Release Date: September 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross margin increased significantly to 55.4%, up from 51.2% in Q3 2023.
- Net loss reduced by 50% over the last two years.
- Year-to-date revenue and gross profit grew by 6.9% and 11.6%, respectively.
- Sales in the US market increased by 74% year over year in the last nine months.
- Strong performance on Amazon, maintaining the number one organic energy drink position.
Negative Points
- Net revenue for Q3 2024 was $7.9 million, down from $8.9 million in Q3 2023.
- Challenges in the Canadian market, particularly due to reduced shipments and decreased convenience store traffic.
- Declines in premium retail banners in Quebec, such as Costco, Petro-Canada, IGA, and Metro.
- Petro-Canada's IT system breach led to significant sales declines.
- Lack of strong presence in discount grocers and Costco in the rest of Canada, leading to more pronounced declines.
Q & A Highlights
Q: Can you share your retail sales in Canada during the quarter, including all channels combined?
A: Overall, there was a small decline in Canada, with a slight growth in Quebec but declines in premium retail banners like Costco, Petro-Canada, IGA, and Metro. This was offset by growth in Costco, Dollarama, and Walmart. In the rest of Canada, declines were more pronounced due to issues with Petro-Canada and independent convenience stores.
Q: Can you provide more details on your strong performance online, particularly on Amazon?
A: We are very happy with our performance on Amazon. Basket sizes are growing, repeat rates are around 60%, and new customers to the brand have doubled year-over-year. We are also excited about launching our zero sugar line on Amazon in the US.
Q: Your gross margin expanded significantly this quarter. Can you provide a bridge on the main factors contributing to this improvement?
A: One-third of the gross margin improvement is due to better input costs, and two-thirds are due to favorable pricing dynamics and channel mix. Online sales are slightly more profitable from a gross margin standpoint compared to retail.
Q: Which channel is more profitable for you, retail or online?
A: From a gross margin standpoint, online is a bit more profitable than retail. However, there are additional costs associated with online sales that come later.
Q: Can you provide more details on the input cost improvements?
A: The improvements are mainly driven by lower raw material costs, which have translated into better overall input costs.
Q: What are your expectations for Q4? Could we see a return to revenue growth year-over-year?
A: While we do not provide forward guidance, we have put several initiatives in place, including increased retail activities with PepsiCo, new four-pack strategies, and Costco roadshows. Additionally, our online momentum, particularly with the launch of the zero sugar line on Amazon, is very positive.
Q: Can you provide more color on the retail dynamics in Quebec and the rest of Canada?
A: In Quebec, we are seeing small declines in premium retail banners but strong growth in Costco, Dollarama, and Walmart. In the rest of Canada, declines are driven by issues with Petro-Canada and independent convenience stores. We are not as strong in discount grocers in the rest of Canada, which has impacted our growth.
Q: How are you addressing the channel shifts and consumer behavior changes?
A: We are increasing our presence in discount channels and bulk buying options. Initiatives include new four-pack strategies, Costco roadshows, and special promotions to capture consumers who are looking for value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
