Delivra Health Brands Inc.

Good morning, and welcome to Del Libre HealthBrands, Inc. Third Quarter 2023 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. The information communicated by Delivra Brands Health Inc., the company, is intended solely for discussion purposes and are not intended as and do not constitute an offer to sell or solicitation of an offer to buy any security and should not be relied upon by you in evaluating the merits of investing in any security. The company believes the information communicated in this overview to be reliable but makes no warranty or representation of whether expressed or implied, and assumes no legal liability for the accuracy, completeness, or usefulness of any information disclosed. Any estimates, investment strategies, and views expressed during the conference call are based upon current market conditions and or data and information provided by unaffiliated third parties and is subject to change without notice. All forward-looking information provided during this conference call are given as of the date, hereof, and are based upon the opinions and estimates of management. and information available to management as of the date hereof. Except as required by law, the company disclaims any obligation to update, revise, any forward-looking statements, whether as a result of new information, events, or otherwise. I would now like to turn the conference over to Gord Davey, President and CEO of Delivra Health Brands, Inc. Mr. Davey, please proceed.

Good day, and welcome everyone to our Quarter 3 Shareholder Investor Conference. We're extremely pleased to be here with you today. I'm Gordon Davey, the President and Chief Executive Officer of Deliver Health Brands. I'm joined today by Chief Financial Officer, Jack Tassi. During our second conference call in February of 2022, Jack and I took you through the historic favorable results of the first two quarters for Deliver Health Brands and outlined our strategy and vision for fiscal 2023 and beyond. Today, we are excited, pleased, and grateful to take you through another outstanding result for our first three quarters of 2023, which provide a positive, sustainable future for our company. We'll take you through what is driving the results, our strategic approach, the challenges we face, and what you can expect from Deliver Health Brands as we continue to accelerate. As we take you through the positive results, we'd like to again share the excitement and celebration of our evolved identity and name change to Deliver Health Brands. a global health and wellness company that is uniquely positioned in the consumer packaged goods segment, as well as the constantly developing cannabis space. Deliver Health Brands has strived to create a culture centered around inclusion, diversity, and teamwork. We have created our vision, mission, and values around this culture. Our culture of Deliver Health Brands is we are building a community of wellness naturally. Mission. of deliver health brands is. We are pioneering the alternative wellness space with innovative products that bring relief to everyday health issues and enhance the quality of life. And these are reinforced by the values of deliver health brands. Trust, passion, agility, drive, courage, and humility. We will reiterate that we have great products, we have great people, and our portfolio of brands are in growing categories, which provide sustainable, profitable growth, which is an important foundational pillar to deliver health brands. Our products are in large categories that are constantly growing. The sleep category is a $25 billion category, growing at over 20%. The topical pain category is a $13 billion category, growing at over 9.5%. And the cannabis category is exponentially growing expanding, and developing as the market continues to be educated. DeliverHelp brands are front and center in these categories with strong brands and proprietary intellectual properties. I'm sure everyone on this call has suffered from a sleepless night, anxiety, joint or muscle pain. We encourage you to look for our products at leading retail outlets like Shoppers Drug Mart, Loblaws, Circle K, Publix, and Wegmans, just to name a few. As well, if you're looking online for solutions for these ailments, you'll see us prominently positioned on Amazon and Shopify. A year is not being without risks and challenges is what you do in these challenging times to help define your future. There continues to be COVID hangover, which has evolved our approach to work, home life, and how we shop. There continues to be supply shortages, which tests our processes, our strategic planning, and our agility in the marketplace. Inflation continues to be high, which affects our margins, capital markets, and people's willingness to spend. And obviously, there is global political uncertainty, which creates reservations in markets and global expansion. Our team has been faced with these factors, not unlike other companies. Amid dealing with these challenges and risks, Deliver Health Brands has produced historic positive results. Jack will later take you through in more detail. However, here are the top five results of our third quarter. We are very excited to report that for the second consecutive quarter and first time in company history, we have repeated EBITDA positive results. Quarter one was our first quarter we were cash flow positive, and quarter two was the first quarter we were EBITDA positive, and quarter three is the first time we have repeated positive quarterly EBITDA results. Let me outline the significance of this achievement. In 2020 when we began our transition to a health and wellness company, we are at negative $9 million in EBITDA. Our first three quarters of fiscal 2022, we improved that loss to a negative $2.3 million in EBITDA. We are pleased to report for the first three quarters of fiscal 2023, we have improved by over $2.35 million and are now EBITDA positive for the first three quarters of the year, a historic accomplishment. So let us continue on the positive Q3 results. We hurtled our largest ever quarter for 2022 and increased our revenue from $2.3 to $2.35 million. We increased our gross margin percentage from 39% to 41%, which is a significant increase from 9% back in 2020. We've decreased our SG&A expenses at gain by 19% quarter over quarter. So higher revenues with higher margins and lower costs equals improved EBITDA. It's the right formula. How was this accomplished? Well, it was the execution of our strategic initiatives. Those included expansion in the United States through products and channels and customers, through international growth in territories and customer bases and products, accelerator-infused topical platform through territories, channels, and products, and also through key partnership focuses on impactful customer programs e-commerce expansion, and innovation. These were the strategic pillars that Jack and I talked about in our last investors call. We have continued to do what we said we were going to do, and we are executing this phase of deliver health grants. We have also expanded our airport coverage, adding innovation to DreamWater lineup with DreamWater Sleep Gummies and DreamWater Immunity. We encourage you to look for our products as you travel. How do we continue to improve at an accelerated rate. We have developed a strong and focused strategy to drive sustainable growth and enhance shareholder value. Our strategic updates encompass several key areas. We'll continue to execute on the outlined strategies above, as well as execute on detailed plans for 2024 and beyond. And these are done with the pillars of growth through Deliver Health Brands. These include current account acceleration, maintaining year-over-year growth and adding innovation. Through new account growth, a dedicated hit list of customers and channels. Through the launch of Live Relief in the United States, or through e-commerce and retail outlets. Through the growth of e-commerce, through expansion and increased investments in e-commerce. Through international growth, expanding in our current areas, as well as new innovative products and new territories. We're going to increase our lip relief distribution through increased penetration in Canada, and we're going to expand globally. And obviously through mergers and acquisitions, but we are exploring opportunities constantly. This is what excites us at Deliver Health Brands. Our strategies work. We will continue to focus on scaling up our business. We have closely monitored industry dynamics and identified emerging trends that present significant growth opportunities for Deliver Health Brands. By leveraging our expertise and market insights, we are well-positioned to capitalize on these trends and strengthen our competitive position. Our diverse portfolio of high-quality healthcare products and services continues to expand. We have launched new, innovative offerings that address the evolving needs of our customers while also exploring new markets and sectors for potential growth. We recognize the importance of innovation and technology in today's rapidly changing healthcare landscape. Through our ongoing investments in research and development, we are actively exploring new technologies and solutions to improve customer and patient outcomes, increase operational efficiencies, and drive long-term value for our shareholders. Success of these strategies is dependent on investment, execution, and marketing. We have the team and the plan to accomplish this. We have accomplished our transition to a health and wellness company We are positioned for unprecedented growth. We are not without challenges. However, our team and our board are prepared to take on the challenges and continue to bring long-term sustainable growth to Deliver Health brands, our shareholders, and investors. In closing, we extend our sincere appreciation for your continued support and trust in Deliver Health brands. We are committed to executing our strategic vision, driving sustainable growth, and maximizing shareholder value. Together, we will build a healthier future for all. Jack will take you through some detailed financials and business overview. We appreciate your support in our vision of Deliver Health Brands.

Thank you. Thank you, Gord.

This is Jack Tassi, CFO of Deliver Health Brands, and it is a pleasure to be on this call to update shareholders and potential investors on our progress. For providing the high-level financial overview, it is important to state that all commentary provided should be explained in the context of the latest financial statements and MD&A filed by the company. As indicated in Q2 fiscal 2023, the company is no longer burning cash. As a typical startup, which is very important to shareholders and potential investors to know, as very few small cap companies out there are in a position to break even the way we have done it over the last two quarters. The company had a slight EBITDA loss in Q1 this year, and then two consecutive positive adjusted EBITDA data points in Q2 and Q3 of this year, making year-to-date results on a year-to-date basis as a break-even year. In addition to this progress being in a good cash position, help the company to pay down some payables and at the same time invest in sales and marketing which is very required to maintain and improve brand equity especially when consumer spending is under inflationary pressure as mentioned in the past this continued progress means the following to us as a company and management and board of directors it illustrates that this business is a unique business model and it works and it is scalable meaning that this company has the potential of becoming a brand powerhouse. The relevance of our products and ability to compete with their backed brands in the health and wellness space, our existing brands focus on sleep and pain reduction and reduction of anxiety. Our offerings or our product offerings are intelligent and premium products, and they simply work. Such problems in sleep and pain are simply part of our lives to manage, that are not going away, which adds to the sustainability argument of our business. Similar to prior calls, I will build briefly on the same key performance indicators presented in the annual investor call and then the quarterly call, as the company gives significant attention to the following three internal key performance indicators. The first key performance indicator, which is to uncover potential in the US and international markets. This strategy was explained in prior investor calls. As communicated, managing customer mix and focusing on international distributors continues to be the strategy and continues to pay off. We continue to see growth quarter over quarter and year to date as well, and the company is in the process of working on other projects that are expected to increase growth beyond current levels, assuming everything else being equal. This takes us to the second key performance indicator, maintaining and growing gross profit and gross profit margin. Just high level background, the company has succeeded year over year in increasing its gross margin from 24% in fiscal 2021 to 32% in fiscal 2022, so on and so forth. And we expect this to continue into the future. So again, as a result of the company's focus on the right customer slash distributor, mix which means lower sales fees and lower distribution costs the company managed to increase its gross profit and growth profit margin in q3 from 914 000 or 39 percent last year to 961 000 or 41 percent this year year-to-date profit margins are tracking at 44 percent which is a healthy margin compared to 36 percent same period last year The company took some provisions on write-downs and write-downs of $309,000 compared to $26,000 last year. This provision relates to aging SKUs. The company considers such margin percentages as financial achievements, especially when compared to prior years as a result of the company's ability to manage the customer mix and manage operational costs at the same time. This takes us to the third key performance indicator, which is targeted improvements and adjusted EBITDA. Our objective was always to break even, to demonstrate that our business model works and is scalable. Q3 slide positive adjusted EBITDA gives the company the opportunity to invest and reinvest in needed marketing products and innovation to socialize our existing products and new products as well. Given the progress year-to-date results, which is a break-even point compared to last year, $2.3 million negative adjusted EBITDA, which requires significant amount of funding to continue operations, have this continued into the future. Based on the above, I would like to add another key performance indicator referred to as scalability. Given that the business model works from a margin and rent equity perspectives, and the company is not in a startup mode any longer, This will help us to shed some light in the next call on the scalability of the business. Scalability requires financing. So financing is required to scale up, and given the company's performance and balance sheet positions, Delivera Health Brands is in a perfect position to scale up its business model. In conclusion, management will continue to focus and improve shareholder value and explore opportunities that are long-term in nature. And based on such improved results and milestones, we are hoping that performance or the performance of DeliverHelp brands gets noticed by existing shareholders and potential investors, given how the company embraced change in uncertain times and leading to positive financial performance. Thank you very much for listening. And with that, we will open the call for questions. Operator.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. Once again, to join the question queue, please press star, then 1 now.

Once again, to join the question queue, please press star, then one, now.

This concludes the question and answer session. I would like to turn the conference back over to Gord Davey for any closing remarks.

Thank you so much.

And for those that are on the call, we sincerely appreciate your time and your commitment to deliver health plans. We look forward to a very promising and sustainable future.

Thank you very much and have a great day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.