TORONTO, June 30, 2020 /CNW/ - Mimi's Rock Corp. (TSXV: MIMI) (the "Company"), an online dietary supplement and wellness company, today announced its financial results for the three months ended March 31, 2020.
- Q1 2020 Revenues of $10.4M – highest quarterly revenue to date
- Q1 2020 Adjusted EBITDA of $1.23M
- On June 8, 2020, the Company announced several new products recently added to the Dr Tobias portfolio. Based on the demands of customers and in light of the focus on immunity support, the Company launched a number of new products focused on supporting the immune system. These products include Vitamin C, Elderberry Immune with Echinacea, Zinc and Vitamin C, as well as a 50mg Zinc product. The new additions complement the brands' existing established portfolio of immune supporting products.
"Our first quarter 2020 results reflect the incredible efforts of our team, as we were able to re-establish the trajectory of the Dr Tobias brand's growth " said David Kohler, CEO. "We identified and addressed a number of considerable challenges towards the end of 2019 and I'm pleased with the rapidity and efficiency with which we were able to course correct. We have also been able to integrate the operations of the newly acquired skin care businesses and I am optimistic that the combination of these businesses with our core brands will allow us to drive even better performance over the balance of the year."
Results of Operations for the Three Months Ended March 31, 2020
For the three months ended March 31, 2020, the Company earned net income of $281,515, compared to net income of $391,917 for the three months ended March 31, 2019. EBITDA for the three months ended March 31, 2020 was $1,099,367, compared to $1,097,913 for the same period in 2019. Adjusted EBITDA, which adds back (deducts) non-cash stock-based compensation, investment income, acquisition costs and listing expenses, was $1,228,070 for the three months ended March 31, 2020, compared to $1,318,520 for the same three month period in 2019.
Revenues and Gross Margin
Revenues were $10,435,311 for the three months ended March 31, 2020, compared to revenues of $10,166,227 for the three month period ended March 31, 2019. Revenues reported in the current period primarily represent sales from the Company's DTI GmbH ("DTI") business as well as sales from All Natural and Maritime Naturals, acquired in December 2019. Revenues in the comparative 2019 period primarily represent revenues from the DTI business only. While the Company's sales do not experience significant seasonality, there is some fluctuation on a quarterly basis due to natural demand fluctuation as well as promotional impacts. In addition, the DTI business experienced significant changes in the market in mid- to late-2019 which put downward pressure on revenue with heavier advertising spend. The first quarter of 2020 saw a return to previous sales and revenue levels, with sales increasing on a weekly basis throughout the quarter. Revenues from the newly acquired skin care businesses, All Natural and Maritime Naturals, was in-line with expectations and historical performance. The Company expects these revenues to continue to grow throughout 2020 as the businesses are integrated within the existing platform.
Revenues to date have been generated almost entirely through the Company's online sales channels in the United States, Canada and Europe. Revenue growth in future quarters is expected to come from expansion into additional geographic territories as well as the launch of new complementary products.
Gross margin for the three months ended March 31, 2020 was $7,253,442 (69.5%) compared to $7,124,896 (70.1%) for the three month period ended March 31, 2019. Costs of goods sold for the 2020 period includes an adjustment of $109,636 relating to recognition of fair value adjustments made on acquisition of All Natural and Maritime Naturals. Without consideration to this adjustment, gross margin for the period would have been 68.5%, an improvement over the 2019 period due to better pricing from suppliers as well as overall process efficiencies.
Selling and Marketing Expense
The Company incurred selling and marketing expenses of $4,748,087, or approximately 45.5% of revenue, for the three months ended March 31, 2020, compared to $4,502,744, or 44.3% of revenue, for the three months ended March 31, 2019. The Company continues to adapt and further its brand strategy. Online advertising in the period was increased with a focus on brand awareness and customer loyalty. Sales from its own e-commerce site, drtobias.com, as well through additional online retail outlets continued to grow; however, a majority of revenue continues to be generated on the Amazon platform.
Advertising spend in the first quarter of 2020 was lower than in recent periods but higher relative to sales than the first quarter of 2019. Management spent considerable time and effort to understand challenges which presented in the DTI business in late 2019 and a recalibrated advertising strategy was able to provide support for an increase in sales volumes across most Dr Tobias products. In addition, the Company was able to maintain sales growth such that current levels are comparable to those a year ago, despite operating challenges presented by COVID-19. Short term promotions on new product launches will enable the business to continue to drive growth. The Company continues to better understand its customer base, metrics and drivers in order to optimize advertising spend compared to revenue.
Selling and marketing expenses for the period consist primarily of fulfillment costs related to delivering products to customers, direct online advertising placements, costs related to marketing the Dr Tobias brand and other promotional and awareness initiatives. The Company will continue to actively monitor its selling and marketing expenses, particularly direct advertising expenses and expects that these will begin to stabilize in relation to sales revenues going forward.
General and Administrative Expense
General and administrative expenses for the three months ended March 31, 2020 were $1,277,285, compared to $1,303,632 for the same period in 2019. General and administrative expenses consist primarily of salaries and benefits, professional fees, occupancy costs and insurance. General and administrative expenses are relatively comparable to the same period in 2019. Staff and operational costs are relatively stable and expected to remain so going forward.
Share based Compensation Expense
Share based compensation expense relates to awards under the Company's incentive stock option plan and is based on the estimated number of awards that will eventually vest using the Black-Scholes option pricing model. Share based compensation expense for the three months ended March 31, 2020 was $71,182 compared to $212,372 for the three months ended March 31, 2019. Share based compensation expense in 2019 was considerably higher due to initial vesting of employee grants.
Foreign Exchange Gains and Losses
Foreign exchange losses of $57,521 were recorded in the three months ended March 31, 2020, compared to $21,535 for the three months ended March 31, 2019, primarily due to the movements in the value of the US dollar relative to the Euro between the time that expenses were incurred and the time that they were settled.
Interest Expense and Financing Costs
Interest and financing costs of $244,738 were incurred during the three months ended March 31, 2020, compared to $467,471 for the three months ended March 31, 2019. Interest and financing expenses have decreased significantly in the first quarter of 2020 compared to the same period in 2019 primarily due to renegotiations of the senior debt facility as well as lower interest rates and non-cash charges related to amortization of finance costs incurred in securing the loan.
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.
About Mimi's Rock Corp.:
Mimi's Rock Corp. is an online dietary supplement and wellness company operating under the Dr. Tobias brand. The brand features over 30 products including the top selling colon cleansing product and the #1 selling Omega 3 Fish Oil on Amazon.com. Mimi's Rock currently serves customers in the United States and has rapid growth plans to expand into other markets. For more information, visit https://mimisrock.com.
This news release contains forward-looking statements and forward looking information within the meaning of applicable securities laws. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. The forward looking statements in this press release include, but are not limited to, statements regarding the impact of the COVID-19 pandemic on the business and operations of the Company, the Company's expected revenues, the expected increase in quarterly revenues and Adjusted EBITDA. Please refer to the Company's 2019 Annual Financial Statements and MD&A for more details on the Company's calculation of EBITDA and Adjusted EBITDA.
All forward-looking statements reflect the Company's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company's forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although the Company believes that these assumptions are reasonable, this list is not exhaustive of factors that may affect any of the forward-looking statements.
Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements, including risks relating to: the Company's reliance on strength of reputation and brands, third-party manufacturing, transportation and distribution, the Company's ability to protect its intellectual property, the Company's reliance on e-commerce sites, disruption or breaches in information technology systems, the successful integration subsequent to acquisitions, litigation, volatility in the market price, the inability to successfully implement growth strategy on a timely basis, difficulty expanding sales in targeted international markets, changes in general economic conditions, the Company's ability to service its debt obligations, management of growth, reliance on management, conflicts of interest, local and foreign tax matters, liquidity, currency and other financial risks, potential product liability or other regulatory claims, product recalls, the need to develop and innovate products, changes in legal and regulatory standards, competition, operating risk and insurance coverage, natural disasters, unusual weather and geo-political events, the effect of COVID-19 on operations and other risks relating to the business and industry of the Company that are detailed from time to time in the Company's filings with the Canadian provincial securities regulators.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.
SOURCE Mimi's Rock Corp.
For further information: David Kohler, CEO, 905-330-5081, [email protected]