Jamieson Wellness Inc. Reports Third Quarter 2024 Results

Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX: JWEL) today reported its third quarter results for the period ended September 30, 2024. All amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS and other financial measures. See “Non-IFRS and Other Financial Measures” below.

“Our brands continued to resonate with consumers globally in the third quarter, with strong consumption and growth in all of our key markets,” said Mike Pilato, President and CEO of Jamieson Wellness. “Consumers continue to improve their health and wellness with quality brands they can trust, which is reflected in our branded revenue growth of 20% in the quarter.

“As we prepare to close 2024, we remain focused on the execution of our strategic priorities. Our newly launched integrated advertising campaign in Canada continues to reinforce Jamieson’s position as the leading VMS brand in the country and we are preparing to take its success into international markets in 2025. Our investments in brand growth in China and in the U.S. are ongoing, and we have increased collaboration with our key distributor partners to further fuel the growth in our International business segment.

“Our results this quarter were driven by the growing consumer momentum behind proactive health and wellness solutions, and exceptional execution by our entire team. I want to thank all our team members for their dedication to delivering growth, relentless pursuit of our commitments, and passion for ensuring our high-quality products help to inspire better lives every day.”

Third Quarter Highlights

• Successful launch of the Jamieson brand’s integrated advertising campaign in Canada, focused on the Company’s 102-year-history of quality and trust
• Achieved the Company’s highest third quarter revenue to date in China, driven by investments in increasing brand awareness, market penetration, and ecommerce programs
• Sustained growth of the youtheory brand, led by consumption of product innovations
• 25% International revenue growth, driven by innovation and distribution gains in multiple markets
• Renewed the Company’s partnership with environmental restoration company veritree, expanding its Canadian kelp restoration project and committing to two new international tree planting projects in 2025

Third Quarter Financial Results Consolidated Summary

All comparisons are with the third quarter of 2023

• Consolidated revenue increased 16.3% to $176.2 million, driven by 20.0% growth in Jamieson Brands and lower revenue in Strategic Partners, as expected
• Gross profit increased by $16.4 million to $67.6 million; normalized gross profit increased by $12.9 million largely driven by higher revenues and increased margins
• Gross profit margin³ increased by 460 basis points; normalized gross profit margin increased 230 basis points due to a higher mix of Jamieson Brands sales and the impact of normalizing for the amortization of fair value adjustments in the prior year
• EBITDA¹ increased by $2.4 million to $27.9 million, mainly driven by higher revenues and gross profit; Adjusted EBITDA¹ increased by $2.0 million to $33.9 million, reflecting the impact of higher sales and pricing, partially offset by investments in demand driving marketing
• Net earnings was $10.4 million; Adjusted net earnings¹ was $15.8 million, or $0.8 million higher, reflecting higher normalized earnings from operations and lower interest rates in the current year
• Diluted earnings per share was $0.24; Adjusted diluted earnings per share² was $0.37

Summary of Segment Results

All comparisons are with the third quarter of 2023

Jamieson Brands

• Revenue increased 20.0% or $25.9 million to $155.0 million
  • Canada revenue increased by 15.1% to $87.3 million, driven by continued strong consumer consumption, pricing, and lapping of a customer inventory reduction
  • China revenue increased 81.7% to $22.6 million on a constant currency basis, driven by the Company’s marketing and promotional investment strategy in the country
  • youtheory revenue increased 5.7% to $34.9 million, driven by consumer consumption, innovation and new distribution, partially offset by the initial stocking of product renovations in the prior year
  • International revenue increased by 25.2% to $10.3 million on a constant currency basis, driven by innovation and distribution gains
• Gross profit increased by $17.6 million to $65.3 million; normalized gross profit increased by $14.1 million mainly due to higher revenues and increased margins
• Gross profit margin³ increased by 520 basis points to 42.1%; normalized gross profit margin increased by 250 basis points to 42.1%, mainly driven by channel mix and favourable category growth in China, the Company’s higher margin geography
• Adjusted EBITDA¹ increased by $3.2 million to $32.3 million, driven by higher gross profit partially offset by investments in SG&A to drive brand awareness and growth in China; Adjusted EBITDA margin² was 20.9%, a decrease of 170 basis points due to higher SG&A as a percentage of revenue

Strategic Partners

• Revenue was $21.2 million, an expected decrease of 5.4% or $1.2 million, reflecting the Company’s previously announced transition away from a customer contract
• Gross profit was $2.3 million, a decrease of $1.1 million; gross profit margin³ was 10.9%, a decrease of 460 basis points impacted by lower plant utilization and customer mix
• Adjusted EBITDA¹ was $1.6 million, a decrease of $1.2 million; Adjusted EBITDA margin² was 7.4%, a decrease of 490 basis points

Balance Sheet and Cash Flow from Operations

All comparisons are with the third quarter of 2023

• As at September 30, 2024, the Company had approximately $207.2 million in cash and available revolving and swingline facilities and net debt¹ of $292.8 million
• The Company generated $24.2 million in cash from operations compared to $14.0 million used in Q3 2023
• Cash from operating activities before working capital considerations of $18.5 million increased by $0.8 million
• Cash generated from working capital increased by $37.4 million driven by timing of accounts receivable collections, income tax payable, and drawdown of inventory

Narrowing Fiscal 2024 Outlook and Maintaining Fiscal 2025 Outlook

The Company is narrowing its outlook for the 2024 fiscal year and is now anticipating the following:

• Revenue to range between $725.0 to $755.0 million (+7.2% to +11.7% growth)
• Adjusted EBITDA to range from $139.0 to $143.0 million (up to 3.6% growth)
• Adjusted diluted earnings per share to range from $1.57 to $1.63 (up to +5.2% growth)

In fiscal 2025, the Company continues to anticipate the following:

• The return of low double-digit growth with Adjusted EBITDA of between $155.0 and $165.0 million
• Profitability driven by Jamieson Brands and Strategic Partners volume growth, and manufacturing efficiencies
• SG&A and marketing investments consistent with Jamieson Brands revenue growth rates

For additional details on the Company’s fiscal 2024 and 2025 outlook, including guidance for the fourth quarter of 2024, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the three and nine months ended September 30, 2024.

Declaration of Third Quarter Dividend

The board of directors of the Company declared a cash dividend for the third quarter of 2024:

• $0.21 per common share, or approximately $8.8 million in the aggregate
• Paid on December 13, 2024 to all common shareholders of record at the close of business on November 29, 2024
• The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (Canada)

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s unaudited condensed consolidated interim financial statements and accompanying notes as at and for the three and nine months ended September 30, 2024 and related MD&A are available under the Company’s profile on SEDAR+ at www.sedarplus.com and on the Investor Relations section of the Company’s website at https://investors.jamiesonwellness.com.

Conference Call

Management will host a conference call to discuss the Company’s third quarter 2024 results at 5:00 p.m. ET today, November 7, 2024. To access:

• By phone: 1-800-717-1738 from Canada and the U.S. or 1-646-307-1865 from international locations
• Online: https://investors.jamiesonwellness.com or https://viavid.webcasts.com/starthere.jsp?ei=1692246&tp_key=a049489fcb

About Jamieson Wellness

Jamieson Wellness is dedicated to Inspiring Better Lives Every Day with its portfolio of innovative natural health brands. Established in 1922, the Jamieson brand is Canada's #1 vitamins, minerals and supplements (“VMS”) brand. The Company’s youtheory brand, acquired in 2022, is an established and growing lifestyle brand in the U.S. Combined, these global brands are available in more than 50 countries worldwide. The Company also offers a variety of innovative VMS products as well as sports nutrition products to consumers in Canada with its Progressive, Smart Solutions, Iron Vegan and Precision brands. The Company is a participant of the United Nations Global Compact and adheres to its principles-based approach to responsible business. For more information please visit www.jamiesonwellness.com.

Jamieson Wellness’ head office is located at 1 Adelaide Street East Suite 2200, Toronto, Ontario, Canada.

Forward-Looking Information

This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company’s anticipated results and its outlook for its 2024 revenue, Adjusted EBITDA and Adjusted diluted earnings per share. Words such as “expect”, “anticipate”, “intend”, “may”, “will”, “estimate” and variations of such words and similar expressions are intended to identify such forward-looking information. This information reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated March 28, 2024 and under the “Risk Factors” section in the MD&A filed today, November 7, 2024. This information is based on the Company’s reasonable assumptions and beliefs in light of the information currently available to it and the statements are made as of the date of this press release. The Company does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law or regulatory authority.

The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company’s results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “Forward-looking Information” and “Risk Factors” within the MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.

Non-IFRS and Other Financial Measures

This press release makes reference to certain financial measures, including non-IFRS financial measures that are historical, non-IFRS measures that are forward-looking, non-GAAP ratios and supplementary financial measures. Management uses these financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing the Company’s business performance and trends. 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 the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses the following non-IFRS financial measures: “EBITDA”, “Adjusted EBITDA” and “Adjusted net earnings”, the most directly comparable financial measure for each that is disclosed in its financial statements being net earnings, “normalized gross profit”, “normalized SG&A”, “normalized earnings from operations”, “cash from operating activities before working capital considerations” and “net debt”, the most directly comparable financial measures for each that is disclosed in its financial statements being gross profit, SG&A, earnings from operations, cash flows from operating activities, and long-term debt, respectively, the following non-IFRS ratios: “Adjusted EBITDA margin”, “Adjusted diluted earnings per share”, “normalized gross profit margin”, “normalized operating margin”, and the following supplementary financial measures: “gross profit margin” and “operating margin” to provide supplemental measures of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non-IFRS and supplementary financial measures in order to prepare annual operating budgets and to determine components of management compensation. For an explanation of the composition of each such measure and the usefulness and additional uses of each by management, see the “How we Assess the Performance of our Business” section of the MD&A, which is incorporated by reference. See below for a quantitative reconciliation of each non-IFRS financial measure to its most directly comparable financial measure disclosed in the Company’s financial statements to which the measure relates.

The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA, and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings from operations to normalized earnings from operations and net debt, each of which are non-IFRS financial measures (see the “Non-IFRS and Other Financial Measures” of this press release for further information on each non-IFRS financial measure) for the three and nine months ended September 30, 2024, and September 30, 2023.

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