Thursday 29 September 2022

Aegis Brands reports growth in 2Q, Bridgehead’s same coffeehouse sales are up 40%, but still below 2019 levels

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MARKHAM, ON, Canada – Aegis Brands Inc. reported on Wednesday (Aug 10) financial results for the second quarter ending June 26th, 2022, reflecting improvements on key performance indicators. “Our strategies to take advantage of pandemic recovery are bearing fruit,” said Steve Pelton, President and CEO, Aegis Brands Inc. “With the food and beverage recovery well underway and our actions to grow new revenue channels, Aegis is well-positioned to build on this momentum in the quarters ahead.”

Highlights:

  • Bridgehead’s same coffeehouse sales for the quarter rose 40 percent from the comparable quarter in 2021, but have yet to reach 2019 levels.
  • Revenue for the quarter increased by 36 percent to $3,240,000, from $2,383,000 in the same quarter last year.
  • Net loss for the quarter was $2,816,000 or $0.12 per share. However, when adjusted for the non-cash revaluation of warrants and securities, Aegis had net earnings of $23,000 or $0.01 per share for the quarter, compared to a loss of $5,101,000 or $0.22 per share for the same quarter last year.
  • Subsequent to the quarter, Aegis’ Development Line of Credit (DLOC) with CWB Franchise Finance (CWB) was increased by $3,000,000, to $30,000,000. No amount has been drawn on this facility to date. This DLOC provides Aegis with financial support to pursue its acquisitions and is in addition to the $3,000,000 line of credit already in place for general operating needs.

Bridgehead

Bridgehead’s revenue from increased to $3,240,000 from $2,383,000, or 36 percent, in the same quarter last year. Year-to-date revenue rose to $5,782,000, from $4,610,000 in 2021.

Bridgehead coffeehouse sales continued to grow throughout the second quarter as more and more people returned to office work. Coffeehouse sales in the 13 weeks ended June 26th, 2022 were $2,810,000 compared to $1,877,000 in the second quarter of 2021, representing an increase of $938,355 or 50 percent. This result combines a 40 percent increase in same coffeehouse sales over the comparable quarter last year with sales from two new locations.

Bridgehead’s net income was $459,000 compared to a net loss of $23,000 in the same quarter last year. Year-to-date the business had a net loss of $140,000 compared to a loss of $5,000 in 2021. Pandemic and “Freedom Convoy” subsidies received in the second quarter bolstered results in the quarter.

“Concurrent with our focus on growing in-store sales, we continue to invest in growth in both the wholesale and e-commerce of our business,” said Pelton. Bridgehead recently hired experienced senior leaders to head up these channels. Investments continue in the redesign of the website; e-commerce functionality; and new marketing initiatives to support e-commerce, wholesale, and the traditional coffeehouse business.

In the quarter, Bridgehead entered a national broker/distributor agreement to further accelerate the growth of the wholesale business. The broker distributor partner was chosen due to its history in successfully selling and distributing high quality, socially- and environmentally-responsible coffee in grocery stores across the country and they have the industry know-how and relationships to do it again with Bridgehead.

“We are excited to begin this partnership and are looking forward to bringing the Bridgehead coffee experience to people across Canada,” said Kate Burnett, President of Bridgehead. “Our wholesale business is up over 30 percent over last year and we have only just begun with the marketing and distribution required to realize our targets in this segment of the business,” continued Burnett.

Aegis Brands Inc.

Aegis’s adjusted EBITDA from continuing operations for the quarter was $320,000 when adjusted for the non-cash revaluations of Kiaro and Meta warrants and Kiaro shares of $2,904,000 (2021 – $nil). The book value of the Kiaro investment as of Q2 is $1,652,000, which has been written down by $4,977,000 since Q3 of 2021. Steven Pelton resigned from the Kiaro board as of July 25th, 2022.

As the company continues to recover from the pandemic, Aegis continues advance its previously disclosed strategy of pursuing acquisitions in the hospitality/food and beverage space. “We have committed to becoming a consolidator of great brands, and we will only pursue companies we believe we can help grow beyond their current trajectory,” added Pelton.

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