MONTREAL, Aug. 10, 2023 (GLOBE NEWSWIRE) -- Knight Therapeutics Inc. (TSX: GUD) ("Knight" or “the Company”), a leading pan-American (ex-US) specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2023. All currency amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.
Q2 2023 Highlights
Financial Results
- Revenues were $89,905, an increase of $14,085 or 19% over the same period in prior year.
- Gross margin of $37,493 or 42% compared to $38,295 or 51% in the same period in prior year.
- Adjusted EBITDA1 was $14,269, a decrease of $3,621 or 20% over the same period in prior year.
- Adjusted EBITDA per share1 of $0.13, a decrease of $0.02 or 15% over the same period in prior year.
- Net gain on financial assets measured at fair value through profit or loss of $3,939.
- Net income was $1,840, compared to $2,516 in the same period in the prior year.
- Cash outflow from operations was $1,486, compared to a cash inflow from operations of $13,249 in the same period in prior year.
Corporate Developments
- Purchased 2,875,020 common shares through Knight’s NCIB at an average price of $4.78 for aggregate cash consideration of $13,733.
Products
- Submitted Pemazyre® (pemigatinib) for regulatory approval in Argentina and Mexico.
- Submitted Minjuvi® (tafasitamab) for regulatory approval in Mexico.
- Submitted Rembre® (dasatinib) and Karfib® (carfilzomib) for regulatory approval in Chile.
- Obtained regulatory approval for Xetrane® (pomalidomide) in Chile.
Subsequent to quarter-end
- Submitted marketing authorization for Tavalisse® (fostamatinib) in Colombia and Mexico.
- Obtained regulatory approval for Minjuvi® (tafasitamab) in Brazil.
- Launched a NCIB in July 2023 to purchase up to 5,999,524 common shares of the Company.
“I am excited to report that Knight achieved record revenues this quarter. During the first six months of 2023, Knight has delivered revenues of over $172 million and adjusted EBITDA of over $32 million, a growth of 24% and 4%, respectively, compared to the same prior year period. The strong performance is a testament to the hard work and dedication of our team and the continued success of our portfolio. In addition, our team continues to focus on advance our pipeline, with the submission of innovative and branded generic products across our territories” said Samira Sakhia, President and Chief Executive Officer of Knight Therapeutics Inc.
1 Adjusted EBITDA and Adjusted EBITDA per share are non-GAAP measures and ratios, refer to section "Non-GAAP measures" and "Reconciliation to adjusted EBITDA" for additional details.
SELECT FINANCIAL RESULTS REPORTED UNDER IFRS
[In thousands of Canadian dollars]
| Change | Change | |||||||||||||||
| Q2-23 | Q2-22 | $1 | %2 | YTD-23 | YTD-22 | $1 | %2 | |||||||||
| Revenues | 89,905 | 75,820 | 14,085 | 19 | % | 172,502 | 139,627 | 32,875 | 24 | % | ||||||
| Gross margin | 37,493 | 38,295 | (802 | ) | 2 | % | 78,255 | 70,772 | 7,483 | 11 | % | |||||
| Gross margin % | 42 | % | 51 | % | — | — | 45 | % | 51 | % | — | — | ||||
| Operating expenses4 | 37,603 | 35,959 | (1,644 | ) | 5 | % | 72,732 | 68,752 | (3,980 | ) | 6 | % | ||||
| Net income (loss) | 1,840 | 2,516 | (676 | ) | 27 | % | (2,097 | ) | (16,295 | ) | 14,198 | 87 | % | |||
| EBITDA3 | 14,269 | 17,890 | (3,621 | ) | 20 | % | 32,506 | 31,202 | 1,304 | 4 | % | |||||
| Adjusted EBITDA3 | 14,269 | 17,890 | (3,621 | ) | 20 | % | 32,506 | 31,202 | 1,304 | 4 | % | |||||
1 A positive variance represents a positive impact to net income (loss) and a negative variance represents a negative impact to net income (loss).
2 Percentage change is presented in absolute values.
3 EBITDA and adjusted EBITDA are non-GAAP measures, refer to the definitions in section “Non-GAAP measures” for additional details.
4 Operating expenses include selling and marketing expenses, general and administrative expenses, research and development expenses, amortization and impairment of intangible assets.
SELECT FINANCIAL RESULTS AT CONSTANT CURRENCY
[In thousands of Canadian dollars]
| Q2-23 | Q2-22 | Variance | YTD-23 | YTD-22 | Variance | |||||||||||
| Excluding impact of IAS 291 | ||||||||||||||||
| Constant Currency1 | $2 | %3 | Constant Currency1 | $2 | %3 | |||||||||||
| Revenues | 90,400 | 77,082 | 13,318 | 17 | % | 173,067 | 143,102 | 29,965 | 21 | % | ||||||
| Gross margin | 40,244 | 42,345 | (2,101 | ) | 5 | % | 81,630 | 77,498 | 4,132 | 5 | % | |||||
| Gross margin % | 45 | % | 55 | % | — | — | 47 | % | 54 | % | — | — | ||||
| Operating expenses4 | 37,985 | 34,888 | (3,097 | ) | 9 | % | 72,812 | 67,802 | (5,010 | ) | 7 | % | ||||
| EBITDA1 | 14,269 | 19,079 | (4,810 | ) | 25 | % | 32,506 | 33,272 | (766 | ) | 2 | % | ||||
| Adjusted EBITDA1 | 14,269 | 19,079 | (4,810 | ) | 25 | % | 32,506 | 33,272 | (766 | ) | 2 | % | ||||
1 Financial results at constant currency, excluding the impact of hyperinflation, EBITDA and adjusted EBITDA are non-GAAP measures. Refer to section “Non-GAAP measures” and "Reconciliation to adjusted EBITDA" for additional details.
2 A positive variance represents a positive impact to net income and a negative variance represents a negative impact to net income.
3 Percentage change is presented in absolute values.
4 Operating expenses include selling and marketing expenses, general and administrative expenses, research and development expenses, amortization and impairment of non-current assets.
SELECT BALANCE SHEET ITEMS
[In thousands of Canadian dollars]
| Change | ||||||
| June 30, 2023 | December 31, 2022 | $ | %1 | |||
| Cash, cash equivalents and marketable securities | 141,623 | 172,674 | (31,051 | ) | 18 | % |
| Trade and other receivables | 161,755 | 151,669 | 10,086 | 7 | % | |
| Inventory | 98,682 | 92,489 | 6,193 | 7 | % | |
| Financial assets | 160,881 | 176,563 | (15,682 | ) | 9 | % |
| Accounts payable and accrued liabilities | 96,365 | 108,730 | (12,365 | ) | 11 | % |
| Bank loans | 72,461 | 70,072 | 2,389 | 3 | % | |
1 Percentage change is presented in absolute values.
Revenues: For the quarter ended June 30, 2023, excluding the impact of hyperinflation, revenues increased by $15,379 or 20% compared to the same period in prior year. The appreciation of select LATAM currencies led to an increase in revenues of $2,061 in Q2-23 compared to Q2-22. The revenues by therapeutic areas are as follows:
| Excluding impact of IAS 293 | ||||||
| Change | ||||||
| Therapeutic Area | Q2-23 | Q2-22 | $1 | %2 | ||
| Oncology/Hematology | 27,935 | 26,034 | 1,901 | 7 | % | |
| Infectious Diseases | 45,567 | 29,860 | 15,707 | 53 | % | |
| Other Specialty | 16,898 | 19,127 | (2,229 | ) | 12 | % |
| Total | 90,400 | 75,021 | 15,379 | 20 | % | |
1 A positive variance represents a positive impact to net income due to the application of IAS 29 and a negative variance represents a negative impact to net income due to the application of IAS 29.
2 Percentage change is presented in absolute values.
3 Revenues excluding the impact of IAS 29 is a non-GAAP measure, refer to section “Non-GAAP measures” for additional details.
The increase in revenues excluding the impact of hyperinflation is explained by the following:
- Oncology/Hematology: The oncology/hematology portfolio grew by approximately $5,923 due to continued growth of key promoted products including Lenvima®, Trelstar®, Rembre® and the assumption of commercial activities of Akynzeo® in Brazil, Argentina and Canada. This increase is offset by a reduction of approximately $4,000 in revenues of our mature and branded generics products due to their lifecycle including the market entrance of new competitors.
- Infectious Diseases: The infectious disease portfolio grew by approximately $18,913, excluding the impact of the planned transition and termination of the Gilead Amendment. The increase is driven by the revenues of $18,000 related to the sales contract the with the Ministry of Health in Brazil for Ambisome® ("MOH Contract"), and the growth of our key promoted products including Cresemba®.
- Other Specialty: The decrease in the other specialty portfolio is primarily driven by a net decrease of the revenues of Exelon® of $1,500 due to the transition from Novartis to Knight. The revenues of Exelon® declined by approximately $7,500 in Q2-23 versus Q2-22 due to the transition of commercial operations from Novartis to Knight. The revenues in Q2-23 were negatively impacted due to advanced purchases in Q1-23 in connection with transition of commercial operations, primarily in Mexico. In addition, in Q2-22, Knight recorded higher revenues due to the advanced purchases in connection with the transition of commercial operations, primarily in Brazil and Colombia. The decrease is offset by an estimated $6,000 additional revenues recognized due to the change in accounting treatment from net profit transfer to revenues with related cost of sales upon the transition.
Gross margin: For the quarter ended June 30, 2023, gross margin, as a percentage of revenues, was 42% in Q2-23 and 51% Q2-22. Excluding the impact of IAS 29, gross margin, as a percentage of revenues, was 45% in Q2-23 and 54% in Q2-22. Exelon® was recorded as a net profit transfer from Novartis in Q2-22. If Knight had reported revenues and related cost of sales for Exelon® instead of a net profit transfer, the gross margin would have been 50% ("Adjusted Gross Margin"). The decrease in the Adjusted Gross Margin of 50% in Q2-22 to 45% in Q2-23 is due to product mix.1
Selling and marketing (“S&M”): For the quarter ended June 30, 2023, S&M expenses were $12,874, an increase of $1,948 or 18%, compared to the same period in prior year. Excluding the impact of IAS 29, the increase is $2,245 or 21%. The increase is driven an expansion of the sales force structure as well as marketing activities related to Exelon® upon the transition of commercial activities from Novartis to Knight and Akynzeo® relaunched in Brazil in Q3-22 and Canada in Q4-22. In addition, certain variable costs such as logistics fees rose as a function of higher revenues.
General and administrative (“G&A”): For the quarter ended June 30, 2023, G&A expenses were $9,119, a decrease of $1,447 or 14%, compared to the same period in prior year. Excluding the impact of IAS 29, the decrease is $528 or 5%.
Research and development (“R&D”): For the quarter ended June 30, 2023, R&D expenses were $4,336, an increase of $924 or 27%, compared to the same period in prior year. Excluding the impact of IAS 29, the increase is $1,458 or 46%. The increase is driven by an expansion in our structure behind product development and medical initiatives related to key promoted products including Akynzeo® relaunched in Brazil Q3-22 and in Canada Q4-22.
Amortization and impairment of intangible assets: For the quarter ended June 30, 2023, amortization and impairment of intangible assets was $11,274, an increase of $219 or 2% compared to the same period in prior year.
Interest income: Interest income is the sum of interest income on financial instruments measured at amortized cost and other interest income. For the quarter ended June 30, 2023, interest income was $3,087, an increase of $660 or 27%, compared to the same period in prior year. The increase is driven by higher interest rates on cash and marketable securities.
Interest expense: For the quarter ended June 30, 2023, interest expenses were $3,004, an increase of $1,287 or 75%, compared to the same period in prior year. The increase is driven by higher average loan balance resulting from IFC loan closed in December 2022 and higher variable interest rates, partially offset by principal repayments of Itaú Unibanco Brasil and Bancolombia bank loans.
Adjusted EBITDA: For the three-month period ended June 30, 2023, adjusted EBITDA decreased by $3,621 or 20%, driven by the decrease in gross margin and increase in operating expenses.
Net income: For the quarter ended June 30, 2023, net income was $1,840 compared to net income of $2,516 for the same period in prior year. The variance mainly resulted from the above-mentioned items and (1) a net gain on the revaluation of financial assets measured at fair value through profit or loss of $3,939 versus a net loss of $7,692 in the same period in prior year, mainly due to unrealized revaluations of the strategic fund investments, (2) a foreign exchange loss of $4,918 in Q2-23 versus a foreign exchange gain of $4,507 in Q2-22 and (3) an income tax recovery of $1,628 in Q2-23 driven by the recognition of certain deferred tax assets due to timing differences related to our financial assets, tax loss in certain jurisdictions and certain intercompany transactions, offset by current income tax expense due to operating income, compared to the income tax recovery of $1,009 in Q1-23.
1 Adjusted Gross Margin is a non-GAAP measure, refer to section "Non-GAAP measures" for additional details.
Cash, cash equivalents and marketable securities: As at June 30, 2023, Knight had $141,623 in cash, cash equivalents and marketable securities, a decrease of $31,051 or 18% as compared to December 31, 2022. The variance is primarily due to outflows for certain regulatory and sales milestones on certain products, including Akynzeo® and Aloxi® from Helsinn, shares repurchased through NCIB, repayment of bank loans partially offset by cash inflows from operating activities, principal repayment of a strategic loan and proceeds from the disposal of Medimetriks.
Financial assets: As at June 30, 2023, financial assets were at $160,881, a decrease of $15,682 or 9%, as compared December 31, 2022, driven mainly by the mark-to-market adjustments of $8,029 due to the decline in the share prices of the publicly-traded equities held by our strategic fund investments and a strategic loan repayment of $5,357, offset by capital calls on the funds. Given the nature of the fund investments there could be significant fluctuations in the fair value of the underlying assets.
Bank Loans: As at June 30, 2023, bank loans were at $72,461, an increase of $2,389 or 3% as compared to December 31, 2022.
Product Updates
During the quarter, Knight submitted the marketing authorization applications for two innovative products, Pemazyre® (pemigatinib) in Argentina and Mexico and Minjuvi® (tafasitamab) in Mexico. Knight advanced its branded generics portfolio, particularly in Chile, with the submission of the marketing authorization applications for Rembre® (dasatinib) and Karfib® (carfilzomib) and obtained regulatory approval of Xetrane® (pomalidomide).
Subsequent to the quarter, Knight submitted marketing authorization applications for fostamatinib, for the treatment of thrombocytopenia in adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment, for regulatory approval in Mexico and Colombia. In addition, the Company received the regulatory approval in Brazil for Minjuvi®, in combination with lenalidomide followed by tafasitamab monotherapy for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL), including DLBCL due to low-grade lymphoma, who are not eligible for autologous stem cell transplantation (ASCT). Upon obtaining the marketing authorization from ANVISA, Knight submitted an application for pricing approval to Drugs Market Regulation Chamber (“CMED”) which establishes maximum prices allowed for drugs sold in Brazil. The timing and outcome of the pricing approval process is uncertain and could take up to two years. The commercial launch of Minjuvi® is dependent on obtaining a favorable CMED price.
Corporate Updates
NCIB
On July 12, 2023, the Company announced that the Toronto Stock Exchange approved its notice of intention to launch a NCIB (“2023 NCIB”). Under the terms of the 2023 NCIB, Knight may purchase for cancellation up to 5,999,524 common shares of the Company which represented 10% of its public float as at June 30, 2023. The 2023 NCIB commenced on July 14, 2023 and will end on the earlier of July 13, 2024 or when the Company completes its maximum purchases under the NCIB. Furthermore, Knight entered into an agreement with a broker to facilitate purchases of its common shares under the NCIB.
During the three month period ended June 30, 2023, the Company purchased 2,875,020 common shares at an average price of $4.78 for aggregate cash consideration of $13,733 of which $215 remains to be settled as at June 30, 2023. Subsequent to quarter-end up to August 3, 2023, the Company purchased an additional 480,434 common shares at an average purchase price of $4.87 for an aggregate cash consideration of $2,341.
Financial Outlook Update
Knight provides guidance on revenues1 on a non-GAAP basis. This is due to both the difficulty in predicting Argentinian inflation rates and its IAS 29 impact.
For fiscal 2023, Knight has updated its financial guidance on revenues and expects to generate between $310 million to $330 million in revenues an increase of $10 million on the lower and upper end of the range. The adjusted EBITDA is expected to be between 16% to 17% of revenues. The increase in the financial outlook is primarily due to an improvement in LATAM currencies against the Canadian dollar in the second quarter of 2023. The guidance is based on a number of assumptions, including but not limited to the following:
- no revenues for business development transactions not completed as at August 10, 2023
- discontinuation of certain distribution agreements
- no interruptions in supply whether due to global supply chain disruptions or general manufacturing issues
- no new generic entrants on our key pharmaceutical brands
- no unforeseen changes to government mandated pricing regulations
- successful commercial execution on product listing arrangements with HMOs, insurers, key accounts, and public payers
- successful execution and uptake of newly launched products
- no significant restrictions or economic shut down due to global pandemics
- foreign currency exchange rates remaining within forecasted ranges
Should any of the assumptions differ, the financial outlook and the actual results may vary materially. Refer to the risks and assumptions referred to in the Forward-Looking Statements section of this news release for further details.
1 Revenues excluding the impact of IAS 29 is a non-GAAP measure, refer to the definitions in section “Non-GAAP measures” for additional details.
Conference Call Notice
Knight will host a conference call and audio webcast to discuss its second quarter ended June 30, 2023, today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.
Date: Thursday, August 10, 2023
Time: 8:30 a.m. ET
Telephone: Toll Free: 1-888-664-6383 or International 1-416-764-8650
Webcast: www.knighttx.com or Webcast
This is a listen-only audio webcast. Media Player is required to listen to the broadcast.
Replay: An archived replay will be available for 30 days at www.knighttx.com
About Knight Therapeutics Inc.
Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing and commercializing pharmaceutical products for Canada and Latin America. Knight's Latin American subsidiaries operate under United Medical, Biotoscana Farma and Laboratorio LKM. Knight Therapeutics Inc.'s shares trade on TSX under the symbol GUD. For more information about Knight Therapeutics Inc., please visit the company's web site at www.knighttx.com or www.sedar.com.
Forward-Looking Statement
This document contains forward-looking statements for Knight Therapeutics Inc. and its subsidiaries. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Knight Therapeutics Inc. considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared but cautions the reader that these assumptions regarding future events, many of which are beyond the control of Knight Therapeutics Inc. and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations are discussed in Knight Therapeutics Inc.'s Annual Report and in Knight Therapeutics Inc.'s Annual Information Form for the year ended December 31, 2022 as filed on www.sedar.com. Knight Therapeutics Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether because of new information or future events, except as required by law.
CONTACT INFORMATION:
| Investor Contact: | |
| Knight Therapeutics Inc. | |
| Samira Sakhia | Arvind Utchanah |
| President & Chief Executive Officer | Chief Financial Officer |
| T: 514-484-4483 | T. +598.2626.2344 |
| F: 514-481-4116 | |
| Email: info@knighttx.com | Email: info@knighttx.com |
| Website: www.knighttx.com | Website: www.knighttx.com |
IMPACT OF HYPERINFLATION
[In thousands of Canadian dollars]
The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company's Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation. If the Company did not apply IAS 29, the effect on the Company's operating income would be as follows:
| Q2-23 | YTD-23 | |||||||||||||||
| Reported under IFRS | Excluding impact of IAS 291 | Variance | Reported under IFRS | Excluding impact of IAS 291 | Variance | |||||||||||
| $2 | %3 | $2 | %3 | |||||||||||||
| Revenues | 89,905 | 90,400 | (495 | ) | 1 | % | 172,502 | 173,067 | (565 | ) | — | % | ||||
| Cost of goods sold | 52,412 | 50,156 | (2,256 | ) | 4 | % | 94,247 | 91,437 | (2,810 | ) | 3 | % | ||||
| Gross margin | 37,493 | 40,244 | (2,751 | ) | 7 | % | 78,255 | 81,630 | (3,375 | ) | 4 | % | ||||
| Gross margin (%) | 42 | % | 45 | % | 45 | % | 47 | % | ||||||||
| Expenses | ||||||||||||||||
| Selling and marketing | 12,874 | 12,985 | 111 | 1 | % | 23,539 | 23,698 | 159 | 1 | % | ||||||
| General and administrative | 9,119 | 9,188 | 69 | 1 | % | 18,225 | 18,075 | (150 | ) | 1 | % | |||||
| Research and development | 4,336 | 4,623 | 287 | 6 | % | 8,523 | 8,725 | 202 | 2 | % | ||||||
| Amortization and impairment of intangible assets | 11,274 | 11,189 | (85 | ) | 1 | % | 22,445 | 22,314 | (131 | ) | 1 | % | ||||
| Operating income (loss) | (110 | ) | 2,259 | (2,369 | ) | 105 | % | 5,523 | 8,818 | (3,295 | ) | 37 | % | |||
1 Financial results excluding the impact of hyperinflation is a non-GAAP measure. Refer to section “Non-GAAP measures” for additional details.
2 A positive variance represents a positive impact on net income due to the application of IAS 29 and a negative variance represents a negative impact on net income due to the application of IAS 29.
3 Percentage change is presented in absolute values.
NON-GAAP MEASURES
[In thousands of Canadian dollars]
Non-GAAP measures
The Company discloses non-GAAP measures and ratios that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance. Non-GAAP financial measures and adjusted EBITDA per share ratio do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.
The Company uses the following non-GAAP measures:
Revenues and Financial results excluding the impact of hyperinflation under IAS 29: Revenues and financial results under IFRS are adjusted to remove the impact of hyperinflation under IAS 29. The impact of hyperinflation under IAS 29 is calculated by applying an appropriate general price index to express the effects of inflation. After applying the effects of translation, the statement of income is converted using the closing foreign exchange rate of the month.
Revenues and Financial results at constant currency: Revenues/financial results at constant currency are obtained by translating the prior period revenues/financial results from the functional currencies to CAD using the conversion rates in effect during the current period. Furthermore, with respect to Argentina, the Company excludes the impact of hyperinflation and translates the revenues/results at the average exchange rate in effect for each of the periods.
Revenues/financial results at constant currency allow revenues/financial results to be viewed without the impact of fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of revenues/financial results under constant currency is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.
Adjusted Gross Margin: Gross margin is adjusted, to consider revenues and related cost of sales for Exelon® separately, rather than presenting as net profit transfer.
EBITDA: Operating income or loss adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.
Adjusted EBITDA: EBITDA adjusted for acquisition costs and non-recurring expenses.
Adjusted EBITDA per share: Adjusted EBITDA over number of common shares outstanding at the end of the respective period.
Adjustments include the following:
- With the adoption of IFRS 16, the lease payments of Knight are not reflected in operating expenses. The IFRS 16 adjustment approximates the cash outflow related to leases of Knight.
- Acquisition costs relate to costs incurred on legal, consulting and advisory fees for the acquisitions.
- Other non-recurring expenses relate to expenses incurred by Knight that are not due to, and are not expected to occur in, the ordinary course of business.
For the three and six-month period ended June 30, 2023, the Company calculated EBITDA and adjusted EBITDA as follows:
| Change | Change | |||||||||||||||
| Q2-23 | Q2-22 | $1 | %2 | YTD-23 | YTD-22 | $1 | %2 | |||||||||
| Operating income (loss) | (110 | ) | 2,336 | (2,446 | ) | 105 | % | 5,523 | 2,020 | 3,503 | 173 | % | ||||
| Adjustments to operating income (loss): | ||||||||||||||||
| Amortization and impairment of intangible assets | 11,274 | 11,055 | 219 | 2 | % | 22,445 | 22,343 | 102 | — | % | ||||||
| Depreciation of property, plant and equipment and ROU assets | 884 | 2,723 | (1,839 | ) | 68 | % | 2,796 | 4,816 | (2,020 | ) | 42 | % | ||||
| Lease costs (IFRS 16 adjustment) | (636 | ) | (643 | ) | 7 | 1 | % | (1,367 | ) | (1,289 | ) | (78 | ) | 6 | % | |
| Impact of IAS 29 | 2,857 | 2,419 | 438 | 18 | % | 3,109 | 3,312 | (203 | ) | 6 | % | |||||
| EBITDA3 | 14,269 | 17,890 | (3,621 | ) | 20 | % | 32,506 | 31,202 | 1,304 | 4 | % | |||||
| Acquisition and transition costs | — | — | — | — | — | — | — | — | ||||||||
| Other non-recurring expenses | — | — | — | — | — | — | — | — | ||||||||
| Adjusted EBITDA3 | 14,269 | 17,890 | (3,621 | ) | 20 | % | 32,506 | 31,202 | 1,304 | 4 | % | |||||
1 A positive variance represents a positive impact to net income (loss) and a negative variance represents a negative impact to net income (loss).
2 Percentage change is presented in absolute values.
3 EBITDA and adjusted EBITDA are non-GAAP measures, refer to the definitions in section "Non-GAAP measures" for additional details.
The Company calculated adjusted EBITDA per share as follows:
| Q2-23 | Q2-22 | YTD-23 | YTD-22 | |
| Adjusted EBITDA1 | 14,269 | 17,890 | 32,506 | 31,202 |
| Adjusted EBITDA per common share1 | 0.13 | 0.16 | 0.30 | 0.27 |
| Number of common shares outstanding at period end (in thousands) | 107,177 | 114,623 | 107,177 | 114,623 |
1 Adjusted EBITDA is non-GAAP measure and adjusted EBITDA per share is a non-GAAP ratio, refer to the definitions in section “Non-GAAP measures” for additional details.
INTERIM CONSOLIDATED BALANCE SHEETS
[In thousands of Canadian dollars]
[Unaudited]
| As at | 06-30-2023 | 12-31-2022 |
| ASSETS | ||
| Current | ||
| Cash and cash equivalents | 37,844 | 71,679 |
| Marketable securities | 92,657 | 85,826 |
| Trade receivables | 103,666 | 94,890 |
| Other receivables | 14,433 | 12,930 |
| Inventories | 98,682 | 92,489 |
| Prepaids and deposits | 1,792 | 1,704 |
| Other current financial assets | 32,745 | 33,716 |
| Income taxes receivable | 3,548 | 2,385 |
| Total current assets | 385,367 | 395,619 |
| Marketable securities | 11,122 | 15,169 |
| Prepaids and deposits | 4,529 | 4,355 |
| Right-of-use assets | 4,777 | 5,827 |
| Property, plant and equipment | 15,302 | 16,806 |
| Intangible assets | 318,638 | 338,780 |
| Goodwill | 85,738 | 82,274 |
| Other financial assets | 128,136 | 142,847 |
| Deferred income tax assets | 15,051 | 9,310 |
| Other long-term receivables | 43,656 | 43,849 |
| 626,949 | 659,217 | |
| Assets held for sale | 1,427 | — |
| Total assets | 1,013,743 | 1,054,836 |
| LIABILITIES AND EQUITY | ||
| Current | ||
| Accounts payable and accrued liabilities | 93,537 | 106,061 |
| Lease liabilities | 1,942 | 2,578 |
| Other liabilities | 1,545 | 5,793 |
| Bank loans | 21,097 | 17,674 |
| Income taxes payable | 1,652 | 2,274 |
| Other balances payable | 2,222 | 6,941 |
| Total current liabilities | 121,995 | 141,321 |
| Accounts payable and accrued liabilities | 2,828 | 2,669 |
| Lease liabilities | 4,797 | 5,050 |
| Bank loans | 51,364 | 52,398 |
| Other balances payable | 20,711 | 23,176 |
| Deferred income tax liabilities | 4,849 | 4,365 |
| Total liabilities | 206,544 | 228,979 |
| Shareholders’ Equity | ||
| Share capital | 571,928 | 599,055 |
| Warrants | 117 | 117 |
| Contributed surplus | 25,275 | 23,664 |
| Accumulated other comprehensive income | 47,430 | 41,266 |
| Retained earnings | 162,449 | 161,755 |
| Total shareholders’ equity | 807,199 | 825,857 |
| Total liabilities and shareholders’ equity | 1,013,743 | 1,054,836 |
INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)
[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]
| Three months ended June 30, | Six months ended June 30, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Revenues | 89,905 | 75,820 | 172,502 | 139,627 | ||||
| Cost of goods sold | 52,412 | 37,525 | 94,247 | 68,855 | ||||
| Gross margin | 37,493 | 38,295 | 78,255 | 70,772 | ||||
| Expenses | ||||||||
| Selling and marketing | 12,874 | 10,926 | 23,539 | 20,616 | ||||
| General and administrative | 9,119 | 10,566 | 18,225 | 19,398 | ||||
| Research and development | 4,336 | 3,412 | 8,523 | 6,395 | ||||
| Amortization and impairment of intangible assets | 11,274 | 11,055 | 22,445 | 22,343 | ||||
| Operating income (loss) | (110 | ) | 2,336 | 5,523 | 2,020 | |||
| Interest income on financial instruments measured at amortized cost | (2,015 | ) | (708 | ) | (4,194 | ) | (1,054 | ) |
| Other interest income | (1,072 | ) | (1,719 | ) | (2,245 | ) | (2,853 | ) |
| Interest expense | 3,004 | 1,717 | 5,795 | 2,828 | ||||
| Other expense | (310 | ) | (219 | ) | (216 | ) | (129 | ) |
| Net (gain) loss on financial instruments measured at fair value through profit or loss | (3,939 | ) | 7,692 | 7,908 | 24,055 | |||
| Foreign exchange (gain) loss | 4,918 | (4,507 | ) | 4,845 | 1,682 | |||
| Gain on hyperinflation | (908 | ) | (556 | ) | (1,636 | ) | (833 | ) |
| Income (loss) before income taxes | 212 | 636 | (4,734 | ) | (21,676 | ) | ||
| Income tax | ||||||||
| Current | 33 | 798 | 2,139 | 971 | ||||
| Deferred | (1,661 | ) | (2,678 | ) | (4,776 | ) | (6,352 | ) |
| Income tax recovery | (1,628 | ) | (1,880 | ) | (2,637 | ) | (5,381 | ) |
| Net income (loss) for the period | 1,840 | 2,516 | (2,097 | ) | (16,295 | ) | ||
| Basic and diluted net income (loss) per share | 0.02 | 0.02 | (0.02 | ) | (0.14 | ) | ||
| Weighted average number of common shares outstanding | ||||||||
| Basic | 108,475,559 | 115,082,184 | 109,988,526 | 116,127,721 | ||||
| Diluted | 108,678,732 | 115,177,789 | 109,988,526 | 116,127,721 | ||||
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
[In thousands of Canadian dollars]
[Unaudited]
| Three months ended June 30, | Six months ended June 30, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| OPERATING ACTIVITIES | ||||||||
| Net income (loss) for the period | 1,840 | 2,516 | (2,097 | ) | (16,295 | ) | ||
| Adjustments reconciling net income to operating cash flows: | ||||||||
| Depreciation and amortization | 12,158 | 13,778 | 25,241 | 27,159 | ||||
| Net loss (gain) on financial instruments | (3,939 | ) | 7,692 | 7,908 | 24,055 | |||
| Unrealized foreign exchange (gain) loss | (809 | ) | (5,981 | ) | (2,062 | ) | 669 | |
| Other operating activities | 407 | (734 | ) | (92 | ) | (3,150 | ) | |
| 9,657 | 17,271 | 28,898 | 32,438 | |||||
| Changes in non-cash working capital and other items | (11,143 | ) | (4,022 | ) | (26,068 | ) | (5,915 | ) |
| Cash inflow (outflow) from operating activities | (1,486 | ) | 13,249 | 2,830 | 26,523 | |||
| INVESTING ACTIVITIES | ||||||||
| Purchase of marketable securities | (76,334 | ) | (43,427 | ) | (185,550 | ) | (59,235 | ) |
| Proceeds on maturity of marketable securities | 75,200 | 43,324 | 181,168 | 79,870 | ||||
| Investment in funds | (148 | ) | (413 | ) | (170 | ) | (453 | ) |
| Purchase of intangible assets | — | (18,216 | ) | (7,667 | ) | (18,450 | ) | |
| Other investing activities | 5,482 | 3,155 | 7,705 | 3,509 | ||||
| Cash inflow (outflow) from investing activities | 4,200 | (15,577 | ) | (4,514 | ) | 5,241 | ||
| FINANCING ACTIVITIES | ||||||||
| Repurchase of common shares through Normal Course Issuer Bid | (13,951 | ) | (10,259 | ) | (24,465 | ) | (16,922 | ) |
| Principal repayment of bank loans | (5,422 | ) | (5,391 | ) | (6,009 | ) | (5,391 | ) |
| Proceeds from bank loans | 1,443 | — | 2,090 | 422 | ||||
| Other financing activities | (4,165 | ) | (2,283 | ) | (5,583 | ) | (3,249 | ) |
| Cash outflow from financing activities | (22,095 | ) | (17,933 | ) | (33,967 | ) | (25,140 | ) |
| Increase (decrease) in cash and cash equivalents during the period | (19,381 | ) | (20,261 | ) | (35,651 | ) | 6,624 | |
| Cash and cash equivalents, beginning of the period | 56,218 | 113,457 | 71,679 | 85,963 | ||||
| Net foreign exchange difference | 1,007 | (77 | ) | 1,816 | 532 | |||
| Cash and cash equivalents, end of the period | 37,844 | 93,119 | 37,844 | 93,119 | ||||
| Cash and cash equivalents | 37,844 | 93,119 | ||||||
| Marketable securities | 103,779 | 43,116 | ||||||
| Total cash, cash equivalents and marketable securities | 141,623 | 136,235 | ||||||
