For those unfamiliar with Ryan Irvine, his firm looks at more than 5000 stocks per year and only selects 5-10 for their subscribers. In other words, this is a good endorsement. GLTA Next in our YSOT segment Brennan answers a viewer question on Jamieson Wellness Inc. (JWEL:TSX), which develops, manufactures, distributes, markets, and sells natural health products including vitamins, herbal and mineral nutritional supplements for humans in Canada, the United States of America, and internationally. The business, which is posting strong revenue growth and pays a 3% dividend, sells products designed to improve your health, but can the stock help improve your portfolio? YSOT Jamieson Wellness Inc. (JWEL:TSX)
Price: $24.85
Market Cap: $1.04 Billion
Yield: 3.00% (forward yield)
Description:
Jamieson Wellness, develops, manufactures, distributes, markets, and sells natural health products including vitamins, herbal and mineral nutritional supplements for humans in Canada, the United States of America, and internationally.
Slide 2
Q2 Highlights – directly from the company’s investor presentation. I am just going to go over a few of the highlights here.
2) On July 19, 2022, the company acquired Nutrawise Health & Beuty Corp. (which sells supplements under the Youtheory brand) for approximately $265M Canadian. The acquisition was made as to provide a platform for expansion in the U.S. And as they noted new SKUs have begun to ship.
3) The company acquired the assets of its own Chinese Distributor for CAD$26M.
6) The company recently increased their quarterly dividend from $0.17 to $$0.19 per quarter.
Slide 3
Moving to the recent financials, the company’s Q2 2023 was strong:
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- Revenue was up 50% Y/Y to $167.8M – Due to organic growth of 3.6% for Jamieson Brands and its acquisitions’ sale of Youtheory products.
- Adjusted EBITDA was up 27% Y/Y to $31.1M – Due to lower Gross Profit Margins and the integration of Youtheory.
- Adj. Diluted EPS was flat Y/Y at $0.32.
Cash = $91.4M
Debt & Leases = $345.1M
Net Debt = $253.7M
Net Debt to EBITDA of 1.9x
Slide 4
Looking forward the company reduced the upper end of its guidance from Revenue growth of 28%, now down to 26% and Adjusted EBITDA margins now between 13-16% rather than the previous 13-18%. Management noted that the reason for the trimming of top-end guidance is due to post-pandemic trends the company is seeing in Canada and Internationally as certain retailers manage down their inventory and international markets manage through backlogs of new products regulatory approvals.
Adjusted EPS was also revised downward to a range of $1.56-$1.63 which represents 5% growth (previously expecting 5-11% growth)
On a forward basis the company trades with a P/Adj. Earnings multiple of 16x
And based on its quarterly dividend of $0.19 per share or $0.76 per year, the company’s forward payout ratio is expected to be ~48%.
Slide 5
To conclude, I think that Jamieson is interesting. The company is guiding to grow revenue at a great double-digit pace this year, but reduced the upper end of its guidance and its adjusted earnings profitability.
The balance sheet remains healthy, the yield is attractive and sustainable, the company appears to trade at reasonable multiple, and has a runway of growth opportunities in both the U.S., China, and internationally. We will be digging further into the company.