$KAVL Kaival Brands Reports Fiscal 2023 Third Quar
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Posted On: 09/20/2023 8:57:01 AM
$KAVL Kaival Brands Reports Fiscal 2023 Third Quarter Financial Results and Highlights Recent Achievements
https://www.globenewswire.com/news-release/20...ments.html
Stable Revenues and Improving Gross Margin and Net Profits
Expanding Distribution, Revised PMI Licensing Agreement and More Favorable Regulatory Environment Expected to Serve as Strong Tailwinds for Improving Financial Performance
GRANT-VALKARIA, Fla., Sept. 20, 2023 (GLOBE NEWSWIRE) -- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) ("Kaival Brands," the "Company," or "we"
, the exclusive U.S. distributor of all products manufactured by Bidi Vapor, LLC ("Bidi Vapor" , including the BIDI® Stick, which are intended for adults 21 and over, today announced its financial results for the fiscal 2023 third quarter ended July 31, 2023.
Recent Business Highlights
Added more than 1,500 store locations to Circle K rollout bringing the total locations to more than 2,700 in the South Atlantic and Midwest regions
Shipped an initial order of BIDI® Sticks to over 900 Kwik Trip and Mapco locations
Amended agreement with Phillip Morris International (PMI) for distribution of Bidi Vapor products internationally, simplifying payment structure thereby reducing costs and accelerating royalty payments. On September 8, 2023, the Company received both a net reconciliation payment from PMI of approximately $135,000 pursuant to this amendment, and also received a royalty payment earned from July 1, 2023 through July 31, 2023, in the amount of approximately $121,000
Appointed Thomas J. Metzler to the role of Chief Financial Officer
Promoted Eric Mosser to the role of Chief Executive Officer
Promoted Stephen Sheriff to role of Chief Operating Officer
Management Comments
Eric Mosser, Chief Executive Officer and President of Kaival Brands, stated, “We are increasingly encouraged by the renewed BIDI® Stick interest and order flow from our distribution partners and increased enforcement of compliance regulations by the U.S. Food and Drug Administration (FDA). Over the past several months, we have increased placements with several large-scale C-store brands including Kwik Trip and Circle K, both of which are focused on ID-verification and youth-access prevention, and engaged a prominent national broker and one of the largest retail distributors in the U.S. We are pushing distribution into more channels and expect the impact will be evident in our financial results in the coming periods. Sales in September are on pace to double sales in August, a solid proof point of the momentum that is building.
“We recently renegotiated the licensing agreement with PMI in light of regulation changes in international markets and given the lessons learned during the first year of the agreement. Importantly, the revised agreement simplifies the payment terms, provides us with incremental cost savings and improves visibility into our future revenue and cash flows. We anticipate an acceleration of royalty payments, which will also serve as a catalyst for improving financial performance in the coming periods.”
Financial Results for Fiscal Third Quarter 2023
Revenues: Revenues for the third quarter of fiscal year 2023 were $3.6 million, compared to $3.8 million in the same period of the prior fiscal year. Revenues were flat in the third quarter of 2023, primarily due to credits/discounts/rebates issued to customers. The Company does not anticipate this trend to continue as renewed distribution ramps up and sales of non-tobacco flavored BIDI® Sticks increase, and even more so now that the PMTA denial order has been vacated by the 11th Circuit Court of Appeals, which allows it to continue marketing and selling BIDI ® Sticks, subject to the FDA’s enforcement discretion.
Cost of Revenue, Net, and Gross Profit: Gross profit in the third quarter of fiscal year 2023 was $1.3 million, or 36.3% of revenues, net, compared to approximately $442,000 gross profit, or 11.5% of revenues, net, for the third quarter of fiscal year 2022. Total cost of revenue, net was $2.3 million, or 63.7% of revenue, net for the third quarter of fiscal year 2023, compared to $3.4 million, or 88.5% of revenue, net for the third quarter of fiscal year 2022. The increase in gross profit was primarily driven by improved cost per sticks during the third quarter of fiscal year 2023.
Operating Expenses: Total operating expenses were $3.0 million for the third quarter of fiscal year 2023, compared to $4.3 million for the third quarter of fiscal year 2022. For the third quarter of fiscal year 2023, operating expenses consisted of advertising and promotion fees of $578,000 compared to $658,000 in the prior year quarter, and general and administrative expenses of $2.4 million compared to $3.6 million in the prior year quarter. The reduction in general and administrative expenses was primarily the result of lower stock option expenses and professional fees, which was partially offset by an increase in other general and administrative expenses. The Company expects future operating expenses to increase while it increases the footprint of its business and generates increased sales growth.
Net Loss: Net loss for the third quarter of fiscal year 2023 was $1.8 million, or $0.03 basic and diluted net loss per share, compared to a net loss of $3.9 million, or $0.09 basic and diluted net loss per share, for the third quarter of fiscal year 2022. The decrease in the net loss for the third quarter of fiscal year 2023, as compared to the third quarter of fiscal year 2022, is primarily attributable to increased gross margins on sold products and a reduction in general & administrative expenses.
Cash Position: As of July 31, 2023, the Company had working capital of $2.4 million and total cash of $1.0 million.
Additional information regarding the Company’s results of operations for the third quarter ended July 31, 2023 is available in the Company’s Quarterly Report on Form 10-Q for such reporting period, which has been filed with the Securities and Exchange Commission.
https://www.globenewswire.com/news-release/20...ments.html
Stable Revenues and Improving Gross Margin and Net Profits
Expanding Distribution, Revised PMI Licensing Agreement and More Favorable Regulatory Environment Expected to Serve as Strong Tailwinds for Improving Financial Performance
GRANT-VALKARIA, Fla., Sept. 20, 2023 (GLOBE NEWSWIRE) -- Kaival Brands Innovations Group, Inc. (NASDAQ: KAVL) ("Kaival Brands," the "Company," or "we"
, the exclusive U.S. distributor of all products manufactured by Bidi Vapor, LLC ("Bidi Vapor" , including the BIDI® Stick, which are intended for adults 21 and over, today announced its financial results for the fiscal 2023 third quarter ended July 31, 2023. Recent Business Highlights
Added more than 1,500 store locations to Circle K rollout bringing the total locations to more than 2,700 in the South Atlantic and Midwest regions
Shipped an initial order of BIDI® Sticks to over 900 Kwik Trip and Mapco locations
Amended agreement with Phillip Morris International (PMI) for distribution of Bidi Vapor products internationally, simplifying payment structure thereby reducing costs and accelerating royalty payments. On September 8, 2023, the Company received both a net reconciliation payment from PMI of approximately $135,000 pursuant to this amendment, and also received a royalty payment earned from July 1, 2023 through July 31, 2023, in the amount of approximately $121,000
Appointed Thomas J. Metzler to the role of Chief Financial Officer
Promoted Eric Mosser to the role of Chief Executive Officer
Promoted Stephen Sheriff to role of Chief Operating Officer
Management Comments
Eric Mosser, Chief Executive Officer and President of Kaival Brands, stated, “We are increasingly encouraged by the renewed BIDI® Stick interest and order flow from our distribution partners and increased enforcement of compliance regulations by the U.S. Food and Drug Administration (FDA). Over the past several months, we have increased placements with several large-scale C-store brands including Kwik Trip and Circle K, both of which are focused on ID-verification and youth-access prevention, and engaged a prominent national broker and one of the largest retail distributors in the U.S. We are pushing distribution into more channels and expect the impact will be evident in our financial results in the coming periods. Sales in September are on pace to double sales in August, a solid proof point of the momentum that is building.
“We recently renegotiated the licensing agreement with PMI in light of regulation changes in international markets and given the lessons learned during the first year of the agreement. Importantly, the revised agreement simplifies the payment terms, provides us with incremental cost savings and improves visibility into our future revenue and cash flows. We anticipate an acceleration of royalty payments, which will also serve as a catalyst for improving financial performance in the coming periods.”
Financial Results for Fiscal Third Quarter 2023
Revenues: Revenues for the third quarter of fiscal year 2023 were $3.6 million, compared to $3.8 million in the same period of the prior fiscal year. Revenues were flat in the third quarter of 2023, primarily due to credits/discounts/rebates issued to customers. The Company does not anticipate this trend to continue as renewed distribution ramps up and sales of non-tobacco flavored BIDI® Sticks increase, and even more so now that the PMTA denial order has been vacated by the 11th Circuit Court of Appeals, which allows it to continue marketing and selling BIDI ® Sticks, subject to the FDA’s enforcement discretion.
Cost of Revenue, Net, and Gross Profit: Gross profit in the third quarter of fiscal year 2023 was $1.3 million, or 36.3% of revenues, net, compared to approximately $442,000 gross profit, or 11.5% of revenues, net, for the third quarter of fiscal year 2022. Total cost of revenue, net was $2.3 million, or 63.7% of revenue, net for the third quarter of fiscal year 2023, compared to $3.4 million, or 88.5% of revenue, net for the third quarter of fiscal year 2022. The increase in gross profit was primarily driven by improved cost per sticks during the third quarter of fiscal year 2023.
Operating Expenses: Total operating expenses were $3.0 million for the third quarter of fiscal year 2023, compared to $4.3 million for the third quarter of fiscal year 2022. For the third quarter of fiscal year 2023, operating expenses consisted of advertising and promotion fees of $578,000 compared to $658,000 in the prior year quarter, and general and administrative expenses of $2.4 million compared to $3.6 million in the prior year quarter. The reduction in general and administrative expenses was primarily the result of lower stock option expenses and professional fees, which was partially offset by an increase in other general and administrative expenses. The Company expects future operating expenses to increase while it increases the footprint of its business and generates increased sales growth.
Net Loss: Net loss for the third quarter of fiscal year 2023 was $1.8 million, or $0.03 basic and diluted net loss per share, compared to a net loss of $3.9 million, or $0.09 basic and diluted net loss per share, for the third quarter of fiscal year 2022. The decrease in the net loss for the third quarter of fiscal year 2023, as compared to the third quarter of fiscal year 2022, is primarily attributable to increased gross margins on sold products and a reduction in general & administrative expenses.
Cash Position: As of July 31, 2023, the Company had working capital of $2.4 million and total cash of $1.0 million.
Additional information regarding the Company’s results of operations for the third quarter ended July 31, 2023 is available in the Company’s Quarterly Report on Form 10-Q for such reporting period, which has been filed with the Securities and Exchange Commission.
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