Knight Therapeutics Inc. (TSX: GUD) ("Knight" or “the Company”), a
leading pan-American (ex-US) specialty pharmaceutical company,
today reported financial results for its second quarter ended
June 30, 2023. All currency amounts are in thousands except
for share and per share amounts. All currencies are Canadian unless
otherwise specified.
Q2 2023
Highlights
Financial Results
- Revenues were
$89,905, an increase of $14,085 or 19% over the same period in
prior year.
- Gross margin
of $37,493 or 42% compared to $38,295 or 51% in the same period in
prior year.
- Adjusted
EBITDA1 was $14,269, a decrease of $3,621 or 20% over the same
period in prior year.
- Adjusted
EBITDA per share1 of $0.13, a decrease of $0.02 or 15% over the
same period in prior year.
- Net gain on
financial assets measured at fair value through profit or loss of
$3,939.
- Net income was
$1,840, compared to $2,516 in the same period in the prior
year.
- Cash outflow
from operations was $1,486, compared to a cash inflow from
operations of $13,249 in the same period in prior year.
Corporate Developments
- Purchased
2,875,020 common shares through Knight’s NCIB at an average price
of $4.78 for aggregate cash consideration of $13,733.
Products
- Submitted Pemazyre® (pemigatinib)
for regulatory approval in Argentina and Mexico.
- Submitted Minjuvi® (tafasitamab)
for regulatory approval in Mexico.
- Submitted Rembre® (dasatinib) and
Karfib® (carfilzomib) for regulatory approval in Chile.
- Obtained regulatory approval for
Xetrane® (pomalidomide) in Chile.
Subsequent to quarter-end
- Submitted marketing authorization for
Tavalisse® (fostamatinib) in Colombia and Mexico.
- Obtained
regulatory approval for Minjuvi® (tafasitamab) in Brazil.
- Launched a
NCIB in July 2023 to purchase up to 5,999,524 common shares of the
Company.
“I am excited to report that Knight achieved
record revenues this quarter. During the first six months of 2023,
Knight has delivered revenues of over $172 million and adjusted
EBITDA of over $32 million, a growth of 24% and 4%, respectively,
compared to the same prior year period. The strong performance is a
testament to the hard work and dedication of our team and the
continued success of our portfolio. In addition, our team continues
to focus on advance our pipeline, with the submission of innovative
and branded generic products across our territories” said Samira
Sakhia, President and Chief Executive Officer of Knight
Therapeutics Inc.
1 Adjusted EBITDA and Adjusted EBITDA per share
are non-GAAP measures and ratios, refer to section "Non-GAAP
measures" and "Reconciliation to adjusted EBITDA" for additional
details.
SELECT FINANCIAL RESULTS REPORTED UNDER
IFRS[In thousands of Canadian dollars]
| |
|
|
Change |
|
|
Change |
|
|
Q2-23 |
|
Q2-22 |
|
$1 |
|
%2 |
|
YTD-23 |
|
YTD-22 |
|
$1 |
|
%2 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
89,905 |
|
75,820 |
|
14,085 |
|
19 |
% |
172,502 |
|
139,627 |
|
32,875 |
|
24 |
% |
|
Gross margin |
37,493 |
|
38,295 |
|
(802 |
) |
2 |
% |
78,255 |
|
70,772 |
|
7,483 |
|
11 |
% |
|
Gross margin % |
42 |
% |
51 |
% |
— |
|
— |
|
45 |
% |
51 |
% |
— |
|
— |
|
|
Operating expenses4 |
37,603 |
|
35,959 |
|
(1,644 |
) |
5 |
% |
72,732 |
|
68,752 |
|
(3,980 |
) |
6 |
% |
|
Net income (loss) |
1,840 |
|
2,516 |
|
(676 |
) |
27 |
% |
(2,097 |
) |
(16,295 |
) |
14,198 |
|
87 |
% |
|
EBITDA3 |
14,269 |
|
17,890 |
|
(3,621 |
) |
20 |
% |
32,506 |
|
31,202 |
|
1,304 |
|
4 |
% |
|
Adjusted EBITDA3 |
14,269 |
|
17,890 |
|
(3,621 |
) |
20 |
% |
32,506 |
|
31,202 |
|
1,304 |
|
4 |
% |
1 A positive variance represents a positive
impact to net income (loss) and a negative variance represents a
negative impact to net income (loss).2 Percentage change is
presented in absolute values.3 EBITDA and adjusted EBITDA are
non-GAAP measures, refer to the definitions in section “Non-GAAP
measures” for additional details.4 Operating expenses include
selling and marketing expenses, general and administrative
expenses, research and development expenses, amortization and
impairment of intangible assets.
SELECT FINANCIAL RESULTS AT CONSTANT
CURRENCY[In thousands of Canadian dollars]
|
|
Q2-23 |
|
Q2-22 |
|
Variance |
YTD-23 |
|
YTD-22 |
|
Variance |
|
Excluding impact of IAS 291 |
|
|
Constant Currency1 |
$2 |
|
%3 |
|
|
Constant Currency1 |
$2 |
|
%3 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
90,400 |
|
77,082 |
|
13,318 |
|
17 |
% |
173,067 |
|
143,102 |
|
29,965 |
|
21 |
% |
|
Gross margin |
40,244 |
|
42,345 |
|
(2,101 |
) |
5 |
% |
81,630 |
|
77,498 |
|
4,132 |
|
5 |
% |
|
Gross margin % |
45 |
% |
55 |
% |
— |
|
— |
|
47 |
% |
54 |
% |
— |
|
— |
|
|
Operating expenses4 |
37,985 |
|
34,888 |
|
(3,097 |
) |
9 |
% |
72,812 |
|
67,802 |
|
(5,010 |
) |
7 |
% |
|
EBITDA1 |
14,269 |
|
19,079 |
|
(4,810 |
) |
25 |
% |
32,506 |
|
33,272 |
|
(766 |
) |
2 |
% |
|
Adjusted EBITDA1 |
14,269 |
|
19,079 |
|
(4,810 |
) |
25 |
% |
32,506 |
|
33,272 |
|
(766 |
) |
2 |
% |
1 Financial results at constant currency,
excluding the impact of hyperinflation, EBITDA and adjusted EBITDA
are non-GAAP measures. Refer to section “Non-GAAP measures” and
"Reconciliation to adjusted EBITDA" for additional details.2 A
positive variance represents a positive impact to net income and a
negative variance represents a negative impact to net
income.3 Percentage change is presented in absolute
values.4 Operating expenses include selling and marketing
expenses, general and administrative expenses, research and
development expenses, amortization and impairment of non-current
assets.
SELECT BALANCE SHEET ITEMS[In
thousands of Canadian dollars]
|
|
|
|
Change |
|
|
June 30,2023 |
December 31,2022 |
$ |
|
%1 |
|
|
|
|
|
|
|
|
Cash, cash equivalents and marketable securities |
141,623 |
172,674 |
(31,051 |
) |
18 |
% |
|
Trade and other receivables |
161,755 |
151,669 |
10,086 |
|
7 |
% |
|
Inventory |
98,682 |
92,489 |
6,193 |
|
7 |
% |
|
Financial assets |
160,881 |
176,563 |
(15,682 |
) |
9 |
% |
|
Accounts payable and accrued liabilities |
96,365 |
108,730 |
(12,365 |
) |
11 |
% |
|
Bank loans |
72,461 |
70,072 |
2,389 |
|
3 |
% |
1 Percentage change is presented in
absolute values.
Revenues: For the quarter ended
June 30, 2023, excluding the impact of hyperinflation,
revenues increased by $15,379 or 20% compared to the same period in
prior year. The appreciation of select LATAM currencies led to an
increase in revenues of $2,061 in Q2-23 compared to Q2-22. The
revenues by therapeutic areas are as follows:
| |
Excluding impact of IAS 293 |
| |
|
|
Change |
|
Therapeutic Area |
Q2-23 |
Q2-22 |
$1 |
|
%2 |
|
|
Oncology/Hematology |
27,935 |
26,034 |
1,901 |
|
7 |
% |
|
Infectious Diseases |
45,567 |
29,860 |
15,707 |
|
53 |
% |
|
Other Specialty |
16,898 |
19,127 |
(2,229 |
) |
12 |
% |
|
Total |
90,400 |
75,021 |
15,379 |
|
20 |
% |
1 A positive variance represents a positive
impact to net income due to the application of IAS 29 and a
negative variance represents a negative impact to net income due to
the application of IAS 29.2 Percentage change is presented in
absolute values.3 Revenues excluding the impact of IAS 29 is a
non-GAAP measure, refer to section “Non-GAAP measures” for
additional details.
The increase in revenues excluding the impact of
hyperinflation is explained by the following:
-
Oncology/Hematology: The oncology/hematology
portfolio grew by approximately $5,923 due to continued growth of
key promoted products including Lenvima®, Trelstar®, Rembre® and
the assumption of commercial activities of Akynzeo® in Brazil,
Argentina and Canada. This increase is offset by a reduction of
approximately $4,000 in revenues of our mature and branded generics
products due to their lifecycle including the market entrance of
new competitors.
- Infectious
Diseases: The infectious disease portfolio grew by
approximately $18,913, excluding the impact of the planned
transition and termination of the Gilead Amendment. The increase is
driven by the revenues of $18,000 related to the sales contract the
with the Ministry of Health in Brazil for Ambisome® ("MOH
Contract"), and the growth of our key promoted products including
Cresemba®.
- Other Specialty:
The decrease in the other specialty portfolio is primarily driven
by a net decrease of the revenues of Exelon® of $1,500 due to the
transition from Novartis to Knight. The revenues of Exelon®
declined by approximately $7,500 in Q2-23 versus Q2-22 due to the
transition of commercial operations from Novartis to Knight. The
revenues in Q2-23 were negatively impacted due to advanced
purchases in Q1-23 in connection with transition of commercial
operations, primarily in Mexico. In addition, in Q2-22, Knight
recorded higher revenues due to the advanced purchases in
connection with the transition of commercial operations, primarily
in Brazil and Colombia. The decrease is offset by an estimated
$6,000 additional revenues recognized due to the change in
accounting treatment from net profit transfer to revenues with
related cost of sales upon the transition.
Gross margin: For the quarter
ended June 30, 2023, gross margin, as a percentage of
revenues, was 42% in Q2-23 and 51% Q2-22. Excluding the impact of
IAS 29, gross margin, as a percentage of revenues, was 45% in Q2-23
and 54% in Q2-22. Exelon® was recorded as a net profit transfer
from Novartis in Q2-22. If Knight had reported revenues and related
cost of sales for Exelon® instead of a net profit transfer, the
gross margin would have been 50% ("Adjusted Gross Margin"). The
decrease in the Adjusted Gross Margin of 50% in Q2-22 to 45% in
Q2-23 is due to product mix.1
Selling and marketing
(“S&M”): For the quarter ended June 30, 2023,
S&M expenses were $12,874, an increase of $1,948 or 18%,
compared to the same period in prior year. Excluding the impact of
IAS 29, the increase is $2,245 or 21%. The increase is driven an
expansion of the sales force structure as well as marketing
activities related to Exelon® upon the transition of commercial
activities from Novartis to Knight and Akynzeo® relaunched in
Brazil in Q3-22 and Canada in Q4-22. In addition, certain variable
costs such as logistics fees rose as a function of higher
revenues.
General and administrative
(“G&A”): For the quarter ended June 30, 2023,
G&A expenses were $9,119, a decrease of $1,447 or 14%, compared
to the same period in prior year. Excluding the impact of IAS 29,
the decrease is $528 or 5%.
Research and development
(“R&D”): For the quarter ended June 30, 2023,
R&D expenses were $4,336, an increase of $924 or 27%, compared
to the same period in prior year. Excluding the impact of IAS 29,
the increase is $1,458 or 46%. The increase is driven by an
expansion in our structure behind product development and medical
initiatives related to key promoted products including Akynzeo®
relaunched in Brazil Q3-22 and in Canada Q4-22.
Amortization and impairment of
intangible assets: For the quarter ended June 30,
2023, amortization and impairment of intangible assets was $11,274,
an increase of $219 or 2% compared to the same period in prior
year.
Interest income: Interest
income is the sum of interest income on financial instruments
measured at amortized cost and other interest income. For the
quarter ended June 30, 2023, interest income was $3,087, an
increase of $660 or 27%, compared to the same period in prior year.
The increase is driven by higher interest rates on cash and
marketable securities.
Interest expense: For the
quarter ended June 30, 2023, interest expenses were $3,004, an
increase of $1,287 or 75%, compared to the same period in prior
year. The increase is driven by higher average loan balance
resulting from IFC loan closed in December 2022 and higher variable
interest rates, partially offset by principal repayments of Itaú
Unibanco Brasil and Bancolombia bank loans.
Adjusted EBITDA: For the
three-month period ended June 30, 2023, adjusted EBITDA decreased
by $3,621 or 20%, driven by the decrease in gross margin and
increase in operating expenses.
Net income: For the quarter
ended June 30, 2023, net income was $1,840 compared to net
income of $2,516 for the same period in prior year. The variance
mainly resulted from the above-mentioned items and (1) a net gain
on the revaluation of financial assets measured at fair value
through profit or loss of $3,939 versus a net loss of $7,692 in the
same period in prior year, mainly due to unrealized revaluations of
the strategic fund investments, (2) a foreign exchange loss of
$4,918 in Q2-23 versus a foreign exchange gain of $4,507 in Q2-22
and (3) an income tax recovery of $1,628 in Q2-23 driven by the
recognition of certain deferred tax assets due to timing
differences related to our financial assets, tax loss in certain
jurisdictions and certain intercompany transactions, offset by
current income tax expense due to operating income, compared to the
income tax recovery of $1,009 in Q1-23.
1 Adjusted Gross Margin is a non-GAAP measure,
refer to section "Non-GAAP measures" for additional details.
Cash, cash equivalents and marketable
securities: As at June 30, 2023, Knight had $141,623
in cash, cash equivalents and marketable securities, a decrease of
$31,051 or 18% as compared to December 31, 2022. The variance is
primarily due to outflows for certain regulatory and sales
milestones on certain products, including Akynzeo® and Aloxi® from
Helsinn, shares repurchased through NCIB, repayment of bank loans
partially offset by cash inflows from operating activities,
principal repayment of a strategic loan and proceeds from the
disposal of Medimetriks.
Financial assets: As at
June 30, 2023, financial assets were at $160,881, a decrease
of $15,682 or 9%, as compared December 31, 2022, driven mainly by
the mark-to-market adjustments of $8,029 due to the decline in the
share prices of the publicly-traded equities held by our strategic
fund investments and a strategic loan repayment of $5,357, offset
by capital calls on the funds. Given the nature of the fund
investments there could be significant fluctuations in the fair
value of the underlying assets.
Bank Loans: As at June 30,
2023, bank loans were at $72,461, an increase of $2,389 or 3% as
compared to December 31, 2022.
Product
Updates
During the quarter, Knight submitted the
marketing authorization applications for two innovative products,
Pemazyre® (pemigatinib) in Argentina and Mexico and Minjuvi®
(tafasitamab) in Mexico. Knight advanced its branded generics
portfolio, particularly in Chile, with the submission of the
marketing authorization applications for Rembre® (dasatinib) and
Karfib® (carfilzomib) and obtained regulatory approval of Xetrane®
(pomalidomide).
Subsequent to the quarter, Knight submitted
marketing authorization applications for fostamatinib, for the
treatment of thrombocytopenia in adult patients with chronic immune
thrombocytopenia (ITP) who have had an insufficient response to a
previous treatment, for regulatory approval in Mexico and Colombia.
In addition, the Company received the regulatory approval in Brazil
for Minjuvi®, in combination with lenalidomide followed by
tafasitamab monotherapy for the treatment of adult patients with
relapsed or refractory diffuse large B-cell lymphoma (DLBCL),
including DLBCL due to low-grade lymphoma, who are not eligible for
autologous stem cell transplantation (ASCT). Upon obtaining the
marketing authorization from ANVISA, Knight submitted an
application for pricing approval to Drugs Market Regulation Chamber
(“CMED”) which establishes maximum prices allowed for drugs sold in
Brazil. The timing and outcome of the pricing approval process is
uncertain and could take up to two years. The commercial launch of
Minjuvi® is dependent on obtaining a favorable CMED price.
Corporate Updates
NCIB
On July 12, 2023, the Company announced that the
Toronto Stock Exchange approved its notice of intention to launch a
NCIB (“2023 NCIB”). Under the terms of the 2023 NCIB, Knight may
purchase for cancellation up to 5,999,524 common shares of the
Company which represented 10% of its public float as at June 30,
2023. The 2023 NCIB commenced on July 14, 2023 and will end on the
earlier of July 13, 2024 or when the Company completes its maximum
purchases under the NCIB. Furthermore, Knight entered into an
agreement with a broker to facilitate purchases of its common
shares under the NCIB.
During the three month period ended June 30,
2023, the Company purchased 2,875,020 common shares at an average
price of $4.78 for aggregate cash consideration of $13,733 of which
$215 remains to be settled as at June 30, 2023. Subsequent to
quarter-end up to August 3, 2023, the Company purchased an
additional 480,434 common shares at an average purchase price of
$4.87 for an aggregate cash consideration of $2,341.
Financial Outlook Update
Knight provides guidance on revenues1 on a
non-GAAP basis. This is due to both the difficulty in predicting
Argentinian inflation rates and its IAS 29 impact.
For fiscal 2023, Knight has updated its
financial guidance on revenues and expects to generate between $310
million to $330 million in revenues an increase of $10 million on
the lower and upper end of the range. The adjusted EBITDA is
expected to be between 16% to 17% of revenues. The increase in the
financial outlook is primarily due to an improvement in LATAM
currencies against the Canadian dollar in the second quarter of
2023. The guidance is based on a number of assumptions, including
but not limited to the following:
- no revenues for
business development transactions not completed as at August 10,
2023
- discontinuation
of certain distribution agreements
- no interruptions
in supply whether due to global supply chain disruptions or general
manufacturing issues
- no new generic
entrants on our key pharmaceutical brands
- no unforeseen
changes to government mandated pricing regulations
- successful
commercial execution on product listing arrangements with HMOs,
insurers, key accounts, and public payers
- successful
execution and uptake of newly launched products
- no significant
restrictions or economic shut down due to global pandemics
- foreign currency
exchange rates remaining within forecasted ranges
Should any of the assumptions differ, the
financial outlook and the actual results may vary materially. Refer
to the risks and assumptions referred to in the Forward-Looking
Statements section of this news release for further details.
1 Revenues excluding the impact of IAS 29 is a
non-GAAP measure, refer to the definitions in section “Non-GAAP
measures” for additional details.
Conference Call
Notice
Knight will host a conference call and audio
webcast to discuss its second quarter ended June 30, 2023,
today at 8:30 am ET. Knight cordially invites all interested
parties to participate in this call.
Date: Thursday, August 10,
2023Time: 8:30 a.m. ETTelephone:
Toll Free: 1-888-664-6383 or International
1-416-764-8650Webcast: www.knighttx.com or
WebcastThis is a listen-only audio webcast. Media Player is
required to listen to the broadcast.
Replay: An archived replay will be
available for 30 days at www.knighttx.com
About Knight Therapeutics
Inc.
Knight Therapeutics Inc., headquartered in
Montreal, Canada, is a specialty pharmaceutical company focused on
acquiring or in-licensing and commercializing pharmaceutical
products for Canada and Latin America. Knight's Latin American
subsidiaries operate under United Medical, Biotoscana Farma and
Laboratorio LKM. Knight Therapeutics Inc.'s shares trade on TSX
under the symbol GUD. For more information about Knight
Therapeutics Inc., please visit the company's web site at
www.knighttx.com or www.sedar.com.
Forward-Looking Statement
This document contains forward-looking
statements for Knight Therapeutics Inc. and its subsidiaries. These
forward-looking statements, by their nature, necessarily involve
risks and uncertainties that could cause actual results to differ
materially from those contemplated by the forward-looking
statements. Knight Therapeutics Inc. considers the assumptions on
which these forward-looking statements are based to be reasonable
at the time they were prepared but cautions the reader that these
assumptions regarding future events, many of which are beyond the
control of Knight Therapeutics Inc. and its subsidiaries, may
ultimately prove to be incorrect. Factors and risks, which could
cause actual results to differ materially from current expectations
are discussed in Knight Therapeutics Inc.'s Annual Report and in
Knight Therapeutics Inc.'s Annual Information Form for the year
ended December 31, 2022 as filed on www.sedar.com. Knight
Therapeutics Inc. disclaims any intention or obligation to update
or revise any forward-looking statements whether because of new
information or future events, except as required by law.
CONTACT INFORMATION:
|
Investor Contact: |
|
|
Knight Therapeutics Inc. |
|
|
Samira Sakhia |
Arvind Utchanah |
|
President & Chief Executive Officer |
Chief Financial Officer |
|
T: 514-484-4483 |
T. +598.2626.2344 |
|
F: 514-481-4116 |
|
|
Email: info@knighttx.com |
Email: info@knighttx.com |
|
Website: www.knighttx.com |
Website: www.knighttx.com |
IMPACT OF HYPERINFLATION[In
thousands of Canadian dollars]
The Company applies IAS 29, Financial Reporting
in Hyperinflation Economies, as the Company's Argentine
subsidiaries used the Argentine Peso as their functional currency.
IAS 29 requires that the financial statements of an entity whose
functional currency is the currency of a hyperinflationary economy
be adjusted based on an appropriate general price index to express
the effects of inflation. If the Company did not apply IAS 29, the
effect on the Company's operating income would be as follows:
|
|
Q2-23 |
YTD-23 |
|
|
Reported under IFRS |
Excluding impact of IAS 291 |
Variance |
Reported under IFRS |
Excluding impact of IAS 291 |
Variance |
|
|
$2 |
%3 |
$2 |
%3 |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
89,905 |
|
90,400 |
|
(495 |
) |
1 |
% |
172,502 |
|
173,067 |
|
(565 |
) |
— |
% |
|
Cost of goods sold |
52,412 |
|
50,156 |
|
(2,256 |
) |
4 |
% |
94,247 |
|
91,437 |
|
(2,810 |
) |
3 |
% |
|
Gross margin |
37,493 |
|
40,244 |
|
(2,751 |
) |
7 |
% |
78,255 |
|
81,630 |
|
(3,375 |
) |
4 |
% |
|
Gross margin (%) |
42 |
% |
45 |
% |
|
|
45 |
% |
47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
Selling and marketing |
12,874 |
|
12,985 |
|
111 |
|
1 |
% |
23,539 |
|
23,698 |
|
159 |
|
1 |
% |
|
General and administrative |
9,119 |
|
9,188 |
|
69 |
|
1 |
% |
18,225 |
|
18,075 |
|
(150 |
) |
1 |
% |
|
Research and development |
4,336 |
|
4,623 |
|
287 |
|
6 |
% |
8,523 |
|
8,725 |
|
202 |
|
2 |
% |
|
Amortization and impairment of intangible assets |
11,274 |
|
11,189 |
|
(85 |
) |
1 |
% |
22,445 |
|
22,314 |
|
(131 |
) |
1 |
% |
|
Operating income (loss) |
(110 |
) |
2,259 |
|
(2,369 |
) |
105 |
% |
5,523 |
|
8,818 |
|
(3,295 |
) |
37 |
% |
1 Financial results excluding the impact of
hyperinflation is a non-GAAP measure. Refer to section “Non-GAAP
measures” for additional details.2 A positive variance
represents a positive impact on net income due to the application
of IAS 29 and a negative variance represents a negative impact on
net income due to the application of IAS 29.3 Percentage change is
presented in absolute values.
NON-GAAP MEASURES [In thousands
of Canadian dollars]
Non-GAAP measures
The Company discloses non-GAAP measures and
ratios that do not have standardized meanings prescribed by IFRS.
The Company believes that shareholders, investment analysts and
other readers find such measures helpful in understanding the
Company’s financial performance. Non-GAAP financial measures and
adjusted EBITDA per share ratio do not have any standardized
meaning prescribed by IFRS and may not have been calculated in the
same way as similarly named financial measures presented by other
companies.
The Company uses the following non-GAAP
measures:
Revenues and Financial results excluding
the impact of hyperinflation under IAS 29: Revenues and
financial results under IFRS are adjusted to remove the impact of
hyperinflation under IAS 29. The impact of hyperinflation under IAS
29 is calculated by applying an appropriate general price index to
express the effects of inflation. After applying the effects of
translation, the statement of income is converted using the closing
foreign exchange rate of the month.
Revenues and Financial results at
constant currency: Revenues/financial results at constant
currency are obtained by translating the prior period
revenues/financial results from the functional currencies to CAD
using the conversion rates in effect during the current period.
Furthermore, with respect to Argentina, the Company excludes the
impact of hyperinflation and translates the revenues/results at the
average exchange rate in effect for each of the periods.
Revenues/financial results at constant currency
allow revenues/financial results to be viewed without the impact of
fluctuations in foreign currency exchange rates thereby
facilitating the comparison of results period over period. The
presentation of revenues/financial results under constant currency
is considered to be a non-GAAP measure and does not have any
standardized meaning under GAAP. As a result, the information
presented may not be comparable to similar measures presented by
other companies.
Adjusted Gross Margin: Gross
margin is adjusted, to consider revenues and related cost of sales
for Exelon® separately, rather than presenting as
net profit transfer.
EBITDA: Operating income or
loss adjusted to exclude amortization and impairment of intangible
assets, depreciation, purchase price allocation accounting
adjustments, and the impact of IAS 29 (accounting under
hyperinflation) but to include costs related to leases.
Adjusted EBITDA: EBITDA
adjusted for acquisition costs and non-recurring expenses.
Adjusted EBITDA per share:
Adjusted EBITDA over number of common shares outstanding at the end
of the respective period.
Adjustments include the following:
- With the adoption of IFRS 16, the
lease payments of Knight are not reflected in operating expenses.
The IFRS 16 adjustment approximates the cash outflow related to
leases of Knight.
- Acquisition costs relate to costs
incurred on legal, consulting and advisory fees for the
acquisitions.
- Other non-recurring expenses relate
to expenses incurred by Knight that are not due to, and are not
expected to occur in, the ordinary course of business.
For the three and six-month period ended June
30, 2023, the Company calculated EBITDA and adjusted EBITDA as
follows:
|
|
|
|
Change |
|
|
Change |
|
|
Q2-23 |
|
Q2-22 |
|
$1 |
%2 |
YTD-23 |
YTD-22 |
$1 |
%2 |
|
Operating income (loss) |
(110 |
) |
2,336 |
|
(2,446 |
) |
105 |
% |
5,523 |
|
2,020 |
|
3,503 |
|
173 |
% |
|
Adjustments to operating income (loss): |
|
|
|
|
|
|
|
|
|
Amortization and impairment of intangible assets |
11,274 |
|
11,055 |
|
219 |
|
2 |
% |
22,445 |
|
22,343 |
|
102 |
|
— |
% |
|
Depreciation of property, plant and equipment and ROU assets |
884 |
|
2,723 |
|
(1,839 |
) |
68 |
% |
2,796 |
|
4,816 |
|
(2,020 |
) |
42 |
% |
|
Lease costs (IFRS 16 adjustment) |
(636 |
) |
(643 |
) |
7 |
|
1 |
% |
(1,367 |
) |
(1,289 |
) |
(78 |
) |
6 |
% |
|
Impact of IAS 29 |
2,857 |
|
2,419 |
|
438 |
|
18 |
% |
3,109 |
|
3,312 |
|
(203 |
) |
6 |
% |
|
EBITDA3 |
14,269 |
|
17,890 |
|
(3,621 |
) |
20 |
% |
32,506 |
|
31,202 |
|
1,304 |
|
4 |
% |
|
Acquisition and transition costs |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Other non-recurring expenses |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Adjusted EBITDA3 |
14,269 |
|
17,890 |
|
(3,621 |
) |
20 |
% |
32,506 |
|
31,202 |
|
1,304 |
|
4 |
% |
1 A positive variance represents a positive
impact to net income (loss) and a negative variance represents a
negative impact to net income (loss).2 Percentage change is
presented in absolute values. 3 EBITDA and adjusted EBITDA are
non-GAAP measures, refer to the definitions in section "Non-GAAP
measures" for additional details.
The Company calculated adjusted EBITDA per share as
follows:
|
|
Q2-23 |
Q2-22 |
YTD-23 |
YTD-22 |
|
Adjusted EBITDA1 |
14,269 |
17,890 |
32,506 |
31,202 |
|
Adjusted EBITDA per common share1 |
0.13 |
0.16 |
0.30 |
0.27 |
|
Number of common shares outstanding at period end (in
thousands) |
107,177 |
114,623 |
107,177 |
114,623 |
1 Adjusted EBITDA is non-GAAP measure and
adjusted EBITDA per share is a non-GAAP ratio, refer to the
definitions in section “Non-GAAP measures” for additional
details.
INTERIM CONSOLIDATED BALANCE
SHEETS[In thousands of Canadian
dollars][Unaudited]
|
As at |
06-30-2023 |
12-31-2022 |
| ASSETS |
|
|
| Current |
|
|
| Cash and cash equivalents |
37,844 |
71,679 |
| Marketable securities |
92,657 |
85,826 |
| Trade receivables |
103,666 |
94,890 |
| Other receivables |
14,433 |
12,930 |
| Inventories |
98,682 |
92,489 |
| Prepaids and deposits |
1,792 |
1,704 |
| Other current financial
assets |
32,745 |
33,716 |
| Income
taxes receivable |
3,548 |
2,385 |
|
Total current assets |
385,367 |
395,619 |
|
|
|
|
| Marketable securities |
11,122 |
15,169 |
| Prepaids and deposits |
4,529 |
4,355 |
| Right-of-use assets |
4,777 |
5,827 |
| Property, plant and
equipment |
15,302 |
16,806 |
| Intangible assets |
318,638 |
338,780 |
| Goodwill |
85,738 |
82,274 |
| Other financial assets |
128,136 |
142,847 |
| Deferred income tax
assets |
15,051 |
9,310 |
| Other
long-term receivables |
43,656 |
43,849 |
| |
626,949 |
659,217 |
| Assets held for sale |
1,427 |
— |
|
Total assets |
1,013,743 |
1,054,836 |
| |
|
|
| LIABILITIES AND
EQUITY |
|
|
| Current |
|
|
| Accounts payable and accrued
liabilities |
93,537 |
106,061 |
| Lease liabilities |
1,942 |
2,578 |
| Other liabilities |
1,545 |
5,793 |
| Bank loans |
21,097 |
17,674 |
| Income taxes payable |
1,652 |
2,274 |
| Other balances payable |
2,222 |
6,941 |
|
Total current liabilities |
121,995 |
141,321 |
| |
|
|
| Accounts payable and accrued
liabilities |
2,828 |
2,669 |
| Lease liabilities |
4,797 |
5,050 |
| Bank loans |
51,364 |
52,398 |
| Other balances payable |
20,711 |
23,176 |
| Deferred income tax
liabilities |
4,849 |
4,365 |
|
Total liabilities |
206,544 |
228,979 |
| |
|
|
| Shareholders’
Equity |
|
|
| Share capital |
571,928 |
599,055 |
| Warrants |
117 |
117 |
| Contributed surplus |
25,275 |
23,664 |
| Accumulated other
comprehensive income |
47,430 |
41,266 |
| Retained earnings |
162,449 |
161,755 |
|
Total shareholders’ equity |
807,199 |
825,857 |
|
Total liabilities and shareholders’ equity |
1,013,743 |
1,054,836 |
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(LOSS)[In thousands of Canadian dollars, except for share
and per share amounts][Unaudited]
|
|
Three months ended June 30, |
Six months ended June 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
Revenues |
89,905 |
|
75,820 |
|
172,502 |
|
139,627 |
|
|
Cost of goods sold |
52,412 |
|
37,525 |
|
94,247 |
|
68,855 |
|
|
Gross margin |
37,493 |
|
38,295 |
|
78,255 |
|
70,772 |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Selling and marketing |
12,874 |
|
10,926 |
|
23,539 |
|
20,616 |
|
|
General and administrative |
9,119 |
|
10,566 |
|
18,225 |
|
19,398 |
|
|
Research and development |
4,336 |
|
3,412 |
|
8,523 |
|
6,395 |
|
|
Amortization and impairment of intangible assets |
11,274 |
|
11,055 |
|
22,445 |
|
22,343 |
|
|
Operating income (loss) |
(110 |
) |
2,336 |
|
5,523 |
|
2,020 |
|
|
|
|
|
|
|
|
Interest income on financial instruments measured at amortized
cost |
(2,015 |
) |
(708 |
) |
(4,194 |
) |
(1,054 |
) |
|
Other interest income |
(1,072 |
) |
(1,719 |
) |
(2,245 |
) |
(2,853 |
) |
|
Interest expense |
3,004 |
|
1,717 |
|
5,795 |
|
2,828 |
|
|
Other expense |
(310 |
) |
(219 |
) |
(216 |
) |
(129 |
) |
|
Net (gain) loss on financial instruments measured at fair value
through profit or loss |
(3,939 |
) |
7,692 |
|
7,908 |
|
24,055 |
|
|
Foreign exchange (gain) loss |
4,918 |
|
(4,507 |
) |
4,845 |
|
1,682 |
|
|
Gain on hyperinflation |
(908 |
) |
(556 |
) |
(1,636 |
) |
(833 |
) |
|
Income (loss) before income taxes |
212 |
|
636 |
|
(4,734 |
) |
(21,676 |
) |
|
|
|
|
|
|
|
Income tax |
|
|
|
|
|
Current |
33 |
|
798 |
|
2,139 |
|
971 |
|
|
Deferred |
(1,661 |
) |
(2,678 |
) |
(4,776 |
) |
(6,352 |
) |
|
Income tax recovery |
(1,628 |
) |
(1,880 |
) |
(2,637 |
) |
(5,381 |
) |
|
Net income (loss) for the period |
1,840 |
|
2,516 |
|
(2,097 |
) |
(16,295 |
) |
|
|
|
|
|
|
|
Basic and diluted net income (loss) per share |
0.02 |
|
0.02 |
|
(0.02 |
) |
(0.14 |
) |
|
Weighted average number of common shares
outstanding |
|
|
|
|
|
Basic |
108,475,559 |
|
115,082,184 |
|
109,988,526 |
|
116,127,721 |
|
|
Diluted |
108,678,732 |
|
115,177,789 |
|
109,988,526 |
|
116,127,721 |
|
INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS[In thousands of Canadian dollars][Unaudited]
|
|
Three months ended June 30, |
Six months ended June 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
Net income (loss) for the period |
1,840 |
|
2,516 |
|
(2,097 |
) |
(16,295 |
) |
|
Adjustments reconciling net income to operating cash flows: |
|
|
|
|
|
Depreciation and amortization |
12,158 |
|
13,778 |
|
25,241 |
|
27,159 |
|
|
Net loss (gain) on financial instruments |
(3,939 |
) |
7,692 |
|
7,908 |
|
24,055 |
|
|
Unrealized foreign exchange (gain) loss |
(809 |
) |
(5,981 |
) |
(2,062 |
) |
669 |
|
|
Other operating activities |
407 |
|
(734 |
) |
(92 |
) |
(3,150 |
) |
|
|
9,657 |
|
17,271 |
|
28,898 |
|
32,438 |
|
|
Changes in non-cash working capital and other items |
(11,143 |
) |
(4,022 |
) |
(26,068 |
) |
(5,915 |
) |
|
Cash inflow (outflow) from operating activities |
(1,486 |
) |
13,249 |
|
2,830 |
|
26,523 |
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
Purchase of marketable securities |
(76,334 |
) |
(43,427 |
) |
(185,550 |
) |
(59,235 |
) |
|
Proceeds on maturity of marketable securities |
75,200 |
|
43,324 |
|
181,168 |
|
79,870 |
|
|
Investment in funds |
(148 |
) |
(413 |
) |
(170 |
) |
(453 |
) |
|
Purchase of intangible assets |
— |
|
(18,216 |
) |
(7,667 |
) |
(18,450 |
) |
|
Other investing activities |
5,482 |
|
3,155 |
|
7,705 |
|
3,509 |
|
|
Cash inflow (outflow) from investing activities |
4,200 |
|
(15,577 |
) |
(4,514 |
) |
5,241 |
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
Repurchase of common shares through Normal Course Issuer Bid |
(13,951 |
) |
(10,259 |
) |
(24,465 |
) |
(16,922 |
) |
|
Principal repayment of bank loans |
(5,422 |
) |
(5,391 |
) |
(6,009 |
) |
(5,391 |
) |
|
Proceeds from bank loans |
1,443 |
|
— |
|
2,090 |
|
422 |
|
|
Other financing activities |
(4,165 |
) |
(2,283 |
) |
(5,583 |
) |
(3,249 |
) |
|
Cash outflow from financing activities |
(22,095 |
) |
(17,933 |
) |
(33,967 |
) |
(25,140 |
) |
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents during the
period |
(19,381 |
) |
(20,261 |
) |
(35,651 |
) |
6,624 |
|
|
Cash and cash equivalents, beginning of the period |
56,218 |
|
113,457 |
|
71,679 |
|
85,963 |
|
|
Net foreign exchange difference |
1,007 |
|
(77 |
) |
1,816 |
|
532 |
|
|
Cash and cash equivalents, end of the period |
37,844 |
|
93,119 |
|
37,844 |
|
93,119 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
37,844 |
|
93,119 |
|
|
Marketable securities |
|
|
103,779 |
|
43,116 |
|
|
Total cash, cash equivalents and marketable
securities |
|
|
141,623 |
|
136,235 |
|
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