Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Better Choice Co Inc (BTTR, Financial) achieved a 33% quarter-over-quarter sales growth, reaching $11.4 million.
- The company improved its gross margin for the third consecutive quarter to 40%.
- BTTR reported its first profitable quarter in years with an adjusted EBITDA of over $200,000.
- The company saw a 23% increase in new-to-brand consumers on its second largest digital platform.
- International sales, particularly in the Asia Pacific region, grew by 9% year-over-year, highlighting strong market potential.
Negative Points
- Year-to-date net sales decreased to $28 million from $33 million in the same period last year due to strategic exits from unprofitable channels.
- The company had to close its direct-to-consumer platform to improve financial leverage.
- Despite improvements, there is still significant work needed to achieve sustained growth and profitability.
- The company is reliant on cyclical international sales, which may lead to variability in quarterly performance.
- Better Choice Co Inc (BTTR) raised nearly $5 million through a public offering, indicating a need for additional capital.
Q & A Highlights
Q: Can you elaborate on the strategic pivots that have contributed to the improved margins and profitability?
A: Kent Cunningham, CEO: Our strategic pivots focused on operational consistency and executional discipline, which have significantly improved margins. We exited unprofitable channels and customers, closed our direct-to-consumer platform, and achieved favorable terms on our co-supply agreement, leading to a 600 basis point gross margin accretion to 40%.
Q: What drove the 33% quarter-over-quarter sales growth to $11.4 million?
A: Carolina Martinez, CFO: The growth was primarily driven by a 92% increase in sales in our Asia Pacific region, highlighting the cyclical nature of our international business. Additionally, our domestic digital channels saw a 10% net sales growth year-over-year.
Q: How has the company's financial position improved in terms of working capital?
A: Carolina Martinez, CFO: We improved our net working capital position to $9.5 million from $3.1 million last quarter. This was achieved through strategic pivots, including a public offering that raised just under $5 million, enhancing our financial flexibility.
Q: What are the expectations for the SRx Health acquisition?
A: Kent Cunningham, CEO: The acquisition of SRx Health will position Better Choice as a leading global health and wellness company. It is expected to yield operational efficiencies and synergies, providing near- and long-term growth opportunities. We anticipate the transaction to close in early Q1 of 2025.
Q: Can you discuss the performance in the international markets, particularly in Asia?
A: Kent Cunningham, CEO: We saw 9% year-over-year growth in our international channel, with strong performance in Asia Pacific. The pet food market in Asia is rapidly growing, driven by a demographic shift with younger pet owners. This represents a significant opportunity for us to expand our footprint in one of the largest and fastest-growing markets globally.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
