Operational Efficiency Improves: Operating
Expenses as a Percentage of Revenue Plunge by 35 Percentage Points
to 53%
Net Loss Improves by 31% Year-Over-Year
(All dollar amounts in this release are
unaudited and in U.S. dollars)
The Alkaline Water Company Inc. (NASDAQ: WTER) (the “Company”),
the country’s largest independent Alkaline water company, today
announced record-breaking financial results for the fiscal year
ending March 31, 2023. The Company reported historic high revenues
of $63.8 Million, representing year-over-year growth of 16%. The
Company also highlighted substantial progress on its Pathway to
Profitability. The corresponding Form 10-K will be filed with the
SEC on August 16, 2023, and can be accessed on the investor
relations section of the Company's website at
ir.theAlkalinewaterco.com.
The Company, the proud producer of Deliciously Smooth™
Alkaline88®, one of the nation’s best-selling alkaline water
brands, provided highlights and management commentary on the full
fiscal year.
Full-Year Fiscal 2023 Financial
Performance (all amounts in U.S. dollars):
- Revenue: Up 16% Year-over-Year (YoY) to $63.8MM.
- Gross Profit Margin: Improved by 111 basis points YoY to
18%.
- Total Operating Expenses (OpEx): Decreased $14.7 million
YoY.
- Total Operating Expenses as a Percentage of Revenue:
Improved from 88% to 53%, a 35 percentage point reduction YoY.
- Net Loss: Improved more than $12 million YoY from ($39.6
MM) to ($27.4 MM).
- Net Cash Used in Operating Activities: Improved 67% YoY,
from ($31.8MM) to ($10.4MM).
“Fiscal Year 2023 marked the highest revenue
in our company's history and 16% year-over-year growth, despite a
challenging economic environment,” stated Frank Chessman, President
and CEO of The Alkaline Water Company. “This achievement reflects
the strength of the Alkaline88® brand, the hard work of our team,
and the loyalty of our customers.”
Progress on the Pathway to Profitability—$22 Million in Cost
Savings and Margin Enhancement Now Identified:
In July of 2022, the Company announced its new Pathway to
Profitability, an initiative to increase margins, cut costs, and
improve overall operational efficiency.
The company's gross profit margin improved by 111 basis
points for the fiscal year. The improvement was a result of
more efficient production processes, better pricing on raw
materials, and strategic price increases to clients.
“Equally important to driving top-line
growth, we've emphasized cost control, margin enhancements, and
streamlining operations under our 'Pathway to Profitability'
initiative which we announced a year ago,” stated Mr. Chessman. “In
that time, we’ve seen an uptrend in our gross profit margin
which improved by over 100 basis points year over year.”
Amidst record revenue, another financial milestone stands
out—the substantial decrease in operating expenses relative to
our revenue. This fell sharply from 88% to 53%, a
year-over-year improvement of 35 percentage points.
The Alkaline Water Company has also managed to decrease net cash
used in operating activities by $21.4 million, down from ($31.8MM)
last year to ($10.4MM) this year. Furthermore, the company reported
that its net loss improved by 31%, and its loss per share (LPS)
improved by 50%.
Mr. Chessman added, “The Alkaline Water
Company is not only consistently driving top-line growth but also
ensuring that we extract maximum value out of every dollar of
revenue that we generate as we march on toward profitability. We
acknowledge there’s still a ways to go but we made progress in
fiscal year 2023 and trends continue in the right direction. We
have now identified approximately $22 Million in cost-savings and
margin enhancement compared to fiscal year 2022, once all the
changes are fully implemented. Our growth in topline sales and
these improvements in cost management and operational efficiency
all bring us closer to our goal of profitability.”
Key Business and Operational
Highlights
- Alkaline88 added over 11,000 new stores to its retail
footprint.
- Adding new clients in fiscal year 2023 was an important driver
to the Company’s continued growth. Alkaline88 found new shelf space
for the first time in stores across all channels including many
large and small regional convenience store chains, drug stores,
military exchanges, and whole divisions of large national grocery
banners like Whole Foods and Kroger.
- Alkaline88 expanded SKU offerings in over 33,000 existing
clients.
- Another important driver that helped the company maintain
double digit sales growth in fiscal year 2023 was the addition of
new SKUs in over 33,000 stores including some of the nation’s
largest drug store and grocery chains.
- The introduction of thousands of new distribution points and a
variety of size options in stores frequented by millions of
shoppers who are already familiar with the brand greatly increases
the likelihood of more Alkaline88 making its way into more shopping
carts across the country.
- Alkaline88 outpaced category growth in both dollar volume
and unit volume and continued its dominance as the leader in
bulk-sized Value-Added Water.
- For the 52-weeks ending 3/25/23 (6 days before the end of the
Company’s fiscal year), Nielsen xAOC+Conv. data shows that:
- Alkaline88 had over $93MM in retail sales, making it one of
only 12 brands across the nation with over $90MM in yearly sales
(excluding all private labels combined).
- Alkaline88 grew 19.5% year-over-year across all channels in
Dollar Volume, more than double the category’s growth, and
second-best amongst the 12 biggest brands.
- Alkaline88 also had the second-best Unit Volume growth amongst
the top-12 brands and was one of only five of these brands to
record growth in both Units and Dollars.
- The Alkaline88 1-Gallon was the 16th best-selling Value-Added
Water product by Dollar Volume in the entire country, regardless of
size. It outsold the next closest gallon product in the category by
more than 11x.
“The growth we've experienced this past fiscal year reaffirms
the strength of our brand, our strategy, and our team,” reiterated
Mr. Chessman. “We are optimistic about what the future holds for
The Alkaline Water Company as we continue to strive for
profitability, improve operational efficiencies, and create value
for our shareholders and customers."
Cash Flow and Operational
Runway
The Company reported limited cash resources at the end of the
fiscal year. As a result, the management team has remained focused
on securing the necessary funds to keep operations running
smoothly. The Company’s current credit facility, an asset-based
loan, has been extended into the fall as management pursues another
revolving financing agreement to continue pursuing the goal of
profitable operations.
Fiscal 2023 Complete Financial
Results
Complete results for the Company’s fiscal year 2023 will also be
filed on SEDAR under the Company’s profile on www.sedar.com and on
EDGAR at www.sec.gov.
Note on Reverse Split:
Effective April 5, 2023, The Company effected a one for fifteen
reverse stock split of its authorized, issued and outstanding
shares of common stock. As a result, the Company’s authorized
common stock has decreased from 200,000,000 shares of common stock,
with a par value of $0.001 per share, to 13,333,333 shares of
common stock, with a par value of $0.001 per share, and the number
of issued and outstanding shares of common stock has decreased from
approximately 152,149,661 to approximately 10,185,898. Any
fractional shares resulting from the reverse stock split were
rounded up to the next nearest whole number.
Accordingly, all share and per-share amounts referenced above
for the current period and prior periods have been adjusted to
reflect the reverse stock split.
About The Alkaline Water Company:
The Alkaline Water Company is the Clean Beverage® company making
a difference in the water you drink and the world we share.
Founded in 2012, The Alkaline Water Company (NASDAQ: WTER) is
headquartered in Scottsdale, Arizona. Its flagship product,
Alkaline88®, is a leading premier alkaline water brand available in
bulk and single-serve sizes along with eco-friendly aluminum
packaging options. With its innovative, state-of-the-art
proprietary electrolysis process, Alkaline88® delivers perfect 8.8
pH alkaline drinking water with trace minerals and electrolytes and
boasts our trademarked “Clean Beverage” label.
To purchase The Alkaline Water Company’s products online, visit
us at www.alkaline88.com.
To learn more about The Alkaline Water Company, please visit
www.thealkalinewaterco.com or connect with us on Facebook, Twitter,
Instagram, or LinkedIn.
Notice Regarding Forward-Looking Statements
This news release contains “forward-looking statements.”
Statements in this news release that are not purely historical are
forward-looking statements and include any statements regarding
beliefs, plans, expectations or intentions regarding the future.
Such forward-looking statements include, among other things, the
following: the statements relating to the Company’s pathway to
profitability, including the statement that the pathway to
profitability is an initiative to increase margins, cut costs and
improve overall operational efficiency; that the Company
acknowledges there’s still a ways to go on its pathway to
profitability but it has made progress in fiscal year 2023 and
trends continue in the right direction; that the Company has now
identified approximately $22 million in cost savings and margin
enhancement compared to fiscal year 2022 once all the changes are
fully implemented; that the Company’s growth in topline sales and
improvements in cost management and operational efficiency bring
the Company closer to its goal of profitability; and that the
Company is optimistic about what the future holds as it continues
to strive for profitability, improve operational efficiencies and
create value for its shareholders and customers.
The material assumptions supporting these forward-looking
statements include, among others, that the Company’s cost-saving
and margin enhancement measures will be fully implemented and, once
implemented, they will be effective to reduce the Company’s annual
expense and enhance the Company’s margin to the extent anticipated
by the Company; that the Company’s burn rate to reach the level
anticipated by the Company as a result of the Company’s proactive
reduction in its monthly burn rate; that the demand for the
Company’s products will continue to significantly grow; that the
past production capacity of the Company’s co-packing facilities can
be maintained or increased; that there will be increased production
capacity through implementation of new production facilities, new
co-packers and new technology; that there will be an increase in
number of products available for sale to retailers and consumers;
that there will be an expansion in geographical areas by national
retailers carrying the Company’s products; that there will be an
expansion into new national and regional grocery retailers; that
there will be an expansion into new e-commerce, home delivery,
convenience, and healthy food channels; that there will not be
interruptions on production of the Company’s products; that there
will not be a recall of products due to unintended contamination or
other adverse events relating to the Company’s products; and that
the Company will be able to obtain additional capital to meet the
Company’s growing demand and satisfy the capital expenditure
requirements needed to increase production and support sales
activity. Actual results could differ from those projected in any
forward-looking statements due to numerous factors. Such factors
include, among others, governmental regulations being implemented
regarding the production and sale of alkaline water; additional
competitors selling alkaline water and enhanced water products in
bulk containers reducing the Company’s sales; the fact that the
Company does not own or operate any of its production facilities
and that co-packers may not renew current agreements and/or not
satisfy increased production quotas; the fact that the Company has
a limited number of suppliers of its unique bulk bottles; the
potential for supply-chain interruption due to factors beyond the
Company’s control; the fact that there may be a recall of products
due to unintended contamination; the inherent uncertainties
associated with operating as an early stage company; changes in
customer demand and the fact that consumers may not embrace
enhanced water products as expected or at all; the extent to which
the Company is successful in gaining new long-term relationships
with new retailers and retaining existing relationships with
retailers; the Company’s ability to raise the additional funding
that it will need to continue to pursue its business, planned
capital expansion and sales activity; and competition in the
industry in which the Company operates and market conditions. These
forward-looking statements are made as of the date of this news
release, and the Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those projected in the forward-looking
statements, except as required by applicable law, including the
securities laws of the United States and Canada. Although the
Company believes that any beliefs, plans, expectations and
intentions contained in this news release are reasonable, there can
be no assurance that any such beliefs, plans, expectations or
intentions will prove to be accurate. Readers should consult all of
the information set forth herein and should also refer to the risk
factors disclosure outlined in the reports and other documents the
Company files with the SEC, available at www.sec.gov, and on the
SEDAR, available at www.sedar.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230816095018/en/
The Alkaline Water Company Inc. Frank Chessman CEO
866-242-0240 investors@thealkalinewaterco.com
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