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spk00: Welcome to the Guru Organic Energy Second Quarter 2021 Results Conference Call and Webcast being recorded today, June 14, 2021, at 4.45 p.m. Eastern Time. At this time, all participants are in a listen-only mode. If anyone has difficulties hearing the conference, please press star followed by zero for operator assistance at any time. Please note that, exceptionally, there will be no Q&A session with financial analysts following today's presentation. Guru's press releases issued today, its MD&A, and financial statements are available in the Investors section of its website and on CEDAR. During the call, the company may refer to certain non-IFRS measures. Reconciliations are available in its MD&A. Also note that all financial figures are expressed in Canadian dollars unless otherwise indicated. I would also like to remind you that today's presentation may contain forward-looking statements about Guru's current and future plans, expectations, and intentions, results, level of activity, performance, goals, or achievements, or other future events or developments. As such, please take a moment to read the disclaimer on forward-looking statements on slide two of the presentation. I would now turn the call over to Carl Goyette, GURU's chief executive officer.
spk01: Thank you, operator.
spk02: Hello, everyone, and welcome to our earnings call. Joining me this afternoon is our CFO, Indy Saraf. This afternoon, Guru released record results for the second quarter of 2021, having made continued progress since the beginning of the year to achieve our growth objectives. We were also very pleased to announce a game-changing distribution agreement with PepsiCo Beverages Canada. But more on that in a moment. First, let's take a look at our quarterly results. Q2 revenue increased by 74%, to $7.1 million, and our gross margins stood at 63%. Record revenue growth was primarily driven by significant increase in our points of sales and continued strong Quebec growth. Sales in Canada grew by 89%. U.S. sales increased for a consecutive quarter to 28% year-over-year increase in constant dollars, and online sales continued to perform well. These results reflect our strong performance in our markets and growing consumer appetite for plant-based products and better-for-you energy drinks. During the quarter, we continue to execute on our near-term growth plans with the addition of over 800 doors, namely with the Fresh Market, Wise Market, and Raley's in the U.S., and Canadian Tire Gas in Canada. We have grown our presence by over 6,000 additional doors in the first half of 2021. With these most recent additions, we have now fully captured the U.S. natural grocery channel in terms of banners, further strengthening our health and wellness conditionings. Also in the U.S., we launched Guru Yerba Mate earlier this month. The product is now available to our various distribution partners there. Guru Yerba Mate has performed extremely well since it launched in Quebec late last year, so we expect that it will contribute to sales growth south of the border as we grow its distribution. This launch is also being supported by some targeted activations. In Canada, we are in full execution mode following the various new doors we announced in markets outside of Quebec in support of our Canadian growth plans. Our efforts are being supported by digital marketing, in-store marketing, field marketing, and sales activation. These activities will be ramping in the coming months through to the fall and will support continued sales growth in subsequent quarters. Online sales continue to be robust. This is supported by ongoing consumer acquisition investments, sustained demand for healthier functional products, and a continued consumer shift towards online channels, accelerated by the pandemic. Finally, on the operations front, proactive measures we have taken to strengthen and diversify our supply chain continue to prove effective, with our supply chain activities running smoothly in support of our growth. NG, over to you.
spk01: Thank you, Carl, and hello, everyone. For Q2 2021, we generated record revenue of $7.1 million compared to $4.1 million last year. The increase reflects sales growth in Canada and the US as a result of increased points of sale and velocity growth in both markets. The Q2 2020 comparative quarter also coincided with the onset of the pandemic, which negatively affected sales in that period. Gross profit totaled $4.4 million compared to $2.4 million a year ago. Gross margin returned to historical levels at 63% compared to 60% last year. The increase was due to changes in the product mix and the timing of promotional activities. SG&E was $5.5 million or 78% of sales compared to $3.2 million or 80% of sales a year ago. Adjusted EBITDA was negative $0.8 million from a negative $0.7 million a year ago due to higher SG&E partially offset by the increase in gross profit. Net loss totaled $1.2 million or $0.04 per share compared to a net loss of $0.7 million or $0.03 per share a year ago. The majority of the net loss reflects additional costs associated with operating as a public company and the setup of our expansion plans. We have a strong financial position with cash and cash equivalents of $24.1 million and unused Canadian dollar and U.S. dollar denominated credit facilities totaling about $10 million as of April 30, 2021. Even though it is still early to assess the impact of COVID-19 on our business going forward, we are starting to see a positive effect in our in-store sales as vaccination rates continue to increase and various restrictions are lifted. with hopefully a gradual return to a more normalized situation in the coming months. Carl, back to you to discuss our game-changing agreement with PepsiCo Beverages Canada announced concurrently with the release of our Q2 results.
spk02: Thank you, Angie. We are thrilled to have announced today that Guru has entered into an exclusive long-term national distribution agreement with PepsiCo Beverages Canada to distribute our energy drinks in the Canadian market. They are one of Canada's largest and fastest-growing non-alcoholic beverage companies. They have best-in-class sales capabilities and an expansive direct-to-store distribution network that is significantly greater than our current retail network. The agreement is for an initial term of 10 years and can be renewed for subsequent five-year periods unless either party chooses not to renew or if agreement is terminated. Further details are in the press release issued today. Starting in October, PepsiCo Beverages Canada will be responsible for selling and distributing our products in Canada, providing us with access to their sales presence and expansive distribution network from coast to coast. On our end, we will refocus our efforts on the marketing side and dedicate significant resources to support our new partners' best-in-class sales efforts in retail and food service and continue to grow customer acquisition for our online activities. As a result, we expect to significantly ramp up our marketing activities in Canada while redeploying additional sales resources towards the U.S., as some of these will no longer be required in Canada. This agreement significantly expands our distribution capabilities in a very short period of time and will accelerate our growth plans north of the border. Specifically, this partnership has the potential to accelerate our Canadian market share growth significantly. Basically, we're going from walking to running here. It gives us first-mover advantage in the better-for-you energy drink space nationally. This is key right now when you look at the attractiveness of this market. It will also solidify Guru as the natural energy drink in Canada in a fast-growing and competitive category. We've been at this for some time, and we have big ambition. This is an incredible opportunity to reach your objectives with an amazing partner. Finally, it de-risks the execution of our Canadian market growth plan from a sales and distribution point. They are the leader in this space. As for the U.S., the agreement, which is for Canada only, makes it possible for us to reallocate sales resources to the U.S. market to accelerate our growth there. And there is no doubt that our association with a global leader and the best of breed here in Canada can only have positive benefits for us in all markets. The confidence in our product is a strong endorsement of what we can bring to the table. We are very excited about this agreement and the team is motivated to execute on it to maximize success. That work is already in motion, so we are ready to go come October. Today, Guru also announced the financing co-led by CIFOL and CIBC and with the participation of prominent institutional investors. The proceeds will be used to fund the required ramp up of our marketing efforts in the context of the agreement with PepsiCo Canada and further support our Canadian growth plan, which will be accelerated by the agreement. It will also support the ramp up of Guru's distribution activities in the U.S. These milestone transactions are the result of the hard work of many dedicated people. I would like to say my deepest thanks to the Guru team for their contributions and dedication and their amazing ability to adapt, which is so important when you have ambitions like we do. There is a lot of good energy to deliver now, and I know the team is super motivated to capture the amazing opportunities ahead. I'd also like to thank our existing Canadian distribution partners for their support through the years as we transition to this model and our various banner partners across Canada. Finally, I would like to thank our new Canadian distribution partner for recognizing our unique positioning and our potential. We will continue setting the standard as the Canadian consumer's organic plant-based energy drink of choice. This concludes our formal remarks. Thank you all for joining this afternoon. Operator, back to you to end the call.
spk00: This concludes today's conference call. Thank you for participating. You may now.
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