GURU Organic Energy Announces First Quarter 2022 Financial Results

• Record Q1 net revenue of $7.0 million, up from $6.6 million in Q1 2021
• Volume growth of 22% as a result of stronger velocities and increased points of sale
• Fastest growing energy drink in Canada in the last 52 weeks1
• Gross margin of 55% (versus 51% in Q4 2021 and 62% in Q1 2021), reflecting the change in the Company’s business model for the Canadian market since Q4 2021
• Strong financial position with cash and unused credit facilities of over $70 million to support ongoing North American growth plans
• Subsequent to Q1, GURU increased its points of sale by 1,500 retail locations, primarily in California, supported by an expanded DSD distributor network
• Subsequent to Q1, launch of GURU Guayusa Tropical Punch across Canada following successful launch in Quebec, where Guayusa ranks as the #6 Top SKU in C&G2. The launch will be supported by store activations and a national marketing campaign through the spring
• 1,700 additional Canadian points of sale anticipated in the coming quarter following recent confirmations from several grocery and drug retail chains

MONTREAL, March 15, 2022 (GLOBE NEWSWIRE) -- GURU Organic Energy Corp. (TSX: GURU) (“GURU” or the “Company”), Canada’s leading organic energy drink brand, is pleased to announce its results for the first quarter ended January 31, 2022. All amounts are in Canadian dollars unless otherwise indicated.

“In the first quarter, we posted a record Q1 top line performance, while continuing to build our partnership with our exclusive distributor in Canada and working actively on the execution of our ambitious, long-term pan-Canadian growth strategy aimed at driving brand awareness and trial throughout 2022,” said Carl Goyette, President and CEO of GURU. “Our strong Q1 results were mainly driven by the increase in new doors obtained with the help of our exclusive partner and its vast distribution network, which allowed us to increase sales volume by 22% in the first quarter.”

“After a strong fall back-to-university campaign in key Canadian markets, which generated solid brand awareness results in Q4 2021, we moderated our marketing activations during Q1 and the first half of Q2 in the context of increased lockdown restrictions across Canada due to the Omicron variant. Now that those sanitary restrictions have been lifted, we are in full execution mode in the roll-out of our targeted marketing campaigns, including the national launch of our latest innovation, GURU Guayusa Tropical Punch, across Canada. With our growing point-of-sale base, strong financial position, increasing brand awareness in Canada and strong partners, we are in an excellent position to increase brand awareness over time and reach new GURU consumers.”

“In the U.S., we are continuing to show improved results quarter over quarter, with increased gains of doors in leading and specialty grocery, drug, natural and independent retail chains. We are strengthening our direct to store delivery (or DSD) network in the Western U.S. market by partnering with leading regional players, enabling us to significantly increase our points of sale, particularly in California. In the coming quarters, we will continue to be methodical in the execution of our U.S. growth strategy, by favouring this distribution strategy and focusing our sales efforts in California, the state with the highest population of natural product consumers in the country,” concluded Mr. Goyette.

Results of operations
Net revenue in the first quarter increased by 5% to $7.0 million, compared to $6.6 million for the same period a year ago. The increase is reflected by sales growth in Canada and the U.S. driven by a 22% increase in volume overall as a result of higher velocities and increased points of sale, partially offset by the cost of the new exclusive Canadian distribution agreement. Sales in Canada grew by 5% compared to the same period last year, reflecting the change in the Company’s business model in Canada as a result of the new exclusive Canadian distribution agreement launched on October 4, 2021. U.S. sales grew by 9% in U.S. dollars, or 7% in Canadian dollars, during Q1 2022, compared to the same period last year. According to SPINS4, which measures U.S. retail sales of GURU energy drinks, GURU experienced 27% growth nationally in Q1 2022 versus Q1 2021, and 49% growth in California for the same period, showing continued strength in the U.S. market.

Gross profit totalled $3.8 million, compared to $4.1 million in Q1 2021. Gross margin was 55%, compared to 62% for the same period a year ago. The decrease in gross margin was mainly due to a change in the Company’s business model for the Canadian market since Q4 2021 as a result of the new exclusive Canadian distribution agreement, which became effective on October 4, 2021, and comprises distribution, selling and merchandizing fees (a portion of which was previously categorized as SG&A expenses) and a one-time set-up cost. The lower gross margin was also slightly impacted by rising product costs driven by higher input and transportation costs since the onset of the COVID-19 pandemic.

Selling, general and administrative expenses (“SG&A”), which include operational, sales, marketing, and administration costs amounted to $7.1 million in the first quarter, compared to SG&A of $4.7 million for the same period a year ago. Selling and marketing expenses accounted for $2.0 million of the increase in SG&A as the Company invested in targeted sales and marketing campaigns during the quarter, notably the fall Quebec marketing campaign with ‘Occupation Double’ that ended in December 2021, which was more extensive in fiscal 2021 than in 2020, the start of partnerships with ski resorts as well as continued field and trade marketing investments in Ontario, Western and Atlantic Canada. However, due to COVID-19 Omicron variant restrictions and lockdowns, the Company moderated its marketing activities during the quarter.

Adjusted EBITDA3 amounted to $(3.0) million compared to $(0.4) million last year. The decrease in adjusted EBITDA was mainly due to higher selling and marketing expenses, and to a lesser extent to lower gross margins.

Net loss for the first quarter totalled $3.2 million or $(0.10) per share (basic and diluted), compared to a net loss of $0.6 million or $(0.02) per share (basic and diluted) for the same period a year ago. The increase in net loss reflects the lower margins and the additional costs associated with brand, field and trade marketing activities.

As of January 31, 2022, the Company had cash and cash equivalents of $61.7 million and unused $CA and $US denominated credit facilities totalling $10 million.

1 Nielsen Last 52 weeks, period ending January 22, 2022 - All Channels, Canada
2 Nielsen Last 12 weeks, period ending February 26, 2022 – Convenience and Gas (C&G) channel, Quebec
3 Please refer to the “Non-GAAP financial measure” section for additional information on reconciliation of net loss to adjusted EBITDA at the end of this release.
4 SPINS IRI data, Total Multi-Outlet (MULO) and Natural channels, period ending January 31, 2022.

Conference call
GURU will hold a conference call to discuss its first quarter 2022 results today, March 15, 2022, at 10:00 a.m. ET. Interested parties can listen in by accessing the live audio webcast at https://investors.guruenergy.com/en/ir-corner or by dialling 833-678-0822 (North America) or 602-563-8278 (International). Participants will need to provide the following Conference ID Number: 8093839. A webcast replay will be available on GURU’s website until March 15, 2023.

Virtual annual general meeting
GURU's annual general meeting of shareholders will also be held today at 2 p.m. ET. In order to comply with measures imposed by the federal and provincial governments related to the COVID-19 pandemic, and to mitigate risks to the health and safety of our communities, shareholders, employees and other stakeholders, we will hold our meeting in a virtual-only format, which will be conducted via live audio at https://virtual-meetings.tsxtrust.com/1249 and password: guru2022 (case sensitive). We recommend that you log in at least 15 minutes before the start time of the meeting.

About GURU Products
All GURU energy drinks are plant-based, high in natural caffeine, free of artificial sweeteners, artificial colours and flavours, and have no preservatives. In addition, all drinks are organic, vegan and gluten free – and the best thing is their amazing taste.

About GURU
GURU Organic Energy Corp. (TSX: GURU) is a dynamic, fast-growing beverage company launched in 1999, when it pioneered the world’s first natural, plant-based energy drink. The Company markets organic energy drinks in Canada and the United States through an estimated distribution network of over 25,000 points of sale, and through guruenergy.com and Amazon. GURU has built an inspiring brand with a clean list of organic plant-based ingredients. Its drinks offer consumers good energy that never comes at the expense of their health. The Company is committed to achieving its mission of cleaning the energy drink industry in Canada and the United States. For more information, go to www.guruenergy.com or follow us @guruenergydrink on Instagram and @guruenergy on Facebook.

Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. Such forward-looking statements include, but are not limited to, information with respect to our objectives and the strategies for achieving those objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. Forward-looking statements are typically identified by the use of words such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, or “continue”, although not all forward-looking statements contain these words. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company and its business, operations, prospects, and risks at a point in time in the context of historical and possible future developments, and the reader is therefore cautioned that such information may not be appropriate for other purposes. Forward-looking statements are based on assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements. Those risks and uncertainties include the following, which are discussed in greater detail under “Risk Factors” in the Company’s Annual Information Form for the year ended October 31, 2021, available on SEDAR at www.sedar.com: management of growth; reliance on key personnel; changes in consumer preferences; significant changes in government regulation; criticism of energy drink products and/or the energy drink market; economic downturn and continued uncertainty in the financial markets and other adverse changes in general economic or political conditions, as well as the COVID-19 pandemic or other major macroeconomic phenomena; global or regional catastrophic events; fluctuations in foreign currency exchange rates; net revenues derived entirely from energy drinks; increased competition; relationships with co-packers and distributors and/or their ability to manufacture and/or distribute GURU’s products; relationships with existing customers; changing retail landscape; increases in costs and/or shortages of raw materials and/or ingredients and/or fuel and/or costs of co-packing; failure to accurately estimate demand for its products; history of negative cash flow and no assurance of continued profitability or positive EBITDA; intellectual property rights; maintenance of brand image or product quality; retention of the full-time services of senior management; climate change; litigation; information technology systems; fluctuation of quarterly operating results; risks associated with the PepsiCo distribution agreement; no assurance of continued profitability or positive EBITDA; and conflicts of interest. Certain assumptions were made in preparing the forward-looking statements concerning availability of capital resources, business performance, market conditions and consumer demand. Consequently, all of the forward-looking statements contained herein are qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition, or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking statements contained herein are provided as of the date hereof, and we do not undertake to update or amend such forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Non-GAAP Financial Measure

Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as net income or loss before national Canadian distribution agreement set-up costs, reverse acquisition of Mira X expenses, income taxes, net financial expenses, depreciation and amortization, and stock-based compensation expense. The exclusion of national Canadian distribution agreement set-up costs eliminates the impact on earnings of costs that are not expected to re-occur in the near term. The exclusion of net finance expense eliminates the impact on earnings derived from non-operational activities, and the exclusion of depreciation, amortization, and share-based compensation eliminates the non-cash impact of these items. We believe that adjusted EBITDA is a useful measure of financial performance without the variation caused by the impacts of the items described above because it provides an indication of the Company’s ability to seize growth opportunities in a cost-effective manner, finance its ongoing operations and service its long-term debt. Excluding these items does not imply that they are necessarily non-recurring. Management believes this non-GAAP financial measure, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and future prospects in a manner similar to management. Although Adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, it has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under IFRS. This non-GAAP financial measure is not an earnings or cash flow measure recognized by International Financial Reporting Standards (IFRS) and does not have a standardized meaning prescribed by IFRS. Our method of calculating this financial measure may differ from the methods used by other issuers and, accordingly, our definition of this non-GAAP financial measure may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-GAAP financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows.

Reconciliation of Net Loss to Adjusted EBITDA

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