Delivers Positive Cash Flow from Operations of
$2.3 million and Positive EBITDA
VANCOUVER, BC, Aug. 11,
2022 /CNW/ - Kits Eyecare Ltd. (KITS) (TSX: KITS)
Canada's largest
direct-to-consumer eyeglasses manufacturer and digital eyecare
provider has released its financial results for the second quarter
of 2022.
Second Quarter 2022 Financial Highlights
- Revenue was consistent at $21,770,000 year-on-year, and up 8.6%
quarter-on-quarter
- Gross profit grew 49.7% year-on-year to a record $7,017,000 and up 14.8% quarter-on-quarter
- Glasses revenue grew 48.3% year-on-year and units grew 72.1% to
a record 74,000 eyeglasses delivered
- Record two-year Active Customers of 740,000, an increase of
23.3% year-over-year
- Gross margin expanded to a record 32.2% in the second quarter
of 2022, a 1060-basis point expansion compared to 21.6% in the
second quarter of 2021
- Returning customers were 69% of second quarter 2022 revenue
continuing category leading retention
- Marketing expenses declined 23.3% in the quarter
year-on-year
- EBITDA improved to $141,000 up
$5,649,000 year-on-year
- Cash flow from operations was $2.3
million resulting in a strong cash balance of $19 million at the end of Q2 2022
"It was an outstanding quarter as we delivered 175,000 eyecare
orders in Q2, delivering almost 2,700 orders a day to
vision-corrected patients making us one of the largest vision
providers in Canada, our
asset-light platform also became a free cash flow generator in Q2 a
key milestone as we continue to build momentum. Glasses revenue
increased 48% year-over-year in the quarter, while marketing
investments decreased by 23%. 69% of our revenue came from
returning customers, and gross profit margins expanded 1060 basis
points to 32.2% in the quarter. Overall, we made tremendous headway
in what was a challenging macro environment. Having proven our
asset light, cash generating model's resilience and
category-leading loyalty metrics, fueled by beautifully high NPS
and satisfaction metrics, we will continue growing our leadership
position in coming quarters." said Roger
Hardy co-founder and CEO.
"This quarter showed the ability of our digital,
vertically-integrated, onshore business model to outperform in
times of disruption and volatility. The KITS team efficiently
executed through tough consumer and supply chain circumstances.
This quarter, we reached a significant milestone and generated
positive cash from operations and EBITDA for the first-time since
our IPO. Our strong team, data driven culture, operational
excellence, and lasting connection with our loyal consumers
position us well for the future." said Sabrina Liak, CFO.
Conference Call and Webcast Information
Roger Hardy, Chief Executive Officer,
Joseph Thompson, Chief Operating
Officer, and Sabrina Liak, Chief Financial Officer will host a
conference call at 1:30 p.m. Pacific
Time on August 11, 2022, to
discuss KITS' financial results and outlook. To attend the call,
participants may dial: (416) 764-8659 or (888) 664-6392 Conference
Id: 41442194 or join our webcast:
https://app.webinar.net/wZ8WGRJGX9B
About KITS
KITS is a rapidly growing, digital eyecare
platform providing eyewear for eyes everywhere. We offer customers
access to a vast selection of contact lenses and eyeglasses,
including our own exclusive KITS designed products, as well as a
robust suite of online vision tools. Our efficient digital
platform, backed by our industry-leading manufacturing and designs,
removes intermediaries and enables us to offer great prices and
deliver made to order personalized products with incredible care
and accuracy. We are creating disruption in the industry by
constantly pursuing cutting-edge technologies to enable the best
customer experience, including online eyewear fitting tools, and
virtual try-on for glasses. We strive to delight our customers with
our competitive prices, a convenient digital shopping experience,
fast and reliable delivery options and an unrelenting focus on
earning our customers' lifelong trust. For more information on
KITS, visit: www.KITS.com.
Financial Highlights
The following selected financial information is qualified in its
entirety by and should be read in conjunction with our unaudited
condensed interim consolidated financial statements for the three
and six months ended June 30, 2022,
and June 30, 2021 and accompanying
notes and Management's Discussion and Analysis ("MD&A") which
may be viewed on SEDAR at www.sedar.com.
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
Financial and
Operating Data
|
|
June 30,
2022
(unaudited)
|
|
June 30,
2021
(unaudited)
|
|
June 30,
2022
(unaudited)
|
|
June 30,
2021
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
21,770
|
|
$
21,669
|
|
$
41,822
|
|
$
42,101
|
|
Gross profit
|
|
$
7,017
|
|
$
4,686
|
|
$
13,130
|
|
$
9,590
|
|
Net loss
|
|
$
(923)
|
|
$
(4,858)
|
|
$
(3,187)
|
|
$
(8,426)
|
|
Net loss per
share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.03)
|
|
$
(0.16)
|
|
$
(0.10)
|
|
$
(0.29)
|
|
Diluted
|
|
$
(0.03)
|
|
$
(0.16)
|
|
$
(0.10)
|
|
$
(0.29)
|
|
|
|
|
|
|
|
|
|
|
|
Non-IFRS Measures
(a):
|
|
|
|
|
|
|
|
|
|
Constant currency
revenue
|
|
$
21,238
|
|
$
21,669
|
|
$
41,280
|
|
$
42,101
|
|
EBITDA
|
|
$
141
|
|
$
(5,508)
|
|
$
(1,582)
|
|
$
(10,418)
|
|
Adjusted EBITDA
|
|
$
(556)
|
|
$
(3,197)
|
|
$
(1,474)
|
|
$
(5,914)
|
|
Adjusted EBITDA Margin
%
|
|
(2.6 %)
|
|
(14.8) %
|
|
(3.5 %)
|
|
(14.0) %
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
constant currency revenue
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
21,770
|
|
$
21,669
|
|
$
41,822
|
|
$
42,101
|
|
Foreign exchange
impact
|
|
(532)
|
|
-
|
|
(542)
|
|
-
|
|
Constant Currency
Revenue
|
|
$
21,238
|
|
$
21,669
|
|
$
41,280
|
|
$
42,101
|
|
|
|
|
|
|
|
|
|
|
|
Change in constant
currency
|
|
$
(431)
|
|
|
|
$
(821)
|
|
|
|
Change in constant
currency %
|
|
(2.0) %
|
|
|
|
(2.0) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
Net income loss for the
period
|
|
$
(923)
|
|
$
(4,858)
|
|
$
(3,187)
|
|
$
(8,426)
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
(184)
|
|
(1,433)
|
|
(898)
|
|
(4,019)
|
|
Finance costs -
net
|
|
385
|
|
290
|
|
789
|
|
1,026
|
|
Depreciation and
amortization
|
|
863
|
|
493
|
|
1,714
|
|
1,001
|
|
EBITDA
|
|
$
141
|
|
$
(5,508)
|
|
$
(1,582)
|
|
$
(10,418)
|
|
|
|
|
|
|
|
|
|
|
|
Add back
|
|
|
|
|
|
|
|
|
|
Share-based
compensation (b)
|
|
362
|
|
322
|
|
668
|
|
661
|
|
Brand expenses
(c)
|
|
-
|
|
1,144
|
|
-
|
|
2,448
|
|
Exchange loss /
(gain)
|
|
(1,063)
|
|
93
|
|
(578)
|
|
(61)
|
|
One-time costs
(d)
|
|
4
|
|
752
|
|
18
|
|
1,456
|
|
Adjusted
EBITDA
|
|
$
(556)
|
|
$
(3,197)
|
|
$
(1,474)
|
|
$
(5,914)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
21,770
|
|
$
21,669
|
|
$
41,822
|
|
$
42,101
|
|
Adjusted EBITDA Margin
% (a)
|
|
(2.6) %
|
|
(14.8) %
|
|
(3.5) %
|
|
(14.0) %
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
(a)
|
Refer to "Non-IFRS
Measures and Industry Metrics" section of the MD&A filed on
www.sedar.com.
|
(b)
|
Represents non-cash
share-based compensation expense associated with restricted share
rights ("RSRs") and options recognized in the period.
|
(c)
|
Represent expenses
associated with brand and content creation for KITS including film
and other brand assets. The Company plans to use these brand assets
over time and therefore will be able to derive future economic
benefits from these expenses incurred.
|
(d)
|
In connection with the
acquisition of Kits.com and the IPO, the Company incurred expenses
related to professional fees, consulting, legal, and accounting
that would otherwise not have been incurred and were directly
related to these two matters. These fees are not indicative of the
Company's ongoing costs. Other than the one-time IPO directors' and
officers' insurance costs which are expensed over the insurance
coverage period, we expect the remaining cost to discontinue
following the completion of the IPO.
|
Non-IFRS Financial Measures and Industry Metrics
This press release includes references to certain non-IFRS
financial measures such as Constant Currency Revenue, EBITDA and
Adjusted EBITDA, and industry metrics such as Active Customers.
These financial measures and industry metrics are employed by the
company to measure its operating and economic performance and to
assist in business decision-making, as well as providing key
performance information to senior management. The company believes
that, in addition to conventional measures prepared in accordance
with IFRS, certain investors and analysts use this information to
evaluate the company's operating and financial performance. These
financial measures are not defined under IFRS, nor do they replace
or supersede any standardized measure under IFRS. Other companies
in our industry may calculate these measures differently than we
do, limiting their usefulness as comparative measures. Definitions
and reconciliations of non-IFRS measures to the nearest IFRS
measure and Industry Metrics can be found in our Management's
Discussion and Analysis. Such non- IFRS reconciliations can also be
found in this press release under "Financial Highlights".
Forward-Looking Statements
This press release contains forward-looking statements,
including statements relating to the execution of our proposed
strategy, our operating performance and prospects for the business.
These forward-looking statements generally can be identified by the
use of words such as "intend," "believe," "could," "continue,"
"expect," "estimate," "forecast," "may," "potential," "project,"
"plan," "would," "will," and other words of similar meaning. Each
forward-looking statement contained in this press release is
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied by such
statement. Our business is subject to substantial risks and
uncertainties. This forward-looking information and other
forward-looking information are based on our opinions, estimates
and assumptions in light of our experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors that we currently believe
are appropriate and reasonable in the circumstances. Despite a
careful process to prepare and review the forward-looking
information, there can be no assurance that the underlying
opinions, estimates and assumptions will prove to be correct.
Certain assumptions in respect of the expansion and enhancement of
our optical laboratory for glasses and warehouse facilities; the
growth of our business and launch of new technologies; our ability
to drive sales growth; our ability to maintain, enhance, and grow
within our addressable market; our ability to drive ongoing
development and innovation of our exclusive brands and product
categories; our ability to continue directly sourcing from third
party suppliers and manufacturers; our ability to retain key
personnel; our ability to add, maintain and expand production,
distribution and fulfillment capabilities; our ability to continue
investing in infrastructure to support our growth; our ability to
obtain and maintain existing financing on acceptable terms;
currency exchange and interest rates; the impact of competition;
the changes and trends in our industry or the global economy; and
the changes in laws, rules, regulations, and global standards are
material factors made in preparing forward-looking information and
management's expectations. KITS' risks and uncertainties are
discussed in detail in the company's Annual Information Form, filed
on SEDAR on March 9, 2022. Investors,
potential investors, and others should give careful consideration
to these risks and uncertainties. We caution investors not to rely
on the forward-looking statements contained in this press release
when making an investment decision in our securities. The
forward-looking statements in this press release speak only as of
the date of this release, and we undertake no obligation to update
or revise any of these statements, except as required under
applicable securities laws. If we do update certain
forward-looking information, no inference should be made that we
will further update such or other forward-looking information.
SOURCE KITS