YTD Q3 2021 Revenue Increased 184% Year-over-Year to $8.0 Million
YTD Q3 2021 Production Units Sold Increased 154% Year-over-Year
YTD Q3 2021 eCommerce Revenue Increased by $4.0 Million or 206% Year-over-Year
YTD Q3 2021 Fulfilled eCommerce Orders Increased by 142% to 64,784 Year-over-Year
The Very Good Food Company Inc. (NASDAQ: VGFC) (TSXV: VERY.V) (FSE: 0SI) (" VERY GOOD " or the " Company "), a leading plant-based food technology company, today reported its financial results for the third quarter ended September 30, 2021.
"VERY GOOD delivered another strong quarter, achieving solid year-over-year growth across our eCommerce and wholesale channels, driven by strategic execution and demand for plant-based food products," said Mitchell Scott, co-founder and CEO of VERY GOOD. “We launched successfully into the US retail market, strategically shifting our focus towards growing retail orders over eCommerce, securing long-term in store listings, driving higher units sold, and ultimately delivering 86% wholesale revenue growth since last quarter. Since quarter end the success of this strategy has been further demonstrated as increased retail listings across US and Canada and demand for vegan meat alternatives for the holidays drove record revenue this October of $1.5 million, a 202% increase over last year.”
“Scaling our production capabilities to meet strong demand for our products remains a key priority,” added Mr. Scott. “Line 1 at the Rupert Facility is currently operating five days a week with three shifts per day, producing seven SKUs of the popular The Very Good Butchers lineup and five SKUs of our new Butcher’s Select suite of products. With our ramped-up production, our products are now available in more than 1,400 outlets across North America, including 600 stores in the US. We already have over 2,000 retail locations confirmed for the first quarter of 2022.”
“As we head into the final quarter of 2021, like many others, our industry is facing near-term pressures including supply chain disruption and labour shortages, which could impact our results. To continue to drive growth, we remain flexible and agile in our approach, adjusting quickly in line with evolving trends. Looking forward to the medium-term, we believe that the strategic investments we’re making in our expansion plans, premium products, and production capacity along with our great partners, positions VERY GOOD for the future."
Q3 2021 Financial Highlights
- Revenue in Q3 2021 increased 85% to $2,536,097 as compared to the same quarter last year primarily driven by strong eCommerce sales and an increase in wholesale revenue due to the Company's successful scaling of production and distribution expansion to meet demand in both sales channels. Compared to Q2 2021, revenue decreased 9% as VERY GOOD strategically prioritized retail orders over eCommerce, reserving inventory for the wholesale channel to support the third quarter US retail launch. As a result, VERY GOOD had a record month in October with $1.5 million in revenue from both its eCommerce and retail channels. The demand for Stuffed Beast and the introduction of Holiday Boxes led to a significant sales increase ahead of the festive season.
- Wholesale revenue increased 173% to $846,749 in Q3 2021 compared to $310,444 in Q3 2020; and increased 86% from $455,055 in Q2 2021.
- Wholesale distribution points increased 331% to 4,551 at the end of Q3 2021 compared to 1,055 at the end of Q3 2020 and increased 143% from 1,869 in Q2 2021.
- eCommerce sales increased 58% to $1,546,146 in Q3 2021 compared to $978,883 in Q3 2020; and decreased 30% from $2,206,402 in Q2 2021 as retail orders were prioritized and inventory reserved to support the August US retail launch and fourth quarter eCommerce holiday promotions.
- eCommerce orders fulfilled increased 34% to 17,546 in Q3 2021 compared to 13,107 orders fulfilled in Q3 2020 and decreased 27% from 24,057 in Q2 2021.
- Adjusted gross margin was 36% of revenue YTD Q3 2021 compared to 30% of revenue YTD Q3 2020.
- Adjusted general and administrative expense was $3,963,524 in Q3 2021 compared to $1,466,121 in Q3 2020 and $2,208,555 in Q2 2021. The year-over-year increase was driven by investments in expansion of the management team, professional and software license fees, and office expenses as we scale to accelerate growth.
- Adjusted EBITDA was a loss of $(8,174,024) in Q3 2021 compared to $(3,138,595) in Q3 2020; and $(5,673,109) in Q2 2021.
Q3 2021 Operational Highlights
- Aggressively Increasing Market Share in North America as New Wholesale Retail Distribution Points Drive Growth . The Company recently launched into US retail in August 2021 and, by quarter-end, was in over 396 stores in the US; in addition to 805 stores in Canada at the end of September. US store count has increased by over 200 stores since the end of September, sitting at 600 stores currently, and we have over 1,125 locations confirmed in Q1 2022.
- Successfully launched into US retail, strategically prioritizing retail orders over eCommerce by reserving inventory for the wholesale channel to secure long-term in store listings and meet fill requirements on orders received. This resulted in higher units sold in the wholesale channel and an 86% increase in retail revenue as compared to Q2 2021. As compared to Q2 2021, eCommerce revenue decreased by 30% due to fewer units being sold in support of this strategy.
- Increasing US retail presence through retail banners such as Wegmans, Raleys and Earth Fare and The Very Good Butchers and Butcher's Select products have been rolled out into over 1,200 stores across North America including 396 US locations across 15 states through the end of September.
- Expanded retail footprint in Eastern Canada and Quebec. Our popular The Very Good Butchers products are now available for the first time in Qubec at Rachelle Bry health food stores, and online throughout the Greater Toronto Area via Voil, Sobeys' online home delivery service.
Developing the Chops to Meet the Demand - Building Operational Scalability and Enhanced Production Capabilities
- Line 1 at the Rupert Facility recently achieved a key production capability target of 40,000 lbs in a single day and is on its way to hit the next capacity milestone of 60,000 lbs in a single day in Q1 2022. The line is currently producing seven SKUs of the popular The Very Good Butchers collection, as well as five SKUs of our new gluten and soy-free Butcher’s Select lineup.
- Line 2 at the Rupert Facility is expected to be commissioned in Q3 2022 with food production commencing in early Q4 2022. The timeline for Line 2 has been delayed due to global supply chain pressures slowing plant preparation and equipment delivery. Once online, Line 2 is expected to produce six SKUs of our Butcher’s Select line.
- Strategically reallocated and built-up inventory to support the US retail launch, new retailers, and planned eCommerce promotions. During the third quarter, VERY GOOD continued to ramp up production at the Rupert Facility to meet demand with finished goods inventory increasing quarter-over-quarter by $693,986 (46%) in Q3 2021.
Product Updates
- Launched the highly anticipated Butcher's Select product line through a limited release online at www.verygoodbutchers.com , with a retail rollout underway in North America in Q4 2021. This marks VERY GOOD's entry into the gluten-free and soy-free market, strengthening the Company's position in the fast-growing plant-based meat segment. VERY GOOD also received industry accolades with the mmm…Meatballs winning the coveted NEXTY Award in the Best New Frozen Product category.
- The Butcher's Select product line up has achieved Non-GMO project verified certification by the Non-GMO Project, North America's only third-party verification for non-Genetically Modified Organism, or "Non-GMO" food and products. This achievement will resonate with our healthy-savvy consumers becoming increasingly concerned with the quality of the ingredients on their plates.
Capital Markets Update
- On October 13, 2021, VERY GOOD completed a successful NASDAQ listing and commenced trading on the NASDAQ Capital Market under the ticker symbol “VGFC”. We believe that the NASDAQ listing will increase VERY GOOD’s visibility in the marketplace, improve liquidity, broaden and diversify its shareholder base, and enhance long-term shareholder value. We plan to accelerate the Company’s business strategy focused on global expansion into the US and Europe with this US listing.
- On October 19, 2021, VERY GOOD completed an SEC-registered direct offering for gross proceeds of US$30,000,000. VERY GOOD intends to use the net proceeds from the Offering to scale its operations, to expand its geographical reach, for accretive acquisitions within the plant-based food sector, for research and development, for marketing initiatives and for general corporate and other working capital purposes.
Related Party Transaction Update
- On November 16, 2021, the Company entered into loan agreements with its Chief Executive Officer (“CEO”), Mitchell Scott, and its Chief Research & Development Officer (“CRDO”), James Davison, to provide individual loans in the amounts of $750,000 and $500,000 to the CEO and CRDO, respectively (collectively, the “Loans”). With the express consent of the CEO and CRDO, the Loans were amended on November 23, 2021 such that all accrued principal and interest under the CEO Loan is now immediately due and payable and the CRDO Loan is due and payable within 60 days. It is anticipated that the CEO will pay his Loan in full by December 1, 2021 and the CRDO will pay his Loan in full on or before maturity. Until repayment, the Loans continue to bear interest at a rate of 9% per annum, payable monthly, and, if for any reason a Loan is not paid in full on or before January 18, 2022, the Loan will be secured by certain financial assets commencing on such date. Moreover, the CRDO Loan provides for scheduled repayments prior to maturity.
VERY Good’s Board of Directors has reviewed and approved the financial information for the three and nine months ended September 30, 2021 contained in this document and its release. The financial information contained in this document has not been audited by VERY Good’s auditor. The management's discussion and analysis for the period and the accompanying financial statements and notes will be available under the Company's profile on SEDAR at www.sedar.com and will be furnished on a Report on Form 6-K on EDGAR at www.sec.gov upon the completion of the Company's financial closing procedures.
Third Quarter 2021 Conference Call Details
VERY GOOD will host a conference call today, Wednesday, November 24, 2021 at 11:00 am Eastern Time/ 8:00 am Pacific Time to discuss the financial results and business outlook.
Participant Dial-In Numbers:
Toll-Free: 1-877-425-9470
Toll / International: 1-201-389-0878
* Participants should request The Very Good Food Company Third Quarter Earnings Call.