TORONTO – May 31, 2021 – Men Inc. (TSX-V:MENE) (US:MENEF) (“Men” or the “Company”), an online 24 karat jewelry brand, today announced financial results for the first quarter ended March 31, 2021 (“Q1 2021”). All amounts are expressed in Canadian dollars unless otherwise noted.
Financial Highlights
• Record IFRS Quarterly Revenue of $7.2 million, a $2 million (40%) increase year-over-year (“YoY”). Non-IFRS Adjusted Revenue2 of $8.3 million, an increase of 48% YoY, also a new record for the Company.
• Record IFRS Gross Profit of $1.7 million, an increase of $0.7 million (72%) YoY.
• Operating Income of $0.2 million, an increase of $0.9 million (129%) YoY.
• Reduced operating expenses to 21% of revenue, compared to 33% in the same quarter last year.
• Reported first Quarterly Net Income and Total Comprehensive Income of $0.7 million and $0.9 million respectively, since the Company began selling its products to customers in January 2018.
• Sold 7,850 units of jewelry through 5,067 Customer Orders during the quarter, an increase of 18% and 22% respectively, YoY.
• Sold 79kg of gold and platinum jewelry during the quarter, an increase of 10 kg, or 15% YoY.
• Average Order Value of $1,742, an increase of 20% YoY.
• Inventory level of 258 Gold Equivalent Kilograms, an increase of 18% quarter-over-quarter (“QoQ”), as the Company stocks up for anticipated growth in sales during the year.
• Converted $5 million of note payable to equity to enhance working capital.
• At March 31, 2021, the Company had Tangible Common Equity4 of $16.5 million, including $3 million in cash and cash equivalents, $5.2 million in short-term investments, with a net working capital of $16 million.
Operational Highlights
• Introduced 13 new product designs during the quarter, including the Twisted Rope Chain, the Sun + Moon Pendant Set, the Ying + Yang Pendant Set and the Golden Egg.
• Launched EUR currency payments for European customers.
• Returning Customers attributed to 64% of total sales due to great customer satisfaction.
• Registered more than 22,500 independent customer reviews on mene.com/reviews.
• Featured in HOLA Magazine and Sotheby’s 76 Faubourg.
(1) The Company’s financial statements for fiscal year-ending 2020 and 2019 are audited by an external assurance firm.
(2) The Company adjusts its revenue by adding back the value of jewelry that was returned by customers, and discounts given to customers. These adjustments are made to assess the gross revenue before deducting these items from revenue per IFRS. See Non-IFRS Measures for a full reconciliation.
(3) The Company adjusts its total comprehensive loss by adjusting for Non-IFRS Adjusted Gross Profit, and removing the impact of non-cash expenses, consisting of depreciation and amortization, stock-based compensation, accretion, revaluation of metal loan and translation gain or loss. See Non-IFRS Measures for a full reconciliation.
(4) Inventory balances in kilograms of gold are calculated by taking the total Canadian Dollar (CAD) inventory value at each quarter-end date and dividing the value by the CAD gold spot price per gram.
Debt Retirement
Subsequent to the year end, the Company entered into a debt retirement agreement with a private institutional lender. Pursuant to the debt retirement agreement, the Company issued an aggregate of 9,920,635 Class B Shares in settlement of $5,000,000 ($0.504 per Class B Share), and made a cash payment of $5,119,166.83 (including all accrued interest to the date of completion of the debt retirement), in consideration for the retirement of a total of $10,119,166.83 in principal and accrued liabilities owing to the lender. With this increase in shareholders equity, the Company is well positioned to deliver sustainable growth, without the need to raise further capital for the next few years.
Statement from Founder & CEO, Roy Sebag
In Q1 of Fiscal 2021, Men achieved its most important milestone: profitability. Three years from launch to profitability is, in my view, the most critical validation of our business. Men achieved profitability while growing its brand and minimizing dilution to its long-term shareholders. Our growth rates show no signs of slowing down and we continue to believe that 2021 and 2022 will be strong years for our business. Another important development this quarter has been the strengthening of our balance sheet and shareholder equity. All things being equal, our shareholder equity should begin to grow from here with each passing quarter of profitable activity. As regards to growth, we remain convinced that our top-line revenues have plenty of runway both due to the size and scale of the global jewelry industry but also because an increasing share of luxury consumption is moving online. Finally, it is intellectually rewarding to see the weight of metal Men is distributing each quarter from the miner to the customer with great frequency. This capability is proving yet another core tenet of our business philosophy, the timeless nature and extraordinary utility of gold as an element of great wonder. It is my hope that the gold mining community will soon come to appreciate how important Men can be for the industry.
Non-IFRS Measures