The Very Good Food Company Reports Record Results for Fourth Quarter and Fiscal Year 2020
2020 Revenue Increased 364% to $4.6M Compared to Prior Year
Adjusted Gross Profit in 2020 Increased to 32% compared 16% in Fiscal 2019
Significant Increase in Production Capacity, eCommerce Sales & Distribution Partnerships Drive Continued Operational & Financial Growth
Vancouver, British Columbia--(Newsfile Corp. - April 26, 2021) - The Very Good Food Company Inc. (TSXV: VERYV) (OTCQB: VRYYF) (FSE: 0SI) ("VERY GOOD" or the "Company"), a leading plant-based food technology company, is pleased to announce its financial results for its fiscal fourth quarter and 2020 year ended December 31, 2020.
CEO Mitchell Scott stated, "Our financial results in 2020 demonstrate the success we have achieved in implementing a vertically integrated business model to build our 'The Very Good Food' house of brands into an extensive and innovative plant-based product portfolio. Our growth is guided by our simple mission, which is lofty, badass but beautifully simple: Get millions to rethink their food choices while helping them do the world a world of good. And we are doing this by offering plant-based food options so delicious and nutritious, we're helping this kind of diet become the norm. We are pleased to report that through the success of our eCommerce channel which demonstrated an 825% increase in online orders and continued demand from our retail distribution partners with an increase in retail distribution points from 100 to 1,300, we have started to build the foundation to become a key player in North America's plant-based food industry as our purpose driven business resonates with consumers.
"As we continue to see increased market demand for our unique product portfolio, now consisting of 14+ plant-based products, we are pleased to report that we are well positioned to reach a new level of growth for VERY GOOD in 2021. We are on track with the roll-out of our new production facility in Vancouver, providing us with a substantial growth opportunity to increase production capacity by 2,690% with 37 million lbs of annualized product in 2021. As we continue to build our operational footprint across North America, entering into new relationships with grocery chains through distribution partnerships and opening our eCommerce website to new high-growth markets, we look forward to unlocking the true value of our facilities in the year ahead," said Scott.
Q4 and Fiscal Year 2020 Financial Summary
|Revenue by channel|
|Butcher Shop, Restaurant and Other||142,475||84,486||413,890||618,539|
|Gross Profit %||14%||21%||18%||(17%)|
|Adjusted Gross Profit(1)||$||676,709||$||370,507||$||1,500,796||$||156,020|
|Adjusted Gross Profit %(1)||37%||27%||32%||16%|
|Adjusted EBITDA net loss(1)||$||(3,279,266||)||$||(3,138,595||)||$||(8,344,117||)||$||(1,328,260||)|
|Loss per share - basic and diluted||$||(0.06||)||$||(0.06||)||$||(0.21||)||$||(0.06||)|
(1) See "Non-GAAP Measures" below and in our Management's Discussion and Analysis for the years ended December 31, 2020 and 2019 for further details concerning Adjusted EBITDA and Adjusted Gross Profit including definitions and reconciliations to the relevant reported IFRS measures, which is available under our SEDAR profile at www.sedar.com
Revenue increased 364% to $4,636,838 in fiscal 2020 compared to $999,797 in fiscal 2019.
In Q4 2020, revenue was $1,836,682 compared to $1,373,814 in Q3 2020.
eCommerce sales increased 1,403% to $3,382,458 in fiscal 2020 compared to $225,121 in fiscal 2019; comprising 73% of total revenue resulting from 40,322 orders in fiscal 2020 compared to 4,347 orders in the prior year.
eCommerce sales were $1,438,931 in Q4 2020, an increase of 47% compared to Q3 2020.
Wholesale revenue increased 438% to $840,490 in fiscal 2020 compared to $156,137 in fiscal 2019; with wholesale distribution points increasing from 100 to 1,300 in fiscal 2020.
Wholesale revenue was $255,276 in Q4 2020, a decrease of 18% compared to Q3 2020 resulting from higher sales mix weighted towards eCommerce.
Adjusted Gross Profit(1) was $1,500,797 or 32% of revenue in fiscal 2020, compared to $156,020 or 16% of revenue in fiscal 2019; driven by increased sales volume and related operational efficiencies.
Adjusted Gross Profit was $676,709 or 37% of revenue in Q4 2020, compared to $370,507 or 27% of revenue in Q3 2020. Adjusted gross profit improved from the transition of the fulfillment of sales orders to third-party logistics partners.
Adjusted EBITDA(1) was $(8,344,117) compared to $(1,328,260) in fiscal year 2019.
In Q4 2020, Adjusted EBITDA loss was $(3,279,266) compared to $(3,138,595) in Q3 2020. Adjusted EBITDA was impacted by the increase in operating expenses as the Company continues to scale its manufacturing and distribution network.
Q4 and Fiscal Year 2020 Operational and Corporate Highlights
|Year ended December 31||Year ended December 31|
|For the period ended:|
|Production volume sold by channel (units)|
|Number of eCommerce orders||13,580||13,107||40,322||4,357|
|As at period end:|
|Production capacity (lbs)||20,000||8,100|
|Number of product SKUs manufactured||14||13|
|Number of wholesale distribution points(2)||1,300||100|
- Increased production capacity at our facility in Victoria, BC through targeted initiatives to improve operational efficiency and transitioning the fulfillment of sales orders to third-party distribution centres through newly established third-party logistics ("3PL") partnerships, resulting in an increase in weekly production volume from 8,100 lbs to 20,000 lbs per week by the end of 2020.
- Grew eCommerce sales by launching US eCommerce platform to expand our reach to our US customers and increased our online order fulfillment rate by 100% from 900 to 1,800 orders per week during the fourth quarter of 2020: supporting the increase in online orders from 4,357 to 40,322 in 2020.
- Wholesale distribution agreement with UNFI Canada, a subsidiary of United Natural Foods, Inc. (NYSE: UNFI), the largest publicly traded wholesale distributor in North America, to distribute The Very Good Butchers™ line-up of products across Canada. This new distribution partnership and others supported VERY GOOD's retail expansion efforts resulting in 1,300 distribution points in 2020 compared to 100 in 2019.
- Launched 8 new The Very Good Butchers products into the market including The Very Good Pepperoni and The Very Good Dog, which are quickly becoming fan favorites.
- Completed three oversubscribed financings totaling over $26 million in gross proceeds employed to scale of operations.
- Three new strategically located 3PL partnerships with established hubs across North America to assist with the fulfillment of both eCommerce and wholesale sales orders with the capability to deliver VERY GOOD's products to 50 states in the US; and 10 provinces and 3 territories in Canada.
- Strengthened corporate governance with the addition of a new independent member, Bill Tolany, past Whole Foods Market and Amazon executive, to VERY GOOD's Board of Directors bringing significant marketing and eCommerce experience.
- Strategically built out leadership team adding key roles to support the increased operations and planned strategic growth in 2021, including Kamini Hitkari, who was appointed CFO in late Q3 2020; and Ana Silva, who was appointed as VERY GOOD's President in Q1 2021.
Fiscal 2021 Strategic Initiatives
Scale production and distribution
- Commissioning of new production lines with the first production line already being commissioned, tested and producing product at our Rupert Facility in Vancouver, BC. This line is expected to produce 7+ SKUs of our existing products already in the market. The second line is planned to start food production in Q4 2021 and is expected to produce at least another 6+ SKUs that are yet to be launched into the market. The Rupert Facility comprises 45,000 square feet and, once fully operational, is expected to produce up to 37,000,000 lbs of annualized product from these two production lines to be phased in over 2021, representing an approximate increase of 2,690% over the Victoria Facility's annualized production capacity of 1,375,000 lbs per year.
- Expand the Company's US operational footprint and introduce new products into the market, through the VERY GOOD's signed lease for the Patterson Facility; a 25,000 square foot manufacturing space with the option to lease an additional 25,000 square feet in California. The Paterson Facility can accommodate three to four production lines allowing for potential capacity of up to 98,500,00 lbs of annualized product per year. Food production is targeted for the latter half of 2021.
- Partnered with Green Spoon Sales, Colorado-based natural food & beverage brokerage, to accelerate VERY GOOD's reach into grocery and retail across the US and recently secured our first US sales order from the California-based online vegan grocery store, GTFO It's Vegan; marking the first in its relationship with the sustainable grocer.
- Continued scale of our retail network from 275 retail stores and 1,300 points of distribution at the end of 2020 to a target of at least 3,000 retail stores and 15,000 points of distribution by the end of 2021 across North America, with our increased production capabilities in 2021. Through our newly formed 3PL partnerships, VERY GOOD plans to build the capability to fulfill over 5,000 online orders per week by the end of 2021; in addition to wholesale orders with current gross sales per pound ranging from $7 to $10.
Strengthen brand awareness and consumer engagement
- Rebranded corporate presence from "The Very Good Butchers" to "The Very Good Food Company" brought to life in a revamped "The Very Good Food Co.™" logo and newly unveiled website, www.VeryGoodFood.com. The new site was created as a centralized platform for our growing portfolio of great-tasting and nutritious plant-based products while showcasing its personality and approachability to the fast-growing base of consumers embracing plant-based food options.
- Opening of Mount Pleasant, our second flagship store; located in Vancouver, BC, with a retail front featuring our Butcher Shop and Restaurant concept including a test kitchen and R&D innovation centre. Our flagship stores allow for the rapid introduction of new creative products into the market. We expect to welcome our first customers to the Mount Pleasant flagship store in Q4 2021.
Launch new products and gain market share
- Launch of our new gluten-free Butcher's Select™ product line which is expected to be introduced in the third quarter of 2021. The Butcher's Select product range comprises extra meaty artisanal meats made with simple plant-based ingredients. These sausages, burgers and meatballs are gluten-free, soy-free and will be Non-GMO verified.
- Introduction of The Very Good Cheese Co.™ from the acquisition of The Cultured Nut ("Cultured Nut"), a highly popular artisan vegan cheese producer on the West Coast of Canada, driving the Company's entry into the cheese alternatives space. VERY GOOD plans to rebrand the Cultured Nut's product line under a new brand called "The Very Good Cheese Co." which is scheduled to launch during the second quarter of 2021.
- European expansion efforts are underway with the planned launch of an eCommerce sales platform in the United Kingdom in the third quarter of 2021; and an online platform in the European Union late in the fourth quarter of 2021.
- Accretive acquisitions will continue to be evaluated to further expand both our product categories and geographical regions.
Other 2021 Corporate Highlights
- Acquired Lloyd-James Marketing Group, a boutique wholesale and food service broker specializing in the plant-based food industry with a history of placement in large natural, specialty and conventional grocery retailers such as Whole Foods Market, The Pattison Food Group, Sobeys, Metro, Loblaw and Walmart.
- Listed on the TSX Venture Exchange on March 17, 2021 under the trading symbol "VERY.V".
"We are excited to significantly increase the production of our growing product line in 2021 through our new 45,000 square foot production space at our Rupert facility. Based on our enhanced production capacity, we expect to scale our retail network from 275 retail stores and 1,300 points of distribution at the end of 2020 to a target of greater than 3,000 retail stores and 15,000 points of distribution by the end of 2021 in Canada and the US. We will also continue to take advantage of increased online grocery shopping through our eCommerce website and, through our recent initiatives, will be able to complete over 5,000 orders per week. VERY GOOD is on its way to transitioning itself into an industry leader in 2021 and we look forward to leveraging our scaled operations to build on our success and achieve greater top line growth in the year ahead," concluded Scott.
The management's discussion and analysis for the period and the accompanying financial statements and notes are available under the Company's profile on SEDAR at www.sedar.com and the Company's website www.verygoodfood.com/investors.
(1) Adjusted Gross Profit and Adjusted EBITDA are non-GAAP measures used by management that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management defines Adjusted Gross Profit as Gross Profit less The Butcher Shop & Restaurant related procurement expense and the non-cash portion of share-based expense recognized in procurement. Adjusted EBITDA is defined as Net loss from operations, as reported, before finance expense, tax, depreciation and amortization, share-based payments and other one-time and non-cash items.
Management believes Adjusted Gross Profit and Adjusted EBITDA are useful financial metrics to assess its operating performance on an adjusted basis as described above. See "Non-GAAP Measures" below and in our Management's Discussion and Analysis for the years ended December 31, 2020 and 2019 for further details concerning Adjusted Gross Profit and Adjusted EBITDA including definitions and reconciliations to the relevant reported IFRS measures, which is available under our SEDAR profile at www.sedar.com
(2) Wholesale distribution points are defined as the number of retail stores multiplied by the number of SKUs.
Q4 and Fiscal Year 2020 Conference Call Details
The Company will host a conference call on Tuesday, April 27, 2021 at 11:00 am Eastern Time/ 8:00 am Pacific Time to discuss the financial results and business outlook.
Conference Call Dial-in Numbers and Webcast Details
Toll / International: 1-631-891-4304
* Participants should request The Very Good Food Company Earnings Call.
Please visit the website at least 15 minutes before the call to register, download, and install any necessary audio software. A replay of the call will be available on VERY GOOD's investor page approximately two hours after the conference call has ended.
About The Very Good Food Company Inc.
The Very Good Food Company Inc. is an emerging plant-based food technology company that produces plant-based meat and other food products that are delicious while maintaining a wholesome nutritional profile. To date we have developed a core product line under The Very Good Butchers brand.
OUR MISSION IS LOFTY, BADASS BUT BEAUTIFULLY SIMPLE: GET MILLIONS TO RETHINK THEIR FOOD CHOICES WHILE HELPING THEM DO THE WORLD A WORLD OF GOOD. BY OFFERING PLANT-BASED FOOD OPTIONS SO DELICIOUS AND NUTRITIOUS, WE'RE HELPING THIS KIND OF DIET BECOME THE NORM.
This news release contains forward-looking information for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any such forward-looking information may be identified by words such as "proposed", "expects", "intends", "may", "will", and similar expressions. Forward looking information contained or referred to in this news release includes statements relating: to the positioning of VERY GOOD to become a key player in North America's plant-based food industry and the level of support from consumers; VERY GOOD being well situated to unlock and reach a new level of growth in 2021; plans and timing for production at the Rupert Facility including the commencement of food production on the second production line and number of SKUs to be produced thereon as well as the ultimate production capacity of the Rupert Facility to be phased in over 2021; VERY GOOD's plans to expand its operational footprint in the US; the plans and timing for and the expected production capacity of the Patterson Facility; VERY GOOD's expectation of scaling its retail network to a target of greater than 3,000 retail stores and 15,000 points of distribution by the end of 2021; the Company's plans to build the capability to fulfill over 5,000 online orders per week by the end of 2021; the plans and timing for opening of the new flagship butcher shop and restaurant at Mount Pleasant; the expected timing for the launches of the Butcher's Select product line and The Very Good Cheese Co.; VERY GOOD's plans for expansion to the UK and European Union; and the Company's plans to continue to look for accretive acquisitions. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information, but which may prove to be incorrect including, but not limited to material assumptions with respect to the continued strong demand for VERY GOOD's products, the availability of sufficient financing on reasonable terms to fund the Company's capital requirements and the ability to obtain necessary equipment, production inputs and labour. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because VERY GOOD can give no assurance that such expectations will prove to be correct. Risks and uncertainties that could cause actual results, performance or achievements of VERY GOOD to differ materially from those expressed or implied in such forward-looking information include, among others, negative cash flow and future financing requirements to sustain and grow operations, limited history of operations and revenues and no history of earnings or dividends, expansion of facilities, competition, availability of raw materials, dependence on senior management and key personnel, general business risk and liability, regulation of the food industry, change in laws, regulations and guidelines, compliance with laws, unfavourable publicity or consumer perception, product liability and product recalls, risks related to intellectual property, difficulties with forecasts, management of growth and litigation, as well as the impact of, uncertainties and risks associated with the ongoing COVID-19 pandemic, many of which are beyond the control of VERY GOOD. For a more comprehensive discussion of the risks faced by VERY GOOD, please refer to VERY GOOD's Management's Discussion & Analysis for the fiscal years ended December 31, 2020 and 2019 filed with Canadian securities regulatory authorities at www.sedar.com. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, VERY GOOD disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.
This news release makes reference to certain non-GAAP 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. Definitions and reconciliations of non-GAAP measures to the relevant reported measures can be found in VERY GOOD's Management's Discussion & Analysis for the fiscal years ended December 31, 2020 and 2019 filed with Canadian securities regulatory authorities at www.sedar.com.
The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Phil Carlson / Erika Kay
KCSA Strategic Communications
The Very Good Food Company
Chief Executive Officer and Director
Corporate Communications and Investor Relations
Phone: +1 855-472-9841
KCSA Strategic Communications
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