GFI ANNOUNCES SECOND QUARTER FISCAL YEAR 2023 RESULTS

Gross profit continues to improve with the shift in product mix

SUMMARY

• Revenue totaled $24.1 million in the three months ended September 30, 2022, including incremental sales in the quarter from higher margin product categories such as plant-based pet food ingredients ($5.3 million) and consumer product packaged goods ($0.3 million).

  

• Revenue declined by 23.8% or $7.5 million from $31.6 million in the three months ended September 30, 2021, primarily attributable to a one-time substantial sale in the prior year’s quarter of $13.0 million.

• Continued improvement in gross profit, backed by the Company’s shift to higher margin product categories. Adjusted gross profit totaled $2.4 million in comparison to $3.1 million in the three months ended September 30, 2021. Adjusted gross profit margin was 9.9% of revenue, consistent with the prior year period. The prior year period included a significant realized gross profit margin from the Edible Bean Sale in September 2021.

• Since its commissioning in June 2022, the volume shipped at the pea splitting facility has increased every month and the facility is currently running 5 days a week with an established order book to support the production.

• Introduced the new branding for Yofiit and Bentilia, both of which are now focusing on increasing the number of points of sales and breadth of customers. Subsequent to quarter end, Bentilia delivered its first shipment to Kehe for the US market.

TORONTO, Nov. 29, 2022 /CNW/ – Global Food and Ingredients Ltd. (TSXV: PEAS) (OTCQX: PEASF) (“GFI” or the “Company“), is pleased to announce the second quarter results for the three and six months ended September 30, 2022.

“GFI is pleased to report continued improvement in our gross profit margin as a result of our shift in focus to higher margin products in our portfolio mix”, commented David Hanna, GFI’s CEO. “This is not immediately obvious in our underlying results in the quarter, but if we exclude a one-time substantial sale in the previous year quarter and the margin associated with the sale, our results would have shown improvements in both the three and six months adjusted gross profit and margins.”

Mr. Hanna added, “We continue to experience growing demand in our plant-based pet food business and are expanding our product offerings and geographical presence. We are excited about the addition of our first US distribution center that will support our growing US distribution business and expand our in-house capabilities in terms of distribution, logistics, processing and packaging. With the completion of the rebranding of both the Yofiit and Bentilia brands, we are now focusing our efforts on major expansion into the US and Canadian markets. We are excited about the future growth prospects from these brands based on initial customer feedback from our attendance at a number of key industry tradeshows over the past couple of months.”

“Overall our strategic refocus is showing results and our capabilities and product offerings continue to grow,” continued Mr. Hanna. “Our business is trending in the right direction and we believe that GFI offers a unique business model that is ideally situated to respond and realize on all pillars of growth in the plant-based global market.”

Second Quarter Results

Financial Highlights – Three Months ended September 30, 2022

• Revenue decreased by 23.8%, to $24.1 million compared to the three months ended September 30, 2021 of $31.6 million, predominantly attributable to GFI’s shift in overall business mix to focus on higher margin revenue streams, the introduction of plant-based consumer packaged goods; and a one-time substantial sale of $13.0 million in the prior year period from a customer’s unique requirement at that time to advance the delivery of six months of typical volume (the “Edible Bean Sale”).

• Gross profit totalled $1.7 million compared to $2.8 million in the three months ended September 30, 2021. Adjusted gross profit¹ totalled $2.4 million in comparison to $3.1 million in the three months ended September 30, 2021. Adjusted gross profit margin¹ was 9.9% of revenue, compared to 9.9% in the prior comparable period, attributable to the shift in focus to higher margin, premium ingredient products in the current period, offset by the margin realized in the prior year period from the Edible Bean Sale.

• Loss for the period of $2.8 million in the second quarter of 2023, compared to loss of $3 thousand in the three months ended September 30, 2021, predominately attributable to:

Financial Highlights – Six Months ended September 30, 2022

• Revenue decreased by 17.1%, to $54.4 million in the six months ended September 30, 2022 compared to the six months ended September 30, 2021 of $65.6 million, predominantly attributable to GFI’s shift in overall business mix to focus on higher margin revenue streams, the introduction of plant-based consumer packaged goods; and the Edible Bean Sale.

• Gross profit totalled $3.9 million, compared to $3.8 million in the six months ended September 30, 2021. Adjusted gross profit¹ totalled $5.3 million in comparison to $5.7 million in the six months ended September 30, 2021. Adjusted gross profit margin¹ was 9.7% of revenue, compared to 8.6% in the prior comparable period, despite the significant margin realized in the prior period from the Edible Bean Sale. The improvement is attributable to:

• Loss for the period of $7.1 million, compared to loss of $0.8 million in the six months ended September 30, 2021, predominately attributable to the additional costs associated with closing the reverse takeover (“RTO”) and other one-time transaction-related expenses, including:

Income Statement Summary

Non-IFRS Measures Summary¹

The unaudited condensed consolidated interim financial statements for the three and six months ended September 30, 2022 (“Financial Statements“) and related Management’s Discussion & Analysis (“MD&A“) for the three and six months ended September 30, 2022, are available under the Company’s profile at www.sedar.com.

About GFI

GFI is a fast-growing Canadian plant-based food and ingredients company, connecting the local farm to the global supply chain for peas, beans, lentils, chickpeas and other high protein specialty crops. GFI is organized into four primary business lines: Pea Protein Inputs, Plant-Based Ingredients, Plant-Based Pet Food Ingredients and Plant-Based Consumer Packaged Goods. Headquartered in Toronto, GFI buys directly from its extensive network of farmers, processes its products locally at its four wholly-owned processing facilities in Western Canada and ships to 37 countries across the world.

GFI’s vision is to become a vertically integrated farm-to-fork plant-based company providing traceable, locally sourced, healthy and sustainable food and ingredients. Through recent acquisition and development activities, GFI now offers a full suite of Plant-Based Consumer Packaged goods with over 20 SKUs under the Yofiit, Bentilia and Five Peas in Love brands.

Disclaimer

Neither the TSXV nor its Regulation Service Provider (as defined policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.

Cautionary Statements

Non-IFRS Measures

This news release contains the financial performance metric of gross profit margin, adjusted gross profit, adjusted gross profit margin, EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin, all of which are measures that are not recognized or defined under IFRS (collectively the “Non-IFRS Measures”). As a result, this data may not be comparable to data presented by other food and ingredients companies. The Company believes that the Non-IFRS Measures are useful indicators of operational performance and are specifically used by management to assess the financial and operational performance of the Company.

Changes to Prior Period Presentation

In the current reporting period, management undertook a review of the historical adjusting items as part of an effort to reduce the number of non-IFRS items it adjusts for in its financial reporting. Management concluded that in order to present adjusting items in a manner more consistent with current and future fiscal year operating results, the Company will no longer adjust for net insurance proceeds associated with the take-or-pay toll processing agreement (“TPA”) cancelled in Q4 of the year ended March 31, 2021.

Starting in the first quarter of the current reporting period, net insurance proceeds will not be considered as an adjusting item. The rationale for the adjustment to the allocation of net insurance proceeds in the quarters and year ended March 31, 2022 presentation is that in comparing the period over period performance, quarters and year ended March 31, 2022 to quarters and year fiscal year ended March 31, 2021, the net insurance proceeds were relevant given the nature of the operation at that time. The same is not the case in comparing the quarters and year ended March 31, 2023 to quarters and year fiscal year ended March 31, 2022. Toll processing services totalled $3.7 million or approximately 6% of the revenue in the fiscal year ended March 31, 2021 in comparison to $0.2 million or less than 1% of revenue in the fiscal year ended March 31, 2022. Therefore, in order to accurately compare the relevant performance of the periods, management allocated a portion of the proceeds recorded in fiscal year ended March 31, 2021 to the relevant quarters in the fiscal year ended March 31, 2022 to show a quantitative comparison as if the toll processing services continued in that year. Given the toll processing related services were cancelled prior to the fiscal year ended March 31, 2022 (with minor residual contracts being executed in the period) and are not part of the operating business in the current reporting period, management has assessed that it is more relevant to compare the current fiscal year ended March 31, 2023 operating results without the inclusion or allocation of any insurance proceeds in the comparable period, fiscal year ended March 31, 2022.

Non-IFRS Measures Definitions
Gross profit margin is defined as gross profit divided by revenue.

Adjusted gross profit is calculated by adding or deducting, as applicable from gross profit, certain costs, charges or benefits incurred in such period which in management’s view are either not indicative or are directly correlated to the Company’s process to sell its products, including: (a) realized foreign exchange loss (gain) and (b) overhead costs attributable to brining inventory to a saleable condition that have been recorded as cost of sales under IFRS. Adjusted gross profit margin represents adjusted gross profit divided by revenue.

EBITDA calculates, for the applicable period, earnings before interest, taxes and depreciation and amortization. Interest includes all finance costs net of interest income and depreciation and amortization includes the depreciation of property, plant and equipment, amortization of right-of-use assets, amortization of intangible assets and amortization of deferred financing fees. Management does not use EBITDA as a financial performance metric. EBITDA margin represents EBITDA divided by revenue.

Adjusted EBITDA is calculated by adding and deducting, as applicable from EBITDA, certain expenses, costs, charges or benefits incurred in such period which in management’s view are either not indicative of underlying business performance, impact the ability to assess the operating performance of our business or are deemed non-cash, non-recurring or one-time in nature. Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

The following tables provide a reconciliation of the Non-IFRS Measures to the most directly comparable financial measures disclosed in the Financial Statements.

The following table provides a reconciliation of segment and consolidated gross profit to adjusted gross profit for the periods presented:

The following table provides a reconciliation of consolidated loss for the period to EBITDA and adjusted EBITDA for the periods presented:

Non-IFRS Measures should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the GFI’s operating results, underlying performance and prospects in a manner similar to GFI’s management.

Accordingly, these Non-IFRS Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Forward-Looking Statements

This press release may contain certain forward-looking information and statements (“forward-looking information”) within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation statements containing the words “believes”, “anticipates”, “plans”, “intends”, “will”, “should”, “expects”, “continue”, “estimate”, “forecasts” and other similar expressions. Forward looking statements in this press release include without limitation statements relating to GFI continuing to add further downstream processing and the effects thereof and GFI’s business objectives. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. GFI undertakes no obligation to comment analyses, expectations or statements made by third-parties in respect of GFI, its securities, or financial or operating results (as applicable). Although GFI believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond GFI’s control, including the risk factors discussed in GFI’s Filing Statement dated May 30, 2022, which are incorporated herein by reference and are available through SEDAR at www.sedar.com. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. GFI disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

SOURCE Global Food and Ingredients

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