresentation; revenues
derived entirely from packaged beverages; increases in costs or
shortages of materials; fluctuation of quarterly operating results;
no assurance of profitability; fluctuations in foreign currency;
changes in government regulation; contamination or recalls of
ingredients or end products; loss of intellectual property rights;
litigation; future tax rates; catastrophic events; climate change;
seasonal business; dependence on key information systems and
third-party service providers; ability to securely maintain
confidential information; maintaining and upgrading information
technology systems; conflict of interest; dual class share
structure; potential volatility of share price; no assurance of
active market for shares; lack of dividends; global financial
condition; publication of inaccurate or unfavourable research and
reports; operating history; and management and conflict of
interests. Consequently, all of the forward-looking statements
contained herein are qualified by the foregoing cautionary
statements, and there can be no guarantee that the results or
developments that we anticipate will be realized or, even if
substantially realized, that they will have the expected
consequences or effects on our business, financial condition or
results of operation. Unless otherwise noted or the context
otherwise indicates, the forward looking. statements contained
herein are provided as of the date hereof, and we do not undertake
to update or amend such forward-looking statements whether as a
result of new information, future events or otherwise, except as
may be required by applicable law.
For further information:
Flow, Trent MacDonald, Chief Financial
Officer, 1-844-356-9426, investors@flowhydration.com;
Investors: Marc
Charbin, investors@flowhydration.com;
Media: Natasha Koifman, nk@nkpr.net,
BioSteel, Rachel Spraker, rachel.spraker@canopygrowth.com
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SOURCE BioSteel Sports Nutrition Inc.