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SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
MONTREAL, March 28,
2023 /CNW/ - LXRandCo, Inc. ("LXR" or the
"Company") (TSX: LXR) (TSX: LXR.WT), a socially-responsible
digital-first omni-channel retailer of authenticated pre-owned
luxury handbags and accessories, today provided an update on the
status of the brokered private placement of convertible debenture
units announced on March 1, 2023, an update on the renewal of
its banking facilities which mature May 25,
2023 and provided preliminary financial results for the year
ended December 31, 2022.
Private Placement of Convertible
Debenture Units
As previously announced on March 1,
2023 ("March 1, 2023 Press
Release"), subject to receipt of all necessary corporate and
regulatory approvals including the approval of the Toronto Stock Exchange, the
Company expects to close on a brokered private placement (the
"Private Placement") of 1,235 unsecured convertible
debenture units of the Company (the "Debenture Units"), for
gross proceeds of $1,235,000 on
March 30, 2023. The net proceeds of
the Private Placement will be used for working capital and for
general corporate purposes. Further details on the Private
Placement are available in the March 1,
2023 Press Release.
Update on Banking
Facilities
On March 9, 2023, the Company and
its lenders agreed on terms for a renewal of its working capital
and term loan facilities, both of which mature on May 25, 2023. While final terms are being
finalized, the new facilities are expected to mature on
May 25, 2025 with all other
underlying terms and conditions remaining substantially unchanged
from the existing facilities.
Update on FY 2022
LXR also announced today that, based on information currently
available to management as of the date hereof, it is providing
select preliminary unaudited financial results for the full-year
ended December 31, 2022 ("FY
2022"). The audited annual consolidated financial statements of
the Company for the FY 2022 and related Management Discussion and
Analysis are expected to be released on March 31, 2023.
The following are select preliminary highlights for FY 2022. All
comparatives, unless otherwise noted, are versus the same period in
the prior year.
- FY 2022 total net revenue was $20.0
million, an increase of 11% — e-commerce net revenue as a
per cent of net revenue was 60.7%
- Gross profit was $7.6 million, an
increase of 12.7% — gross profit margin was 38.2% as compared to
37.6%
- Adjusted EBITDA (a non-IFRS measure) was ($1.4) million, same level as the prior year
- Cash earnings (a non-IFRS measure) was a loss of ($0.7) million compared to a loss of ($1.8) million
- Operating cash flow (Net loss plus changes in non-cash working
capital) was break-even, a significant improvement versus net
outflows of ($3.6) million in the
prior year
- Cash on hand on December 31, 2022
was $2.6 million, a decrease of
$1.0 million from the prior year,
primarily due to debt repayment
Comparative Financial Highlights (for the years ended
December 31)
Financial
highlights ($ Million)
|
FY
2020
|
FY
2021
|
FY
2022
|
Total net
revenue
|
$13.8
|
$18.0
|
$20.0
|
Gross profit margin
%
|
41.9 %
|
37.6 %
|
38.2 %
|
Adj.
EBITDA
|
($3.3)
|
($1.5)
|
($1.4)
|
Adj. EBITDA
%
|
(24 %)
|
(8 %)
|
(7 %)
|
Net
Loss
|
($7.7)
|
($2.9)
|
($1.6)
|
Cash
earnings/(loss)
|
($5.8)
|
($1.8)
|
($0.7)
|
Operating cash
flows
|
($1.4)
|
($3.6)
|
Break-even
|
Cash on
hand
|
$7.3
|
$3.7
|
$2.6
|
Bank
Debt
|
$5.7
|
$6.0
|
$5.3
|
E-comm. % total
revenue
|
32 %
|
59 %
|
61 %
|
All figures reported with respect to FY 2022 are preliminary
results and are subject to change and adjustment as the Company's
fourth quarter 2022 financial results are finalized and such
changes and adjustments could be material. Accordingly, investors
are cautioned not to place undue reliance on the above preliminary
figures. The Company is issuing preliminary results in order to
enable it to disclose such information in connection with the
Private Placement and does not intend to continue to provide
preliminary results in the future. This update should not be viewed
as a substitute for the Company's full audited annual results and
does not present all necessary information for an understanding of
the Company's financial position or results with respect to FY
2022.
Caution Regarding Non-GAAP Financial
Measures
In assessing performance, among other things, the Company relies
on EBITDA, Adjusted EBITDA and Cash Earnings, which are
all non-GAAP measures that do not have a standardized meaning
prescribed by GAAP. These financial measures may not be comparable
to similar measures presented by other issuers. Investors are
cautioned that this measure should not be construed as an
alternative to profit or cash flow from operating activities
determined in accordance with GAAP as an indicator of the
Corporation's performance. The Corporation's management believes
that these measures are commonly reported and widely used by
investors as an indicator of a company's cash operating performance
and ability to service debt.
EBITDA is defined by the Company as earnings before finance
costs, income tax expense and depreciation and amortization.
Adjusted EBITDA excludes from EBITDA the effects of expenses that
are non-recurring in nature. Cash Earnings/(Loss) (or net cash
generated before changes in non-cash working capital) is a
measure we consider to be important as it serves as an indicator of
the actual cash being generated from continuing operations. We
define Cash Earnings as Net Profit/(Loss) plus non-cash
charges.
The following is a reconciliation of the above to its nearest
IFRS measure for the years ended December
31, 2020, 2021 and 2022:
($
000s)
|
FY
2020
|
FY
2021
|
|
FY
2022
|
Reconciliation of
Net Loss to Cash earnings/(loss) and
Operating Cash Flows
|
|
|
|
|
Net Loss
|
(7,711)
|
(2,898)
|
|
(1,647)
|
Add: non-cash
items:
|
|
|
|
|
Depreciation and
amortization expense
|
638
|
348
|
|
353
|
Gain on disposal of
property and equipment
|
—
|
(1)
|
|
—
|
Stock-based
compensation expense
|
267
|
749
|
|
521
|
Write-off of property
and equipment
|
1,050
|
—
|
|
—
|
Unrealized foreign
exchange (gain)/loss
|
(14)
|
12
|
|
44
|
Cash
earnings/(loss)
|
(5,770)
|
(1,790)
|
|
(729)
|
Add: Net change in
non-cash working capital
|
4,320
|
(1,762)
|
|
719
|
Operating Cash
Flows
|
(1,450)
|
(3,552)
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
($
000s)
|
FY
2020
|
FY
2021
|
|
FY
2022
|
Reconciliation of
Net Loss to EBITDA and Adj. EBITDA
|
|
|
|
|
Net Loss
|
(7,711)
|
(2,898)
|
|
(1,647)
|
Adjustments to Net
Loss:
|
|
|
|
|
Amortization and
depreciation expense
|
622
|
319
|
|
325
|
Finance
costs
|
607
|
543
|
|
590
|
Income tax
expense
|
2
|
9
|
|
23
|
EBITDA
|
(6,480)
|
(2,027)
|
|
(709)
|
|
|
|
|
|
Adjustments to
EBITDA:
|
|
|
|
|
Foreign exchange loss
(gain)
|
432
|
142
|
|
(1,304)
|
Loss due to bad debt
from U.S. Partner Bankruptcies
|
704
|
—
|
|
—
|
Write-off of property
and equipment
|
1,050
|
—
|
|
—
|
Gain on disposal of
property and equipment
|
—
|
(1)
|
|
—
|
Stock-based
compensation
|
1,018
|
749
|
|
521
|
Information technology
non-recurring expense
|
—
|
—
|
|
62
|
Write-off of the
right-of-use liability
|
(40)
|
—
|
|
—
|
Store closing
costs
|
12
|
9
|
|
—
|
Gain on
European-related balances
|
—
|
(163)
|
|
—
|
Government wage subsidy
program
|
—
|
(177)
|
|
—
|
Adjusted
EBITDA
|
(3,304)
|
(1,468)
|
|
(1,430)
|
The preliminary results provided in this news release constitute
forward-looking statements within the meaning of applicable
securities laws, are based on a number of assumptions and are
subject to a number of risks and uncertainties. Actual results may
differ materially. Please see the section below entitled Cautionary
Statement Regarding Forward-Looking Information.
Caution Regarding
Forward-Looking Statements
Certain statements in this press release are prospective in
nature and constitute forward-looking information and/or
forward-looking statements within the meaning of applicable
securities laws (collectively, "forward-looking statements").
Forward-looking statements generally, but not always, can be
identified by the use of forward-looking terminology such as
"outlook", "objective", "may", "could", "would", "will", "expect",
"intend", "estimate", "forecasts", "project", "seek", "anticipate",
"believes", "should", "plans" or "continue", or similar expressions
suggesting future outcomes or events and the negative of any of
these terms. Forward- looking statements in this news release
include, but are not limited to, statements regarding the
anticipated proceeds from the Private Placement, the Company's
intended use of proceeds from the Private Placement, the
participation of insiders in the Private Placement, the expected
closing date of the Private Placement, the Company's ability to
renew its working capital and term loan facilities on substantially
similar terms and conditions, the expected maturity of such
facilities and our anticipated results for FY 2022. Forward-looking
statements reflect management's current beliefs, expectations and
assumptions and are based on information currently available to
management, which includes assumptions about management's
historical experience, perception of trends and current business
conditions, expected future developments and other factors which
management considers appropriate. With respect to the forward-
looking statements included in this press release, management has
made certain assumptions with respect to, among other things, the
Company's ability to meet its future objectives and strategies, the
Company's ability to achieve its future projects and plans and that
such projects and plans will proceed as anticipated, as well as
assumptions concerning the satisfaction of all conditions of
closing to the Private Placement, including receipt of all
necessary regulatory and stock exchange approvals, and the
successful completion of the Private Placement within the
anticipated timeframe, general economic and market growth rates,
currency exchange and interest rates and competitive intensity.
Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
future circumstances, outcomes or results anticipated or implied by
such forward- looking statements will occur or that plans,
intentions or expectations upon which the forward-looking
statements are based will occur.
All forward-looking statements included in and incorporated into
this press release are qualified by these cautionary statements.
Unless otherwise indicated, the forward-looking statements
contained herein are made as of the date of this
press release, and
except as required by applicable law, the Company
does not
undertake any obligation to publicly update
or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
Readers are cautioned that the actual results achieved may vary
from the information provided herein and that such variations may
be material. Consequently, there are no representations by
LXRandCo that actual results achieved will be the same in
whole or in part as those set out in the forward-looking
statements.
Exemptions under MI
61-101
Further to the Company's press release on March 1, 2023, Gibraltar & Company, Inc. Eric Graveline, a director of the Company and
Groupe Colsa Inc. (a company controlled by Javier San Juan, a director of the Company) are
related parties of the Company (the "Insider Participants")
which are expected to participate in the Private Placement and, as
such, the Private Placement constitutes a related party transaction
under Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Investments ("MI 61-101"). The Company
is relying on the exemption from the formal valuation requirement
in Section 5.5(a) of MI 61-101 and the exemption from the minority
approval requirement in Section 5.7(1)(a) of MI 61-101 based on the
board of directors of the Company having determined, that the fair
market value of the securities subscribed for by "interested
parties" (as defined under MI 61-101), or the consideration paid
for such securities, does not exceed 25% of the Company's market
capitalization before giving effect to the Private Placement. The
Company anticipates it will file a material change report less than
21 days before the closing of the Private Placement. This shorter
period is reasonable and necessary in the circumstances as the
Company wants to complete the Private Placement as expeditiously as
possible and definitive information with respect to insider
participation has only become recently available. Information
regarding the effect of the Private Placement on the shareholdings
of the Insider Participants is provided below.
Gibraltar & Company, Inc.
currently beneficially owns, controls or directs, directly or
indirectly, 17,929,156 Class B shares of the Company
("Shares"), representing approximately 19.6% of the
aggregate issued and outstanding Shares on a non-diluted basis as
of the date hereof. In addition, Camillo di
Prata, a director and the interim chief executive officer of
the Company and an insider of Gibraltar, currently beneficially owns,
controls or directs, directly or indirectly, approximately
7,053,143 Shares, representing approximately 7.7% of the aggregate
issued and outstanding Shares on a non-diluted basis as of the date
hereof and Valerie Sorbie, a
director and the chair of the Company and an insider of
Gibraltar, beneficially owns,
controls or directs, directly or indirectly, approximately
2,613,413 Shares or approximately 2.9% of the aggregate issued and
outstanding Shares on a non-diluted basis. Gibraltar & Company, Inc. is
expected to acquire up to 300 Debenture Units under the Private
Placement, representing approximately 24.3% of the
1,235 Debenture Units issuable pursuant to the Private
Placement. Ms. Sorbie and Mr. di Prata will not be purchasing any
Debenture Units personally. Upon closing of the Private Placement,
Gibraltar & Company, Inc. is
expected to beneficially own, control or direct, directly or
indirectly, approximately $300,000
principal amount of Debentures and 210,000 Warrants (as defined in
the March 1, 2023 Press Release),
representing approximately 20.1% of the aggregate issued and
outstanding Shares on a partially-diluted basis (assuming full
conversion of the Debentures and full exercise of the Warrants
issued under the Private Placement into Shares).
Groupe Colsa Inc. (a company controlled by Javier San Juan) currently beneficially owns,
controls or directs, directly or indirectly, 1,200,000 Shares,
representing approximately 1.3% of the aggregate issued and
outstanding Shares on a non-diluted basis as of the date hereof.
Groupe Colsa Inc. is expected to acquire up to 50 Debenture Units
under the Private Placement, representing approximately 4.1% of the
1,235 Debenture Units issuable pursuant to the Private Placement.
Upon closing of the Private Placement, Mr. San Juan is
expected to beneficially own, control or direct, directly or
indirectly, approximately $50,000
principal amount of Debentures and 35,000 Warrants, representing
approximately 1.6% of the aggregate issued and outstanding Shares
on a partially-diluted basis (assuming full conversion of the
Debentures and full exercise of the Warrants issued under the
Private Placement into Shares).
Eric Graveline currently
beneficially owns, controls or directs, directly or indirectly,
6,707,643 Shares, representing approximately 7.34 % of the
aggregate issued and outstanding Shares on a non-diluted basis as
of the date hereof. Mr. Graveline is expected to acquire up to 150
Debenture Units under the Private Placement, representing
approximately 12.2% of the 1,235 Debenture Units issuable
pursuant to the Private Placement. Upon closing of the Private
Placement, Mr. Graveline is expected to beneficially own, control
or direct, directly or indirectly, approximately $150,000 principal amount of Debentures and
105,000 Warrants, representing approximately 7.9% of the aggregate
issued and outstanding Shares on a partially-diluted basis
(assuming full conversion of the Debentures and full exercise of
the Warrants issued under the Private Placement into
Shares).
The Private Placement was considered and unanimously approved by
the board of directors of the Company. There was no contrary view
or abstention by any director approving the Private Placement. The
Insider Participants were not present in the final deliberations
and did not participate in the approval process.
This press release is not an offer to sell or the solicitation
of an offer to buy the securities in the
United States or in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to qualification or
registration under the securities laws of such jurisdiction. The
securities being offered have not been,
nor will they be, registered under the United
States Securities Act of 1933,
as amended, and such
securities may not be offered
or sold within the United States or to, or for the account or benefit of,
U.S. persons absent registration or an applicable exemption from
U.S. registration requirements and applicable U.S. state securities
laws.
About LXR
LXRandCo is a socially responsible, digital-first omni-channel
retailer of authenticated pre-owned luxury handbags and personal
accessories. Since 2010, we have been providing consumers with
authenticated branded luxury products by promoting their reuse and
providing an environmentally responsible way for consumers to
purchase luxury products. We achieve this through our digital-first
strategy by selling directly to consumers through our website
at www.lxrco.com and indirectly, by powering the e-commerce
and other platforms of key channel partners. Our omni-channel model
is also supported by retail 'shop-in-shop' experience centers and
by wholesale ativities with select retail partners across
North America.
SOURCE LXRandCo, Inc.