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The Market Opportunity in Producing Better Products for a Better Environment

Stockhouse Editorial
0 Comments| October 27, 2020

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good, natured Products Inc. (TSX-V: GDNP, OTC: SLGBF, Forum) is a plant-based products and packaging Company that Click to enlargemakes the products you use every day better … by producing and distributing sustainable products made with the highest possible percentage of renewable, plant-based materials and no B-P-As, or potentially harmful chemicals to human health or the environment.

We are joined by good natured Products’ CEO Paul Antoniadis to find out more ….

Click here to download the episode.

Transcription:

SH: Let's bring investors up to speed. Tell us a little bit more about yourself and good natured.

PA: I'm originally from the States. I hold citizenship in Canada and the US, my business background is from the retail industry. For the most part, I worked with Best Buy in the States, while they were, you know, budding out of the, or emerging out of the Midwest. I held many different roles. The last role I held at the US business unit was, Vice President of US sales development. And that role was both strategic and operational, and I've held that it was for about four years or so. And then the company set up the international business unit, and I was appointed to vice president of retail operations. And I also hold the role of CEO of best buy brands. And I think it's important for your listeners to understand that context because the good natured strategy business model is built, on a retail consumer products industry, and experience.


SH: with so many petroleum based products in the market. So how do you differentiate yourselves?

PA: good natured is North America's leading or friendly product company, and we start our differentiation by having a largest assortment of plant based products made from the highest renewable content levels that can be used, in your home and in the businesses they operate, to help remove fossil fuels from the products that you use every day. Today good-natured offers over 385 plant products, both covering both the BDB market segment and the consumer market segment. Then we build that plant base product authority as a key differentiation. In two different ways, we do it by, you know, organically with our packaging engineers, product engineers, material engineers. We also use a lot of our strategic partners, engineering capability or third party. And we basically designed products with the highest level of renewable material that are free of any chemicals concern and have a lower gate to gate CO2 footprint.

And these products are equal to, or better than, products that are being replaced in your home and the business you operate. The second way we build that product authority is through acquisitions. So, we have a very active acquisition funnel and we go out and we target petroleum based products or packaging companies, their EBITDA positive. They have lots of different products, high, diverse customer base. And then we convert them to our client base, you know, materials. And then we begin to kind of cross sell that product authority really makes it whether you're a consumer or whether you're a B to B customer. It makes switching on patrolling and plastic, simple, easy and affordable.


SH: Let's turn to your financial results as well as preliminary Q three revenue. Can you expand a bit on this?

PA: I'm really awfully proud of, the team's effort and execution Q2 was a very challenging and continues to be a challenging, environment for communities in the business environment. We delivered a 57% a year over year growth in Q2, despite the economic challenges that COVID, reaping in the business environment community. And just to give you kind of some context, as you may, some of your listeners may already know John is if you just look at the United States, their GDP collapsed and roughly between 30 and 32% in Q two. And so for us to demonstrate such resiliency during a challenging time, really demonstrates to our ownership and potential investors, how strong our business model, diverse customer base, and a wide range of products coming, you know, over four different four to five business groups, really stood up, tall in this circumstance. And that momentum continued and momentum continued in Q3, where we delivered just under 50% growth and both quarters demonstrate gross margin expansion. I'm awfully proud of the effort, by our teams and our, in our key partner.


SH: Now taking a look to Q4, possibly even farther in the company's future. What are some drivers for growth going forward? And how do you look at organic growth versus acquisitions?

PA: Going forward, our growth will be based 50% organically and 50% through acquisitions. And then on the organic growth opponent, half of that will come from acquiring net new customers, and the other half will come from cross selling additional skews for our customers. So, for example, you know, today we have 360 reoccurring B2B customers across the US and Canada. Just hypothetically speaking, let's say they're buying two products in 2020 on average. Well, if we grow that through our cross-selling initiatives, two to four, we basically double the size of the company organically. That's not including any net new customer and they know their organic site. We're also going to be continually expanding our product assortment. Like I mentioned earlier on the call, Jon, we currently have, you know, 385 products, you know, two, three years from now, we may have over a thousand, so we're going to continue to drive, new product development.

PA: And we have a pretty active product roadmap over the next two to three years on the acquisition side. We're going to continue to target these privately held family operated, petroleum, product or packaging companies. It's multigenerational the parents are ready to retire. In some cases, this, the children are still active, and I call them children, they're my age. And they're really good. These, these families have been in business for well over 20 years. And what we, what we'll do with those companies is, you know, will we target companies that are positive in EBITDA, but we, more importantly, that they demonstrated and currently are asking against a, a diverse base of customers that we can then add to our growing customer base. And they have a diverse line of products that we currently don't offer and invite through that acquisition when we convert them to our plant based materials, it opens up new product verticals that we currently aren't in.

And a real good example of that is our recent shepherds, the reforming and packaging acquisition, in the, Toronto Canada area. This acquisition allowed us to gain access to the medical, packaging and device industry. And, you know, it actually launched the natured into the fight against COVID-19 because, you know, today we're producing, packaging for the COVID-19 testing kits being used in the Ontario province, along with the medical face shields, we don't sorry, assemble the medical patients. but for that device, we actually create the, the face shield itself. So, you know, I'm not building a business around COVID-19. We want COVID-19, as I tell all my owners disappear. However, the fact that we're stepping into the fight and we're supporting our medical packaging customers, it's opening up new opportunities, to do other packaging for, for a range of medical packaging companies that we're currently serving. So that's kind of an example of, of the strategy that I just outlined and, and I see us continuously continuing our execution of this strategy, over the next two, three years for, you know, and, so far we've demonstrated that the team has demonstrated our ability to execute it. So, we're just gonna stay focused and that we pride ourselves in our performance and in our ability to execute our strategy and business model. And, you know, we're quite optimistic. the best is yet to come.


SH: Very true. And it seems sustainability is also something you pride yourselves in very highly, a high value to good nature products. How large do you think there's a market opportunity is, and how much can you ultimately address while still being profitable?

PA: That's a great question, John. I mean, when you look at it, the business groups that we currently source are 385 products. There's, there's five of them, one being specific services., but if I just pick the packaging on for sake of time here, if you look worldwide, the packaging industry is well over a trillion dollars. I don't think it's ever had a down year and maybe this year we'll be down or flat. The recovery has been very, very strong and we're disrupting it. When you look at that industry and all the petroleum base competitors, like the largest ones doing, I dunno, roughly thrilling, approximately $30 billion, it's, you know, 3% share. And a lot of these big petroleum companies are using consolidation through, you know, deploying their acquisition as a major growth lever. And they're not really driving growth through, primarily through innovation organically, they're really leaning on the consolidation.


So that really leaves a white space for good nature to, you know, with our first and market having this wide range of plant based products, giving, businesses and consumers, an easy and a simple way to kick fossil fuels to the curbside. I think it really puts us in a strong position to continue our disruption. And obviously we're doing quite well. Like we're, you know, our growth over the last two quarters is, is very strong. But if, even if you go historically and you look at 2019, we grew, it was just under a hundred percent, which was, which was a hundred, you know, that was all driven by organic growth. So, we feel our product authority, simplicity, ease transition from petroleum plastics and in products from affordable manner is really positioning good nature for, for some strong growth moving forward. So, big markets with, you know, with, with our strong alternative, I think is nothing but positive.

And listen, I also want to point out a job and like consumers are driving this, right? So, there's real, you know, consumers, you know, I always tell everyone they're, everybody's good nature, right? They're all looking for products that whether it's for their businesses or home that are better for the environment better for health and wellness of, of humans and society. And yeah, we just want to give them an option. Like we just want to give them a choice and alternative that is equal and performance, if not better. And, and I think customers will embrace that both from the BDB perspective, but also direct, you know, direct customers like yourself. So I think for us, it's just, let's stay focused on our strategy and continue to execute.


SH: Consumers will always be a consuming cause that's one not true thing you can't deny. And also, good nature products recently closed a $3.3 million private placement, a what will these funds be earmarked for?

PA: Yeah, we've already deployed some of those funds. We took $1.2 million and we retired a, a, our 2018 convertible to venture. And we took that debt off our balance sheet because it helped us align some maturity dates, that lowered our overall interest payments, to BDC by about 200 bibs. So, it was a kind of debt, removing interest payment reduction exercise. The remaining, funds will have we've placed on our balance sheet. And, you know, we're going to continue to deploy those sponsors, our growth strategy, both on the organic potential active feature acquisition.


SH: Thank you for joining us today. Paul was great to learn about more about your company. How can investors find out more and again, touch with you?

PA: I really encourage everyone to go to our, investor, web website to gain more information or feel free to just email directly, to invest at denatured products, dot com and, Spencer will respond quickly and we're happy to set up a one on one call with any, any interested listeners. And again, I just really appreciate you taking the time and, and helping share, what we believe is, you know, we're a little bit unknown in the market, so we really appreciate your help in getting the word out on that.


For more information about the Company, visit: investor.goodnaturedproducts.com.


FULL DISCLOSURE: good natured Products is a client of Stockhouse Publishing.


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