Goodfood Market (FOOD) Q3 2024 earnings summary

Executive summary

• Achieved sixth consecutive quarter of positive adjusted EBITDA, with a margin of 9.2% (CAD 3.6 million) for Q3 FY2024, a 1.4% year-over-year improvement.

• Adjusted EBITDA for the last 12 months reached CAD 9.3 million, 4.5 times higher than the same period last year.

• Net income turned positive at $0.3 million, compared to a loss of $1.2 million in Q3-23.

• Consistently positive cash flows, with adjusted free cash flow at $4.4 million for the quarter and $8.7 million year-to-date.

• Strategic focus on profitability, cash flow generation, and customer-centric initiatives, including new recipes, customization, value meals, and partnerships.

Financial highlights

• Net sales for Q3 FY2024 were $38.6 million, down 8% year-over-year, primarily due to fewer active customers and seasonality.

• Gross margin reached a record 44.0%, up 3.0 percentage points year-over-year.

• Adjusted EBITDA increased 8% year-over-year to $3.6 million, with margin up 1.4 percentage points to 9.2%.

• Net income improved to $0.3 million from a net loss of $1.2 million in Q3 2023.

• Cash and cash equivalents stood at $26.2 million at quarter-end.

Outlook and guidance

• Focus remains on growing cash flows and profitability before scaling top-line growth, with internally generated cash flows expected to fund future expansion.

• Q4 expected to show typical seasonality, with some early impact already seen in Q3.

• Plan to reinvest some gross margin gains into enhancing customer value proposition in FY2025.

• Product variety, value meals, and partnerships are expected to drive order frequency and customer engagement.

• Canadian meal kit market projected to grow at a mid-teen CAGR through 2028, providing runway for further penetration.