TORONTO, ONTARIO – August 28, 2023 – Grey Wolf Animal Health Corp. (TSX-V: WOLF) (“Grey Wolf” or the “Company”), a Canadian diversified animal health company, today announced financial results for the quarter and six months ended June 30, 2023.
“The second quarter of 2022 was a continuation of what we experienced in the first quarter. We saw revenue grow by 8.8% to $6.7 million driven by organic growth within our product portfolio as well as new products launched in 2022. Gross margins have remained consistent with previous quarters due to the product mix sold in our Animal Health and Pharmacy businesses during the first six months of 2023. In addition, even as we absorb the additional costs associated with operating a public entity our Adjusted EBITDA1 has remained steady.” said Angela Cechetto, Chief Executive Officer.
Revenue for the three- and six-month period ended June 30, 2023, increased 8.8% to $6.7 million and 12.6% to $12.7 million, respectively, over the same periods in 2022. These increases were due to organic revenue growth from the Animal Health and Pharmacy business units.
Gross margins for the three- and six-month period ended June 30, 2023, decreased to 50.5% compared to 52.0% and remained consistent at 51.4% and 51.3%, respectively, over the same period in 2022. Gross margins were impacted by the product mix in both the Animal Health and Pharmacy business units.
Total expenses for the three- and six-month period ended June 30, 2023, decreased 20.6% to $2.7 million and 10.3% to $5.4 million, respectively, over the same period in 2022. The decrease in total expenses was largely related to costs associated with the Qualifying Transaction during the same periods in 2022 offset by costs noted below. During the three-month period, there was an increase in salary, bonus, and benefits related to operational growth as compared to the same period in 2022. Travel, meals, and business expenses increased in 2023 as the sales and marketing team increased attendance at conventions, trade shows and customer visits. Finally, there was an increase in professional fees and outside services related to corporate costs as the company now operates as a public entity.
Adjusted EBITDA1 was $1.1 million and $2.0 million for the three- and six-month period ended June 30, 2023 consistent with the same periods in 2022 as the Company absorbed costs associated with operating as a public entity in 2023.
Cash and cash equivalents were $6.7 million as at June 30, 2023 compared to $6.9 million at December 31, 2022. The Company generated cash from operations of $0.5 million in the first half of 2023 million primarily as a result of net income for the current period offset by changes in trade and other receivables, inventories and accounts payable and accrued liabilities. As at June 30, 2023, the Company had outstanding borrowings of $9.7 million, of which $1.1 million are current and $8.6 million are non-current. The Company’s debt is a fixed rate term loan with an average interest rate of 4.7% until September 2026. In addition, the Company repaid borrowings of $0.5 million since December 31, 2022.
Management uses both IFRS and Non-IFRS Measures to assess the financial and operating performance of the Company’s operations. These Non-IFRS Measures are not recognized measures under IFRS, do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures presented by other companies. The Non-IFRS Measures referenced in this press release includes Adjusted EBITDA. The Company defines Adjusted EBITDA as earnings before financing and special transaction costs (including, for greater certainty, fees related to the Qualifying Transaction), interest income, interest and accretion expenses, income taxes, depreciation of property and equipment, depreciation of right of use assets, amortization of intangible assets, share-based compensation, change in fair value of embedded derivatives, foreign exchange gains or losses, and other income. The Company considers Adjusted EBITDA as an additional metric in assessing business performance and an important measure of operating performance and cash flow, providing useful information to help analyze and compare profitability between companies for investors and analysts.
The following table provides a summary of the differences between Grey Wolf’s consolidated IFRS and Non-IFRS financial measures, which are reconciled below:
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Certain information included in this press release contains forward-looking information with the meaning of applicable Canadian securities laws. This information includes statements concerning the Company’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events or the negative thereof. Such forward-looking information reflects management’s beliefs and is based on information currently available. All forward-looking information in this press release is qualified by the following cautionary statements.
Forward-looking information necessarily involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the Company’s control, affect the operations, performance and results of the Company and its subsidiaries, and cause actual results to differ materially from current expectations of estimated or anticipated events or results.
A more detailed assessment of the risks that could cause actual results to materially differ than current expectations is contained in the Risk Factors section of Grey Wolf’s Management Discussion and Analysis for the three and six months ended June 30, 2023. The forward-looking information included in this press release is made as of the date hereof and should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
