Jamieson Wellness Inc. Reports Second Quarter 2023 Results and Raises Second Quarter Dividend

Consolidated revenue increased 49.6% to $167.6 million; Jamieson Brands revenue increased 51.5%; Adjusted EBITDA1 increased 27.1% or $6.6 million to $31.1 million

Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX: JWEL) today reported its second quarter results for the period ended June 30, 2023. All amounts are expressed in Canadian dollars.

“Consumers globally remain committed to supporting their health and wellness needs, as evidenced by the continued demand for our products during the second quarter,” said Mike Pilato, President and CEO of Jamieson Wellness. “Consumer consumption continued to be strong, and with the inclusion of the youtheory brand our Jamieson Brands revenue increased more than 50%. Adjusted EBITDA in the quarter increased by 27%, as we continued to integrate youtheory, build our owned model in China, and invest to support our growth across the business.

“Jamieson Wellness is a much different company than it was just a few years ago, as we now operate on a larger scale and in the distinct business units of Canada, U.S., China and International to better support our organizational aspirations. Our ability to consistently deliver growth while also adjusting to the fluctuating global macro-economic environment is a testament to the strength of our team and our strategy.

“From a guidance perspective, we are maintaining our full year growth expectations for the U.S. and China, our key strategic pillars, while adjusting the top-end of our revenue guidance from +28% to +26% and Adjusted EBITDA from +18% to +16% to reflect the post-pandemic situation we are seeing in Canada and in a few International markets. Continued strong Canadian consumption growth is expected to be partially offset by adjusted inventories in trade as certain retailers manage their working capital investments.

“Overall, we are proud of our performance in the quarter, and pleased to announce an 11.8% increase in our dividend as we continue to drive value for all our stakeholders. Our growth in 2023 continues to be strong as our transformation this year sets us up for continued long-term success.”

Second Quarter Highlights

• Solid growth in Canada as consumer consumption significantly outpaced shipments in both units and dollars
• Youtheory met revenue expectations; new products including new and improved turmeric SKU began shipping
• Maintained strong growth momentum in China while successfully closing previously announced DCP Capital (“DCP”) transaction and completing transition to an owned distribution model
• Consumer patterns in Eastern Europe continued to stabilize with 5.0% growth in consumption
• Began implementation of new environmental management system to track scope 1 & 2 greenhouse gas emission for 2024 reporting

Second Quarter Financial Results Consolidated Summary

All comparisons are with the second quarter of 2022

• Consolidated revenue increased 49.6% to $167.6 million with both Jamieson Brands and Strategic Partners segments contributing to growth
• Gross profit increased by $14.2 million to $54.9 million largely driven by higher organic and acquired revenue; Gross profit margin3 decreased by 370 basis points to 32.7% due to the inherently lower youtheory margin profile
• EBITDA1 increased $3.5 million or 18.6% to $22.3 million; Adjusted EBITDA1 increased by $6.6 million or 27.1% to $31.1 million. Adjusted EBITDA includes adjustments mainly related to investments associated with acquisitions, the Company’s strategic partnership in China, and certain IT implementation costs
• Net earnings decreased 28.6% to $7.2 million; Adjusted net earnings1 increased 1.6% to $13.6 million due to the impact of higher revenues and gross profit, offset by selling, general and administrative and marketing investments in the U.S. and China to set the foundation for future growth, and increased borrowing costs
• Diluted earnings per share was $0.17; Adjusted diluted earnings per share2 was $0.32

Summary of Segment Results

All comparisons are with the second quarter of 2022

Jamieson Brands

• Revenue was $132.9 million, an increase of 51.5% or $45.2 million
• Organic Jamieson Brands revenue increased 3.6%
• Canada revenue increased 2.0% as consumer consumption remained strong and outpaced shipments
• U.S. (youtheory) contributed $42.1 million in revenue driven by innovation, strength of e-commerce, and distribution gains
• China revenue grew 63.0%, representing the first period of sales under the new Jamieson-owned distribution model, or 21.0% on a pro-forma basis, driven by continued strong demand in cross border e-commerce, club sales, and new distribution
• International revenue declined $2.2 million reflecting a general slowdown in regulatory approvals as international governments work through pandemic backlogs, and timing of customer inventory replenishment, while consumption remained strong across many geographic regions including 5.0% growth in Eastern Europe
• Gross profit increased $11.8 million to $49.7 million due to higher revenue; gross profit margin3 decreased by 580 basis points largely driven by the inherently lower youtheory margin profile
• Adjusted EBITDA1 increased $4.1 million to $26.7 million driven by higher revenue and gross profit partially offset by previously noted investments in SG&A related to the U.S. and China; Adjusted EBITDA margin2 decreased by 560 basis points to 20.1% due to youtheory’s inherently lower gross profit margin and the seasonal weighting of youtheory volumes

Strategic Partners

• Revenue was $34.7 million, an increase of 42.8% or $10.4 million, driven by the impact of higher pricing, available production capacity, and order timing
• Gross profit increased $2.3 million to $5.1 million; gross profit margin3 increased by 310 basis points to 14.8% due to timing of volume driven operating efficiencies and mix
• Adjusted EBITDA1 increased by $2.5 million to $4.4 million; Adjusted EBITDA margin2 increased by 490 basis points to 12.7%

Balance Sheet and Cash Flow

• The Company generated $11.7 million in cash from operations compared to $13.3 million in Q2 2022
• Cash from operating activities before working capital considerations of $12.7 million decreased by $4.2 million compared to Q2 2022 due to transaction related expenses, the Company’s strategic partnership in China, and system implementation costs
• Cash used in working capital decreased by $2.5 million compared to Q2 2022 driven by timing of accounts receivable collections and payables in the quarter
• As at June 30, 2023, the Company had approximately $246.2 million in cash and available revolving facilities and net debt1 of $253.8 million

1 This is a non-IFRS financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS financial measure.
2 This is a non-IFRS ratio. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS ratio.
3 This is a supplementary financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each supplementary financial measure.

Fiscal 2023 Outlook

Consumer consumption continues to be strong across the organization, and the Company is maintaining its previous growth expectations in both its United States and China business units. In Canada, strong consumer consumption continues to outpace shipments while retailers have begun to reduce their investments in working capital. With lower shipments in Canada and regulatory timing impacting International, the Company has decided to trim the top end of its guidance range in Jamieson Brands revenue and profitability.

The Company now anticipates the following:

• Consolidated fiscal 2023 revenue to range between $670.0 and $690.0 million (+22.0% to +26.0%) from a previous range of +22% to +28%
• Jamieson Canada revenue growth of 2.0% to 4.0% (updated from 3.0% to 6.0%). Consumer consumption remains strong, reflecting continued consumer prioritization of their health and wellness offset by reduced inventory levels within customer and distributor partners as they lower working capital investments in response to higher costs of capital.
• Jamieson International revenue of between flat and 10% growth (updated from 5.0% to 20.0%), reflecting a post COVID-19 government slowdown of processing product registrations in new and existing markets. The Company’s revised outlook continues to be driven by marketing, innovation and the timing of distribution into new markets.
• Adjusted EBITDA to range from $140.0 to $144.0 million (+13.0% to +16.0%) from the previous range of +13% to +18%
• Adjusted diluted earnings per share to range from $1.56 to $1.63 (flat to +5.2%), updated from the previous range of $1.62 to $1.72, reflecting revisions to the Company’s revenue outlook along with higher prevailing interest rates and the timing of cash flows associated with the Company’s partnership in China

The Company’s guidance continues to reflect an accelerated investment in marketing, resources, and infrastructure to support long-term growth opportunities in the United States and in China. The Company continues to anticipate:

• Youtheory revenue of between $145.0 and $155.0 million (unchanged) with growth driven by product innovation, expanded e-commerce initiatives and distribution gains
• Jamieson China revenue growth of between 65.0% to 75.0% (unchanged), reflecting the transition to an owned distribution model completed in the second quarter and the related step-up to distributor level pricing, along with continued consumer demand in cross border e-commerce and distribution gains in the domestic retail channels

For additional details on the Company’s fiscal 2023 outlook, including guidance for the third quarter of 2023, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the three and six months ended June 30, 2023.

Declaration of Second Quarter Dividend

The board of directors of the Company authorized a 2.0 cent or an 11.8% increase in the quarterly dividend and declared a cash dividend for the second quarter of 2023:

• $0.19 per common share, or approximately $8.0 million in the aggregate
• Paid on September 15, 2023 to all common shareholders of record at the close of business on September 1, 2023
• The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (Canada)

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s unaudited condensed consolidated interim financial statements and accompanying notes as at and for the three and six months ended June 30, 2023 and related MD&A are available under the Company’s profile on SEDAR at www.sedar.com and on the Investor Relations section of the Company’s website at https://investors.jamiesonwellness.com.

Conference Call

Management will host a conference call to discuss the Company’s second quarter 2023 results at 5:00 p.m. ET today, August 3, 2023. To access:

• By phone: 1-888-886-7786 from Canada and the U.S. or 1-416-764-8658 from international locations
• Online: https://investors.jamiesonwellness.com or https://viavid.webcasts.com/starthere.jsp?ei=1624672&tp_key=cf4b93bfa4

About Jamieson Wellness

Jamieson Wellness is dedicated to improving the world's health and wellness with its portfolio of innovative natural health brands. Established in 1922, Jamieson is the Company's heritage brand and Canada's #1 consumer health brand. Jamieson Wellness also offers a variety of VMS products under its youtheory, Progressive, Smart Solutions, Iron Vegan and Precision brands. The Company is a participant of the United Nations Global Compact and adheres to its principles-based approach to responsible business. For more information please visitwww.jamiesonwellness.com.

Jamieson Wellness’ head office is located at 1 Adelaide Street East Suite 2200, Toronto, Ontario, Canada.

Forward-Looking Information

This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company’s anticipated results and its outlook for its 2023 revenue, Adjusted EBITDA and Adjusted diluted earnings per share. Words such as “expect”, “anticipate”, “intend”, “may”, “will”, “estimate” and variations of such words and similar expressions are intended to identify such forward-looking information. This information reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated March 30, 2023 and under the “Risk Factors” section in the MD&A filed today, August 3, 2023. This information is based on the Company’s reasonable assumptions and beliefs in light of the information currently available to it and the statements are made as of the date of this press release. The Company does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law or regulatory authority.

The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company’s results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “Forward-looking Information” and “Risk Factors” within the MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.

Non-IFRS and Other Financial Measures

This press release makes reference to certain financial measures, including non-IFRS financial measures that are historical, non-IFRS measures that are forward-looking, non-GAAP ratios and supplementary financial measures. Management uses these financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing the Company’s business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses the following non‑IFRS financial measures: “EBITDA”, “Adjusted EBITDA” and “Adjusted net earnings”, the most directly comparable financial measure for each that is disclosed in its financial statements being net earnings, “normalized gross profit”, “normalized SG&A”, “normalized earnings from operations”, “cash from operating activities before working capital considerations” and “net debt”, the most directly comparable financial measures for each that is disclosed in its financial statements being gross profit, SG&A, earnings from operations, cash flows from operating activities, and long-term debt, respectively, the following non-IFRS ratios: “Adjusted EBITDA margin”, “Adjusted diluted earnings per share”, “normalized gross profit margin”, “normalized operating margin”, and the following supplementary financial measures: “gross profit margin” and “operating margin” to provide supplemental measures of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non‑IFRS and supplementary financial measures in order to prepare annual operating budgets and to determine components of management compensation. For an explanation of the composition of each such measure and the usefulness and additional uses of each by management, see the “How we Assess the Performance of our Business” section of the MD&A, which is incorporated by reference. See below for a quantitative reconciliation of each non-IFRS financial measure to its most directly comparable financial measure disclosed in the Company’s financial statements to which the measure relates.

The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA, and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings from operations to normalized earnings from operations, each of which are non-IFRS financial measures (see the “Non-IFRS and Other Financial Measures” of this press release for further information on each non-IFRS financial measure) for the three and six months ended June 30, 2023 and June 30, 2022.

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