Release Date: January 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Goodfood Market Corp (GDDFF, Financial) reported its eighth consecutive quarter of positive adjusted EBITDA, reaching CAD1.6 million with a margin of 4.7%, showing consistent profitability growth.
- The company achieved positive adjusted free cash flow of CAD1.9 million, marking the fifth quarter in the past eight with positive cash flow.
- Goodfood Market Corp (GDDFF) successfully closed the acquisition of Genuine Tea, marking the first step in its strategy to acquire and grow a portfolio of next-generation brands.
- The average order value of customers reached a record high, contributing to stable net sales per active customer year over year.
- The company announced a Bitcoin Treasury Investment strategy to strengthen its balance sheet and hedge against inflation and rising food costs, aiming to create shareholder value.
Negative Points
- Net sales for Q1 2025 were CAD34.7 million, reflecting a 14% decline year over year due to softer consumer spending and lower active customer numbers.
- Active customers decreased to 106,000 from 124,000 in Q1 of the previous year, indicating challenges in customer retention and acquisition.
- The macroeconomic environment remains challenging, with organic growth proving elusive for Goodfood Market Corp (GDDFF).
- The company faces potential headwinds from currency fluctuations, particularly the weakening Canadian dollar, which could impact cost of goods sold.
- There is concern about potential tariffs on US imports into Canada, which could affect pricing and sourcing strategies for Goodfood Market Corp (GDDFF).
Q & A Highlights
Q: Can you provide insights on the customer account trends for the upcoming quarters?
A: Roslane Aouameur, CFO: We are seeing more stability in customer accounts with smaller contractions. We expect stability in Q2, potential growth in Q3, and seasonal patterns in Q4. Overall, there's a possibility of growth in active customers by fiscal year-end.
Q: How does the weakening Canadian dollar impact your cost of goods sold (COGS)?
A: Jonathan Ferrari, CEO: A large portion of our purchases are affected by the US dollar, impacting costs like logistics and raw materials. While direct USD purchases are below 50%, the overall effect is significant. We mitigate this through supplier negotiations and menu adjustments to protect gross margins.
Q: How are you managing potential impacts from US tariffs on Canadian imports?
A: Roslane Aouameur, CFO: We are closely monitoring potential tariffs and have some ability to diversify sourcing to mitigate impacts. However, price increases on non-US goods are possible, and we are preparing to adapt accordingly.
Q: Can you elaborate on the Bitcoin Treasury Strategy and its integration with other capital allocation priorities?
A: Jonathan Ferrari, CEO: We started with CAD1 million in Bitcoin and plan to invest excess cash flow into Bitcoin to protect against inflation and create shareholder value. This strategy coexists with our acquisition strategy, focusing on long-term capital allocation based on return profiles.
Q: What early learnings have you gained from the Genuine Tea acquisition that could apply to future M&A activities?
A: Jonathan Ferrari, CEO: The omnichannel strategy of Genuine Tea is impressive, showing brand strength across multiple channels. We aim to acquire brands with proven sustainability and growth. The small US sales portion presents both challenges and opportunities for expansion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
