VANCOUVER, BC / ACCESSWIRE / May 15, 2023 / GLG Life Tech Corporation (TSX:GLG) ("GLG" or the "Company"), a global leader in the agricultural and commercial development of high-quality zero-calorie natural sweeteners, announces financial results for the three months ended March 31, 2023. The complete set of financial statements and management discussion and analysis are available on SEDAR and on the Company's website at www.glglifetech.com.
FINANCIAL SUMMARY
The Company reported revenues of $1.6 million in the first quarter of 2023, compared to $2.8 million in revenue for the first quarter of 2022. The revenue decrease of $1.2 million resulted from a temporary slow-down in orders from one of the Company's largest customers and a reduction in monk fruit sales driven by increasingly competitive monk fruit pricing. The Company's gross profit margin decreased by four percentage points for the first quarter 2023 to 25%, compared to 29% for the same period in 2022.
The Company continues its efforts to closely manage its SG&A expenses, keeping SG&A even in the first quarter of 2023, compared to the first quarter of 2022, at $0.8 million in both quarters.
For the three months ended March 31, 2023, the Company had a net loss attributable to the Company's shareholders of $6.4 million, an increase of $2.2 million over the comparable period in 2022 ($4.3 million). The Company reported a net loss per share of $0.17 for the first quarter of 2023, compared to a net loss per share of $0.11 for the first quarter of 2022.
CORPORATE DEVELOPMENTS
Company Outlook
In recent quarters, one of the most critical items that management has focused on and continues to focus on is the development and implementation of plans to stem the losses that the Company has suffered in recent years and to ameliorate the Company's financial position. As a result of those sustained losses, the Company lacks the cash necessary to fully fund the business operations and its strategic product initiatives. The Company continues to manage its cash flows carefully to mitigate risk of insolvency. As a result of these efforts, management has been successful in improving the Company's cash flows. Nevertheless, without an infusion of cash in the months ahead, the Company may not be able to realize its strategic plans and could eventually cease to be a going concern.
To address that cash need, management has negotiated CAD $1 million revolving loan facilities with a third party for working capital purposes. In 2020, management also realized the sale of one of its two idle assets; the sale of the "Runhao" facility resulted in significant debt reduction and better positions the Company to be able to access additional lines of working capital. Management also continues to explore options for the sale or repurposing of its idle "Runyang" primary processing facility in Jiangsu province to further address its cash needs and/or balance sheet.
Another factor that continues to contribute to the Company's financial situation is the competitive price pressure in the stevia market over the last two years that has reduced mainstream "Reb A" products (such as Reb A 80 and Reb A 97) to the lowest price levels in years, although pricing has begun to rise (reflecting the increased cost of raw materials in the most recent harvest). Monk fruit prices have also become highly competitive in the marketplace. To maintain margins at sustainable levels, the Company has focused on improving its production efficiencies, continues to strive for a mix of products that is weighted more heavily on higher margin, specialty products, and has focused more on higher margin direct sales.
The Company's focus on maintaining positive cash flow led the Company to take decisive steps in 2021 and 2022 to reduce its SG&A costs as well as its production costs. Both its North American operations and Chinese operations have significantly reduced SG&A costs. For the last several years, the Company's production capacity has been far greater than its projected order levels as it had sought rapid increases in orders for Reb A products. The Company's aim continues to be to "right-size" its Chinese operations - i.e., to optimize its staffing and production planning to meet the Company's projected production requirements while retaining the ability to accommodate growth in future order volumes - and management made significant progress in this area and continues striving to optimize staffing and production plans. As a result, this has enabled the Company to sell its goods at more competitive and/or more profitable prices although the competitive price pressures remain strong.
The Company continues to explore options to significantly improve its balance sheet and cash flows, whether through restructuring of debt or other opportunities for infusions of cash to address the debt load. Having closed the idle asset sale in 2020 and having successfully implemented right-sizing efforts to manage costs, having entered into the joint venture, and continuing to optimize production efficiencies, costs, and planning, management is proceeding down the best available path to increased financial stability and improved profitability.
SELECTED FINANCIALS
As noted above, the complete set of financial statements and management discussion and analysis for the three months ended March 31, 2023, are available on SEDAR and on the Company's website at www.glglifetech.com.
Results from Operations
The following results from operations have been derived from and should be read in conjunction with the Company's annual consolidated financial statements for 2022 and the condensed interim consolidated financial statements for the three-month period ended March 31, 2023.
In thousands Canadian $, except per share amounts | 3 Months Ended March 31 | % Change | ||||
| 2023 | 2022 | |||||
Revenue | $1,557 | $2,744 | (43%) | |||
Cost of Sales | ($1,163) | ($1,943) | 40% | |||
% of Revenue | (75%) | (71%) | (4%) | |||
Gross Profit | $393 | $800 | (51%) | |||
% of Revenue | 25% | 29% | (4%) | |||
Expenses | ($1,032) | ($1,083) | (5%) | |||
% of Revenue | (66%) | (39%) | (27%) | |||
Loss from Operations | ($639) | ($283) | (126%) | |||
% of Revenue | (41%) | (10%) | (31%) | |||
Other Expenses | ($5,810) | ($4,002) | (45%) | |||
% of Revenue | (373%) | (146%) | (227%) | |||
Net Loss before Income Taxes | ($6,449) | ($4,285) | (51%) | |||
% of Revenue | (414%) | (156%) | (258%) | |||
Net Loss | ($6,449) | ($4,285) | (51%) | |||
% of Revenue | (414%) | (156%) | (258%) | |||
Net Loss Attributable to Non-Controlling Interest (NCI) | ($41) | ($32) | (28%) | |||
Net Loss Attributable to GLG | ($6,408) | ($4,253) | (51%) | |||
% of Revenue | (412%) | (155%) | (257%) | |||
Net Loss per share (LPS, Basic & Diluted) | ($0.17) | ($0.11) | (54%) | |||
Other Comprehensive Income (Loss) | ($22) | $981 | (102%) | |||
% of Revenue | (1%) | 36% | (37%) | |||
Comprehensive Net Loss | ($6,471) | ($3,304) | (96%) | |||
Comprehensive Loss Attributable to NCI | ($45) | ($21) | (114%) | |||
Comprehensive Loss Attributable to GLG | ($6,426) | ($3,283) | (96%) | |||
% of Revenue | (413%) | (120%) | (293%) | |||
Revenue
Revenue for the three months ended March 31, 2023, was $1.6 million compared to $2.8 million in revenue for the same period last year. Sales decreased by 43% or $1.2 million for the period ending March 31, 2023, compared to the prior period. The sales decrease of $1.2 million was driven by decreases in both stevia and monk fruit sales; the decrease in stevia sales was driven in part by a temporary slow-down in orders from one of the Company's largest customers and the reduction in monk fruit sales was driven by increasingly competitive monk fruit pricing in the international market. International sales remain the predominant component of the Company's revenues (100% in first quarter 2023 versus 89% in first quarter 2022).
Cost of Sales
For the quarter ended March 31, 2023, the cost of sales was $1.2 million compared to $1.9 million in cost of sales for the same period last year ($0.8 million or 40% decrease). Cost of sales as a percentage of revenues was 75% for the first quarter 2023, compared to 71% for the comparable period, an increase of 4 percentage points.
The increase in cost of sales as a percentage of revenue for the three months ended March 31, 2023, compared to the prior comparable period, is primarily attributable to the decrease in sales.
Capacity charges charged to the cost of sales ordinarily would flow to inventory and are a significant component of the cost of sales. Only two of GLG's manufacturing facilities were operating during the first quarter of 2023, and capacity charges of $0.2 million were charged to cost of sales (representing 17% of cost of sales) compared to $0.1 million charged to cost of sales in the same period of 2022 (representing 7% of cost of sales).
Gross Profit (Loss)
Gross profit for the three months ended March 31, 2023, was $0.4 million, compared to a gross profit of $0.8 million for the comparable period in 2022. The gross profit margin was 25% in the first quarter of 2023 compared to 29% for the same period in 2022, a decrease of 4 percentage points. This 4 percentage point decrease in gross profit margin for the first quarter of 2023, relative to the comparable period in 2022, is primarily attributable to the decrease in sales.
Selling, General and Administration Expenses
Selling, General and Administration ("SG&A") expenses include sales, marketing, general and administration costs ("G&A"), stock-based compensation, and depreciation and amortization expenses on G&A fixed assets. A breakdown of SG&A expenses into these components is presented below:
In thousands Canadian $ | 3 Months Ended March 31 | % Change | |||
| 2023 | 2022 | ||||
G&A Expenses | $828 | $812 | 2% | ||
Depreciation Expenses | $204 | $271 | (25%) | ||
Total | $1,032 | $1,083 | (5%) | ||
G&A expenses for the three months ended March 31, 2022, were $0.8 million versus $0.8 million in the same period in 2021.
Net Loss Attributable to the Company
In thousands Canadian $ | 3 Months Ended March 31 | % Change | ||||
| 2023 | 2022 | |||||
Net Loss | ($6,449) | ($4,285) | (51%) | |||
Net Loss Attributable to NCI | ($41) | ($32) | (28%) | |||
% of Revenue | (3%) | (1%) | (1%) | |||
Net Loss Attributable to GLG | ($6,408) | ($4,253) | (51%) | |||
% of Revenue | (412%) | (155%) | (257%) | |||
For the three months ended March 31, 2023, the Company had a net loss attributable to the Company of $6.4 million, an increase of $2.2 million or 51% over the comparable period in 2022 ($4.3 million). The $2.2 million increase in net loss attributable to the Company was driven by increases in (1) other expenses ($1.8 million) and (2) operating loss ($0.4 million).
Quarterly Basic and Diluted Loss per Share
The basic and diluted net loss loss per share from operations was $0.17 for the three months ended March 31, 2023, compared with a basic and diluted net loss of $0.11 for the comparable period in 2022.
Additional Information
Additional information relating to the Company, including our Annual Information Form, is available on SEDAR (www.sedar.com). Additional information relating to the Company is also available on our website (www.glglifetech.com).
For further information, please contact:
Simon Springett, Investor Relations
Phone: +1 (604) 669-2602 ext. 101
Fax: +1 (604) 662-8858
Email: [email protected]
About GLG Life Tech Corporation
GLG Life Tech Corporation is a global leader in the supply of high-purity zero calorie natural sweeteners including stevia and monk fruit extracts used in food and beverages. GLG's vertically integrated operations, which incorporate our Fairness to Farmers program and emphasize sustainability throughout, cover each step in the stevia and monk fruit supply chains including non-GMO seed and seedling breeding, natural propagation, growth and harvest, proprietary extraction and refining, marketing and distribution of the finished products. Additionally, to further meet the varied needs of the food and beverage industry, GLG, through its Naturals+ product line, supplies a host of complementary ingredients reliably sourced through its supplier network in China. For further information, please visit www.glglifetech.com.
Forward-looking statements: This press release may contain certain information that may constitute "forward-looking statements" and "forward looking information" (collectively, "forward-looking statements") within the meaning of applicable securities laws. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
While the Company has based these forward-looking statements on its current expectations about future events, the statements are not guarantees of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors include amongst others the effects of general economic conditions, consumer demand for our products and new orders from our customers and distributors, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgments in the course of preparing forward-looking statements. Specific reference is made to the risks set forth under the heading "Risk Factors" in the Company's Annual Information Form for the financial year ended December 31, 2022. In light of these factors, the forward-looking events discussed in this press release might not occur.
Further, although the Company has attempted to identify factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
As there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements, readers should not place undue reliance on forward-looking statements.
SOURCE: GLG Life Tech Corporation