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Simply Better Brands Corp. (OTCQB:PKANF) (TSXV:SBBC) released its financial results for the quarter ended March 31, 2023, revealing revenue of $24.6 million, an increase of 103% compared to $10.5 million in Q1 2022.
Q1 2023 Financial Highlights
Gross profit was $13.9 million, an increase of 74% compared to $8.0 million in the first quarter of 2022.
Gross profit margin was 57% compared to 66% in Q1 2022.
Net loss was $2.7 million compared to a net loss of $3.2 million for the three months ended March 31, 2022 or an improvement of $500,000.
Adjusted EBITDA of $800,000, an increase of $1.9 million over the adjusted EBITDA loss of $1.1 million for the comparable period in 2022.
The company had a cash balance of $5.7 million as of March 31, 2023.
The company's working capital deficiency decreased from $9.3 million as of December 31, 2022, to a working capital deficiency of $6.5 million as of March 31, 2023. Working capital deficiency included the Mainstreet loan ($10.3 million) which is classified as current whereas the term of the loan is 5 years maturing in December 2025. The Mainstreet loan has a five-year term with principal repayments due to start in December 2023 with the first $1.5 million principal repayment. This loan has several covenants including annual and quarterly reporting and debt service coverage.
The company was not compliant with the debt service covenant as of December 31, 2022 although it made progress in improving the adjusted EBITDA performance of Purekana LLC during the year. For example, adjusted EBITDA reported for Purekana LLC for the year ended December 31, 2022 was $1.4 million compared to an adjusted EBITDA loss of $1.4 million for the year ended December 31, 2021 or a $2.8 million improvement. No notice of default has been received by the company as of May 30, 2023 and has been paying the interest on a regular basis. It has been classified as current as a result of the noncompliance with the debt service covenant.
2023 Outlook
The company expects consolidated net sales to exceed $80 million.
The company expects gross margin as a percentage of net sales to be between 58% and 60%.
The company expects to achieve positive adjusted EBITDA in the range of $3-4 million.
Photo by Richard T on Unsplash
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