• Revenue: $11.4 million, a 33% quarter-over-quarter growth.
• Gross Margin: Improved to 40%, a 600 basis point increase year-over-year.
• Adjusted EBITDA: Over $200,000, marking the first profitable quarter in years.
• Net Income: $1.5 million for the third quarter.
• Earnings Per Share (EPS): $0.74 for the third quarter.
• Asia Pacific Sales Growth: 92% quarter-over-quarter and 9% year-over-year.
• Digital Channel Sales Growth: 10% net sales growth year-over-year.
• Inventory Reduction: 48% year-over-year.
• Net Working Capital: $9.5 million, up from $3.1 million last quarter.
• Public Offering Proceeds: Raised just under $5 million.

• Warning! GuruFocus has detected 3 Warning Signs with BTTR.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Better Choice Co Inc (BTTR) achieved a 33% quarter-over-quarter sales growth, reaching $11.4 million.
• The company improved its gross margin for the third consecutive quarter to 40%.
• BTTR reported its first profitable quarter in years with an adjusted EBITDA of over $200,000.
• The company saw a 23% increase in new-to-brand consumers on its second largest digital platform.
• International sales, particularly in the Asia Pacific region, grew by 9% year-over-year, highlighting strong market potential.

Negative Points

• Year-to-date net sales decreased to $28 million from $33 million in the same period last year due to strategic exits from unprofitable channels.
• The company had to close its direct-to-consumer platform to improve financial leverage.
• Despite improvements, there is still significant work needed to achieve sustained growth and profitability.
• The company is reliant on cyclical international sales, which may lead to variability in quarterly performance.
• Better Choice Co Inc (BTTR) raised nearly $5 million through a public offering, indicating a need for additional capital.

Q & A Highlights

Q: Can you elaborate on the strategic pivots that have contributed to the improved margins and profitability? A: Kent Cunningham, CEO: Our strategic pivots focused on operational consistency and executional discipline, which have significantly improved margins. We exited unprofitable channels and customers, closed our direct-to-consumer platform, and achieved favorable terms on our co-supply agreement, leading to a 600 basis point gross margin accretion to 40%.

Q: What drove the 33% quarter-over-quarter sales growth to $11.4 million? A: Carolina Martinez, CFO: The growth was primarily driven by a 92% increase in sales in our Asia Pacific region, highlighting the cyclical nature of our international business. Additionally, our domestic digital channels saw a 10% net sales growth year-over-year.

Q: How has the company's financial position improved in terms of working capital? A: Carolina Martinez, CFO: We improved our net working capital position to $9.5 million from $3.1 million last quarter. This was achieved through strategic pivots, including a public offering that raised just under $5 million, enhancing our financial flexibility.

Q: What are the expectations for the SRx Health acquisition? A: Kent Cunningham, CEO: The acquisition of SRx Health will position Better Choice as a leading global health and wellness company. It is expected to yield operational efficiencies and synergies, providing near- and long-term growth opportunities. We anticipate the transaction to close in early Q1 of 2025.

Q: Can you discuss the performance in the international markets, particularly in Asia? A: Kent Cunningham, CEO: We saw 9% year-over-year growth in our international channel, with strong performance in Asia Pacific. The pet food market in Asia is rapidly growing, driven by a demographic shift with younger pet owners. This represents a significant opportunity for us to expand our footprint in one of the largest and fastest-growing markets globally.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.