Knight Therapeutics Inc. (TSX: GUD) ("Knight" or “the Company”), a
leading pan-American (ex-US) specialty pharmaceutical company,
today reported financial results for its third quarter ended
September 30, 2023. All currency amounts are in thousands
except for share and per share amounts. All currencies are Canadian
unless otherwise specified.
Q3 2023 Highlights
Financial Results
- Revenues were
$81,500, an increase of $9,219 or 13% over the same period in prior
year.
- Gross margin
of $40,182 or 49% compared to $30,401 or 42% in the same period in
prior year.
- Adjusted
EBITDA1 was $15,512, an increase of $6,503 or 72% over the same
period in prior year.
- Adjusted
EBITDA per share1 of $0.15, an increase of $0.07 or 87% over the
same period in prior year.
- Net gain on
financial assets measured at fair value through profit or loss of
$5,562.
- Net income was
$9,588, compared to $1,591 in the same period in the prior
year.
- Cash inflow from
operations was $15,166, an increase of $3,374 or 29% over the same
period in prior year.
Corporate Developments
- Launched a
NCIB to purchase up to 5,999,524 common shares of the Company over
the next 12 months.
- Purchased 2,158,091 common shares
through Knight’s NCIB at an average price of $4.55 for aggregate
cash consideration of $9,833.
Products
- Submitted marketing authorization
for Tavalisse® (fostamatinib) in Colombia and Mexico.
- Obtained regulatory approval for
Minjuvi® (tafasitamab) in Brazil.
- In-licensed a branded generic
molecule in Oncology/Hematology for Brazil.
Subsequent to quarter-end
- Obtained CMED
pricing approval for Minjuvi® in Brazil.
- Submitted marketing authorization
for Pemazyre® (pemigatinib) in Brazil.
“I am excited to announce that for the nine
months ended September 30, 2023, we reported record revenues and
record adjusted EBITDA of over $254,000 and over $48,000,
respectively, which represents a growth of 20% and 19%,
respectively, over the same period last year, putting us on track
to deliver record 2023 results. In addition, we advanced our
product pipeline with the Brazilian pricing approval for Minjuvi®
which we expect to launch in the second quarter of 2024. We
continue to execute on our mission to build a leading Pan-American
ex US specialty pharmaceutical company by bringing innovative and
branded generic products to our markets,” said Samira Sakhia,
President and Chief Executive Officer of Knight Therapeutics
Inc.
1 |
Adjusted EBITDA and Adjusted EBITDA per share are non-GAAP
measures. 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 |
|
Q3-23 |
Q3-22 |
$1 |
%2 |
YTD-23 |
YTD-22 |
$1 |
%2 |
|
|
|
|
|
|
|
|
|
Revenues |
81,500 |
|
72,281 |
|
9,219 |
13 |
% |
254,002 |
|
211,908 |
|
42,094 |
|
20 |
% |
Gross margin |
40,182 |
|
30,401 |
|
9,781 |
32 |
% |
118,437 |
|
101,173 |
|
17,264 |
|
17 |
% |
Gross margin % |
49 |
% |
42 |
% |
|
|
47 |
% |
48 |
% |
|
|
Operating expenses4 |
39,252 |
|
42,415 |
|
3,163 |
7 |
% |
111,984 |
|
111,167 |
|
(817 |
) |
1 |
% |
Net
income (loss) |
9,588 |
|
1,591 |
|
7,997 |
503 |
% |
7,491 |
|
(14,704 |
) |
22,195 |
|
151 |
% |
EBITDA3 |
15,512 |
|
9,009 |
|
6,503 |
72 |
% |
48,018 |
|
40,211 |
|
7,807 |
|
19 |
% |
Adjusted EBITDA3 |
15,512 |
|
9,009 |
|
6,503 |
72 |
% |
48,018 |
|
40,211 |
|
7,807 |
|
19 |
% |
Adjusted EBITDA per share3 |
0.15 |
|
0.08 |
|
0.07 |
87 |
% |
0.46 |
|
0.35 |
|
0.11 |
|
30 |
% |
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, adjusted EBITDA and
adjusted EBITDA per share are non-GAAP measures. Refer to section
“Non-GAAP measures” for additional details |
4 |
Operating expenses include
selling and marketing expenses, general and administrative
expenses, research and development expenses, amortization of
intangible assets and impairment of intangible assets |
SELECT FINANCIAL RESULTS AT CONSTANT
CURRENCY[In thousands of Canadian dollars]
|
Q3-23 |
|
Q3-22 |
|
Variance |
YTD-23 |
|
YTD-22 |
|
Variance |
Excluding impact of IAS 291 |
|
ConstantCurrency1 |
|
$2 |
%3 |
|
ConstantCurrency1 |
|
$2 |
|
%3 |
|
|
|
|
|
|
|
|
|
Revenues |
81,669 |
|
73,358 |
|
8,311 |
11 |
% |
254,736 |
|
216,461 |
|
38,275 |
|
18 |
% |
Gross margin |
42,121 |
|
35,846 |
|
6,275 |
18 |
% |
123,751 |
|
113,345 |
|
10,406 |
|
9 |
% |
Gross
margin % |
52 |
% |
49 |
% |
|
|
49 |
% |
52 |
% |
|
|
Operating expenses4 |
39,072 |
|
40,243 |
|
1,171 |
3 |
% |
111,884 |
|
108,047 |
|
(3,837 |
) |
4 |
% |
EBITDA1 |
15,512 |
|
9,925 |
|
5,587 |
56 |
% |
48,018 |
|
43,197 |
|
4,821 |
|
11 |
% |
Adjusted EBITDA1 |
15,512 |
|
9,925 |
|
5,587 |
56 |
% |
48,018 |
|
43,197 |
|
4,821 |
|
11 |
% |
Adjusted EBITDA per share1 |
0.15 |
|
0.09 |
|
0.06 |
70 |
% |
0.46 |
|
0.38 |
|
0.08 |
|
21 |
% |
1 |
Financial results at constant currency, excluding the impact of
hyperinflation, EBITDA, adjusted EBITDA and adjusted EBITDA per
share 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 (loss) and a negative variance
represents a negative impact to net income (loss). |
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 of
intangible assets and impairment of intangible assets |
SELECT BALANCE SHEET ITEMS[In
thousands of Canadian dollars]
|
|
|
Change |
|
09-30-23 |
12-31-22 |
$ |
%1 |
|
|
|
|
|
Cash, cash equivalents and marketable securities |
153,815 |
172,674 |
(18,859 |
) |
11 |
% |
Trade and other
receivables |
144,841 |
151,669 |
(6,828 |
) |
5 |
% |
Inventory |
112,447 |
92,489 |
19,958 |
|
22 |
% |
Financial assets |
158,470 |
176,563 |
(18,093 |
) |
10 |
% |
Accounts payable and accrued
liabilities |
83,002 |
108,730 |
(25,728 |
) |
24 |
% |
Bank
loans |
75,364 |
70,072 |
5,292 |
|
8 |
% |
1 |
Percentage change is presented in absolute values |
Revenues: For the quarter ended
September 30, 2023, excluding the impact of hyperinflation,
revenues increased by $12,558 or 18% compared to the same period in
prior year. The appreciation of select LATAM currencies led to an
increase in revenues of $4,248 in Q3-23 compared to Q3-22. The
revenues by therapeutic areas are as follows:
|
Excluding impact of IAS 293 |
|
|
|
Change |
Therapeutic Area |
Q3-23 |
Q3-22 |
$1 |
%2 |
Oncology/Hematology |
31,336 |
26,271 |
5,065 |
19 |
% |
Infectious Diseases |
29,195 |
27,244 |
1,951 |
7 |
% |
Other
Specialty |
21,138 |
15,596 |
5,542 |
36 |
% |
Total |
81,669 |
69,111 |
12,558 |
18 |
% |
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 |
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 $7,300 primarily due to continued
growth of key promoted products including Lenvima®, Trelstar®,
Palbocil® launched in Argentina in Q1-23 and the assumption of
commercial activities of Akynzeo® in Brazil, Argentina and Canada
in 2022. The increase is offset by a reduction of approximately
$2,200 in revenues of our mature and branded generics products due
to their lifecycle including the entrance of new competitors.
- Infectious
Diseases: The increase is driven by our key promoted
products, including Cresemba®, as well as higher demand of
Impavido®, offset by the purchasing patterns for certain products.
Furthermore, Knight received an order for Ambisome® for $4,875 from
MOH, which is expected to be delivered in Q4-23 ("Q4-23 MOH
Order").
- Other Specialty:
The increase in the other specialty portfolio is primarily driven
by the transition of commercial operations of Exelon® from Novartis
to Knight. The revenues of Exelon® increased by approximately
$5,700 in Q3-23 versus Q3-22. In Q3-22, Knight recorded lower
revenues of Exelon® due to advance purchases of $3,000 in Brazil
and Colombia in Q2-22, in connection with the transition of
commercial activities. The remainder of the variance is explained
by the change in accounting treatment from net profit transfer to
revenues with related costs of sales upon the transition as well as
timing of purchases from certain customers.
Gross margin: For the quarter
ended September 30, 2023, gross margin, as a percentage of
revenues, was 49% compared to 42% in Q3-22. Excluding the impact of
IAS 29, gross margin, as a percentage of revenues, was 52% in Q3-23
and 49% in Q3-22. The increase is driven by the change in product
mix.
Selling and marketing
(“S&M”): For the quarter ended September 30,
2023, S&M expenses were $11,924, a decrease of $1,532 or 11%,
compared to the same period in prior year. Excluding the impact of
IAS 29, the decrease is $634 or 5%. There is no significant
variance in S&M expenses.
General and administrative
(“G&A”): For the quarter ended September 30,
2023, G&A expenses were $11,080, an increase of $664 or 6%,
compared to the same period in prior year. Excluding the impact of
IAS 29, the increase is $1,902 or 21%, mainly due to an increase in
our compensation costs related to Knight’s long term incentive plan
as well as higher spending on professional and consulting fees.
Research and development
(“R&D”): For the quarter ended September 30,
2023, R&D expenses were $4,768, an increase of $548 or 13%,
compared to the same period in prior year. Excluding the impact of
IAS 29, the increase is $968 or 26%. The increase is driven by an
expansion in our product development and medical initiatives.
Amortization of intangible
assets: For the quarter ended September 30, 2023,
amortization of intangible assets was $11,480, a decrease of $763
or 6% compared to the same period in prior year. There is no
significant variance.
Impairment of intangible assets: For the
quarter ended September 30, 2023, impairment of intangible
assets was nil, compared to an impairment of $2,080 recognized in
Q3-22 which represents the write-down of upfront and certain
milestones payments made under certain product license agreements
as a result of changes in commercial expectations.
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 September 30, 2023, interest income was $3,055,
an increase of $593 or 24%, 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 September 30, 2023, interest expenses were
$2,603, an increase of $1,124 or 76%, compared to the same period
in prior year. The increase is driven by the higher average loan
balance resulting from IFC loan which 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
quarter ended September 30, 2023, adjusted EBITDA increased by
$6,503 or 72%, driven by an increase in gross margin (excluding
impact of IAS 29) of $8,324, offset by an increase in operating
expenses.
Net income:
For the quarter ended September 30, 2023, net income was
$9,588 compared to net income of $1,591 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 $5,562 versus a
net loss of $5,446 in the same period in prior year mainly driven
by realized and unrealized gains and losses in the fair value of
financial assets, (2) a foreign exchange loss of $1,317 in Q3-23
mainly driven by unrealized losses due to the appreciation of
select LATAM currencies versus a foreign exchange gain of $10,787
in Q3-22 mainly driven by unrealized gains due to the appreciation
of the USD and (3) other income of $1,907 in Q3-23 relating to
certain fees recognized on strategic loans, as well as a gain on a
disposal of a property in Colombia compared to an income of $5,860
in Q3-22 mainly relating to the gain recognized upon execution of a
settlement agreement and general release with the former
shareholders of GBT.
Cash, cash equivalents and marketable
securities: As at September 30, 2023, Knight had
$153,815 in cash, cash equivalents and marketable securities, a
decrease of $18,859 or 11% as compared to December 31, 2022. The
variance is primarily due to cash outflows for certain regulatory
and sales milestones on certain products, including Akynzeo® and
Aloxi® from Helsinn, shares repurchased through NCIB and repayment
of bank loans, partially offset by cash inflows from operating
activities, principal loan repayments from Moksha8, proceeds from
the disposal of Medimetriks and net proceeds from marketable
securities and bank loans.
Financial assets: As at
September 30, 2023, financial assets were at $158,470, a
decrease of $18,093 or 10%, as compared to December 31, 2022,
driven mainly by a decrease of $18,170 due to negative
mark-to-market adjustments from the decline in share prices of
publicly-traded equities held by our strategic fund investments,
strategic loan repayments of $12,454 from Moksha8, offset by the
increase in the fair value of equity investments and derivatives of
$12,520. Given the nature of the fund investments there could be
significant fluctuations in the fair value of the underlying
assets.
Bank Loans: As at
September 30, 2023, bank loans were at $75,364, an increase of
$5,292 or 8% as compared to December 31, 2022.
Product Updates
Fostamatinib: 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.
Minjuvi®: Knight received
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).
Subsequent to the quarter, the Company received pricing approval
for Minjuvi® (tafasitamab) from the Drugs Market Regulation Chamber
("CMED"). As a result, Knight expects to launch Minjuvi® in Brazil
in the second quarter of 2024.
Pemigatinib: Subsequent to the
quarter, Knight submitted a marketing authorization application for
pemigatinib to ANVISA, the Brazilian health regulatory agency,
under the rare diseases approval pathway, for the treatment of
adults with locally advanced or metastatic cholangiocarcinoma with
a FGFR2 fusion or rearrangement that have progressed after at least
one prior line of systemic therapy.
Corporate Updates
Normal Course Issuer Bid
During the three month period ended September
30, 2023, the Company purchased 2,158,091 common shares at an
average price of $4.55 for aggregate cash consideration of $9,833
of which $211 remains to be settled as at September 30, 2023.
Subsequent to quarter-end up to October 31, 2023, the Company
purchased an additional 676,775 common shares at an average
purchase price of $4.53 for an aggregate cash consideration of
$3,069.
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 $325
million to $335 million in revenues an increase of $15 million on
the lower end and $5 million on the upper end of the range. The
adjusted EBITDA is expected to be approximately 18% of revenues.
The increase in the financial outlook is primarily due to the Q4-23
MOH Order, as well as improvement in forecasted LATAM currencies
against the Canadian dollar. 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
November 9, 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 third quarter ended September 30, 2023, today at 8:30 am
ET. Knight cordially invites all interested parties to participate
in this call.
Date: Thursday, November 9,
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: IR@knighttx.com |
|
Email: IR@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:
|
Q3-23 |
YTD-23 |
|
Reportedunder IFRS |
|
Excludingimpact ofIAS 291 |
|
Variance |
Reportedunder IFRS |
|
Excludingimpact ofIAS 291 |
|
Variance |
|
|
|
$2 |
%3 |
|
|
$2 |
%3 |
|
|
|
|
|
|
|
|
|
Revenues |
81,500 |
|
81,669 |
|
(169 |
) |
|
— |
254,002 |
|
254,736 |
|
(734 |
) |
|
— |
Cost of
goods sold |
41,318 |
|
39,548 |
|
(1,770 |
) |
4 |
% |
135,565 |
|
130,985 |
|
(4,580 |
) |
3 |
% |
Gross margin |
40,182 |
|
42,121 |
|
(1,939 |
) |
5 |
% |
118,437 |
|
123,751 |
|
(5,314 |
) |
4 |
% |
Gross margin (%) |
49 |
% |
52 |
% |
|
|
47 |
% |
49 |
% |
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Selling and marketing |
11,924 |
|
11,937 |
|
13 |
|
|
— |
35,463 |
|
35,635 |
|
172 |
|
|
— |
General and
administrative |
11,080 |
|
11,009 |
|
(71 |
) |
1 |
% |
29,305 |
|
29,084 |
|
(221 |
) |
1 |
% |
Research and development |
4,768 |
|
4,651 |
|
(117 |
) |
3 |
% |
13,291 |
|
13,376 |
|
85 |
|
1 |
% |
Amortization of intangible assets |
11,480 |
|
11,475 |
|
(5 |
) |
|
— |
33,925 |
|
33,789 |
|
(136 |
) |
|
— |
Operating income |
930 |
|
3,049 |
|
(2,119 |
) |
69 |
% |
6,453 |
|
11,867 |
|
(5,414 |
) |
46 |
% |
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
(loss) due to the application of IAS 29 and a negative variance
represents a negative impact on net income (loss) due to the
application of IAS 29. |
3 |
Percentage change is presented in absolute values. |
NON-GAAP MEASURES [In thousands
of Canadian dollars]
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: Adjusted
gross margin excludes the impact of IAS 29 and 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 nine-month period ended
September 30, 2023, the Company calculated EBITDA and adjusted
EBITDA as follows:
|
|
|
Change |
|
|
Change |
|
Q3-23 |
|
Q3-22 |
|
$1 |
%2 |
YTD-23 |
YTD-22 |
$1 |
%2 |
Operating income (loss) |
930 |
|
(12,014 |
) |
12,944 |
|
108 |
% |
6,453 |
|
(9,994 |
) |
16,447 |
|
165 |
% |
Adjustments to
operating income (loss): |
|
|
|
|
|
|
|
|
Amortization of intangible assets |
11,480 |
|
12,243 |
|
(763 |
) |
6 |
% |
33,925 |
|
34,586 |
|
(661 |
) |
2 |
% |
Impairment of intangible assets |
— |
|
2,080 |
|
(2,080 |
) |
100 |
% |
— |
|
2,080 |
|
(2,080 |
) |
100 |
% |
Depreciation of property, plant and equipment and ROU assets |
2,218 |
|
3,025 |
|
(807 |
) |
27 |
% |
5,014 |
|
7,841 |
|
(2,827 |
) |
36 |
% |
Lease costs (IFRS 16 adjustment) |
(779 |
) |
(625 |
) |
(154 |
) |
25 |
% |
(2,146 |
) |
(1,914 |
) |
(232 |
) |
12 |
% |
Impact of IAS 29 |
1,663 |
|
4,300 |
|
(2,637 |
) |
61 |
% |
4,772 |
|
7,612 |
|
(2,840 |
) |
37 |
% |
EBITDA3 |
15,512 |
|
9,009 |
|
6,503 |
|
72 |
% |
48,018 |
|
40,211 |
|
7,807 |
|
19 |
% |
Adjusted EBITDA3 |
15,512 |
|
9,009 |
|
6,503 |
|
72 |
% |
48,018 |
|
40,211 |
|
7,807 |
|
19 |
% |
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:
|
Q3-23 |
Q3-22 |
YTD-23 |
YTD-22 |
Adjusted EBITDA1 |
15,512 |
9,009 |
48,018 |
40,211 |
Adjusted EBITDA per
share1 |
0.15 |
0.08 |
0.46 |
0.35 |
Number
of common shares outstanding at period end (in thousands) |
105,045 |
113,958 |
105,045 |
113,958 |
1 |
Adjusted EBITDA and adjusted EBITDA per share are non-GAAP
measures. Refer to the definitions in section “Non-GAAP measures”
for additional details. |
INTERIM CONSOLIDATED BALANCE
SHEETS[In thousands of Canadian dollars][Unaudited]
As at |
09-30-2023 |
12-31-2022 |
ASSETS |
|
|
Current |
|
|
Cash and cash equivalents |
77,418 |
71,679 |
Marketable securities |
65,040 |
85,826 |
Trade receivables |
82,222 |
94,890 |
Other receivables |
17,788 |
12,930 |
Inventories |
112,447 |
92,489 |
Prepaids and deposits |
2,567 |
1,704 |
Other current financial
assets |
40,487 |
33,716 |
Income
taxes receivable |
3,327 |
2,385 |
Total current assets |
401,296 |
395,619 |
|
|
|
Marketable securities |
11,357 |
15,169 |
Prepaids and deposits |
1,069 |
4,355 |
Right-of-use assets |
5,650 |
5,827 |
Property, plant and
equipment |
14,805 |
16,806 |
Intangible assets |
311,201 |
338,780 |
Goodwill |
85,883 |
82,274 |
Other financial assets |
117,983 |
142,847 |
Deferred income tax
assets |
17,074 |
9,310 |
Other
long-term receivables |
44,831 |
43,849 |
|
609,853 |
659,217 |
Total assets |
1,011,149 |
1,054,836 |
INTERIM CONSOLIDATED BALANCE SHEETS
(continued)[In thousands of Canadian
dollars][Unaudited]
As at |
09-30-2023 |
12-31-2022 |
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
Current |
|
|
Accounts payable and accrued
liabilities |
82,782 |
106,061 |
Lease liabilities |
1,840 |
2,578 |
Other liabilities |
1,515 |
5,793 |
Bank loans |
25,684 |
17,674 |
Income taxes payable |
1,882 |
2,274 |
Other
balances payable |
1,374 |
6,941 |
Total current liabilities |
115,077 |
141,321 |
|
|
|
Accounts payable and accrued
liabilities |
220 |
2,669 |
Lease liabilities |
4,813 |
5,050 |
Bank loans |
49,680 |
52,398 |
Other balances payable |
21,721 |
23,176 |
Deferred income tax liabilities |
4,973 |
4,365 |
Total liabilities |
196,484 |
228,979 |
|
|
|
Shareholders’
equity |
|
|
Share capital |
560,500 |
599,055 |
Warrants |
117 |
117 |
Contributed surplus |
25,624 |
23,664 |
Accumulated other
comprehensive income |
54,689 |
41,266 |
Retained earnings |
173,735 |
161,755 |
Total shareholders’ equity |
814,665 |
825,857 |
Total liabilities and shareholders’ equity |
1,011,149 |
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 September 30, |
|
Nine months ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
Revenues |
81,500 |
|
72,281 |
|
254,002 |
|
211,908 |
|
Cost of
goods sold |
41,318 |
|
41,880 |
|
135,565 |
|
110,735 |
|
Gross margin |
40,182 |
|
30,401 |
|
118,437 |
|
101,173 |
|
|
|
|
|
|
Expenses |
|
|
|
|
Selling and marketing |
11,924 |
|
13,456 |
|
35,463 |
|
34,072 |
|
General and
administrative |
11,080 |
|
10,416 |
|
29,305 |
|
29,814 |
|
Research and development |
4,768 |
|
4,220 |
|
13,291 |
|
10,615 |
|
Amortization of intangible
assets |
11,480 |
|
12,243 |
|
33,925 |
|
34,586 |
|
Impairment of intangible assets |
— |
|
2,080 |
|
— |
|
2,080 |
|
Operating income (loss) |
930 |
|
(12,014 |
) |
6,453 |
|
(9,994 |
) |
|
|
|
|
|
Interest income on financial
instruments measured at amortized cost |
(2,024 |
) |
(1,096 |
) |
(6,218 |
) |
(2,150 |
) |
Other interest income |
(1,031 |
) |
(1,366 |
) |
(3,276 |
) |
(4,219 |
) |
Interest expense |
2,603 |
|
1,479 |
|
8,398 |
|
4,307 |
|
Other income |
(1,907 |
) |
(5,860 |
) |
(2,123 |
) |
(5,989 |
) |
Net (gain) loss on financial
instruments measured at fair value through profit or loss |
(5,562 |
) |
5,446 |
|
2,346 |
|
29,501 |
|
Foreign exchange (gain)
loss |
1,317 |
|
(10,787 |
) |
6,162 |
|
(9,105 |
) |
Gain on
hyperinflation |
(1,364 |
) |
(681 |
) |
(3,000 |
) |
(1,514 |
) |
Income (loss) before income taxes |
8,898 |
|
851 |
|
4,164 |
|
(20,825 |
) |
|
|
|
|
|
Income
tax |
|
|
|
|
Current |
1,112 |
|
1,204 |
|
3,251 |
|
2,175 |
|
Deferred |
(1,802 |
) |
(1,944 |
) |
(6,578 |
) |
(8,296 |
) |
Income tax recovery |
(690 |
) |
(740 |
) |
(3,327 |
) |
(6,121 |
) |
Net income (loss) for the period |
9,588 |
|
1,591 |
|
7,491 |
|
(14,704 |
) |
|
|
|
|
|
Basic and diluted net income
(loss) per share |
0.09 |
|
0.01 |
|
0.07 |
|
(0.13 |
) |
Weighted average
number of common shares outstanding |
|
|
|
|
Basic |
106,250,793 |
|
114,466,484 |
|
108,728,924 |
|
115,569,933 |
|
Diluted |
106,511,761 |
|
114,597,655 |
|
108,958,045 |
|
115,569,933 |
|
INTERIM CONSOLIDATED STATEMENTS OF CASH
FLOWS[In thousands of Canadian dollars][Unaudited]
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
OPERATING ACTIVITIES |
|
|
|
|
Net income (loss) for the
period |
9,588 |
|
1,591 |
|
7,491 |
|
(14,704 |
) |
Adjustments reconciling net
income to operating cash flows: |
|
|
|
|
Depreciation and
amortization |
13,698 |
|
15,268 |
|
38,939 |
|
42,427 |
|
Impairment of intangible
assets |
— |
|
2,080 |
|
— |
|
2,080 |
|
Net loss (gain) on financial
instruments |
(5,562 |
) |
5,446 |
|
2,346 |
|
29,501 |
|
Unrealized foreign exchange
(gain) loss |
3,619 |
|
(8,104 |
) |
1,557 |
|
(7,435 |
) |
Other
operating activities |
1,058 |
|
(1,955 |
) |
966 |
|
(5,058 |
) |
|
22,401 |
|
14,326 |
|
51,299 |
|
46,811 |
|
Changes
in non-cash working capital and other items |
(7,235 |
) |
(2,534 |
) |
(33,303 |
) |
(8,449 |
) |
Cash inflow from operating activities |
15,166 |
|
11,792 |
|
17,996 |
|
38,362 |
|
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
Purchase of marketable
securities |
(52,118 |
) |
(21,412 |
) |
(237,668 |
) |
(80,647 |
) |
Proceeds on maturity of
marketable securities |
81,204 |
|
21,370 |
|
262,372 |
|
101,240 |
|
Investment in funds |
(1,006 |
) |
(2,847 |
) |
(1,176 |
) |
(3,300 |
) |
Purchase of intangible
assets |
(60 |
) |
(74 |
) |
(7,727 |
) |
(18,524 |
) |
Other
investing activities |
7,736 |
|
(333 |
) |
15,441 |
|
3,176 |
|
Cash inflow (outflow) from investing activities |
35,756 |
|
(3,296 |
) |
31,242 |
|
1,945 |
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
Repurchase of common shares
through Normal Course Issuer Bid |
(9,833 |
) |
(4,463 |
) |
(34,396 |
) |
(21,385 |
) |
Principal repayment of bank
loans |
(2,571 |
) |
(56 |
) |
(8,580 |
) |
(5,447 |
) |
Proceeds from bank loans |
2,706 |
|
— |
|
4,796 |
|
422 |
|
Other
financing activities |
(1,541 |
) |
(1,070 |
) |
(7,124 |
) |
(4,319 |
) |
Cash outflow from financing activities |
(11,239 |
) |
(5,589 |
) |
(45,304 |
) |
(30,729 |
) |
|
|
|
|
|
Increase (decrease) in cash
and cash equivalents during the period |
39,683 |
|
2,907 |
|
3,934 |
|
9,578 |
|
Cash and cash equivalents,
beginning of the period |
37,844 |
|
93,119 |
|
71,679 |
|
85,963 |
|
Net
foreign exchange difference |
(109 |
) |
5,796 |
|
1,805 |
|
6,281 |
|
Cash and cash equivalents, end of the period |
77,418 |
|
101,822 |
|
77,418 |
|
101,822 |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
77,418 |
|
101,822 |
|
Marketable securities |
|
|
76,397 |
|
43,320 |
|
Total cash, cash equivalents and marketable
securities |
|
|
153,815 |
|
145,142 |
|
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