MISSISSAUGA, ON, March 31, 2021 /CNW/ - Aegis
Brands Inc. (the "Company" or "Aegis Brands") (TSX: AEG) today
reported financial results for the fourth quarter and fiscal year
ended December 26, 2020. Concurrently with filing its annual
financial statements, the Company has withdrawn its previously
announced application for a management cease trade order.
Highlights
- Aegis entered a definitive agreement to sell Second Cup for
$14 million plus earn out.
- Consolidated Net Loss including Second Cup for Q4 and fiscal
year was $14.0 million and
$19.6 million respectively compared
with $3.6 million and $4.7 million for last year.
- Q4 and fiscal year Net Loss from continuing operations,
excluding Second Cup, was $6.1
million and $7.7 million
respectively compared with $1.1
million and $1.9 million last
year, in large part due to non-cash impairment charges of
$3.6 million as a result of the
COVID-19 pandemic.
- Bridgehead's Same Store Sales were (38.52%) when compared with
(43.97%) in the third quarter of 2020.
- Hemisphere's revenue increased by 38% from Q3 to Q4.
Aegis Brands Inc.
In February of 2021, the Company entered into a definitive
agreement to sell its Second Cup Coffee Co. retail operating brand.
Subject to shareholder approval and closing activities, the Company
will receive $14 million in cash upon
consummating the sale of Second Cup, which will significantly
strengthen the Company's financial position to carry out its
strategic objectives in consolidation and growing Bridgehead and
Hemisphere Cannabis. The company expects to close this transaction
in April.
"Second Cup is a remarkable brand with more than 45 years of
brand equity in Canada, said
Steven Pelton, President and CEO of
Aegis Brands. "We are happy to see the brand continue with
Foodtastic, a Canadian company that has a great deal of experience
in the franchise business. The sale of Second Cup will enable Aegis
to focus resources on further development of Bridgehead Coffee and
Hemisphere Cannabis, and compelling new growth and acquisition
opportunities with likeminded, innovative entrepreneurs that align
with our vision," said Pelton.
Moving forward with a clean balance sheet, the Company will
focus on its consolidation and acquisition strategy at a pivotal
time when there is much opportunity. Aegis is actively exploring
several opportunities in the food and beverage and cannabis
sectors.
"It is an exciting time in the Food and Beverage industry. There
is pent up demand which will be great for the industry when
restrictions are lifted. What I believe to be more exciting is all
the innovation that has occurred during the pandemic, which will
continue to improve sales, efficiencies and connection with
consumers as stores reopen," said Pelton. "In the Retail Cannabis
industry, we believe it is important to gain scale rapidly and we
are actively exploring options for consolidation. Although the
sector has been negatively affected by the recent lockdowns, the
legal market is growing as we see new consumers enter the
stores."
Bridgehead
Bridgehead continues to see strong e-commerce and wholesale
sales, now selling coffee in Costco, Farm Boy and Whole Foods in
addition to several local Ottawa
vendors. In recent weeks, Bridgehead is also seeing steady
increases in traffic and sales at its stores, with vaccination
rates rising and restrictions loosening.
Bridgehead's Same Store Sales were (38.52%) compared with
(43.97%) in the third quarter of 2020, as a result of reduced
restrictions in the greater Ottawa
area. 16 of 20 Bridgehead locations were open in Q4 which was
consistent with Q3.
"The impact of the second wave of the pandemic and subsequent
implications for the food service and retail industries continues
to impact our stores," said Kate
Burnett, COO of Bridgehead Coffee. "With restrictions slowly
lifting and vaccinations plans underway, we are highly encouraged
to see customer responding, steadily driving foot traffic and sales
back into stores."
In Fall 2021, Bridgehead will open a new location at
Carleton University, as it continues to
explore exciting expansion opportunities for the brand. With the
continued movement to bolster support for local Canadian brands,
the timing to introduce this meaningful, purpose-driven brand to
the rest of the country will be well suited.
Hemisphere Cannabis Co.
In the fourth quarter the Hemisphere brand opened two new
downtown locations in Toronto and
Ottawa. As a result of this
increase in store count, Hemisphere's sales rose by 38% when
compared to Q3. Despite the additional competition and lockdown
measures impacting its stores, Hemisphere's gross margin in the
fourth quarter remained strong at 33.2%.
The brand continues to focus on scaling and building brand
awareness in order to compete, with plans to open three additional
stores before the end of the second quarter. Two additional stores
are slated to open later in 2021. Knowing scale remains imperative
in this market, Aegis is actively considering options for
consolidation.
About Aegis Brands Inc.
Aegis Brands Inc.'s vision is
to build a portfolio of amazing brands that can grow and
flourish with access to resources and expertise. The Company
is committed to letting each company under the Aegis Brands
umbrella operate as an independent brand, and to provide shared
expertise – and shared services – to help them thrive. The
Company now owns and operates Bridgehead and Hemisphere Cannabis
Co. as well as the Second Cup Coffee Co. specialty coffee business
which is currently under the sale process to Foodtastic. For
more information, please visit www.aegisbrands.ca or find the
Company on Facebook and Twitter.
CONSOLIDATED HIGHLIGHTS: CONTINUING OPERATIONS OF BRIDGEHEAD,
HEMISPHERE CANNABIS CO. AND AEGIS CORPORATE
The following table sets out selected IFRS and certain non-IFRS
financial measures of the Company and should be read in conjunction
with the audited Consolidated Financial Statements of the Company
for the 52 weeks ended December 26,
2020.
(In thousands of
Canadian dollars,
except same café and store sales,
number of cafés and stores, per
share amounts, and number of
common shares.)
|
13 weeks
ended
|
|
52 weeks
ended
|
December 26,
2020
|
December
28, 2019
|
|
December
26, 2020
|
December
28, 2019
|
|
|
|
|
|
|
System sales of cafés
and stores1
|
$3,701
|
-
|
|
$11,201
|
-
|
|
|
|
|
|
|
Same café and stores
sales 1,2
|
(38.5%)
|
-
|
|
(32.1%)
|
-
|
|
|
|
|
|
|
Number of cafés &
stores - end of period
|
24
|
-
|
|
24
|
-
|
|
|
|
|
|
|
Total
revenue
|
$3,701
|
-
|
|
$11,201
|
-
|
|
|
|
|
|
|
Operating costs and
expenses
|
$7,902
|
$508
|
|
$18,140
|
$1,795
|
|
|
|
|
|
|
Operating
loss1
|
($4,201)
|
($508)
|
|
($6,939)
|
($1,795)
|
|
|
|
|
|
|
EBITDA1
|
($3,467)
|
($508)
|
|
($4,182)
|
($1,795)
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
($275)
|
($508)
|
|
($626)
|
($1,795)
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
($6,141)
|
($1,053)
|
|
($7,730)
|
($1,872)
|
|
|
|
|
|
|
Adjusted net loss and
comprehensive loss1
|
($4,349)
|
($372)
|
|
($5,124)
|
($1,790)
|
|
|
|
|
|
|
Basic and diluted
loss per share as reported
|
($0.27)
|
(0.05)
|
|
($0.34)
|
(0.09)
|
|
|
|
|
|
|
Adjusted basic and
diluted loss per share1
|
($0.18)
|
(0.02)
|
|
($0.22)
|
(0.09)
|
|
|
|
|
|
|
Total assets - end of
period
|
$25,235
|
$113,352
|
|
$25,235
|
$113,352
|
|
|
|
|
|
|
Number of weighted
average common
shares issued and
outstanding
|
22,916,028
|
20,394,959
|
|
22,839,842
|
20,135,567
|
1See the
section "Definitions and Discussion on Certain non-IFRS Financial
Measures" for further analysis.
|
2Same café
& store sales represent the percentage change, on average, in
sales at cafés & stores operating system-wide that have been
open for more than 12 months. This metric is limited to the
Bridgehead brand, as the Hemisphere brand started in mid-July of
fiscal 2020, and as such, there is no comparative information
available. Compared with sales of Bridgehead in prior year
before acquisition.
|
CONSOLIDATED HIGHLIGHTS: DISCONTINUED OPERATIONS OF SECOND
CUP
The following table sets out selected IFRS and certain non-IFRS
financial measures of the Company and should be read in conjunction
with the audited Consolidated Financial Statements of the Company
for the 52 weeks ended December 26,
2020.
(In thousands of
Canadian dollars,
except same café and store sales,
number of cafés and stores, per
share amounts, and number of
common shares.)
|
13 weeks
ended
|
|
52 weeks
ended
|
December 26,
2020
|
December
28, 2019
|
|
December
26, 2020
|
December
28, 2019
|
|
|
|
|
|
|
System sales of cafés
and stores1
|
$16,285
|
$36,132
|
|
$69,342
|
$137,757
|
|
|
|
|
|
|
Same café and stores
sales 1,2
|
(42.5%)
|
(2.6%)
|
|
(34.6%)
|
(1.6%)
|
|
|
|
|
|
|
Number of cafés &
stores - end of period
|
216
|
244
|
|
216
|
244
|
|
|
|
|
|
|
Total
revenue
|
$4,603
|
$7,605
|
|
$15,679
|
$27,037
|
|
|
|
|
|
|
Operating costs and
expenses
|
$15,885
|
$10,813
|
|
$30,339
|
$30,811
|
|
|
|
|
|
|
Operating
loss1
|
($11,282)
|
($3,208)
|
|
($14,660)
|
($3,774)
|
|
|
|
|
|
|
EBITDA1
|
($10,691)
|
($2,299)
|
|
($12,329)
|
($265)
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
($585)
|
$297
|
|
($1,799)
|
$3,336
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
($7,906)
|
($2,548)
|
|
($11,892)
|
($2,802)
|
|
|
|
|
|
|
Adjusted net loss and
comprehensive loss1
|
($621)
|
($646)
|
|
($4,296)
|
($164)
|
|
|
|
|
|
|
Basic and diluted
loss per share as reported
|
($0.35)
|
($0.13)
|
|
($0.52)
|
($0.14)
|
|
|
|
|
|
|
Adjusted basic and
diluted loss per share1
|
($0.03)
|
($0.03)
|
|
($0.19)
|
($0.01)
|
|
|
|
|
|
|
Total assets - end of
period
|
$77,421
|
$113,352
|
|
$77,421
|
$113,352
|
|
|
|
|
|
|
Number of weighted
average common
shares issued and
outstanding
|
22,916,028
|
20,394,959
|
|
22,839,842
|
20,135,567
|
1See the
section "Definitions and Discussion on Certain non-IFRS Financial
Measures" for further analysis.
|
2Same café
& store sales represent the percentage change, on average, in
sales at cafés & stores operating system-wide that have been
open for more than 12 months.
|
Acquisition of Bridgehead
On January 9, 2020, the Company completed the
acquisition of 100% of the issued and outstanding shares of
Bridgehead, which is based in Ottawa. The base purchase price consisted of
cash consideration of $6.0 million,
stock consideration of $3.3 million,
which represents the fair value of the stock as at the valuation
date of January 8, 2020, and
additional earn out payments of up to $1.5
million based on the profitability of Bridgehead's existing
coffeehouses over the next two years.
Held For Sale and Discontinued Operations
On
February 7, 2021, the Company entered
into a definitive purchase agreement to sell substantially all of
the assets comprising its specialty coffee brand, Second Cup Coffee
Co. ("Second Cup"), to an affiliate of Quebec-based Foodtastic Inc. ("Foodtastic").
As at December 26, 2020, the Company
is committed to a plan to sell the disposal group, comprising the
assets and liabilities of Second Cup which are included in the
definitive purchase agreement (the "Agreement"). The disposal group
is expected to be sold to Foodtastic for a sale price, as outlined
in the Agreement, of $14 million in
cash payable on closing (subject to customary closing adjustments)
as well as a post-closing earn-out based on royalties earned from
certain Second Cup cafés opened following completion of the sale.
The sale of this disposal group is subject to approval by at least
two-thirds of the votes cast by the Company's common shareholders
at a special meeting of common shareholders scheduled to be held on
April 7, 2021. The directors and
executive officers of the Company and certain other major
shareholders, collectively holding approximately 43% of the
Company's issued and outstanding common shares, have entered into
support agreements agreeing to vote their common shares in favour
of the transaction. Management has assessed that the Second Cup
assets met the criteria to be classified as held for sale as at
December 26, 2020 and it is unlikely
that significant changes to the transaction will be made or that
the plan will be withdrawn. The disposal group is available for
immediate sale in its present condition, subject to terms that are
usual and customary for sales of this nature in the retail
industry, and the sale is highly probable based on the factors
above. In accordance with IFRS 5 ("Non-Current Assets Held for Sale
and Discontinued Operations"), the Company has classified this
disposal group as held for sale as its carrying amount will be
recovered principally through a sale transaction rather than
through continuing use.
The Company has measured the disposal group classified as held
for sale at the lower of its carrying amount and fair value less
costs to sell being $14 million less
$500 in estimated costs to sell and
$1,750 estimated in working capital
adjustments. As at December 26, 2020,
the carrying value of the Second Cup disposal group was
$23 million, which gave rise to an
impairment loss of $11.2 million.
As the disposal group referenced above represents a major line
of business, and the Company has a single coordinated plan to
dispose of this separate major line of business. As such, the
Company has presented the disposal group as discontinued operations
as a single amount in the consolidated statement of operations and
comprehensive loss, comprising the post-tax loss of discontinued
operations and post-tax loss recognized on the measurement to fair
value less costs to sell. The Company has further disclosed details
of the discontinued operations in note 29 in its annual
consolidated financial statements.
Fourth Quarter – Aegis Brands Inc.
System sales of cafés and stores
System sales
of cafés and stores for the 13 weeks ended December 26, 2020 were $3,701 composed of revenue generated from
Company-owned and operated Bridgehead cafés as well as Hemisphere
retail cannabis dispensaries. Both Bridgehead and Hemisphere joined
the Aegis family of retail brands in fiscal 2020, and as such there
is no comparative prior information.
Same café and store sales
During the Quarter,
same café sales at Bridgehead locations decreased by 38.5%, as
cafés continued to be impacted by the ongoing economic impacts of
the COVID-19 pandemic, including temporary closures and significant
restrictions on store operations, such as the closure of dining
room space and operations limited to take-out, delivery and
drive-thru.
Analysis of revenue
The Company generated
revenue for the Quarter of $3,701
from its Company-owned and operated locations.
Sales composed of $1,029 were
generated through retail cannabis products and accessories at
Hemisphere Cannabis Co. locations. The Company opened its first two
recreational retail cannabis locations in the third Quarter of
fiscal 2020, and added two locations in the fourth Quarter.
Company-owned and operated Bridgehead coffeehouses generated
sales of $2,672 in the Quarter.
As per preceding discussions, sales across both brands continued
to be weighed down by drop in consumer foot traffic as a direct
result of restrictions from the COVID-19 pandemic.
Operating costs and expenses
Operating costs
and expenses include the costs of Company-owned stores and product
sales, general and administrative expenses, loss on disposal of
assets, and depreciation and amortization. Operating costs were
partially reduced by the amount of the financial relief that the
Company applied for and received in connection with the
Canada Emergency Wage Subsidy, the
Canada Emergency Commercial Rent
Assistance, and the Canada
Emergency Rent Subsidy programs introduced by the Federal
Government in response to the ongoing COVID-19 pandemic. People
costs also went down due to a reduction in remuneration of Aegis
Central staff through temporary and permanent layoffs, suspension
of compensation for the Board of Directors, and the reduction of
salaries for certain members of the Company's Senior Leadership
Team.
Total operating costs and expenses for the Quarter totaled
$7,902, of which $2,003 is attributable to costs incurred in
connection with the operations of retail cannabis dispensaries;
$5,354 attributable to Company-owned
coffeehouses; and $545 attributable
to Aegis Corporate. Aegis Corporate costs are made up of costs
related to certain administrative functions and public company
related expenses.
Company-owned stores and product related expenses for the
Quarter were $3,118, of which
$1,050 is attributable to Hemisphere
and $2,068 attributable to
Bridgehead.
General and administrative expenses were $857 for the Quarter, of which $321 attributable to Bridgehead and $536 is attributable to Aegis.
Depreciation and amortization expense was $735, of which $291
is attributable to Hemisphere, $435
attributable to Bridgehead and $9 is
attributable to Aegis. Total amortization of right-of-use assets
was $658 and the amortization on
fixed and intangible assets came to $77.
Impairment indicators were identified as a result of the
economic impacts of the COVID-19 pandemic, which has resulted in
the temporary closures of cafés, and scaled down nature of
operations of open cafés. Impairment analysis was performed for
fixed and right-of-use assets as well as on the Company's
trademarks and goodwill recorded on acquisition of Bridgehead. The
Company has recorded non-cash asset impairment charges of
$3,192 in the Quarter against its
right-of-use assets and property and equipment, of which
$662 is attributed to Hemisphere and
$2,530 to Bridgehead.
EBITDA
EBITDA for the Quarter was a loss of
$3,467. Adjusted for impairment
charges, EBITDA for the Quarter was a loss of $275.
Other income
Other income was $1,399, composed of $791 of government grants from COVID-19 financial
relief programs $486 reduction in
contingent consideration in accordance with the terms of the
Bridgehead purchase agreement and $122 in the change in the fair market value of
NAC warrants (now converted to High Tide warrants) using the
Black-Scholes pricing model.
In the prior year's quarter, the Company incurred other expenses
of $929, made up of the change in
fair value of NAC warrants of $780
and acquisition costs of $240,
partially offset against income from the NAC strategic alliance of
$91.
Interest and Financing Costs
The Company
reported net interest and financing costs of $356. This is composed primarily of interest
expense recorded on the Company's lease payments for right-of-use
assets recognized in accordance with IFRS 16 ($309) as well as financing costs incurred with
respect to the short-term debts of the Company ($47).
Net loss
The Company reported a net loss for
the quarter of $6,141 or $0.27 per share. Adjusted for impairment costs,
government financial relief programs and the revaluation of
contingent consideration, the net loss was $4,349 or $0.18 per
share.
Reconciliations of net income (loss) to EBITDA, adjusted EBITDA,
adjusted net income (loss) and adjusted net income (loss) per share
are provided in the section "Definitions and Discussion of Certain
non-IFRS Financial Measures".
Full Year – Aegis Brands Inc.
System sales of cafés and stores
System sales
of cafés and stores for fiscal 2020 were $11,201 composed of revenue generated from the
Company's cafés and retail cannabis dispensaries. Sales were
significantly impacted by the ongoing economic impacts of the
COVID-19 pandemic, including the temporary closures of franchised
and corporately owned cafés and restrictions on store operations
(i.e. closure of dining room space and operations limited to take
out, delivery, and drive-thru).
Same café and store sales
During the year,
same café sales at Bridgehead locations decreased by 32.1% as cafés
experienced significant disruption in business activities as a
result of the ongoing economic impacts of the COVID-19 pandemic,
including the temporary closures of stores and restrictions on
store operations such as the closure of dining room space and
operations limited to take-out, delivery and drive-thru.
Analysis of revenue
The Company generated
revenue for the Year of $11,201 from
its Company-owned and operated locations.
Sales of $1,773 were generated
through the sale of retail cannabis products and accessories at
Hemisphere Cannabis Co. locations. The Company operates four
recreational retail cannabis dispensaries, out of which two
locations opened the doors for business in the Company's last
fiscal Quarter of 2020.
Company-owned and operated Bridgehead coffeehouses generated
sales of $9,428 in the Year.
Sales for the majority of fiscal 2020 continued to be impacted
by the ongoing impacts of the COVID-19 pandemic.
Operating costs and expenses
Operating costs
and expenses include the costs of Company-owned stores and product
sales, general and administrative expenses, loss on disposal of
assets, and depreciation and amortization. Operating costs were
partially reduced by the amount of the financial relief that the
Company applied for and received in connection with the
Canada Emergency Wage Subsidy, the
Canada Emergency Commercial Rent
Assistance, and the Canada
Emergency Rent Subsidy programs introduced by the Federal
Government in response to the ongoing COVID-19 pandemic. People
costs also went down due to a reduction in remuneration of Aegis
Central staff through temporary and permanent layoffs, suspension
of compensation for the Board of Directors, and the reduction of
salaries for certain members of the Company's Senior Leadership
Team.
Total operating costs and expenses to date were $18,140, out of which $3,345 of costs are attributable to the operation
of the Company's recreational retail cannabis dispensaries;
$13,095 attributable to Company-owned
coffeehouses; $1,700 attributable to
certain administrative costs and services, as well as public
company related expenses under Aegis Corporate.
Company-owned stores and product related expenses for the Year
were $9,221, of which $2,024 is attributable to Hemisphere and
$7,197 attributable to
Bridgehead.
The Company's general and administrative expenses for the Year
were $2,606, of which $922 is attributable to Company-owned Bridgehead
coffeehouses; $1,684 attributable to
Aegis Corporate, which is a marginal decrease in comparison to the
$1,795 of general and administrative
expenses under Aegis Corporate.
Depreciation and amortization expense was $2,757, of which $659 is attributable to Hemisphere; $2,082 attributable to Bridgehead; and
$16 attributable to Aegis Corporate.
Total amortization expense is composed of amortization of
right-of-use assets of $1,912 and the
amortization on fixed and intangible assets came to $845.
Impairment indicators were identified as a result of the
economic impacts of the COVID-19 pandemic through fiscal 2010,
which has resulted in the temporary closures of cafés and scaled
down nature of operations of open cafés. Impairment analysis was
performed over the Company's fixed and right-of-use assets, as well
as on the Company's trademarks and goodwill recorded on acquisition
of Bridgehead. The Company has recorded non-cash asset impairment
charges of $3,556 for fiscal 2020 to
its right-of-use assets and property and equipment, of which
$662 is attributed to Hemisphere and
$2,894 to Bridgehead.
EBITDA
EBITDA to date was a loss of
$4,182 across the retail operating
brands under Aegis Brands Inc. Adjusted for asset impairment
charges, EBIDTA loss is $626.
Other income
Other income to date was
$950, composed of $792 of government grants from COVID-19 financial
relief programs, $486 from the
revaluation of contingent consideration in accordance with the
terms of the Bridgehead purchase agreement; this was partially
offset against the change in the fair market value of equity
securities based on the Black-Scholes pricing model.
In the prior year, the Company recognized other expense of
$111 composed of recognized income
from the NAC strategic alliance of $1,399, offset against the change in fair value
of warrants of $1,270 and acquisition
costs of $240.
Interest and Financing Costs
The Company
reported net interest and financing costs of $792 largely driven by non-cash interest expense
recorded on the Company's lease obligations in accordance with IFRS
16 ($745), as well as financing costs
of $47 incurred with respect to the
short-term debts of the Company ($47).
Net loss
The Company reported a net loss of
$7,730 or $0.34 per share to date. Adjusted for asset
impairment charges, fair market value adjustments on warrants,
financial relief programs for COVID-19 and the revaluation of the
contingent consideration, net loss to date was $5,124 or $0.22 per
share.
Reconciliations of net income (loss) to EBITDA, adjusted EBITDA,
adjusted net income (loss) and adjusted net income (loss) per share
are provided in the section "Definitions and Discussion of Certain
non-IFRS Financial Measures".
DEFINITIONS AND DISCUSSION ON CERTAIN NON-GAAP FINANCIAL
MEASURES
In this MD&A, the Company reports certain non-GAAP financial
measures such as system sales of cafés and stores, same café and
store sales, operating income (loss), EBITDA, adjusted EBITDA,
adjusted net income (loss) and adjusted net income (loss) per
share. Non-GAAP measures are not defined under IFRS and are
not necessarily comparable to similarly titled measures reported by
other issuers.
System sales of cafés and stores
System sales
of cafés and stores comprise the Gross Revenue from
Company-operated cafés and retail cannabis dispensaries.
Same café and store sales
Same café and store
sales represents the percentage change, on average, in retail sales
at cafés and retail cannabis dispensaries that have been open for
more than 12 months. It is one of the key metrics the Company
uses to assess its performance and provides a useful comparison
between fiscal quarters. The two principal factors that
affect this metric are changes in customer traffic and changes in
average check (the average dollar amount on a single transaction at
the café or store). For comparison, same café sales for Bridgehead
were measured against sales in the prior year before acquisition by
the Company.
Operating income (loss)
Operating income
(loss) represents revenue, less cost of goods sold, less operating
expenses, and less impairment charges. This measure is not defined
under IFRS, although the measure is derived from input figures in
accordance with IFRS. Management views this as an indicator
of financial performance that excludes costs pertaining to interest
and financing, and income taxes.
EBITDA and adjusted EBITDA
EBITDA represents
earnings before interest and financing, income taxes, and
depreciation and amortization. Adjustments to EBITDA are for
items that are not necessarily reflective of the Company's
underlying operating performance. As there is no generally
accepted method of calculating EBITDA, this measure is not
necessarily comparable to similarly titled measures reported by
other issuers. EBITDA is presented as management believes it is a
useful indicator of the Company's ability to meet debt service and
capital expenditure requirements and evaluate liquidity.
Management interprets trends in EBITDA as an indicator of
relative financial performance. EBITDA should not be
considered by an investor as an alternative to net income or cash
flows as determined in accordance with IFRS.
Adjusted net income (loss) and adjusted net income (loss)
per share
Adjustments to net earnings (loss) and net earnings (loss) per
share are for items that are not necessarily reflective of the
Company's underlying operating performance. These measures are not
defined under IFRS, although the measures are derived from input
figures in accordance with IFRS. Management views these as
indicators of financial performance.
Reconciliations of net income (loss) to operating income (loss)
and EBITDA, adjusted net income (loss) and adjusted net income
(loss) per share are provided below:
|
|
13 weeks
ended
|
|
52 weeks
ended
|
|
|
December
26, 20201
|
|
December
28, 2019
|
|
December
26, 20201
|
|
December
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(14,048)
|
$
|
(3,601)
|
$
|
(19,622)
|
$
|
(4,674)
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Net loss from
discontinued operations
|
|
7,906
|
|
2,548
|
|
11,892
|
|
2,802
|
Income tax expense
(recovery)
|
|
2,983
|
|
(384)
|
|
949
|
|
(34)
|
Interest and
financing loss
|
|
357
|
|
-
|
|
792
|
|
-
|
Other loss
(income)
|
|
(1,399)
|
|
929
|
|
(950)
|
|
111
|
Operating
loss
|
$
|
(4,201)
|
$
|
(508)
|
$
|
(6,939)
|
$
|
(1,795)
|
|
|
|
|
|
13 weeks
ended
|
|
52 weeks
ended
|
|
|
December
26, 20201
|
|
December
28, 2019
|
|
December
26, 20201
|
|
December
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(14,048)
|
$
|
(3,601)
|
$
|
(19,622)
|
$
|
(4,674)
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Net loss from
discontinued operations
|
|
7,906
|
|
2,548
|
|
11,892
|
|
2,802
|
Income tax expense
recovery)
|
|
2,983
|
|
(384)
|
|
949
|
|
(34)
|
Interest and
financing loss
|
|
357
|
|
-
|
|
792
|
|
-
|
Other loss
(income)
|
|
(1,399)
|
|
929
|
|
(950)
|
|
111
|
Depreciation of
property and equipment
|
|
68
|
|
-
|
|
824
|
|
-
|
Amortization of
intangible Assets
|
|
9
|
|
-
|
|
21
|
|
-
|
Amortization of
right-of-use assets
|
|
657
|
|
-
|
|
1,912
|
|
-
|
EBITDA
|
$
|
(3,467)
|
$
|
(508)
|
$
|
(4,182)
|
$
|
(1,795)
|
Add impact of
the following:
|
|
|
|
|
|
|
|
|
Asset
impairment Charges
|
|
3,192
|
|
-
|
|
3,556
|
|
-
|
Adjusted
EBITDA
|
$
|
(275)
|
$
|
(508)
|
$
|
(626)
|
$
|
(1,795)
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
52 weeks
ended
|
|
|
December
26, 20201
|
|
December
28, 2019
|
|
December
26, 20201
|
|
December
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(14,048)
|
$
|
(3,601)
|
$
|
(19,622)
|
$
|
(4,674)
|
Add (deduct) impact
of the following:
Net loss from
discontinued operations
|
|
7,906
|
|
2,548
|
|
11,892
|
|
2,802
|
After-tax other
(income) loss
|
|
(1,399)
|
|
681
|
|
(950)
|
|
82
|
After-tax asset
impairment
|
|
3,192
|
|
-
|
|
3,556
|
|
-
|
Adjusted net
loss
|
$
|
(4,349)
|
$
|
(372)
|
$
|
(5,124)
|
$
|
(1,790)
|
|
|
|
|
|
|
|
13 weeks
ended
|
|
52 weeks
ended
|
|
|
December
26, 20201
|
|
December
28, 2019
|
|
December
26, 20201
|
|
December
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss per
share
|
$
|
(0.61)
|
$
|
(0.18)
|
$
|
(0.86)
|
$
|
(0.23)
|
Add (deduct) impact
of the following:
|
|
|
|
|
|
|
|
|
Net loss from
discontinued operations
|
|
0.35
|
|
0.13
|
|
0.52
|
|
0.14
|
After-tax other
(income) loss per share
|
|
(0.06)
|
|
0.03
|
|
(0.04)
|
|
0.00
|
After tax asset
impairment
|
|
0.14
|
|
-
|
|
0.16
|
|
-
|
Adjusted net loss per
share
|
$
|
(0.18)
|
$
|
(0.02)
|
$
|
(0.22)
|
$
|
(0.09)
|
|
|
|
|
|
1 The
Company's results in fiscal 2020 reflect the consolidated financial
statements of its operating brands including Bridgehead and
Hemisphere.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of Canadian securities laws. These forward-looking
statements contain statements of intent, belief or current
expectations of Aegis. Forward-looking information is often, but
not always identified by the use of words such as "anticipate",
"believe", "expect", "plan", "intend", "forecast", "target",
"project", "may", "will", "should", "could", "estimate", "predict"
or similar words suggesting future outcomes or language suggesting
an outlook.
The forward-looking statements included in this press
release, including statements regarding the sale of Second Cup to
Foodtastic ("Transaction"), the receipt of necessary shareholder
approvals and satisfaction of other closing conditions, the
anticipated timing of the special meeting of the Company's common
shareholders, the earn-out component of the purchase price, the
nature of Aegis' growth strategy going forward and execution on any
of its potential plans (including with respect to the growth and
development of Bridgehead Coffee and Hemisphere Cannabis and
identification of future acquisition targets) are not guarantees of
future results and involve risks and uncertainties that may cause
actual results to differ materially from the potential results
discussed in the forward-looking statements. In respect of the
forward-looking statements and information included in this press
release, Aegis has provided such in reliance on certain assumptions
that it believes are reasonable at this time, including assumptions
as to the ability of the parties to receive, in a timely
manner and on satisfactory terms, the necessary shareholder
approvals, the ability of the parties to satisfy, in a timely
manner, the other conditions to the closing of the Transaction, the
ability of the Company to manage the risks (economic, operational,
financial, and other risks) associated with the COVID-19
pandemic, the ability of the Company to identify new
acquisition opportunities and to successfully integrate past and
future acquisition targets into the Company's business, and the
Company's ability to generally execute on its strategy going
forward. Accordingly, readers should not place undue reliance on
the forward-looking statements and information contained in this
news release.
Risks and uncertainties that may cause such differences
include but are not limited to: the risk that the Transaction may
not be completed on a timely basis, if at all; risks that the
conditions to the consummation of the Transaction may not be
satisfied; the risk that the Transaction may involve unexpected
costs, liabilities or delays; the risk that, prior to the
completion of the Transaction, Aegis' business may experience
significant disruptions, including loss of customers or employees,
due to transaction-related uncertainty or other factors; the
possible occurrence of an event, change or other circumstance that
could result in termination of the Transaction; risks that the
Transaction may have a negative impact on the market price and
liquidity of the common shares; risks related to the diversion of
management's attention from Aegis' ongoing business operations;
risks relating to the failure to obtain necessary shareholder
approvals; risks related to the Company's strategy going forward;
risks related to the COVID-19 pandemic; and other risks inherent in
the industry in which Aegis operates.
The risks associated with the COVID-19 pandemic include: the
ultimate extent, duration and severity of the pandemic itself and
the associated government restrictions; effects on consumer and
commercial behavior and other factors associated with or resulting
from such pandemic, including that the outbreak of the COVID-19
pandemic could result in additional cafés temporarily suspending
operations; a decrease in the willingness of guests to patronize
the Company's cafés; shortages of employees to staff the Company's
cafés; interruption of supplies from third parties upon which the
Company relies; the imposition of governmental regulations that
adversely impact the Company's business; the availability of the
Canada Emergency Commercial Rent
Assistance program; landlord willingness to consider franchisees'
requests for deferrals of rent or loan repayments and/or the
Company's requests to amend or terminate certain café leases; that
franchisees may request that the Company take certain steps to
support its franchisees (whether financially or otherwise); and
that the pandemic and the consumer, governmental and commercial
response to it could materially impact economic activity in general
and otherwise have a material adverse effect on the Company's
business, financial condition and results of operations. Such
adverse effects could be rapid and unexpected.
Failure to obtain the requisite approvals or the failure of
the parties to otherwise satisfy the conditions to or complete the
Transaction, may result in the Transaction not being completed on
the proposed terms, or at all. In addition, if the Transaction is
not completed, and Aegis continues in its current form, the
announcement of the Transaction and the dedication of substantial
resources of Aegis to the completion of the Transaction could have
a material adverse impact on Aegis' share price, its current
business relationships (including with future and prospective
employees, customers and partners) and on the current and future
operations, financial condition and prospects of Aegis. When
relying on forward-looking statements to make decisions, investors
and others should carefully consider the foregoing factors and
other uncertainties and potential events. Readers are cautioned
that the foregoing list of factors is not exhaustive. Additional
information on these and other factors that could affect Aegis'
operations or financial results are included in reports on file
with applicable securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com).
The forward-looking statements in this press release are made
as of the date it was issued and Aegis does not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable law.
By their very nature, forward-looking statements involve inherent
risks and uncertainties, both general and specific, and risks that
outcomes implied by forward-looking statements will not be
achieved. Aegis cautions readers not to place undue reliance on
these statements.
SOURCE Aegis Brands Inc.