Company Reports Best Third Quarter Revenue Ever
with $15.9 Million in Sales, +21% Year-Over-Year
The Alkaline Water Company Inc. (NASDAQ and CSE: WTER) (the
“Company”), the country’s largest independent alkaline water
company and the Clean Beverage® company, today announced its
financial results for the third quarter ended December 31, 2022,
its second full quarter on its Pathway to Profitability. The
Company reported record third quarter revenue, significant
year-over-year improvement in total operating expenses and
operating loss, and continued sequential quarter-over-quarter
improvement in its gross margin.
Third Quarter Fiscal 2023 Financial Highlights (all amounts
in U.S. dollars) (unaudited):
- Net revenue for the quarter ended December 31, 2022, was
approximately $15.9 million, an increase of more than 21%
compared to $13.1 million in the same period last year.
- Gross profit for the quarter was approximately $3.9 million,
representing a gross margin of 24.7%, up 300 basis points
from 21.7% in the second quarter fiscal year 2023.
- Total operating expenses were approximately $7.5 million, a
46% reduction compared to the same period last year.
- Total operating loss was approximately ($3.6 million), an
improvement of more than 67% compared to ($10.9 million) in the
same period last year.
- Net loss for the quarter was ($3.97 million), an improvement
of 63% compared to the same period last year.
- Net loss per share was ($0.03) compared to ($0.10) in Q3 Fiscal
2022.
- The Company's cash position on December 31, 2022, was
approximately $2.2 million.
Commentary on Financial Results:
“In spite of a challenging economy we still experienced
significant year-over-year growth of more than 21% in topline
revenue,” stated Frank Chessman, President and CEO of The Alkaline
Water Company. “While continuing to grow sales, we were also able
to reduce our operating expenses and total loss compared to last
year. Total operating expenses are down 46% from the same quarter
last year. Total operating loss is down 67% by the same comparison,
and sequentially compared to Q2, it is down almost 30%. This has
been a very quick turnaround in just a few quarters, thanks to our
strategically implemented Pathway to Profitability initiative
focused on cutting expenses to create a more efficient growth
company. We remain confident in our ability to continue driving
growth and profitability in the coming quarters.
“Our gross margin also continued to improve sequentially. It’s
now more than 24.7%, which is an increase of over 300 basis points
from last quarter. Since the start of our Pathway to Profitability
initiative, we have improved our gross margin by 685 basis points.
We anticipate this trend to continue. This improvement comes from
our continued diligent commitment to reducing expenses by
optimizing every aspect of our production process, from raw
materials to packaging, to copackers. We're working hard to reduce
costs wherever possible while maintaining the product quality that
our consumers love and the sales growth that our shareholders
expect.”
Third Quarter Fiscal Year 2023 Operational
Highlights:
- The Company continued to outperform the value-added water
category, according to Nielsen xAOC+Conv. data ending 12/31/22:
- Alkaline88 was one of 13 value-added water brands (including
all combined private labels) with over $90 million in retail sales
in 2022.
- For the 13 weeks ending 12/31/22, Alkaline88's year-over-year
dollar volume growth outpaced nine of the other twelve and was 1.6
times the overall category average.
- In the same time, Alkaline88's unit growth was better than any
of the other twelve.
- Alkaline88 was the only brand with double-digit unit
growth.
- In the Grocery channel, Alkaline88's 1-gallon product was the
number-five best-selling value-added water product by dollar volume
for the quarter, edging out an Essentia product to gain that
spot.
- Alkaline88's 1-gallon sales were six times that of the next
nearest gallon in the country.
- For unit sales in Grocery, Alkaline88's 1-gallon continued to
grow double digits last quarter.
- The Company expanded its distribution into over 220 BJ's
Wholesale locations on the East Coast and added a grocery co-op and
food distributor serving approximately 250 stores in the
Northwest.
- The flagship Alkaline88 brand was the number-five best-selling
value-added water product by dollar volume for the quarter in the
Grocery channel, and the gallon continued to grow double digits
despite an overall unit sales decrease on average for SKUs in the
category.
- The Company continued to expand its partnership with Gold's
Gym, a leading fitness brand, and has now earned distribution in
over 60 Gold's Gym locations.
- The Company had its first major brick-and-mortar launch of
Alkaline88 Sport in one of the Southern US grocery leaders, Harris
Teeter, with early indications showing good performance.
- The Company added two new direct-store-delivery partners to its
network, expanding DSD coverage to 14 states.
“We have several initiatives in early implementation that are
ramping up to further move us along our Pathway to Profitability as
we continue to drive sales,” said Mr. Chessman. “We're excited
about the future, and we're grateful to our shareholders for their
continued support.”
Leadership Continuity and Pathway to Profitability
Momentum:
The Company also announced last week that due to unforeseen
medical concerns, Frank Lazaran had stepped down as CEO and
President effective February 20, 2023. The Company thanks him for
his dedication and wishes him a speedy recovery. The Company
announced that Frank Chessman, Director of Sales and Operations,
who has been with Alkaline88® since its inception, will serve as
its new President and CEO. Frank Lazaran will continue to serve on
the Board of Directors. “We want to thank Frank for his dedication
and commitments to putting Alkaline88 on its Pathway to
Profitability,” stated Aaron Keay, the Company’s Chairman. “Frank’s
contributions are highlighted by the Company’s financial
performance this quarter as he orchestrated an incredible pivot in
the Company’s direction and initiated many significant changes that
will continue to have a positive impact on the bottom line. We look
forward to his continued influence on the Board of Directors while
he focuses on addressing his medical issues. There is always a spot
for Frank with Alkaline88.”
New Company CEO and President Frank Chessman has over five
decades of experience in sales, marketing, and operations. Prior to
joining the Company, he served as Vice President of Sales and
Advertising for Ralphs Grocery Company and spent 14 years at Simon
Marketing as the Executive Vice President. His extensive experience
also includes a decade in beverage manufacturing.
Since the Company's pivot last year to its Pathway to
Profitability, Mr. Chessman has worked side-by-side with Mr.
Lazaran and has been an integral part of its design and
implementation, overseeing all aspects of sales and operations. As
Mr. Keay stated, "It’s important to us to maintain leadership
continuity for the Company with the appointment of Frank Chessman
as our new CEO and President. He’s been with the Company since its
inception and, in addition to working very closely with Mr. Lazaran
and CFO David Guarino, he has been involved in hiring and working
with employees across all facets of the business. Mr. Chessman's
extensive experience in sales, marketing, and operations, coupled
with his longstanding commitment and passion for Alkaline88, make
him an excellent choice to guide the Company through this
transition as we continue to drive the brand forward."
Correction of Previously Issued Financial Statements:
Comparisons to previous quarters are based on a corrective
adjustment which reclassified an immaterial amount in Sales and
Marketing expenses as a reduction in Revenue. The adjustments
relate to considerations payable to a customer which the Company
has determined were not for distinct goods or services received.
This correction has no impact on Total Operating Loss or Net
Loss.
Company Receives Nasdaq Notice on Late Filing, Since
Remedied:
The Company also announced that it received a letter (the
"Letter") on February 22, 2023 from the Listing Qualifications
Department of The Nasdaq Stock Market (the "Nasdaq"). The Letter
notified the Company that since it had not yet filed its Form 10-Q
for the period ended December 31, 2022, it no longer complies with
the Nasdaq's Listing Rule 5250(c)(1) (the "Rule"), relating to the
Company's obligation to file periodic financial reports for
continued listing.
The Company has since satisfied this obligation by filing its
delinquent Form 10-Q on February 28, 2023.
The Company will not host a third quarter conference call.
About The Alkaline Water Company:
The Alkaline Water Company is the Clean Beverage® company making
a difference in the water you drink and the world we share.
Founded in 2012, The Alkaline Water Company (NASDAQ and CSE:
WTER) is headquartered in Scottsdale, Arizona. Its flagship
product, Alkaline88®, is a leading premier alkaline water brand
available in bulk and single-serve sizes along with eco-friendly
aluminum packaging options. With its innovative, state-of-the-art
proprietary electrolysis process, Alkaline88® delivers perfect 8.8
pH alkaline drinking water with trace minerals and electrolytes and
boasts our trademarked “Clean Beverage” label. In 2021, The
Alkaline Water Company was pleased to welcome Shaquille O’Neal to
its board of advisors and to serve as the celebrity brand
ambassador for Alkaline88®.
To purchase The Alkaline Water Company’s products online, visit
us at www.alkaline88.com.
To learn more about The Alkaline Water Company, please visit
www.thealkalinewaterco.com or connect with us on Facebook, Twitter,
Instagram, or LinkedIn.
Notice Regarding Forward-Looking Statements
This news release contains “forward-looking statements.”
Statements in this news release that are not purely historical are
forward-looking statements and include any statements regarding
beliefs, plans, expectations or intentions regarding the future.
Such forward-looking statements include, among other things, the
following: the statements relating to the Company’s pathway to
profitability, including the statement that the Company is focused
on cutting expenses to create a more efficient growth company; that
the Company is confident in its ability to continue driving growth
and profitability in the coming quarters; the Company anticipates
that the trend of improving gross margin to continue; that the
Company is working hard to reduce costs wherever possible while
maintaining the product quality that the Company’s consumers love
and the sales growth that the Company’s shareholders expect; that
the Company has several initiatives in early implementation that
are ramping up to further move the Company along its Pathway to
Profitability as it continues to drive sales; that the Company is
excited about the future; that many significant changes initiated
by Frank Lazaran will continue to have a positive impact; that the
Company looks forward to Frank Lazaran’s continued influence on the
Board of Directors while he focuses on addressing his medical
issues and there is always a spot for Frank Lazaran with
Alkaline88; and that Frank Chessman is an excellent choice to guide
the Company through this transition as the Company continues to
drive the brand forward.
The material assumptions supporting these forward-looking
statements include, among others, that the Company’s cost-saving
and margin enhancement measures will be fully implemented and, once
implemented, they will be effective to reduce the Company’s annual
expense and enhance the Company’s margin to the extent anticipated
by the Company; that the Company’s burn rate to reach the level
anticipated by the Company as a result of the Company’s proactive
reduction in its monthly burn rate; that the demand for the
Company’s products will continue to significantly grow; that the
past production capacity of the Company’s co-packing facilities can
be maintained or increased; that there will be increased production
capacity through implementation of new production facilities, new
co-packers and new technology; that there will be an increase in
number of products available for sale to retailers and consumers;
that there will be an expansion in geographical areas by national
retailers carrying the Company’s products; that there will be an
expansion into new national and regional grocery retailers; that
there will be an expansion into new e-commerce, home delivery,
convenience, and healthy food channels; that there will not be
interruptions on production of the Company’s products; that there
will not be a recall of products due to unintended contamination or
other adverse events relating to the Company’s products; and that
the Company will be able to obtain additional capital to meet the
Company’s growing demand and satisfy the capital expenditure
requirements needed to increase production and support sales
activity. Actual results could differ from those projected in any
forward-looking statements due to numerous factors. Such factors
include, among others, governmental regulations being implemented
regarding the production and sale of alkaline water or any other
products, including products containing hemp/CBD; the fact that
consumers may not embrace and purchase any of the Company’s
CBD-infused products; the fact that the Company may not be
permitted by the FDA or other regulatory authority to market or
sell any of its CBD-infused products; additional competitors
selling alkaline water and enhanced water products in bulk
containers reducing the Company’s sales; the fact that the Company
does not own or operate any of its production facilities and that
co-packers may not renew current agreements and/or not satisfy
increased production quotas; the fact that the Company has a
limited number of suppliers of its unique bulk bottles; the
potential for supply-chain interruption due to factors beyond the
Company’s control; the fact that there may be a recall of products
due to unintended contamination; the inherent uncertainties
associated with operating as an early stage company; changes in
customer demand and the fact that consumers may not embrace
enhanced water products as expected or at all; the extent to which
the Company is successful in gaining new long-term relationships
with new retailers and retaining existing relationships with
retailers; the Company’s ability to raise the additional funding
that it will need to continue to pursue its business, planned
capital expansion and sales activity; and competition in the
industry in which the Company operates and market conditions. These
forward-looking statements are made as of the date of this news
release, and the Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those projected in the forward-looking
statements, except as required by applicable law, including the
securities laws of the United States and Canada. Although the
Company believes that any beliefs, plans, expectations and
intentions contained in this news release are reasonable, there can
be no assurance that any such beliefs, plans, expectations or
intentions will prove to be accurate. Readers should consult all of
the information set forth herein and should also refer to the risk
factors disclosure outlined in the reports and other documents the
Company files with the SEC, available at www.sec.gov, and on the
SEDAR, available at www.sedar.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230228006385/en/
The Alkaline Water Company Inc. Jeff Wright Director of
Investor Relations 866-242-0240
investors@thealkalinewaterco.com
Alkaline Water (NASDAQ:WTER)
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