VANCOUVER, BC, Nov. 6, 2024 /CNW/ - Kits Eyecare Ltd. (TSX: KITS) ("KITS" or the "Company"), a leading vertically integrated eyecare provider, is reporting its results for the third quarter ended September 30, 2024.
KITS Eyecare Ltd. logo (CNW Group/KITS Eyecare Ltd.)
Third Quarter 2024 Financial & Operational Highlights
For the third quarter of 2024, compared to the third quarter of 2023:
Revenue increased by 34.4% to a record $41.9 million compared to $31.2 million
Gross profit was $13.8 million or 32.9% of revenue, compared to $10.7 million or 34.3% of revenues
Marketing expenses as a percentage of revenue improved by 30 basis points to 13.4% compared to 13.7%
Fulfillment expenses as a percentage of revenue improved by 180 basis points to 10.8% compared to 12.6%
General and administrative expenses as a percentage of revenue improved by 30 basis points to 6.2% compared to 6.5%
EBITDA was $0.9 million compared to $1.4 million
Adjusted EBITDA increased by $1.0 million to $1.6 million compared to $0.6 million
Net income was $0.1 million compared to $0.5 million
Glasses revenue increased by 43.2% to a record $5.7 million compared to $4.0 million
Record revenue milestone of $15.9 million from new customers
For the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023:
Revenue increased 28.9% to $114.5 million compared to $88.8 million
Gross profit was $37.4 million or 32.6% of revenue, compared to $29.7 million or 33.4% of revenues
Marketing expenses as a percentage of revenue declined by 60 basis points to 13.3% compared to 13.9%
Fulfillment expenses as a percentage of revenue declined by 130 basis points to 11.3% compared to 12.6%
General and administrative expenses as a percentage of revenue were 6.7% compared to 6.7%. Excluding Share-based compensation, General and administrative expenses as a percentage of revenue were 5.9% compared to 6.2%
Adjusted EBITDA increased by $2.1 million to $3.5 million compared to $1.4 million
Net income was $0.4 million compared to a net loss of $1.7 million
Strong quarter end cash balance of $19.1 million compared to $19.3 million
Generated positive cash flow from operations of $9.2 million compared to $4.7 million
Management Commentary
"Reflecting on our third-quarter results, I'm incredibly proud of the progress we've made as a team. Achieving a record 34.4% revenue growth and significant operational efficiencies highlights the strength of our approach in reaching new customers while continually optimizing our business." said Roger Hardy, Co-Founder and CEO of KITS. "This quarter, we achieved a milestone in glasses revenue, up 43.2% year-over-year, and welcomed a record number of new customers. These achievements underscore the impact of our dedicated focus on product expansion and customer retention. We're excited to build on this momentum as we continue scaling KITS and driving value for our shareholders."
Third Quarter 2024 Financial Results
Revenue increased by 34.4% to $41.9 million compared to $31.2 million in the third quarter of 2023 (the "prior year period"). The increase was primarily attributable to strong repeat customer revenue in both contact lens and eyeglasses, with higher average order values.
Gross profit increased by 29.2% to $13.8 million compared to $10.7 million in the prior year period.
Net income was $0.1 million compared to net income of $0.5 million in the prior year period. EBITDA was $0.9 million compared to $1.4 million in the prior year period, while Adjusted EBITDA improved to $1.6 million compared to $0.6 million in the prior year period. The bottom-line improvements were primarily attributable to the increase in revenue and gross profit, along with achieving marketing and fulfillment efficiencies as a percentage of revenue.
On September 30, 2024, cash and cash equivalents totaled $19.1 million compared to $16.0 million on December 31, 2023 and $19.3 million on June 30, 2024.
Fourth Quarter 2024 Outlook
For the fourth quarter of 2024, KITS management expects revenue to be in the range of $43.0 million to $45.0 million, with Adjusted EBITDA as a percentage of revenue between 3% and 5%. See "Forward-Looking Statements" below for important disclosure with respect to expectations and forward-looking information.
Conference Call
KITS management will host the conference call followed by a question-and-answer period. To access the call instantly, please click here to register your name and phone number via the rapid connect link.
The conference call will also be webcast live with a presentation and available for replay here and via the investor relations section of the Company's website at www.kits.com.
Date: Wednesday, November 6, 2024 Time: 9:00 a.m. Eastern time (6:00 a.m. Pacific time) Presentation webcast link: https://app.webinar.net/Mj9z3AjBXWO Rapid connect link: https://emportal.ink/3XVV2qY North American toll-free number: 1-888-510-2154 Local Toronto dial-in number: 1-437-900-0527 Confirmation #: 46190 #
Financial Highlights
The following selected financial information is qualified in its entirety by and should be read conjunction with our consolidated financial statements for the three and nine months ended September 30, 2024 and September 30, 2023 and accompanying notes and Management's Discussion and Analysis ("MD&A") which may be viewed on SEDAR at www.sedarplus.ca.
Three Months Ended
Nine Months Ended
Financial and Operating Data
September 30, 2024
(unaudited)
September 30, 2023
(unaudited)
September 30, 2024
(unaudited)
September 30, 2023
(unaudited)
Revenue
$
41,871
$
31,150
$
114,505
$
88,847
Net income (loss)
$
132
$
480
$
383
$
(1,724)
Net income (loss) per share
Basic
$
0.00
$
0.02
$
0.01
$
(0.05)
Diluted
$
0.00
$
0.01
$
0.01
$
(0.05)
Non-IFRS Measures (a):
Constant currency revenue
$
41,414
$
30,561
$
113,681
$
85,944
EBITDA
$
946
$
1,444
$
3,234
$
928
Adjusted EBITDA
$
1,599
$
605
$
3,524
$
1,422
Adjusted EBITDA Margin %
3.8 %
1.9 %
3.1 %
1.6 %
Reconciliation of constant currency revenue
Revenue
$
41,871
$
30,561
$
114,505
$
85,944
Foreign exchange impact
(457)
-
(824)
-
Constant Currency Revenue
$
41,414
$
30,561
$
113,681
$
85,944
Change in constant currency
$
10,264
$
24,834
Change in constant currency %
33.0 %
28.0 %
Reconciliation of Adjusted EBITDA
Net income (loss) for the period
$
132
$
480
$
383
$
(1,724)
Add back:
Income taxes
124
72
349
(468)
Finance costs – net
84
118
551
725
Depreciation and amortization
606
774
1,951
2,395
EBITDA
$
946
$
1,444
$
3,234
$
928
Add back
Share-based compensation (b)
$
122
$
(118)
$
931
$
394
Exchange loss / (gain)
528
(725)
(651)
89
One-time costs (c)
3
4
10
11
Adjusted EBITDA
$
1,599
$
605
$
3,524
$
1,422
Revenue
$
41,871
$
31,150
$
114,505
$
88,847
Adjusted EBITDA Margin % (d)
3.8 %
1.9 %
3.1 %
1.6 %
Notes:
(a)
Refer to "Non-IFRS Measures and Industry Metrics" section of the MD&A filed on www.sedarplus.ca and below.
(b)
Represents non-cash share-based compensation expense associated with restricted share rights ("RSRs") and options recognized in the period.
(c)
One-time IPO directors' and officers' insurance costs which are expensed over the insurance coverage period.
(d)
Represents Adjusted EBITDA divided by revenue from the same period.
About KITS
KITS makes eyecare easy. KITS is a leading vertically integrated digital eyecare brand providing eyewear for eyes everywhere. We offer customers access to a vast selection of contact lenses and eyeglasses, including our own exclusive KITS designed products, as well as a robust suite of online vision tools. Our efficient digital platform, backed by our industry-leading manufacturing and designs, removes intermediaries, and enables us to offer great prices and deliver made to order personalized products with incredible care and accuracy. We are creating disruption in the industry by constantly pursuing cutting-edge technologies to enable the best customer experience, including online eyewear fitting tools, and virtual try-on for glasses. We strive to delight our customers with our competitive prices, a convenient digital shopping experience, fast and reliable delivery options, and an unrelenting focus on earning our customers' lifelong trust. For more information on KITS, visit: www.kits.com.
Non-IFRS Financial Measures and Industry Metrics
This press release includes references to certain non-IFRS financial measures such as Constant Currency Revenue, annual revenue run-rate, EBITDA and Adjusted EBITDA, and industry metrics such as Active Customers. These financial measures and industry metrics are employed by the company to measure its operating and economic performance and to assist in business decision-making, as well as providing key performance information to senior management. The company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts use this information to evaluate the company's operating and financial performance. These financial measures are not defined under IFRS, nor do they replace or supersede any standardized measure under IFRS. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. Definitions and reconciliations of non-IFRS measures to the nearest IFRS measure and Industry Metrics can be found in our Management's Discussion and Analysis. Such non- IFRS reconciliations can also be found in this press release under "Financial Highlights".
Forward-Looking Statements
This press release contains forward-looking statements, including statements relating to the execution of our proposed strategy, our operating performance, our expectations and outlook for the fourth quarter of 2024 and prospects for the business. These forward-looking statements generally can be identified by the use of words such as "intend," "believe," "could," "continue," "expect," "estimate," "forecast," "may," "potential," "project," "plan," "would," "will," and other words of similar meaning. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such a statement. Our business is subject to substantial risks and uncertainties. This forward-looking information and other forward-looking information are based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions in respect of the expansion and enhancement of our optical laboratory for glasses and warehouse facilities; the growth of our business and launch of new technologies; our ability to drive sales growth; our ability to maintain, enhance, and grow within our addressable market; our ability to drive ongoing development and innovation of our exclusive brands and product categories; our ability to continue directly sourcing from third party suppliers and manufacturers; our ability to retain key personnel; our ability to add, maintain and expand production, distribution and fulfillment capabilities; our ability to continue investing in infrastructure to support our growth; our ability to obtain and maintain existing financing on acceptable terms; currency exchange and interest rates; the impact of competition; the changes and trends in our industry or the global economy; and the changes in laws, rules, regulations, and global standards are material factors made in preparing forward-looking information and management's expectations. KITS' risks and uncertainties are discussed in detail in the company's Annual Information Form, filed on SEDAR on March 6, 2024. Investors, potential investors, and others should give careful consideration to these risks and uncertainties. We caution investors not to rely on the forward-looking statements contained in this press release when making an investment decision in our securities. The forward-looking statements in this press release speak only as of the date of this release, and we undertake no obligation to update or revise any of these statements, except as required under applicable securities laws. If we do update certain forward-looking information, no inference should be made that we will further update such or other forward-looking information.
