Yowie Group says its first quarter results show it is on track to deliver net sales growth, improved EBITDA and a positive operating cash run rate in the full year.
Sales in the first quarter increased by 23 per cent over the previous year, up to US$4.5m, while losses shrank from US$178,000 to US$22,000. Operating cashflow was breakeven, compared to a US$519,000 burn in the corresponding period last year.
Mark Schuessler, managing director and CEO of the company, says the sales surge reflected strong US core Yowie, the addition of Bites and Gummies, and timing of Australian shipments.
Commenting on the market he said, “We continue to see significant competitive activity in the US and Australian confectionery markets from major global competitors. We continue to push new distribution and develop new items to compete effectively.”
In his outlook Schuessler said Yowie would continue to deliver on key priorities, is on track to deliver revenue growth and improving EBITDA, and will generate a positive operating cash flow run rate.
However, Shuessler said the company was not in for an easy ride. He said, “Though we have made gradual improvements, there are still major challenges to reach sustainable, on-going profitability and positive operating cash run rate.”
Yowie has been the subject of two takeover bids this year from Australian private equity funds, neither successful.
Shipments have begun into divisions of the fourth biggest US grocer Ahold and the market leading Dollar Store chain, which has 15,000 outlets nationally.
Schuessler said, “We still have room to expand distribution, with our focus on the food and convenience channels. This expanded US distribution is critical for success given the competitive activity ramping up for the holiday season, and the launch of a new global chocolate brand into the market.”
The new single-serve Gummy + pet surprise has started to reach shelves in the US. Yowie is also launching a core Yowie multipack, with bonus toys, for back of the store and Club store distribution. In Australia it has begun in-store tests of a chocolate Bites 105g sharebag, and a 144g Gummy sharebag with pet animal toy, with expected launches in major retailers by the third quarter.
Schuessler said, “We expect a revenue growth trajectory that will result in improved EBITDA and positive operating cash flow run rates. As noted, we continue to see gradual improvement in our EBITDA and cash flow due to fiscal discipline and strategic spending, despite a hyper competitive situation in all markets.
“Our plans are in place to deliver net sales growth, improve EBITDA and cash run rate during FY20 based on continuing to deliver on our key priorities.”
These priorities include expanding distribution in both the US and Australian markets. Schuessler said, “We began pipeline shipping to major US grocery and speciality retailers in Q1 and have several other major retailers expanding store count distribution in Q2 and Q3. We are also adding Bites and Gummy distribution points. “
