good natured Products Inc. Issues Annual Letter to Shareholders
January 26, 2021 — (Vancouver, BC) good natured Products Inc. (the “Company” or “good natured®”) (TSX-V: GDNP), a North American leader in plant-based products and packaging, today released its annual letter to shareholders from Paul Antoniadis, the Company’s CEO.
Dear Owners,
As we enter the new year, I’d like to take an opportunity to update you on our accomplishments over the past year (“FY2020”) and on our exciting growth prospects for 2021 and beyond. This is your company, and you entrusted us to be stewards of your capital. I want to personally thank you for your trust and partnership on our path to building North America’s leading earth-friendly product company.
Our strategy and operations remain firmly focused on delivering strong revenue growth, both organically and through acquisitions, with consistent stable gross margins and annual improvement in EBITDA.
Our revenue growth is driven by our passionate pursuit of making it easy & affordable for business owners and consumers to shift away from petroleum into better everyday plant-based products made from renewable materials and free from chemicals of concern. Strong revenue growth and a broad assortment of plant-based products strengthen our business model and its economics to further solidify a long-term market leadership position. This increases the positive contribution we’re making to a healthier and more sustainable environment.
Focusing on business fundamentals of strong growth, service and operational excellence as the path to deliver meaningful environmental and social impact is unique in our industry and a key driver of how we plan to create shareholder value over the long term.
We could not be more excited about what the future holds for good natured® and its owners. We’re fired up and ready to make it happen in 2021!
2020 Recap & Highlights
As we look back on FY2020, I want to make sure I take this opportunity to highlight our amazing people who really make the difference. Our good natured® leaders, team members, and partners all worked very hard to ensure the collective safety of the group, while creating a work environment that was dedicated to serving our customers. Our energetic, mindful teams across the continent continued their focus on achieving our growth objectives. Due to their passion and dedication, what could have easily been a very challenging year has ended up being a great success story for all our stakeholders and owners. I want to sincerely thank all our team members and partners and am incredibly proud of their achievements.
As per our preliminary results released on January 12, 2021, we ended FY2020 on a very strong note, with growth for the fiscal quarter ended December 31, 2020 anticipated to be between 98% – 110% on revenue between $5.0 million to $5.3 million, while full FY2020 revenue is anticipated to be up almost 70%, at $16.4 million to $16.7 million.
Our strategy remains centered on organic growth contributing 50% of the overall increase and the other 50% coming from acquisition activity. Our revenue growth in 2020 was similarly driven by a mix of organic growth and growth through acquisitions. The closing of the IPF acquisition in December 2020 will set the basis for further revenue growth in 2021 to complement continued organic growth in our business. We also continued to successfully diversify and expand our customer base which now stands at roughly 500 business-to-business customers, and direct-to-consumer purchasing through our e-commerce channels finished the full FY2020 with over 20,000 transactions.
Our January 12, 2021 press release also noted that gross margins for FY2020 are estimated between 35.5% to 37.5% compared to 34.4% for the year ended December 31, 2019. Our team’s focus on expanding the diversity of customers and product mix underpins our business model to deliver strong gross margins over the long term.
Our business performance, supported by increased engagement with prospective investors and our owners, contributed to the Company’s increase in market capitalization. With our share price up 430% for the year, we’ve significantly outperformed the major indexes in Canada and the US.
We’re also very pleased to have received research coverage from two highly respected, independent brokers.
Furthermore, FY2020 was filled with a number of high growth initiatives that are already making a strong contribution to our results and/or have positioned the Company for significant expansion in 2021.
FY2020 Highlights
- Acquired Integrated Packaging Films (“IPF”), a leading rollstock sheet extruder with over 20 years’ of operations. The acquisition diversified and strengthened our industrial business group by adding medical and electronics industrial rollstock segments, nearly 100 customers, and approximately $17.0 million in trailing 12-month revenue and adjusted EBITDA of $3.7 million for the trailing 12 months pre-acquisition.
- Acquired Shepherd Thermoforming & Packaging, expanding our custom packaging capabilities and market reach into Eastern Canada and Northeast USA, and adding over 75 customers, annual revenue of over $5.5 million and adjusted EBITDA of $420,000 for the trailing 12 months pre-acquisition.
- Successfully completed two equity financings; a $4.0 million bought deal private placement associated with the IPF transaction in December 2020; and a $3.3 million private placement financing completed in September 2020.
- Added Flax4Life as a custom packaging customer, a leading producer of certified gluten-free and allergy-friendly baked goods with nationwide US distribution to retailers such as Whole Foods, Kroger and Publix.
- Announced our first series of plant-based flexible packaging products, with the launch of pallet stretch wrap made from 51% plant-based flexible film into the USD $14.2 billion global stretch and shrink film market.
- Launched our first collection of biodegradable cups, cutlery and containers and entered a whole new segment of food establishments and restaurant businesses across North America.
- Entered the medical & pharmaceutical industry with packaging for COVID-19 testing kits, and personal protective equipment such as COVID-19 medical face shields.
- Optimized and re-launched eCommerce sites in both the US and Canada to allow customers to purchase direct from us at their convenience at https://goodnaturedproducts.com and https://goodnaturedproducts.ca
- Launched our new dedicated investor website to ensure our owners and potential investors have easier access to information at https://investor.goodnaturedproducts.com.
2021 Looking Forward
Our strategic and operational execution for 2021 will continue to focus on delivering strong revenue growth, both organically and through acquisitions, and to achieve this while maintaining consistent stable gross margins and improving our year-ending EBITDA over the prior year. Our continued growth will help fuel the positive contribution we’re making to the environment and our collective health & wellness.
The closing of the IPF acquisition announced on December 22, 2020 sets the stage for our 2021 growth plans. Based on IPF’s trailing twelve-month revenues of $17 million, and the Company’s estimated FY2020 revenues between $16.4 million to $16.7 million, good natured® has a clear path to deliver another year of very strong growth. This does not include any additional organic growth in our pipeline, which we believe is strong based on positive macro tailwinds, growth from recently onboarded net new customers, cross-selling opportunities to our existing customers, new product launches that open up new market segments, or any potential future acquisitions. It also does not take into account other revenue and cost synergies we may anticipate from the Shepherd Thermoforming and IPF acquisitions completed in FY2020.
To support our 2021 plans and beyond, we’re also repositioning and enhancing our key executive team to align with our growth strategy objectives. Our current Vice President of Finance, Kevin Leong, will assume the role of Chief Financial Officer, effective February 1, 2021. Current Chief Financial Officer and Executive Vice President of Operations, Don Holmstrom, will take on the new role of Executive Vice President of Corporate Development, Strategic Partnerships and Capital Planning effective February 1, 2021 with a focus on our acquisition pipeline. We would also like to formally introduce our owners to Jon Roby, formerly of Nike & Under Armour, who transitioned from our advisory board to assume the new role of Vice President of Operations in September 2020.
We remain committed to driving alignment between our owners, our board and our operating team members by instilling a culture of performance that rewards the achievement of our collective goals to grow revenue, maintain consistent stable margins, improve EBITDA and create both financial and environmental value.
I want to personally thank you again for your ongoing trust and partnership as we build North America’s leading earth-friendly product company. We look forward to engaging with you further throughout the coming year. For those of our owners who are not on our regular communications list, I encourage you to subscribe to our investor newsletter at the link below to receive updates about our 2021 progress as they happen:
https://investor.goodnaturedproducts.com/contact-us/newsletter-subscription/
Sincerely,
Paul Antoniadis
good natured Products Inc.
CEO & Executive Chair
*****
The good natured® corporate profile can be found on our ESG investment website.
*****
Completion of Share Issuance
good natured® is also pleased to confirm that the issuance of 62,500 common shares to settle $50,000 in corporate debt of the Company, as previously announced December 22, 2020, has been completed.
About good natured Products Inc.
good natured® is passionately pursuing its goal of becoming North America’s leading earth-friendly product company by offering the broadest assortment of eco-friendly options made from plants instead of petroleum. We’re all about making it easy and affordable for business owners and consumers to switch to better everyday products® made from renewable materials and free from chemicals of concern.
Part of the sustainable consumer goods market, good natured® offers over 385 products and services through wholesale and retail channels, including our own e-commerce stores. From plant-based home organization products to compostable food containers, bioplastic industrial supplies and medical packaging, we’re focused on delivering a great customer experience to make more plant-based products readily accessible to more people as the path to deliver meaningful environmental and social impact.
For more information: goodnaturedproducts.com
Investor Contact:
Spencer Churchill
Investor Relations
1-877-286-0617 ext. 113
invest@goodnaturedproducts.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Non-GAAP financial measures
We have included in this press release certain non-GAAP measures that are used to evaluate the performance of IPF, including adjusted EBITDA. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Adjusted EBITDA does not have a generally accepted industry definition.
Cautionary Statement Regarding Forward-Looking Information
Information regarding preliminary financial results, future gross margins, changes to senior employees of the corporation and plans to expand our business organically or through acquisitions contained in this press release may constitute forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement.
The financial outlook provided in this press release is provided to provide early guidance on the fourth quarter and fiscal year financial performance of the Company and place the shareholder letter in context and readers are cautioned that this information may not be appropriate for any other purpose. In preparing the financial outlook, the Company completed an initial review of operations for the quarter and fiscal year ended December 31, 2020, however actual results may differ materially from the financial outlook provided in this press release as the financial outlook has not been audited or reviewed. When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to herein will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
Forward-looking information contained in this news release is based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
Stretch And Shrink Film Market Size, Share & Trends Analysis Report By Resin (LLDPE, LDPE, PVC), By Product (Hoods, Warps, Sleeve Labels), By Application (Food & Beverage, Consumer Goods), And Segment Forecasts, 2020 – 2027, Grand View Research, February 2020.