RE:Q4 Preview*While there might be positive work not yet visible in the results, the bad news in Q4 includes: 1. Golden quarter Adj EBITDA is down to $10.9M from $16.4M last year; 2. Adj SGA did not get cut as I would have expected of entrepreneur in survival mode vs corporate guys, increasing slightly, maybe due to ecommerce/wholesale; 3. Cash is down by a third to $42M from $64M last year and inventory increased as sales did not materialize; 4. Getting very close to triggering $65M min TNW covenant on credit agreement, this will need to be addressed by Q3 end as cash balance looks like it will become negative by then given lower level of peak annual cash at Q4 end so they will actually need to use q credit facility if they can't reverse EBITDA trend.
*Ecommerce/wholesale continues to grow at 20%, up to around $33.4M (if my math is right) or 15.7% of sales. Hopefully they will break this out as a segment going forward so we can see how profitable this business is or isn't. Getting into Loblaws is great but they should diversify into other retailers soon as the L tap can be turned off quickly in a commodity like tea if shelf space is not performing well vs peers. This should be a viable business for them given shelf stability and low weight of products, let's see if the rest of the business gives them the time to work this out properly