MAV MAV Beauty Brands Inc

• Total revenue of $26.7 million versus $23.3 million in Q4 2020
• Net loss of ($0.1) million compared with net income of $0.1 million in Q4 2020
• Adjusted EBITDA of $3.2 million versus $3.4 million in Q4 2020⁽¹⁾
• Adjusted Free Cash Flow of $0.2 million versus $4.8 million in Q4 2020⁽¹⁾
• Cash provided by operating activities of $0.2 million versus $5.1 million in Q4 2020

VAUGHAN, ON, March 24, 2022 /CNW/ - MAV Beauty Brands Inc. ("MAV Beauty Brands" or the "Company"), a global personal care company, today announced its financial results for the three and 12 months ended December 31, 2021. Unless otherwise indicated, all amounts are expressed in U.S. dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures (see "Non-IFRS Measures" below).

"Revenue increased by 14.5% in the quarter compared to prior year and there were multiple performance highlights from the portfolio, including the sustained growth of the Marc Anthony and Cake brands. Nonetheless, it was a challenging quarter and year overall as we felt the impact of net distribution losses while our margins and profitability were also affected by ongoing supply chain cost pressures and other factors, said Serge Jureidini, President & CEO of MAV Beauty Brands. "We continue working to mitigate these headwinds. In a growth oriented haircare market, our focus for 2022 is to stabilize the business through enhanced execution and building the desirability of our brands, notably through product innovation. Over time, we continue to believe the platform will deliver above-category growth from a diverse and complementary brand portfolio."  

Selected Financial Highlights^(1)(2)(3)

Q4 2021 Business and Financial Review 

Q4 2021 revenue increased by 14.5% to $26.7 million, compared to $23.3 million in Q4 2020. For the Canada/US region, revenue increased by 11.9% to $24.4 million in Q4 2021, compared to $21.8 million in Q4 2020. The year-over-year increase mainly reflects higher sales from two of the Company's brands, which offset reduced sales from the other two brands. For the International region, revenue increased by 38.4% to $2.2 million, in Q4 2021 compared to $1.6 million in Q4 2020, reflecting continued recovery from COVID-19 related disruptions and improved production and logistics service levels compared to the prior year.

Gross profit increased by 14.7% to $10.4 million in Q4 2021, compared to $9.1 million in Q4 2020. Gross profit margin was 38.9% in Q4 2021, compared to 38.8% in Q4 2020. The year-over-year improvement reflects a favorable sales mix, offset by the continued negative impact of increased supply chain input costs. Beginning in 2022, the Company is adjusting its pricing on certain products to partially offset some of these higher input costs.

Selling and administrative expense increased by 21.8%, or $1.3 million, to $7.3 million in Q4 2021 compared to $6.0 million in Q4 2020. The increase in selling and administrative expense primarily reflects increased marketing and compensation costs in Q4 2021 compared to Q4 2020, partially offset by a favourable variance in administrative costs.

Adjusted EBITDA⁽¹⁾ decreased to $3.2 million in Q4 2021, from $3.4 million in Q4 2020. In Q4 2021, the Company reported a net loss of ($0.1) million, versus net income of $0.1 million in Q4 2020. Adjusted Net Income⁽¹⁾ decreased to $0.0 million, compared with Adjusted Net Income⁽¹⁾ of $0.8 million in Q4 2020, due to the factors discussed above. Adjusted Earnings Per Share (Diluted)⁽¹⁾ was $0.00 per share in Q4 2021, compared with $0.02 per share in Q4 2020.

Cash flow from operations was $1.7 million and Adjusted Free Cash Flow⁽¹⁾ decreased to $0.2 million in Q4 2021, compared to $1.9 million and $4.8 million, respectively, in Q4 2020 . The year-over-year change was mainly attributable due to change in working capital.  At year end, Net Debt⁽¹⁾ was $121.5 million, and cash was $12.0 million. 

In late February 2022, a cyber security breach at our primary third-party logistics partner disrupted our order outflow capabilities. The Company anticipates an unfavourable impact on its Q1 revenue, primarily resulting in a shift of shipments into Q2.  Mitigation plans have been implemented and the Company anticipates a return to pre-incident operating levels as of April 2022.

Financial Statements and Management's Discussion and Analysis

 The Company's audited consolidated financial statements and Management's Discussion and Analysis for the three- and 12-month periods ended December 31, 2021 are available under the Company's profile on SEDAR at www.sedar.com and on MAV Beauty Brands' investor relations website at investors.mavbeautybrands.com.

Conference Call & Webcast

MAV Beauty Brands will host a conference call to discuss its Fiscal 2021 fourth quarter financial results at 8:30 a.m. EDT on March 24, 2022. To participate in the call, dial 647-794-4605 or 888-204-4368 using the conference ID 7935239. The audio webcast can be accessed at investors.mavbeautybrands.comhttps://bit.ly/2mutHer. Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected.

About MAV Beauty Brands (TSX:MAV)

MAV Beauty Brands is a global personal care platform focused on acquiring great independent brands and helping these brands to scale and win market share. We have built an operating platform to build brands through expanded distribution, innovation, and marketing. Today, we have a diversified portfolio of four complementary personal care brands – Marc Anthony, Renpure, Cake Beauty and The Mane Choice – offering premium quality hair care, body care and beauty products. These products are sold in over 25 countries around the world and many of the world's largest retailers.

Non–IFRS Measures 

This press release makes reference to certain non–IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non–IFRS measures including "Adjusted Earnings Per Share (Diluted)", "Adjusted EBITDA", "Adjusted Free Cash Flow", "Adjusted Net Income", "EBITDA", "Free Cash Flow" and "Net Debt". These non–IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors, and other interested parties frequently use non–IFRS measures in the evaluation of issuers. Our management also uses non–IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation. Definitions and reconciliations of non-IFRS measures to the relevant reported measures prepared in accordance with IFRS can be found under the headings "Non-IFRS Measures" and "Q4 2021 Compared to Q4 2020 & FY2021 Compared to FY2020" in this press release. See also our Management's Discussion and Analysis under the headings "How We Assess the Performance of Our Business" on page 8, and "Non-IFRS Measures" on page 10.

"Adjusted Earnings Per Share (Diluted)" is computed similarly to basic earnings per share except that the weighted average number of shares outstanding is increased to include additional shares for the assumed conversion of preference shares, proportionate voting shares, and exchangeable shares and exercise of stock options, if dilutive. The average number of shares is calculated by assuming that outstanding conversions were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting period. We believe Adjusted Earnings Per Share (Diluted) is a useful measure to assess the performance of our Company as it provides meaningful operating results per diluted share and facilitates period-to-period operating comparisons.

"Adjusted EBITDA" represents, for the applicable period, EBITDA before certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii) purchase accounting adjustments; (iii) share–based compensation; (iv) impairment of goodwill; and (v) unrealized foreign exchange (loss) gain. We believe Adjusted EBITDA is a useful measure to assess the performance of our Company as it provides meaningful operating results and facilitates period-to-period operating comparisons.

"Adjusted Free Cash Flow" is calculated as Free Cash Flow adjusted to add back acquisition related costs which are included in cash provided by operating activities. We believe Adjusted free cash flow is a useful measure to assess the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares. It also facilitates period-to-period comparisons.

"Adjusted Net Income" represents, for the applicable period, net income (loss) as adjusted to add back or deduct, as applicable, certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii)  purchase accounting adjustments; (iii) share–based compensation; (iv) impairment of goodwill; (v) unrealized foreign exchange loss (gain); and (vi) tax impacts of the aforementioned adjustments (based on annual effective tax rate). We believe Adjusted Net Income is a useful measure to assess the performance of our Company as it provides meaningful operating results and facilitates period-to-period operating comparisons.

"EBITDA" represents net income (loss) for the period before: (i) income tax expense (recovery); (ii) interest and accretion; and (iii) amortization and depreciation.

''Free Cash Flow'' represents, for the applicable period, cash provided by operating activities less cash used to purchase property and equipment. Free cash flow is a key metric used by the investing community that measures the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares.

"Net Debt" is calculated as long-term debt before unamortized deferred financing costs less cash as reported in the consolidated statements of financial position. We believe Net Debt is a useful measure is an important measure as it reflects the principal amount of debt owing by the Company as at a particular date.

Forward-Looking Information
Certain information in this press release, including the growth oriented haircare market, improved operational execution across the Company's platform,  the ability to achieve improved and consistent operating results, the ability to build the desirability of our brands through product innovation, the ability to adjust pricing to offset higher product input and supply chain costs, the ability to mitigate the impact of the cyber security breach at our primary third-party logistics partner  and return to pre-incident levels of operation as of April 2022, constitutes forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by MAV Beauty Brands as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the "Risk Factors" section of the Company's Annual Information Form dated March 23, 2022 for the year ended December 31, 2021, the "Risk Factors" section of the Company's Q4 2021 MD&A, and the Company's other periodic filings made available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect MAV Beauty Brands; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and MAV Beauty Brands expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

Q4 2021 Compared to Q4 2020 & FY 2021 Compared to FY 2020

SOURCE MAV Beauty Brands