Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Goodfood Market Corp (GDDFF, Financial) achieved a 93% growth in adjusted EBITA, reaching $9.1 million, reflecting strong cost discipline and optimized pricing strategies.
- The company generated $7.6 million in adjusted free cash flow for fiscal 2024, marking its first full year of free cash flow generation.
- Net leverage ratio was significantly reduced from 4.4 turns in fiscal 2023 to 2.5 turns, enhancing financial flexibility.
- Goodfood Market Corp (GDDFF) expanded its customer value proposition by adding a record number of new recipes and launching a value plan offering meals at $9.99 per serving.
- The acquisition of Genuine Tea, a leading Canadian craft tea company, aligns with Goodfood's strategy to build a portfolio of high-growth, profitable brands.
Negative Points
- Net sales for the quarter declined by 9% to $34.1 million compared to the previous year, reflecting challenging consumer spending and seasonality.
- Active customers decreased to 101,000 from 116,000 in the same quarter last year, indicating a contraction in the customer base.
- The company is experiencing consumer softness and challenges in maintaining activity levels among customers.
- The weakening Canadian dollar is pressuring gross margins due to increased costs of US-sourced products.
- Despite stability in customer count, there is softness in customer activity levels, impacting overall revenue growth.
Q & A Highlights
Q: Can you discuss the trends you're seeing in Q1 regarding customer count, average revenue per user, and customer acquisition costs?
A: Jonathan Ferrari, CEO: In Q1, we're observing continued consumer softness similar to Q4. However, our customer count has remained relatively stable since Q3 2024, which is encouraging. We've improved our customer acquisition cost by about 15% over the summer and maintained this trend into Q1. The value plan is attracting new customers and retaining existing ones by offering affordable meal options.
Q: With customer count stable but consumer softness present, does this imply a decrease in average revenue per user (ARPU)?
A: Ross, CFO: While subscriber numbers are stable, there is some softness in customer activity levels. However, basket size has held up well, which helps maintain revenue levels.
Q: How is the weakening Canadian dollar impacting your business, especially with US dollar purchases?
A: Ross, CFO: The weakening Canadian dollar does impact our food costs, particularly as we source more from the US during winter. While it pressures gross margins slightly, it's not a significant portion of our cost structure.
Q: Can you elaborate on your acquisition strategy? Are you focusing more on brand resonance or specific product categories?
A: Jonathan Ferrari, CEO: We're targeting next-generation brands that align with our values and have a similar customer base for cross-selling opportunities. We're interested in brands with significant e-commerce sales, which allows us to offer fulfillment services efficiently. Genuine Tea, our recent acquisition, fits this profile with its unique niche and growth potential.
Q: Are you considering acquisitions outside of Canada, and how would you manage synergies if so?
A: Jonathan Ferrari, CEO: While our core focus is Canada, we've received interest from North American businesses. We're open to US market opportunities, especially if we can leverage our platform to bring US brands into Canada.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
