Jamieson Wellness Inc T.JWEL

TD

[retiredcf]

Have a $50.00 target. GLTA

Jamieson Wellness Inc.

(JWEL-T) C$32.65

Q3/22 Preview: Expecting Solid Quarter Boosted by Nutrawise Event

 Jamieson will report Q3/22 results on November 3. We forecast adjusted EBITDA of $28.1mm vs. $25.5mm a year ago. Consensus is $30.1mm (range: $28.0mm- $36.0mm). Excluding the $36mm outlier, consensus is closer to $29.2mm. We believe that the main reason for the 4% difference between our estimate and consensus is tied to assumptions around the Nutrawise acquisition.

Impact: NEUTRAL

We are forecasting consolidated revenue growth of ~26% (~20% from Nutrawise and ~6% from the base business) driven by:

Jamieson Brands (+35%)

• Nutrawise contribution (26%): We expect Nutrawise to contribute an

  incremental ~$22mm y/y accounting for about 75% of the growth in the quarter.

• Strong domestic demand (+8.5%) reflecting pricing and consumption growth due to continued strong consumer interests in health and wellness post-pandemic, which we believe will translate into sticky repeat purchases and new uptake in trending categories and ingredients where JWEL continues to innovate. The increased incidence of flu this year could be a positive tailwind.

• International (excluding U.S.) revenue growth of 10% driven by ongoing expansion across geographic markets, led by China.

  Strategic Partners (-2%)

 Lapping difficult y/y comparables (up 18% last year from expanded customer programs). This is a historically volatile segment mostly due to the timing of customer orders.

We forecast adj. EBITDA to increase 11% y/y driven by top line growth, but partially offset by an ~275bps contraction in consolidated margin that reflects:

• Nutrawise's lower margin profile (~18.5% vs. 22% legacy JWEL)

• International spend to support growth initiatives, particularly in China

• Plant inefficiencies due to customer/program mix and timing in Strategic Partners

• Partial offsets from domestic (Canada) market price increases starting in Q3

  Overall, we continue to like JWEL shares given the company's defensive growth and the substantial U.S. expansion opportunity. We would argue that even modest success in the U.S. could push the shares well north of our $50.00 target price over time.

  Conference Call Details

  The Q3/22 conference call is scheduled to be held at 5:00 p.m. ET on November 3. Dial-in number is [phone] / [phone]; replay number is [phone] / [phone] (passcode: 7518646).