MISSISSAUGA, ON, Nov. 10, 2020 /CNW/ - Aegis
Brands Inc., formerly
The Second Cup Ltd., ("Aegis" or "Aegis
Brands" or the "Company") (TSX: AEG) today reported
financial results for the third quarter ended September
26, 2020
Highlights
- EBITDA for the quarter was $731,000 compared with $179,000 in the same quarter last year and
$687,000 EBITDA loss in Q2 2020.
- Net loss for the quarter was $751,000 or $0.03
per share compared with $933,000 or
$0.04 in the same quarter last year
and $1,931,000 or $0.08 in Q2 2020.
- Second Cup's same store sales for the quarter were -41.5%
compared with -52.2% in Q2 2020.
- Bridgehead's same store sales for the quarter were -44.0%
compared with -57.7% in Q2 2020.
- Hemisphere Cannabis Co. producing store level profitability
with five stores still waiting to open.
Third Quarter 2020
Consolidated Q3 EBITDA exceeded the same quarter last year and
the previous quarter by $552,000 and
$1,418,000 respectively. Despite the
dramatic loss in sales due to the pandemic and costs related to
restructuring activities, the company was able to show improvement
due to the reduced overhead costs and the addition of Hemisphere
and Bridgehead to the Aegis family of companies. Aegis system-wide
sales in the quarter declined 43.0% from the prior year's quarter,
mainly as a result of lost sales and store closures related to the
COVID-19 pandemic, partially offset by the addition of the
Bridgehead and Hemisphere brands.
"We continued to see an increase in guests returning to cafés in
both coffee brands in the third quarter before the second wave of
the pandemic took hold. Our franchisees, corporate store managers
and thousands of baristas across the country adapted to the new way
of life and have taken exceptional measures to ensure our guests
and staff felt safe and welcomed back into our stores. Their
efforts have provided steady improvement in same store sales and
store economics in the third quarter," said Steven Pelton, President and CEO of Aegis
Brands.
Second Cup
The ongoing impacts of the COVID-19 pandemic continue to be
deeply felt across the Second Cup's business. As the second wave
continues, 180 Second Cup cafés across the country remain open or
have re-opened. The impact has been more pronounced regionally in
COVID-19 hotspots, with locations in Ontario and Quebec experiencing a sharper decline in same
store sales when compared to other parts of the country, such as
Western Canada where sales remain
more stable at the -20% range and the East Coast in the negative
single digits.
Same store sales were rebounding prior to the onset of the
second wave of the COVID-19 pandemic. As Ontario returned to Phase 1 in September, same
store sales saw an improvement at -36.3%, compared to -57.9%
earlier in the pandemic, with several weeks of steady recovery. The
second wave has had a noticeable impact in the recent sales trend,
but latest average ticket price and same store sales data indicate
that the rebound has already begun.
At the onset of the pandemic, Second Cup took action to directly
support its business and franchisee network in the face of
unprecedented business challenges. This included: hiring an outside
firm to help with landlord negotiations, deferring royalties and
advertising fund contributions between February and June, working
with vendors for more favourable terms for the franchisees,
providing training to take advantage of government support and
financial relief programs, and providing training and support to
ensure the safety of all guests and employees during the
crisis.
Second Cup previously announced the development of new,
"non-traditional" café locations and has since secured 17 locations
to be opened in the remainder of 2020 and 2021. Included in the
2020 openings are pilot stores with Suncor Energy through their
Petro-Canada brand. Second Cup has opened a drive-thru location in
Keswick, Ontario with two more to
be opened before the end of the year. Second Cup looks forward to
the opportunity to build on this relationship in 2021 and
beyond.
A growing retail distribution network will supplement Second
Cup's owned e-commerce platform, which has just launched seasonal
holiday products as of November 2,
2020. Second Cup coffee has recently been made available for
sale at various retail banners operated by TJX Companies Inc. such
as Home Sense, Winners and Marshalls. The Company expects to
continue to expand into grocery channels throughout 2021.
Bridgehead
While the impact of the pandemic continues to be a challenge for
the Bridgehead stores in the downtown core of Ottawa, the urban stores have rebounded
nicely. Same store sales for the third quarter was -44.0% while the
urban stores were approximately 10% better on average. The strength
of the brand in Ottawa continues
to drive significant increases in e-commerce and wholesale volume.
These two channels have become significant contributors as the
brand finds new ways to get coffee into the hands of consumers.
E-commerce sales should exceed $700,000 in fiscal 2020 compared to approximately
$150,000 in 2019, while wholesale
into retailers such as Costco, Farm Boy and others have increased,
especially in the Ottawa region.
Bridgehead expects the wholesale channel to be three times the
volume in 2021 versus 2019.
"Considering the majority of the e-commerce sales are just in
the Ottawa area where Bridgehead
is based, these numbers are quite remarkable. It is also exciting
to think about what the brand can achieve as we start to expand
into other parts of Canada," said
Pelton.
Bridgehead currently has 15 of 19 coffeehouses open with plans
to reopen the downtown Ottawa
stores as the area recovers from the impacts of the COVID-19
pandemic. Later this month it will open its first kiosk inside a
Farm Boy location at the trainyards in Ottawa with plans to open another more
traditional location in Carleton
University in the Fall of 2021. The pandemic has delayed the
plans to expand into Toronto this
year, however the brand is looking for opportunities to resume its
growth outside of Ottawa beginning
in late 2021 or early 2022.
Hemisphere Cannabis Co.
On September 10, 2020, the Company
opened the second location of its retail cannabis stores. The first
two of the Hemisphere locations are generating positive store level
profitability and the brand is optimistic about the other five
locations ready to be opened. The next location is at the corner of
King and Bathurst in the heart of
"King West" Toronto, scheduled to open in the coming weeks, with a
location in Ottawa to follow
shortly thereafter. The company is continuing to build its pipeline
of new stores in Ontario and has
secured its first franchise agreement for a store to be opened in
Alberta. The Company expects
Hemisphere to grow quickly and to be a major contributor to the
earnings of Aegis over the next few years.
"Hemisphere is quickly growing a loyal base of discerning
cannabis users. Our focus on the guest experience in the store and
their experience with the product once they leave, is of paramount
importance to us. This attention to our guests' needs and
expectations is what sets us apart," said Jenn Juby, VP of Retail at Hemisphere Cannabis
Co.
Hemisphere is also collaborating with a cannabis partner to
co-produce a branded line of cannabis products, which will be made
available for sale in all Hemisphere locations.
Liquidity
The Company continues to have confidence that it has the
liquidity required to meet its short-term business needs. In
addition, the Company is still actively pursuing options to obtain
additional capital to pursue long-term opportunities, including,
but not limited to, further growth in the cannabis sector and
future acquisition opportunities.
"It is no revelation to say this pandemic has forced a change in
our way of life. What has been inspiring though, is the resilience
of our companies, our franchisees and our employees. Their ability
to overcome the changes and challenges in order to safely provide
exceptional coffee and cannabis experiences is truly incredible. I
am increasingly proud to work with all of the great people
affiliated with Second Cup, Bridgehead and Hemisphere Cannabis Co.
and I am excited to execute our plans as we emerge from the
pandemic," said Pelton.
About Aegis Brands Inc.
Founded in 1975, Aegis Brands Inc., formerly The Second Cup
Ltd., is a consolidator of brands in the food, beverage and
cannabis spaces with the mission to allow for independent
entrepreneurial spirit while providing shared services that
encourage unlimited growth. In November
2019, the Company announced its intention to implement a new
operating structure in support of its new strategy. The Company now
owns and operates the existing Second Cup Coffee
Co. TM specialty coffee business as part of a
portfolio of brands that also includes Bridgehead® and
Hemisphere Cannabis Co. TM For more information,
please visit www.aegisbrands.ca or find the Company on
Facebook and Twitter.
CONSOLIDATED HIGHLIGHTS
The following table sets out selected IFRS and certain non-IFRS
financial measures of the Company and should be read in conjunction
with the Unaudited Condensed Interim Financial Statements of the
Company for the 13 weeks ended September 26,
2020 and September 28,
2019.
(In thousands of
Canadian dollars,
except same café and store sales,
number of cafés and stores, per
share amounts, and number of
common shares.)
|
13 weeks
ended
|
|
39 weeks
ended
|
September
26, 20202
|
September
28, 20193
|
|
September
26, 20202
|
September
28, 20193
|
|
|
|
|
|
|
System sales of cafés
and stores1
|
$18,758
|
$32,936
|
|
$60,556
|
$101,625
|
|
|
|
|
|
|
Same café and stores
sales 1,4
|
(41.8%)
|
(2.9%)
|
|
(31.5%)
|
(1.3%)
|
|
|
|
|
|
|
Number of cafés &
stores - end of
period
|
252
|
246
|
|
252
|
246
|
|
|
|
|
|
|
Total
revenue
|
$6,245
|
$6,652
|
|
$18,574
|
$19,433
|
|
|
|
|
|
|
Operating costs and
expenses
|
$6,908
|
$7,378
|
|
$24,674
|
$21,286
|
|
|
|
|
|
|
Operating
loss1
|
($663)
|
($726)
|
|
($6,100)
|
($1,853)
|
|
|
|
|
|
|
EBITDA1
|
$731
|
$179
|
|
($2,216)
|
$746
|
|
|
|
|
|
|
Adjusted
EBITDA1
|
$731
|
$785
|
|
($1,429)
|
$1,751
|
|
|
|
|
|
|
Net loss and
comprehensive loss
|
($751)
|
($933)
|
|
($5,579)
|
($1,073)
|
|
|
|
|
|
|
Adjusted net loss and
comprehensive
loss1
|
($751)
|
($233)
|
|
($4,673)
|
($936)
|
|
|
|
|
|
|
Basic and diluted
loss per share as
reported
|
($0.03)
|
($0.04)
|
|
($0.24)
|
($0.05)
|
|
|
|
|
|
|
Adjusted basic and
diluted loss per
share1
|
($0.03)
|
($0.01)
|
|
($0.20)
|
($0.04)
|
|
|
|
|
|
|
Total assets - end of
period
|
$115,772
|
$117,265
|
|
$115,772
|
$117,265
|
|
|
|
|
|
|
Number of weighted
average
common shares issued
and
outstanding
|
22,916,028
|
20,366,649
|
|
22,814,446
|
20,049,103
|
1See the
section "Definitions and Discussion on Certain non-IFRS Financial
Measures" for further analysis.
|
2Financial
results in fiscal 2020 reflect the adoption of IFRS 16 specific to
the Bridgehead brand, as a result of its acquisition by the Company
on January 9, 2020. See the section "Changes in Accounting
Policies" for further analysis.
3The
Company's comparative, prior year results reflect the consolidated
financial results of its Second Cup brand.
4Same café
& store sales represent the percentage change, on average, in
sales at cafés & stores operating system-wide that have
been open for more than 12 months.
|
|
Acquisition of Bridgehead
On December 5, 2019, the Company
announced the acquisition of Ottawa-based Bridgehead Coffee ("Bridgehead"),
the Company's first acquisition since it announced its new
operating structure and strategy in November. This
acquisition closed on January 9,
2020. Bridgehead has 19 coffeehouses in Ottawa, Ontario, including its flagship
roastery, all of which continue to operate under the Bridgehead
brand.
The base purchase price consisted of cash consideration of
$6.0 million, stock consideration of
$3.3 million, which represents the
fair value of the stock as at the valuation date of January 8, 2020, and additional earn out payments
of up to $1.5 million based on the
profitability of Bridgehead's existing coffeehouses over the next
two years.
Third Quarter – Aegis Brands Inc.
System sales of cafés and stores
System sales
of cafés and stores for the 13 weeks ended September 26, 2020 were $18,758 compared to $32,936 for the 13 weeks ended September 28, 2019 representing a decrease of
$14,178 or 43%. The year-over-year
change is driven by the ongoing impacts of the COVID-19 pandemic,
including temporary closures and restrictions on store operations
(i.e. closure of dining room space and operations limited to
take-out, delivery and drive-thru).
Same café and store sales
During the Quarter,
same café and store sales decreased 41.8%, compared to 2.9% in the
same quarter of 2019, largely driven by the economic consequences
of the COVID-19 pandemic.
Analysis of revenue
Total revenue for the
Quarter was $6,245 (2019 -
$6,652), consisting of Company-owned
stores and product sales inclusive of the Second Cup, Bridgehead
and Hemisphere operating brands, royalty revenue, advertising fund
contributions, fees, and other revenue.
Company-owned stores and product sales for the Quarter were
$4,435 (2019 - $2,794), an increase of $1,641. Sales at Company-owned cafés continued to
be negatively impacted by the COVID-19 pandemic. In comparison to
the prior year, sales at Company-owned locations are higher due to
the inclusion of the Bridgehead sales as well sales at the two
newly-opened Hemisphere stores in the Quarter.
Franchise revenue was $1,810 for
the Quarter (2019 - $3,858), a
decrease of $2,048. The franchise
business segment continues to be impacted by the temporary closures
of cafés and scaled down nature of operations under the current
business environment.
Operating costs and expenses
Operating costs
and expenses include the costs of Company-owned stores and product
sales, franchise-related expenses, general and administrative
expenses, loss on disposal of assets, and depreciation and
amortization. The Canada Emergency
Wage Subsidy provided by the government has reduced remuneration
expenses in the quarter. In addition, the Company's operating
expenses decreased due to a reduced number of operating cafés and a
decrease in salaries for Coffee Central staff and elimination of
certain Coffee Central positions through temporary and permanent
lay-offs, as well as the suspension of compensation for the Board
of Directors.
Total operating costs and expenses for the Quarter were
$6,908 (2019 - $7,378), a decrease of $470.
Company-owned stores and product related expenses for the
Quarter were $3,296 (2019 -
$2,715), an increase of $581. Expenses are higher due to the addition of
the Bridgehead and Hemisphere locations this year, offset by the
decline in costs at Second Cup corporate cafés due to lower
sales.
Franchise related expenses for the Quarter were $852 in the Quarter (2019 - $2,013), a decrease of $1,161. Consistent with the decrease in franchise
revenue, expenses associated with the franchise business decreased
due to the reduced number of operating cafés through the Quarter,
lower labor costs as a result of the wage subsidy, and a decrease
in advertising fund expenses versus prior year, offset by an
additional provision for expected credit loss on leases
receivable.
General and administrative expenses were $1,338 for the Quarter (2019 - $1,757), a decrease of $419, driven by reduced labour costs as a result
of the wage subsidy, compensation reduction and reduced staff count
at Coffee Central.
Depreciation and amortization expense were $1,394 (2019 - $905), an increase of $489. Total amortization of right-of-use assets
was $893 and the amortization on
fixed and intangible assets came to $501.
EBITDA
EBITDA for the Quarter was $731
(2019 – $179), an increase of
$552, as a result of lower operating
costs due to the wage subsidy and the elimination of Coffee Central
positions where possible, through both temporary and permanent
layoffs. Business activities in the third quarter benefited, in
comparison to the second fiscal quarter in 2020, from the gradual
relaxation of COVID-19 restrictions.
Interest and Financing Costs
The Company reported net interest and financing costs of
$362, as compared to $197 in the same Quarter last year, primarily
driven by non-cash net interest recorded on the Company's lease
obligations and lease receivables, recorded in accordance with IFRS
16. The net interest is higher due to the inclusion of
company-owned Bridgehead coffeehouses and Hemisphere retail
cannabis dispensaries.
Net loss
The Company reported a net loss for the quarter of $751 or $0.03 per
share, as compared to net loss in the same Quarter last year of
$933 or $0.04 per share.
Adjusted net loss was $751 or
$0.03 per share, as compared to
adjusted net loss of $233 or
$0.01 in the same Quarter last
year.
Reconciliations of net income (loss) to EBITDA, adjusted EBITDA,
adjusted net income (loss) and adjusted net income (loss) per share
are provided in the section "Definitions and Discussion of Certain
non-IFRS Financial Measures".
Year-to-date – Aegis Brands Inc.
System sales of cafés and stores
System sales
of cafés and stores for fiscal 2020 were $60,556 compared to $101,625 last year representing a decrease of
$41,069 or 40%. The year-over-year
change is driven by the ongoing economic impacts of the COVID-19
pandemic, including the temporary closures of franchised and
corporately owned cafés and restrictions on store operations (i.e.
closure of dining room space and operations limited to take out,
delivery, and drive-thru).
Same café and store sales
During the year,
same café and store sales decreased 31.5%, compared to 1.3% last
year, largely driven by the economic consequences of the COVID-19
pandemic.
Analysis of revenue
Total revenue to date was
$18,574 (2019 - $19,433), consisting of Company-owned stores and
product sales inclusive of the Second Cup, Bridgehead and
Hemisphere operating brands, royalty revenue, advertising fund
contributions, other fees and revenue.
Company-owned stores and product sales to date were $12,556 (2019 - $8,002), an increase of $4,554. Sales at Company-owned stores were
negatively impacted by the ongoing COVID-19 pandemic. However,
sales are higher in comparison to the prior year due to the
inclusion of the Bridgehead and Hemisphere stores, partially offset
by the decline in sales at Second Cup corporate cafés.
Franchise revenue was $6,018 to
date (2019 - $11,431), a decrease of
$5,413, as a result of the temporary
closures of cafés and restrictions on store operations.
Operating costs and expenses
Operating costs
and expenses include the costs of Company-owned stores and product
sales, franchise-related expenses, general and administrative
expenses, loss on disposal of assets, and depreciation and
amortization. The Company's operating expenses are partially offset
by the Canada Emergency Wage
Subsidy, the short term reduction of salaries for Coffee Central
staff and the Senior Leadership team, the suspension of all
compensation for the Board of Directors, and the elimination of
certain Coffee Central positions through temporary and permanent
lay-offs.
Total operating costs and expenses to date were $24,674 (2019 - $21,286), an increase of $3,388.
Year to date, expenses related to company-owned stores were
$10,769 (2019 - $7,820), an increase of $2,949 due to the addition of the Bridgehead and
Hemisphere locations in fiscal 2020, partially offset by lower
operating costs at Second Cup corporate cafés.
Franchise related expenses to date were $5,136 to date (2019 - $5,942), a decrease of $806. The year-over-year change is due to the
reduced number of operating cafés and lower operating costs this
year. This was partially offset against: (1) $1,200 of bad debts provision recorded as a
result of the deferral of the collection of accrued royalties and
cooperative advertising fund contributions from franchisees for
twelve weeks starting February 23 to May
16, and (2) $944 of additional
expected credit loss on leases receivable, a non-cash adjustment
which considers forward-looking factors in accordance with IFRS
9.
General and administrative expenses are $4,155 (2019 - $4,916), a decrease of $761, which includes the benefit of the wage
subsidy, compensation reduction and reduced staff count at Coffee
Central.
Depreciation and amortization expense were $3,884 (2019 - $2,599), an increase of $1,285. Total amortization of right-of-use assets
was $2,473 to date and the
amortization on fixed and intangible assets came to $1,411.
Impairment indicators were identified as a result of the
economic impacts of the COVID-19 pandemic, which has resulted in
the temporary closures of cafés, and scaled down nature of
operations of open cafés. Impairment testing was performed over its
fixed and right-of-use assets recorded in accordance with IFRS 16,
as well as on the Company's intangible assets. The Company has
recorded non-cash asset impairment charges of $787 on a year to date basis to its right-of-use
assets.
EBITDA
EBITDA to date was a loss of
$2,216 (2019 – $746), a decrease of $2,962, driven primarily by the loss of revenue
due to the temporary closures of cafés and scaled down operations
of open cafés, bad debts expense recorded on the deferral of
accrued royalties and cooperative advertising contributions for
twelve weeks, the recording of non-cash expected credit losses in
accordance with IFRS 9, and the recognition of non-cash asset
impairment charges. This was partially offset by the wage subsidy,
compensation reduction and reduced staff count.
Adjusted for asset impairment charges, year to date EBIDTA loss
was $1,429.
Other loss
Other loss to date was $450, composed of a decrease in the fair market
value of warrants based on the Black-Scholes pricing model.
Interest and Financing Costs
The Company reported net interest and financing costs of
$1,062, as compared to $429 to date last year, primarily driven by
non-cash net interest recorded on the Company's lease obligations
and lease receivables, recorded in accordance with IFRS 16.
Net income (loss)
The Company reported a net loss of $5,579 or $0.24 per
share to date, as compared to net loss last year of $1,073 or $0.05 per
share.
Adjusted for impairment and fair market value adjustments on
warrants, net loss to date was $4,673
or $0.20 per share, as compared to
adjusted net loss last year of $936
or $0.04.
Reconciliations of net income (loss) to EBITDA, adjusted EBITDA,
adjusted net income (loss) and adjusted net income (loss) per share
are provided in the section "Definitions and Discussion of Certain
non-IFRS Financial Measures".
DEFINITIONS AND DISCUSSION ON CERTAIN NON-GAAP FINANCIAL
MEASURES
In this MD&A, the Company reports certain non-GAAP financial
measures such as system sales of cafés and stores, same café and
store sales, operating income (loss), EBITDA, adjusted EBITDA,
adjusted net income (loss) and adjusted net income (loss) per
share. Non-GAAP measures are not defined under IFRS and are
not necessarily comparable to similarly titled measures reported by
other issuers.
System sales of cafés and stores
System sales
of cafés and stores comprise the net revenue reported to Second Cup
by franchisees of Second Cup cafés and by Company-owned cafés, as
well as net revenue reported by Bridgehead coffeehouses and
Hemisphere retail cannabis dispensaries.
This measure is useful in assessing the operating performance of
the entire Company network, such as capturing the net change of the
overall café and store network. Changes in system sales of cafés
and stores result from the number of open locations and same
café/store sales.
Same café and store sales
Same café and store
sales represent the percentage change, on average, in sales at
cafés and stores operating system-wide that have been open for more
than 12 months. It is one of the key metrics the Company uses
to assess its performance as an indicator of appeal to
customers. Two principal factors that affect same café and
store sales are changes in customer count and changes in average
transaction size.
Operating income (loss)
Operating income
(loss) represents revenue, less cost of goods sold, less operating
expenses, and less impairment charges. This measure is not defined
under IFRS, although the measure is derived from input figures in
accordance with IFRS. Management views this as an indicator
of financial performance that excludes costs pertaining to interest
and financing, and income taxes.
EBITDA and adjusted EBITDA
EBITDA represents
earnings before interest and financing, income taxes, and
depreciation and amortization. Adjustments to EBITDA are for
items that are not necessarily reflective of the Company's
underlying operating performance. As there is no generally
accepted method of calculating EBITDA, this measure is not
necessarily comparable to similarly titled measures reported by
other issuers. EBITDA is presented as management believes it is a
useful indicator of the Company's ability to meet debt service and
capital expenditure requirements and evaluate liquidity.
Management interprets trends in EBITDA as an indicator of
relative financial performance. EBITDA should not be
considered by an investor as an alternative to net income or cash
flows as determined in accordance with IFRS.
Adjusted net income (loss) and adjusted net income (loss)
per share
Adjustments to net earnings (loss) and net
earnings (loss) per share are for items that are not necessarily
reflective of the Company's underlying operating performance. These
measures are not defined under IFRS, although the measures are
derived from input figures in accordance with IFRS.
Management views these as indicators of financial performance.
Reconciliations of net income (loss) to operating income (loss)
and EBITDA, adjusted net income (loss) and adjusted net income
(loss) per share are provided below:
|
|
13 weeks
ended
|
|
39 weeks
ended
|
|
|
September
26, 20201
|
|
September
28, 2019
|
|
September
26, 20201
|
|
September
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(751)
|
$
|
(933)
|
$
|
(5,579)
|
$
|
(1,073)
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
(274)
|
|
(339)
|
|
(2,033)
|
|
(391)
|
Interest and
financing loss
|
|
362
|
|
197
|
|
1,062
|
|
429
|
Other loss
(income)
|
|
-
|
|
349
|
|
450
|
|
(818)
|
Operating
loss
|
$
|
(663)
|
$
|
(726)
|
$
|
(6,100)
|
$
|
(1,853)
|
|
|
|
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
|
|
September
26, 20201
|
|
September
28, 2019
|
|
September
26, 20201
|
|
September
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(751)
|
$
|
(933)
|
$
|
(5,579)
|
$
|
(1,073)
|
Add
(deduct):
|
|
|
|
|
|
|
|
|
Income tax
recovery
|
|
(274)
|
|
(339)
|
|
(2,033)
|
|
(391)
|
Interest and
financing
loss
|
|
362
|
|
197
|
|
1,062
|
|
429
|
Other loss
(income)
|
|
-
|
|
349
|
|
450
|
|
(818)
|
Depreciation of
property
and
equipment
|
|
434
|
|
221
|
|
1,168
|
|
566
|
Amortization
of
intangible
Assets
|
|
68
|
|
103
|
|
243
|
|
359
|
Amortization of
right-of-
use assets
|
|
892
|
|
581
|
|
2,473
|
|
1,674
|
EBITDA
|
$
|
731
|
$
|
179
|
$
|
(2,216)
|
$
|
746
|
Add impact of
the
following:
|
|
|
|
|
|
|
|
|
Asset
impairment
Charges
|
|
-
|
|
-
|
|
787
|
|
-
|
Other
charges
|
|
-
|
|
606
|
|
-
|
|
1,005
|
Adjusted
EBITDA
|
$
|
731
|
$
|
785
|
$
|
(1,429)
|
$
|
1,751
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
|
|
September
26, 20201
|
|
September
28, 2019
|
|
September
26, 20201
|
|
September
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(751)
|
$
|
(933)
|
$
|
(5,579)
|
$
|
(1,073)
|
Add (deduct) impact
of the following:
|
|
|
|
|
|
|
|
|
After-tax other
(income) loss
|
|
-
|
|
256
|
|
329
|
|
(599)
|
After-tax asset
impairment
|
|
-
|
|
-
|
|
577
|
|
-
|
After-tax transition
costs
|
|
-
|
|
444
|
|
-
|
|
736
|
Adjusted net
loss
|
$
|
(751)
|
$
|
(233)
|
$
|
(4,673)
|
$
|
(936)
|
|
|
13 weeks
ended
|
|
39 weeks
ended
|
|
|
September
26, 20201
|
|
September
28, 2019
|
|
September
26, 20201
|
|
September
28, 2019
|
|
|
|
|
|
|
|
|
|
Net loss per
share
|
$
|
(0.03)
|
$
|
(0.04)
|
$
|
(0.24)
|
$
|
(0.05)
|
Add (deduct) impact
of the following:
|
|
|
|
|
|
|
|
|
After-tax other
(income) loss per share
|
|
-
|
|
0.01
|
|
0.01
|
|
(0.03)
|
After tax asset
impairment
|
|
-
|
|
-
|
|
0.03
|
|
-
|
After-tax transition
costs per share
|
|
-
|
|
0.02
|
|
-
|
|
0.04
|
Adjusted net loss
per
share
|
$
|
(0.03)
|
$
|
(0.01)
|
$
|
(0.20)
|
$
|
(0.04)
|
|
|
|
|
|
|
1The
Company's interim results in fiscal 2020 reflect the consolidated
financial statements of its operating brands including
Second Cup, Bridgehead, and Hemisphere.
The Company's comparative, prior year results reflect the
consolidated financial results of its Second Cup brand.
|
FORWARD LOOKING STATEMENTS
This press release may contain forward-looking information
that represents internal expectations, estimates or beliefs
concerning, among other things, future activities or future
operating results and various components thereof. The use of any of
the words "anticipate", "continue", "expect", "may", "will",
"project", "should", "believe", and similar expressions suggesting
future outcomes or events are intended to identify forward-looking
information. Forward-looking statements include the Company's
expectations with respect to the execution of the Company's
strategy, the number of Company stores offering modified or
suspended services and the fluctuation of this number over time,
the conversion of certain Second Cup cafés to retail cannabis
stores and the expansion into the retail cannabis market, the
imposition (or relaxation) of government restrictions and other
factors (including the duration and terms of such restrictions),
the extent of the expected impact of the COVID-19 pandemic and
associated government regulations, expected consumer and commercial
behavior and other related matters on the Company's business,
operations and financial performance, and the timing of any further
updates. Statements regarding such forward-looking information
reflect management's current beliefs and are based on information
currently available to management.
These statements are not guarantees of future performance and
are based on management's estimates and assumptions that are
subject to inherent risks and uncertainties, some of which are
beyond the Company's control, which could cause the Company's
actual performance and financial results in future periods to
differ materially from the forward-looking information contained in
this press release. The dynamic nature of the COVID-19 pandemic and
the events and circumstances resulting from or associated with the
pandemic mean that management can offer no assurance that
forward-looking information or forward-looking statements will
occur or be accurate in the circumstances. This is further
discussed under the heading "Risk Factors" in the Company's annual
information form available at www.sedar.com.
Management's estimates and assumptions include: the ability
to manage the risks (economic, operational, financial, and other
risks) associated with the COVID-19 pandemic, the ability to
continue integration activities relating to the Company's
acquisition, and the ability to continue expansion into the retail
cannabis market. Risks and uncertainties include: the ability
to achieve anticipated benefits of the corporate reorganization;
risks relating to the integration of acquisitions; risks relating
to the new holding company structure following the reorganization;
the risks associated with the COVID-19 pandemic; the risks
associated with the expansion into the retail cannabis market.
Although the forward-looking information contained in this press
release is based upon what management believes are reasonable
assumptions, there can be no assurance that actual results will be
consistent with these forward-looking statements. Readers,
therefore, should not place undue reliance on any such
forward-looking statements.
The risks associated with the COVID-19 pandemic include: the
ultimate extent, duration and severity of the pandemic itself and
the associated government restrictions; effects on consumer and
commercial behavior and other factors associated with or resulting
from such pandemic, including that the outbreak of the COVID-19
pandemic could result in additional stores temporarily suspending
operations, decrease the willingness of guests to patronize the
Company's cafes and stores, shortages of employees to staff the
Company's stores, interruption of supplies from third parties upon
which the Company relies, governmental regulations adversely
impacting the Company's business; the Company's eligibility for
government sponsored financial relief programs including the
Canada Emergency Commercial Rent
Assistance and Canada Emergency
Wage Subsidy; landlord willingness to consider franchisees'
requests for deferrals of rent or loan repayments and/or the
Company's requests to amend or terminate certain store leases; that
franchisees may request that the Company take certain steps to
support its franchisees (whether financially or otherwise); and
that the pandemic and the consumer, governmental and commercial
response to it could materially impact economic activity in general
and otherwise have a material adverse effect on the Company's
business, financial condition and results of operations. Such
adverse effects could be rapid and unexpected.
All forward-looking information in this press release is
qualified by these cautionary statements. Forward-looking
information in this press release is presented only as of the date
made. Except as required by law, the Company disclaims any
intention or obligation to update or revise any forward-looking
statements to reflect subsequent events or circumstances.
SOURCE Aegis Brands Inc.