Freshlocal Appoints New Chief Executive Officer, and Announces its Fourth Quarter and Full-Year Fiscal 2021 Results
Vancouver, BC, December 22, 2021--(T-Net)--Freshlocal Solutions Inc. (TSX: LOCL) (OTC: FLOCF) today announced financial results for the fourth quarter and fiscal year ended October 2, 2021.
The Company's Board of Directors is also announced the appointment of Mr. Simon Cairns, the current President of Food-X Technologies Inc., as the new Chief Executive Officer of Freshlocal, effective as of December 14, 2021, replacing Peter van Stolk. Mr. van Stolk will remain on the Company's Board.
Freshlocal's Board Chair, D. Neil McDonnell, stated, "On behalf of the Board and the Company, we are excited that Simon has agreed to lead Freshlocal through its development as a valued solutions provider in the global grocery market. Simon's success in leading organizations that provide innovative eCommerce solutions to some of the world's largest retailers will immediately benefit the Company and its shareholders. The Board would like to thank Peter for his many contributions to Freshlocal."
"Freshlocal has a healthy underlying core business in eGrocery and is transitioning to being a leading eGrocery Management System (eGMS) provider. I'm excited to be taking on this new role with Freshlocal at such a pivotal point in our development as a business," expressed Simon Cairns, Chief Executive Officer of Freshlocal.
"In our current fiscal year, our focus will be on increasing cash flow through our core eGrocery operations by increasing capacity, optimizing operations, and enhancing our customer experience. The Company will also continue to advance its eGMS efforts."
Full-Year and Q4 Fiscal 2021 Financial Highlights
- Revenues for Fiscal 2021 of $132.8 million, a year-over-year increase of $25.2 million, or 23.4%. Q4 FY2021 revenues of $28.8 million decreased by $2.8 million, or (8.9)% compared to the quarter ended October 3, 2020.
- Gross profit1 for Fiscal 2021 of $49.5 million, a year-over-year increase of $11.0 million, or 28.6%. Q4 FY2021 gross profit1 of $10.4 million decreased by $0.6 million, or (5.5)% compared to the quarter ended October 3, 2020.
- Consolidated gross profit1 margin of 37.3% for the year ended October 2, 2021, a year-over-year increase of 1.5%. Q4 gross profit margin1 increased by 1.3% compared to the quarter ended October 3, 2020.
Key Financial Information
All amounts in CAD $ millions except Active customers, AOS, and Same-store sales
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Three months ended
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Year ended
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October 2,
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October 3,
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October 2,
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October 3,
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2021
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2020
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Change
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2021
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2020
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Change
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Consolidated
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Revenues
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28.8
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31.6
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(8.9)
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%
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132.8
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107.6
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23.4
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%
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Gross profit1
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10.4
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11.0
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(5.5)
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%
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49.5
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38.5
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28.6
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%
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Net loss
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(15.9)
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(13.8)
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(39.2)
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(30.7)
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Per share
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(0.36)
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(0.39)
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(0.99)
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(0.86)
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Adjusted operating loss1
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(7.6)
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(3.3)
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(17.4)
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(10.7)
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Cash flow (used in) provided by operations
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(1.6)
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0.2
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(14.3)
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(6.8)
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eGrocery Business Segment
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Revenues
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20.4
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24.4
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(16.4)
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%
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101.9
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78.0
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30.6
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%
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Active customers1
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26,534
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27,122
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(2.2)
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%
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Average Order Size ("AOS")1
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123
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115
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7.0
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%
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123
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115
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7.0
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%
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Blush Lane Business Segment
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Revenues
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8.8
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10.1
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(12.9)
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%
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37.3
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37.5
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(0.5)
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%
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Same Store Sales1
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(13)
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%
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32
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%
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(1)
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%
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19
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%
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1.
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Please refer to "Metrics and Reconciliation of Non-IFRS Financial Measures" at the end of this press release for further details.
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The financial information above relating to the three months and years ended October 2, 2021, and October 3, 2020, of Freshlocal should be read in conjunction with its audited consolidated financial statements for the years ended October 2, 2021, and October 3, 2020, and its management's discussion and analysis ("MD&A") for the years ended October 2, 2021, and October 3, 2020, respectively. Copies of these documents can be found on Freshlocal's SEDAR profile at www.sedar.com.
Business and Financial Highlights
Q4 FY 2021 and the Period Subsequent to Quarter-End
- Private Placement - On December 2, 2021, the Company completed the first tranche of its $13.9 million brokered private placement of convertible debenture units (the "Convertible Debenture Units"), through which it issued 12,415 Convertible Debenture Units at a price of $1,000 per Convertible Debenture Unit for aggregate gross proceeds of $12.415 million to the Company. The second tranche of the private placement is expected to be completed on or before December 31, 2021, for an additional $1.5 million. The private placement was led by Desjardins Securities Inc., and Cormark Securities Inc. as co-agent. Each Convertible Debenture Unit is comprised of (i) one 8% subordinated unsecured convertible debenture of the Company in a principal amount of $1,000 (collectively, the "Convertible Debentures"), which are convertible into common shares of the Company (each a "Common Share") at a conversion price of $1.90 per Common Share, subject to adjustment in certain events and maturing on December 31, 2024 (the "Maturity Date"); and (ii) 263 common share purchase warrants of the Company, each of which entitles the holder to purchase one Common Share at a price of $1.25 per share until the Maturity Date. Please see the Company's news release dated December 2, 2021 for more information.
- Forbearance Agreement - In connection with the breach of certain financing covenants under the Company's debt facility with Silicon Valley Bank ("SVB"), on December 2, 2021, the Company entered into a forbearance agreement with SVB (the "Forbearance Agreement") under which SVB granted the Company certain relief provisions through January 15, 2022. These relief provisions are subject to, among other things, the completion of certain financing milestones and repayment terms. Please see the "Subsequent Events - SVB Forbearance Agreement" section in the Company's MD&A for more information.
- Continued Expansion of its Product Line-up - The Company continues to focus on expanding its product offering, utilizing the additional space available at its Trapp fulfillment facility. The Company has increased its selection of produce, grocery and liquor from 10,600 products at the end of the Q2 FY2021 to a current offering of over 12,000 unique products.
- Consolidation of our Greater Vancouver Fulfillment Centres - In July 2021, the Company completed the strategic merger of its two Greater Vancouver fulfillment centres, which allows SPUD.ca's BC customers to access its full 12,000 SKU product assortment. This facility consolidation will also generate positive operational efficiencies by reducing facility overhead expenses, a reduction in on-hand inventory and routing optimization.
- Service Region Expansion - Building on the Company's expansion of its eGrocery services into additional regions in Central and Southern Alberta and the Thomson Okanagan area, the Company also announced plans for expansion into the Northern portion of Vancouver Island and offering its full SKU assortment to all Vancouver Island customers within the first quarter of calendar 2022.
Full-Year 2021 Highlights
- Freshlocal Common Shares Commenced Trading on the TSX - On April 16, 2021, Freshlocal announced the completion of its qualifying transaction which consisted of a reverse take-over of the Company. Following completion of the transaction, Freshlocal's Common Shares commenced trading on the Toronto Stock Exchange on April 21, 2021, under the symbol "LOCL".
- Carrefour Equity Participation Right and Execution of New SaaS Agreement in Europe - In April 2021, the Company and Freshlocal entered into an Amended Equity Participation Right Agreement (the "Equity Participation Agreement") with Carrefour S.A., pursuant to which Carrefour S.A. was granted the right to purchase up to 9.9% of the Company's Common Shares on an undiluted basis, calculated on a post-issuance basis, issued and outstanding at the time of exercise of such right (the "EPR"), upon payment of a price per share equal to a 15% discount from the market price at the time the EPR will be exercised. The EPR was subject to the completion of a Qualifying Transaction and the execution of a new SaaS agreement with Carrefour S.A. or one of its affiliates in the European territory as contemplated in the Equity Participation Agreement (the "Contemplated SaaS Agreement"). Following the completion of the Qualifying Transaction and the execution of the Contemplated SaaS Agreement, the conditions governing the EPR have been met and the rights as described in the Equity Participation Agreement may be exercised by Carrefour S.A., in whole or in part, at any time and from time to time prior to November 7, 2022.
- Successful Implementation of the FoodX Grocery E-commerce Solution in Belgium - On May 4, 2021, Freshlocal announced that its wholly-owned subsidiary, Food-X Technologies Inc. ("FoodX"), a leading end-to-end software solution for profitable online grocery fulfillment, reached an important milestone in its strategic partnership with Carrefour Group, a longstanding global leader in the grocery industry, with the commencement of operations of Carrefour Group's new e-commerce fulfillment centre in Belgium. This new facility has at its core the FoodX software-as-a-service (SaaS)-based eGrocery Management Solution (eGMS) to improve the productivity and profitability of operations, and the customer experience.
About Freshlocal Solutions Inc.
Freshlocal Solutions is a Vancouver-based company that is building a leadership position in the provision of end-to-end grocery e-commerce solutions. The Company operates two primary businesses, FoodX and eGrocery, both of which support its corporate mission to innovate food systems for people, planet and prosperity. Food-X Technologies ("FoodX") is Freshlocal Solutions' scalable end-to-end SaaS-based eGrocery Management Solution (eGMS) which is designed to meet the needs of large and small grocery retailers while providing profitable unit economics. The FoodX eGMS is the culmination of over 20 years of experience in online grocery and the Company's proven track record of delivering efficiently, sustainably and profitably.
The Company's consumer eGrocery business has expanded into one of Canada's largest online grocery companies, with a focus on delivering fresh, local, organic produce and groceries, along with exceptional customer experiences. Freshlocal Solutions serves the main urban markets in Alberta and British Columbia through its brick and mortar store locations operating under the Blush Lane and Be Fresh banners, as well as through SPUD.ca which is the Company's award-winning online eGrocery platform. Freshlocal's common shares are listed on the Toronto Stock Exchange under the symbol "LOCL". Please visit www.freshlocalsolutions.com .
Notice on Forward Looking Information
Certain statements contained in this press release may be deemed "forward-looking statements" or "forward-looking information" within the meaning of applicable Canadian and U.S. securities laws. Words such as "may", "will", "would", "could", "expect", "believe", "plan", "anticipate", "intend", "estimate", "continue", or the negative or comparable terminology, as well as terms usually used in the future and the conditional, are intended to identify forward- looking statements. [ MORE ]
Notice on Forward Looking Information
Certain statements contained in this press release may be deemed "forward-looking statements" or "forward-looking information" within the meaning of applicable Canadian and U.S. securities laws. Words such as "may", "will", "would", "could", "expect", "believe", "plan", "anticipate", "intend", "estimate", "continue", or the negative or comparable terminology, as well as terms usually used in the future and the conditional, are intended to identify forward- looking statements.
Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward- looking statements or information will transpire or occur, including, but not limited, to the closing of the Offering and the timing thereof, the size of the Offering, the use of proceeds of the Offering and any exercise of the Agent's Option.
Forward-looking information is based on information available at the time and/or management's good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Freshlocal's control.
These risks, uncertainties and assumptions include, but are not limited to, the failure to satisfy any of the conditions to the completion of the Offering and those risks described under "Risk Factors" in Freshlocal's Filing Statement dated April 9, 2021, a copy of which is available on SEDAR at www.sedar.com and could cause actual events or results to differ materially from those projected in any forward-looking statements.
Freshlocal does not intend, nor does Freshlocal undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws.
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