Day: November 27, 2024

TORONTO and HAIFA, Israel, Nov. 27, 2024 (GLOBE NEWSWIRE) — NurExone Biologic Inc. NRX NRXBF (Germany: J90) (the “Company” or “NurExone“), a pioneering biopharmaceutical company developing regenerative medicine therapies, is pleased to announce its financial and operational results for the three and nine months ended September 30, 2024, the highlights of which are included in this news release. The Company’s complete set of condensed interim consolidated financial statements for the three and nine months ended September 30, 2024, and accompanying management’s discussion and analysis for the period can be accessed by visiting the Company’s website at www.nurexone.com and its profile page on SEDAR+ at www.sedarplus.ca.

Key Business Highlights

• In July 2024 and September 2024, the Company generated gross proceeds of C$143,172.05 through the issuance of 409,063 common shares upon the exercise of warrants at price of C$0.35 per common share which were issued in the Company’s January 2024 private placement.
• On August 1, 2024, the Company engaged Allele Capital Partners, LLC, an independently owned capital markets advisory firm based in the United States, for investor relations services.
• On September 26, 2024, the Company closed the first tranche of its non-brokered private placement through the issuance of 2,927,541 units at a price of C$0.55 per unit, resulting in aggregate gross proceeds of C$1,610,147.55. Each unit consisted of one common share and one common share purchase warrant, with each warrant entitling the holder thereof to purchase one additional common share at a price of C$0.70 per common share for a period of 36 months, subject to acceleration, as more particularly set out in the Company’s September 26, 2024 press release.
• On November 1, 2024, the Company closed the final tranche of its non-brokered private placement through the issuance of 231,818 units at a price of C$0.55 per unit, resulting in aggregate gross proceeds of C$127,499.90.
• On November 1, 2024, the Company engaged Independent Trading Group and Oak Hill Financial Inc. to provide market-making, business, and capital markets advisory services.
• On November 13, 2024, the Company announced that the European Medicines Agency granted Orphan Medicinal Product Designation for the Company’s ExoPTEN therapy, marking a significant step towards making this potential treatment available for acute spinal cord injury patients across Europe.

Third Quarter Fiscal 2024 Financial Results

• Research and development expenses, net, were US$0.50 million in the third quarter of 2024, compared to US$0.40 million in the same quarter in 2023. The increase was primarily due to higher subcontractor and materials expenses of US$0.15 million, partially offset by a governmental grant receipt of US$0.05 million.
• General and administrative expenses were US$0.78 million in the third quarter of 2024, compared to US$0.76 million in the same period in 2023. The rise was mainly attributed to an increase in non-cash costs associated with granted stock options of US$0.17, partially offset by professional and legal services expenses of US$0.15 million.
• Finance income was US$0.04 million in the third quarter of 2024, compared to finance income of US$0.01 million in the same period in 2023, primarily due to income from bank interest and financing exchange rate adjustments.
• The net loss for the third quarter of 2024 was US$1.25 million, compared to a net loss of US$1.16 million in the same quarter of 2023.

As of September 30, 2024, the Company held cash and cash equivalents totaling US$2.52 million, an increase from US$0.54 million as of December 31, 2023. The Company’s working capital also improved to US$2.39 million, up from US$0.07 million at the end of 2023. The increase in cash was primarily driven by the successful completion of private placements in January and September 2024, which generated gross proceeds of approximately US$2.68 million, as well as the exercise of warrants during 2024, yielding an additional US$3.30 million. These inflows were partially offset by a cash outflow of US$3.61 million related to operational activities.

As of September 30, 2024, the Company had an accumulated deficit of US$17.55 million, compared to US$14.06 million as of December 31, 2023.

Eran Ovadya, NurExone’s Chief Financial Officer, stated: “Our latest financial performance reflects our commitment to advancing ExoPTEN to clinical trials, while streamlining operations and optimizing our business strategy to drive sustainable growth and secure long-term success.”

Growth Outlook for 2024-2025

According to Chief Executive Officer Dr. Lior Shaltiel, “NurExone is making significant strides on the path towards human trials, including the receipt of Orphan Drug Status for ExoPTEN in Europe, the successful transfer of key manufacturing processes to a Good Manufacturing Practice-compliant facility – an essential step toward clinical trials and commercial production. These efforts are being strengthened by our consultant, Dr. Yona Geffen, a highly respected expert who has successfully guided companies through the regulatory landscape to commercialization. In parallel, the Company is collaborating with the Goldschleger Eye Institute at Sheba Medical Center, ranked by Newsweek as one of the top ten hospitals in the world, to study ExoPTEN for its potential in a second commercial market, the multi-billion-dollar glaucoma market⁽¹⁾, with promising preliminary results.”

About NurExone Biologic Inc.

NurExone Biologic Inc. is a TSX Venture Exchange (“TSXV“) listed pharmaceutical company that is developing a platform for biologically-guided exosome-based therapies to be delivered, non-invasively, to patients who have suffered Central Nervous System injuries. The Company’s first product, ExoPTEN for acute spinal cord injury, was proven to recover motor function in 75% of laboratory rats when administered intranasally. ExoPTEN has been granted Orphan Drug Designation by the FDA. The NurExone platform technology is expected to offer novel solutions to drug companies interested in noninvasive targeted drug delivery for other indications.

For additional information, please visit www.nurexone.com or follow NurExone on LinkedIn, Twitter, Facebook, or YouTube.

For more information, please contact:

Dr. Lior Shaltiel
Chief Executive Officer and Director
Phone: +972-52-4803034
Email: info@nurexone.com

Oak Hill Financial Inc.
2 Bloor Street, Suite 2900
Toronto, Ontario M4W 3E2
Investor Relations – Canada
Phone: +1-647-479-5803
Email: info@oakhillfinancial.ca

Dr. Eva Reuter
Investment Relation – Germany
Phone: +49-69-1532-5857
Email: e.reuter@dr-reuter.eu

Allele Capital Partners
Investment Relation – US
Phone: +1 978-857-5075
Email: aeriksen@allelecapital.com

FORWARD-LOOKING STATEMENTS

This press release contains certain “forward-looking statements”, that reflect the Company’s current expectations and projections about its future results. Wherever possible, words such as “may”, “will”, “should”, “could”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict” or “potential” or the negative or other variations of these words, or similar words or phrases, have been used to identify these forward-looking statements. Forward-looking statements in this press release include, but are not limited to, statements relating to the receipt of the Orphan Medicinal Product Designation having the intended benefits and incentives on the Company and its business as set out herein; the potential glaucoma market; the Company having adequate financing through the end of the year and well into 2025; the Company entering the European market and bringing its products to patients across Europe; the Company’s latest financial performance positioning it for sustained growth and long-term success; the Company making significant strides on the path towards human trials with assistance from Dr. Yona Geffen; the Company collaborating with the Goldschleger Eye Institute at Sheba Medical Center to study ExoPTEN for its potential in a second commercial market, the multi-billion-dollar glaucoma market, with promising preliminary results; and the NurExone platform technology offering novel solutions to drug companies interested in noninvasive targeted drug delivery for other indications.

These statements reflect management’s current beliefs and are based on information currently available to management as at the date hereof. In developing the forward-looking statements in this press release, we have applied several material assumptions, including the general business and economic conditions of the industries and countries in which we operate; the general market conditions; the ability to secure additional funding; partnerships having their intended impact on the Company and its business; patents safeguarding NurExone’s technology; the Company’s drug products having its intended benefits and effects; the Company making progress through new partnerships and technologies to move towards commercialization of their products; the Company’s intellectual property and technology being novel and inventive; the intellectual property having the intended impact on the Company and its business; exosomes becoming an ideal and natural choice for drug delivery; the Company making advancements in the manufacturing process of exosomes; exosomes holding immense promise for regenerative medicine; the Company’s preclinical and clinical testing will yield their intended results; the Company will proceed to clinical trials on the timelines setout herein; the Company will have sufficient funding for its operations; the Company will enter into new partnerships and/or licensing agreements; the receipt of the Orphan Medicinal Product Designation having the intended benefits and incentives on the Company and its business as set out herein; the Company will enter the European market and bring its products to patients across Europe; the Company being able to make significant strides on the path towards human trials with assistance from Dr. Yona Geffen; the Company being able to collaborate with the Goldschleger Eye Institute at Sheba Medical Center to study ExoPTEN for its potential in a second commercial market, the multi-billion-dollar glaucoma market, with promising preliminary results; the glaucoma market will grow; the Company will have adequate financing through the end of the year and well into 2025; the Company will position itself for sustained growth and long-term success; and the NurExone platform technology being able to offer novel solutions to drug companies interested in noninvasive targeted drug delivery for other indications.

Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to risks related to the Company’s early stage of development; lack of revenues to date; government regulation; market acceptance for its products; rapid technological change; dependence on key personnel; protection of the Company’s intellectual property; dependence on the Company’s strategic partners; the fact that preclinical drug development is uncertain, and the drug product candidates of the Company may never advance to clinical trials and/or on the timelines set out herein; the fact that results of preclinical studies and early-stage clinical trials may not be predictive of the results of later stage clinical trials; the uncertain outcome, cost, and timing of product development activities, preclinical studies and clinical trials of the Company; the uncertain clinical development process, including the risk that clinical trials may not have an effective design or generate positive results; the potential inability to obtain or maintain regulatory approval of the drug product candidates of the Company; the introduction of competing drugs that are safer, more effective or less expensive than, or otherwise superior to, the drug product candidates of the Company; the initiation, conduct, and completion of preclinical studies and clinical trials may be delayed, adversely affected or impacted by unforeseen issues; the potential inability to obtain adequate financing; the potential inability to obtain or maintain intellectual property protection for the drug product candidates of the Company; the Company being unable to have sustained growth and/or continued success; risks that the Company’s intellectual property and technology won’t have the intended impact on the Company and/or its business; the Company’s inability to realize upon partnerships; risks that the Company will not have adequate financing through the end of the year and/or well into 2025; risks that the Company will be unable to position itself for sustained growth and long-term success; the receipt of the Orphan Medicinal Product Designation not having the intended benefits and incentives on the Company and its business as set out herein; the Company not entering the European market and bringing its products to patients across Europe; risk that the Company will not make significant strides on the path towards human trials with assistance from Dr. Yona Geffen; risk that the Company will not collaborate with the Goldschleger Eye Institute at Sheba Medical Center to study ExoPTEN for its potential in a second commercial market, the multi-billion-dollar glaucoma market, with promising preliminary results already available; risk that the NurExone platform technology will be unable to offer novel solutions to drug companies interested in noninvasive targeted drug delivery for other indications; and the risks discussed under the heading “Risk Factors” on pages 44 to 51 of the Company’s Annual Information Form dated August 27, 2024, a copy of which is available under the Company’s SEDAR+ profile at www.sedarplus.ca. These factors should be considered carefully, and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, the Company cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.

Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

___________________________
⁽¹⁾ Global Glaucoma Treatment Market Analysis by Spherical Insights LLP

• Record annual results in key profitability metrics with gross margin² of 41.2%, an improvement of 2.4% compared to last fiscal year and adjusted free cash flow¹ of $8 million, an improvement of 12 million compared to the same period last year
• Net sales of $34 million in the fourth quarter of 2024, with gross profit of $13 million and gross margin² of 38.1%
• Net loss of $3 million, adjusted EBITDA margin¹ of 1% and adjusted EBITDA¹ of $0.5 million in the fourth quarter of 2024
• Cash flows used in operating activities of $1 million and adjusted free cash flow¹ was negative $1 million for the fourth quarter of 2024, with an ending cash balance at $24 million, only slightly down compared to last year, driven primarily by debt reduction, with total net debt to adjusted EBITDA¹ at 2.49 compared to 4.44 last year
• The recently announced Genuine Tea acquisition marks the launch of Goodfood’s next stage of growth by beginning to build a portfolio of leading next-generation direct-to-consumer businesses and brands

MONTREAL, Nov. 27, 2024 (GLOBE NEWSWIRE) — Goodfood Market Corp. (“Goodfood“, “the Company“, “us” or “we“) FOOD, a leading Canadian online meal solutions company, today announced financial results for the fourth quarter and Fiscal 2024, ended September 7, 2024.

“Our full-year results demonstrate the strength of our financial performance in Fiscal 2024, with record adjusted free cash flow¹ of $8 million and a gross margin² surpassing 41%,” said Jonathan Ferrari, Chief Executive Officer of Goodfood. “Focused execution on operational efficiency, disciplined cost management and unit economics improvement have driven record adjusted EBITDA¹ of $9 million for the year. With improved cash flow and profitability, we have in turn significantly reduced our net debt and net leverage¹, enhancing our financial position. The margin improvement and resulting higher cash flows cement our focus on continuing to strengthen our financial performance to deliver improved profitability and value to our shareholders.”

“These results are also a testament to the dedication and commitment of the entire Goodfood team throughout the year,” Ferrari continued. “Every employee has worked with determination to help further solidify our balance sheet and position us well to expand our market reach, innovate our product offering, and maintain our focus on delivering value to customers across Canada. With the recent launch of our Value Plan containing delicious classic recipes under $10 per serving, and with new collaborations with renowned chefs, our teams are creating delightful new meals for every Canadian, every day. The recently announced acquisition of Genuine Tea also marks the beginning of our new phase of growth, consisting of building a portfolio of next-generation businesses and brands by providing direct-to-consumer entrepreneurs with a platform to scale. We are pleased to have added a high-potential brand that aligns with our growth strategy and deepens customer engagement and look forward to building on this first acquisition.”

RESULTS OF OPERATIONS – FISCAL 2024 AND 2023

The following table sets forth the components of the Company’s consolidated statement of loss and comprehensive loss:

(In thousands of Canadian dollars, except per share and percentage information)

VARIANCE ANALYSIS FOR FISCAL 2024 COMPARED TO FISCAL 2023

• The decrease in net sales is primarily driven by a decrease in the number of active customers¹, as we continue to focus on attracting and retaining customers that provide higher gross margins and by changing customer behaviours. This decrease is partially offset by an increase in average basket size as a result of more portions being added per order and pricing optimizations, increased variety in the meal-kit offering as well as the additional week of operations. This net sales decrease is also explained by the Company’s decision to discontinue its on-demand offering in Fiscal 2023.
• The decrease in gross profit primarily resulted from a decrease in net sales as well as higher credit and incentives as a percentage of net sales partially offset by lower food, production and fulfilment costs driven by improved inventory management reducing waste, lower production labour cost and lower packaging and shipping costs. Gross margin increased mainly due to operational efficiencies driving lower food, production and fulfilment costs, as well as pricing optimization, partially offset by an increase in credits and incentives as a percentage of net sales.
• The decrease in selling, general and administrative expenses is primarily due to lower wages and salaries, marketing spend, software expenses, audit fees, utilities, maintenance and insurance expenses driven primarily by the Company’s costs saving initiatives. The decrease was partially offset by the additional week of operations. Selling, general and administrative expenses as a percentage of net sales decreased from 39.1% to 35.9% even with lower net sales.
• The decrease in depreciation and amortization expense is mainly due to the reduction in right-of-use assets following exiting facilities as part of the Company’s costs reduction initiatives as well as the derecognition of a right-of-use asset and fixed assets pursuant to a sublease agreement and depreciation.
• The increase in reorganization and other related net gains is primarily explained by the net gain on reversal of impairment resulting from a sublease agreement concluded in Fiscal 2024.
• The decrease in net finance costs is mainly due to lower interest expense on lease obligations in relation to the Company’s costs saving, lower interest on debt as a result of a lower debt balance as well as lower debt renewal fees in Fiscal 2024 partially offset by higher interest expense on debentures in relation to the Company’s $30 million convertible debentures issued in February 2023.
• The decrease in net loss is mainly due to lower wages and salaries in cost of goods sold and in selling, general and administrative expenses as well as lower depreciation and amortization, lower food costs, marketing spend and audit fees, utilities, maintenance and insurance expenses partially offset by a lower sales base.

RESULTS OF OPERATIONS – FOURTH QUARTER OF FISCAL 2024 AND 2023

The following table sets forth the components of the Company’s consolidated statement of loss and comprehensive loss:

(In thousands of Canadian dollars, except per share and percentage information)

VARIANCE ANALYSIS FOR THE FOURTH QUARTER OF 2024 COMPARED TO FOURTH QUARTER OF 2023

• The decrease in net sales is primarily driven by the decrease in the number of active customers, as we continue to focus on customers providing stronger unit economics, as well as an increase in credits and incentives. This decrease was partially offset by an increase in average basket size as a result of more portions being added per order, pricing optimizations and increased variety in the meal-kit offering as well as the additional week of operations.
• The decrease in gross profit is driven mainly by a decrease in net sales as well as higher credit and incentives as a percentage of net sales mostly offset by lower production costs as a result of lower labour and food costs. Gross margin remained flat compared to the same quarter last year.
• The decrease in selling, general and administrative expenses is primarily due to lower wages and salaries, software expenses and marketing spend driven primarily by the Company’s costs saving initiatives. In addition, this decrease was partially offset by an additional week of operations. Selling, general and administrative expenses as a percentage of net sales increased from 37.1% to 37.5%.
• The decrease in reorganization and other related costs is explained by the finalization of the Company’s cost saving initiatives during Fiscal 2023.
• The slight improvement in net loss is mainly the result of lower wages and salaries in cost of goods sold and selling, general and administrative expenses as well as operational efficiencies reducing production and fulfilment costs. This improvement can also be explained by lower reorganization and other related costs mostly offset by a lower net sales base.

METRICS AND NON-IFRS FINANCIAL MEASURES–RECONCILIATION

ADJUSTED GROSS PROFIT¹ AND ADJUSTED GROSS MARGIN¹

The reconciliation of gross profit to adjusted gross profit and adjusted gross margin is as follows:

(In thousands of Canadian dollars, except percentage information)

For the 14 weeks ended September 7, 2024, adjusted gross profit decreased by $1.2 million while adjusted gross margin remained flat with a narrow decrease of 0.1 percentage points compared to the same quarter last year. The slight change in adjusted gross margin is explained by an increase in credits and incentives as a percentage of net sales mostly offset by operational efficiencies driving lower production costs resulting from lower production labour and packaging costs as well as pricing optimization.

For the 53 weeks ended September 7, 2024, the adjusted gross profit decreased by $3.7 million primarily due to a decrease in net sales partially offset by lower cost of goods sold mainly in food costs, production and fulfillment costs. The increase in adjusted gross margin of 1.7 percentage points can be explained by lower production labour costs, food costs and shipping costs driven mainly by production efficiencies, lower last-mile shipping costs as well as pricing optimization. This improvement was partially offset by an increase in credits and incentives as a percentage of net sales.

EBITDA¹, ADJUSTED EBITDA¹ AND ADJUSTED EBITDA MARGIN¹
The reconciliation of net loss to EBITDA, adjusted EBITDA and adjusted EBITDA margin is as follows:
(In thousands of Canadian dollars, except percentage information)

For the 14 weeks ended September 7, 2024, adjusted EBITDA margin decreased by 0.4 percentage points compared to the same quarter last year mainly driven by lower net sales mostly offset by lower general and administrative expenses as a percentage of net sales. Overall, Adjusted EBITDA decreased by $0.2 million this quarter compared to the same quarter last year.

For the 53 weeks ended September 7, 2024, adjusted EBITDA margin improved by 3.1 percentage points compared to the corresponding period in 2023 mainly driven by stronger adjusted gross margin as well as lower selling, general and administrative expenses as a percentage of net sales as a result of the Company’s cost savings measures which reduced wages and salaries, utilities, maintenance and software expenses. This improvement was partially offset by lower net sales. Overall, Adjusted EBITDA increased by $4.4 million for the 53 weeks ended September 7, 2024, compared to the same period last year.

FREE CASH FLOW¹ AND ADJUSTED FREE CASH FLOW¹

The reconciliation of net cash flows from operating activities to free cash flow and adjusted free cash flow is as follows:

(In thousands of Canadian dollars)

For the 14 weeks ended September 7, 2024, adjusted free cash flow remained flat compared to the same period last year mainly driven by lower net loss after non-cash items and reorganization and other related costs.

For the 53 weeks ended September 7, 2024, adjusted free cash flow was $7.6 million compared to negative $4.5 million in the same period last year. This is an improvement of $12.1 million compared to the corresponding period in 2023 mainly driven by improved profitability through lower net loss as a result of improved adjusted gross margin and lower selling, general and administrative expenses. The improvement can also be explained by a favorable change in non-cash working capital due to a positive change in accounts and other receivables due to timing of government refunds as well as in accounts payable and accrued liabilities resulting from timing of supplier payments.

TOTAL NET DEBT TO ADJUSTED EBITDA¹

(In thousands of Canadian dollars, except ratio information)

Goodfood’s total net debt increased by $1.7 million and its total net debt to adjusted EBITDA ratio was of 2.49, compared to 4.44 last year. This improvement is mainly explained by the Company’s stronger 12 months results.

FINANCIAL OUTLOOK
Goodfood’s core purpose is to create experiences that spark joy and help our community live longer on a healthier planet. As a food brand with a strong following from Canadians coast to coast, we are focused on growing the Goodfood brand through our meal solutions including meal kits and prepared meals, with a range of exciting Goodfood branded add-ons to complete a unique food experience for customers.

We believe there is runway for additional penetration of meal kits into Canadian households, as evidenced by 2024 industry research estimating Canadian meal kit household penetration to reach 4.2% by 2029 (up from current 3.5%), implying a compound annual gross rate (CAGR) in the high single digit percentage points through 2029 (see Goodfood’s 2024 Annual Information Form for additional information and details).

Before scaling our efforts to endeavour to capture an outsized share of the Canadian meal solutions market, our focus has been and continues to be on further improving and growing cash flows. We are pleased to have now reported seven consecutive quarters of positive adjusted EBITDA¹, which on a last four quarters basis amounts to $9.1 million. The substantial rise in adjusted EBITDA¹ has led to significant adjusted free cash flow¹ improvement which has now been positive in four of our last six quarters. These results help position Goodfood to fund its growth with internally generated cash flows.

To grow our customer base, we first aimed to build customer acquisition cost efficiencies. We have also made and continue to make investments in our digital product to elevate the customer experience by reducing friction and enhancing ease of use. Combined with reactivations of previous Goodfood members, these initiatives have driven a double-digit percentage reduction of our customer acquisition costs year-over-year and improved the profitability and unit economics of customers.

To capture more of Canadian’s food wallet, we have increasingly enhanced product variety as a driver of order frequency. In addition to launching our VIP program, which rewards high-frequency customers, we have increased the diversity of our recipe and ingredient offering to provide additional choices to enhance order rate. With a focus on Better-for-You products like organic chicken breasts, organic lean ground beef, bison, sustainably raised steelhead trout, ground turkey and paleo and keto meals, combined with exciting partnerships with first-rate restaurants and chefs, we plan on offering a growing and mouth-watering selection to customers to drive consistently increasing order frequency. Also, to capture customers increasingly looking for value, we have launched a new set of Value Meals starting at $9.99 a portion and we are testing various plan adjustments to attract a broader set of customers to our delicious meals.

Still, the dollar-value of the baskets our customers are building is also increasing and we are building a differentiated set of meal kits, ready-to-eat meals and grocery add-ons to provide Canadians with an exciting online meal solutions option and increasingly capture a larger share of their food wallet. In addition, we have provided and continue to provide more choice of proteins to our customers, with the launch of upsells and customization within our meal-kit recipes allowing customers to swap or double the proteins included in their chosen recipes. With these initiatives, we aim to provide customers with an array of options to easily make their meals better and their baskets bigger.

We are also continuously looking to enhance our sustainability initiatives by prioritizing planet-friendly options. Not only do we offer perfectly portioned ingredients to reduce food waste, we also constantly look to simplify our supply chain by removing middlemen from farm to kitchen table. This year, we are also aiming to offset carbon emissions on deliveries and introducing packaging innovations that have helped us to remove the equivalent of 2.4 million plastic bags annually from our deliveries. Our goal is clear, build a business that helps our customers live healthier lives on a healthier planet. (See Goodfood’s 2024 Annual Information Form for additional information and details on Goodfood’s partnership with Carbonzero and its Fiscal 2023 Greenhouse Gas Emissions Inventory).

In addition to focusing on these key pillars of top-line growth, we are increasingly considering various other growth avenues, including acquisitions.

Our strategic execution to drive profitability and cash flows continues to position us for growth and profitability, underpinned by consistent improvement in adjusted EBITDA¹ and cash flows. Coupled with our unrelenting focus on nurturing our customer relationships, profitable growth remains our top priority. The Goodfood team is fully focused on building and growing Canada’s most loved millennial food brand.

TRENDS AND SEASONALITY
The Company’s net sales and expenses are impacted by seasonality. During the winter holiday season and the summer season, the Company anticipates net sales to be lower as a higher proportion of customers elect to skip their delivery. The Company generally anticipates the number of active customers to be lower during these periods. During periods with significantly colder or warmer weather, the Company anticipates packaging costs to be higher due to the additional packaging required to maintain food freshness and quality.

CONFERENCE CALL

Goodfood will hold a conference call to discuss these results on November 27, 2024 at 8:00AM Eastern Time. Interested parties can join the call by dialing 1 800 717 1738, (Toronto or overseas) or 1 514 400 3792, elsewhere in North America). To access the webcast and view the presentation, click on this link: https://www2.makegoodfood.ca/en/investisseurs/evenements

Parties unable to call in at this time may access a recording by calling 1 888 660 6264 and entering the playback passcode 12890#. This recording will be available until December 4, 2024.

A full version of the Company’s Management’s Discussion and Analysis (MD&A) and Consolidated Financial Statements for the 14 weeks and 53 weeks ended September 7, 2024, will be posted on the Company’s SEDAR+ profile, accessible at http://www.sedarplus.ca later today.

METRICS AND NON-IFRS FINANCIAL MEASURES

Certain metrics and non-IFRS financial measures included in this news release do not have standardized definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. They are provided as additional information to complement IFRS measures and to provide a further understanding of the Company’s results of operations from our perspective. For a more complete description of these measures and a reconciliation of Goodfood’s non-IFRS financial measures to financial results, please see Goodfood’s Management’s Discussion and Analysis for the 14 weeks and 53 weeks ended September 7, 2024.

Goodfood’s definition of the metrics and non-IFRS financial measures are as follows:

• An active customer is a customer that has placed an order within the last three months. For greater certainty, an active customer is only accounted for once, although different products and multiple orders might have been purchased within a quarter. While the active customers metric is not an IFRS or non-IFRS financial measure, and, therefore, does not appear in, and cannot be reconciled to a specific line item in the Company’s consolidated financial statements, we believe that the active customers metric is a useful metric for investors because it is indicative of potential future net sales. The Company reports the number of active customers at the beginning and end of the period, rounded to the nearest thousand.
• Adjusted gross profit is defined as gross profit excluding the impact of the discontinuance of products related to Goodfood On-Demand offering pursuant to the Company’s costs saving initiatives. Adjusted gross margin is defined as the percentage of adjusted gross profit to net sales. The Company uses adjusted gross profit and adjusted gross margin to measure its performance from one period to the next excluding the variation caused by the items described above. Adjusted gross profit and adjusted gross margin are non-IFRS financial measures. We believe that these metrics are useful measures of financial performance to assess how efficiently the Company uses its resources to service its customers as well as to assess underlying trends in our ongoing operations without the variations caused by the impacts of strategic initiatives such as the items described above and facilitates the comparison across reporting periods.
• EBITDA is defined as net income or loss before net finance costs, depreciation and amortization and income taxes. Adjusted EBITDA is defined as EBITDA excluding share-based payments expense, the impact of the inventories write-downs due to the discontinuance of products related to Goodfood On-Demand offering, impairment and reversal of impairment of non-financial assets and reorganization and other related (gains) costs pursuant to the Company’s costs saving initiatives as well as other costs incurred in pursuit of acquisitions. Adjusted EBITDA margin is defined as the percentage of adjusted EBITDA to net sales. EBITDA, adjusted EBITDA, and adjusted EBITDA margin are non-IFRS financial measures. We believe that EBITDA, adjusted EBITDA, and adjusted EBITDA margin are useful measures of financial performance to assess the Company’s ability to seize growth opportunities in a cost-effective manner, to finance its ongoing operations and to service its debt. They also allow comparisons between companies with different capital structures. We also believe that these metrics are useful measures of financial performance to assess underlying trends in our ongoing operations without the variations caused by the impacts of the items described above and facilitates the comparison across reporting periods.
• Free cash flow is defined as net cash provided by or used in operating activities less additions to fixed assets and additions to intangible assets. This measure allows the Company to assess its financial strength and liquidity as well as to assess how much cash is generated and available to invest in growth opportunities, to finance its ongoing operations and to service its debt. It also allows comparisons between companies with different capital structures. Adjusted free cash flow is defined as free cash flow excluding cash payments made to costs related to reorganization activities as well as other costs incurred in pursuit of acquisitions. We believe that adjusted free cash flow is a useful measure when comparing between companies with different capital structures by removing variations caused by the impacts of the items described above. We also believe that this metric is a useful measure of financial and liquidity performance to assess underlying trends in our ongoing operations without the variations caused by the impacts of the items described above and facilitates the comparison across reporting periods.
• Total net debt to adjusted EBITDA (also named net leverage) is calculated as total net debt divided by the last four quarters adjusted EBITDA. Total net debt consists of debt and the liability component of the convertible debentures less cash and cash equivalents. We believe that total net debt to adjusted EBITDA is a useful metric to assess the Company’s ability to manage debt and liquidity.
• Please refer to the “Metrics and non-IFRS financial measures – reconciliation” and the “Liquidity and capital resources” sections of the MD&A for a reconciliation of these non-IFRS financial measures to the most comparable IFRS financial measures.

ABOUT GOODFOOD

Goodfood FOOD is a leading digitally native meal solutions brand in Canada, delivering fresh meals and add-ons that make it easy for customers from across Canada to enjoy delicious meals at home every day. The Goodfood team is building Canada’s most loved millennial food brand, with the mission to create experiences that spark joy and help our community live longer on a healthier planet. Goodfood customers have access to uniquely fresh and delicious products, as well as exclusive pricing, made possible by its world-class culinary team and direct-to-consumer infrastructures and technology. Goodfood is passionate about connecting its partner farms and suppliers to its customers’ kitchens while eliminating food waste and costly retail overhead. The Company’s administrative offices are based in Montreal, Quebec, with production facilities located in the provinces of Quebec and Alberta.

Except where otherwise indicated, all amounts in this news release are expressed in Canadian dollars.

FORWARD-LOOKING INFORMATION

This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward-looking information includes, but is not limited to, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, assumptions, estimates and intentions, including, without limitation, statements in the “Financial Outlook” section of the MD&A. This forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, and “continue”, as well as the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Forward-looking information is provided for the purposes of assisting the reader in understanding the Company and its business, operations, prospects and risks at a point in time in the context of historical trends, current condition and possible future developments and therefore the reader is cautioned that such information may not be appropriate for other purposes.

Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in, or implied by, such forward-looking information. These risks and uncertainties include, but are not limited to, the following risk factors which are discussed in greater detail under “Risk Factors” in the Company’s Annual Information Form for the 53 weeks ended September 7, 2024 available on SEDAR+ at www.sedarplus.ca and under the “Events and Presentations” section of our website at www.makegoodfood.ca/en/investors: history of negative operating cash flow, food industry including current industry inflation levels, indebtedness and impact upon financial condition, future capital requirements, quality control and health concerns, regulatory compliance, regulation of the industry, public safety issues, product recalls, damage to Goodfood’s reputation, social media, transportation disruptions, storage and delivery of perishable foods, product liability, unionization activities, consolidation trends, ownership and protection of intellectual property, evolving industry, reliance on management, fulfillment centres and logistics channels, factors which may prevent realization of growth targets, general economic conditions and disposable income levels, competition, availability and quality of raw materials, environmental and employee health and safety regulations online security breaches and disruptions, reliance on data centers, open source license compliance, operating risk and insurance coverage, management of growth, limited number and scope of products, conflicts of interest, litigation, food costs and availabilities, catastrophic events, risks associated with payments from customers and third parties, being accused of infringing intellectual property rights of others, climate change and environmental risks, failing to obtain or lose our certified B Corp status, as well as an inability to maintain high social responsibility standards could lead to reputational damage and adversely affect our business and Environment, Social and Governance (“ESG“) matters. This is not an exhaustive list of risks that may affect the Company’s forward-looking statements. Other risks not presently known to the Company or that the Company believes are not significant could also cause actual results to differ materially from those expressed in its forward-looking statements. Although the forward-looking information contained herein is based upon what we believe are reasonable assumptions, readers are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information. Certain assumptions were made in preparing the forward-looking information concerning the availability of capital resources, business performance, market conditions, as well as customer demand.

Consequently, all of the forward-looking information contained herein is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is provided as of the date hereof, and we do not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.

¹ Please refer to the “Metrics and Non-IFRS Financial Measures” section of this news release for corresponding definitions.
² Gross margin is defined as gross profit divided by net sales.