Goodfood Market (FOOD) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 marked a transformative year with adjusted EBITDA reaching $9.1 million (6% margin), a 93% year-over-year increase, and the seventh consecutive quarter of positive adjusted EBITDA.

• Adjusted free cash flow for the year was $7.6 million, the first full year of positive free cash flow, supporting a reduction in net leverage and strengthening financial flexibility.

• Net leverage ratio improved to 2.5x from 4.4x year-over-year, driven by profitability, cash flow, and debt repayment.

• The acquisition of Genuine Tea marks the start of a new growth phase, expanding the portfolio of next-generation direct-to-consumer brands.

• Launch of the Value Plan and chef collaborations increased customer choice, engagement, and affordability.

Financial highlights

• Fiscal 2024 net sales were $153 million, down 9% year-over-year, mainly due to fewer active customers, partially offset by higher average basket size and pricing optimization.

• Gross profit for the year was $63 million, down 4%, but gross margin improved to 41.2% from 38.8% due to operational efficiencies.

• Adjusted EBITDA rose to $9.1 million (margin 5.9%), up 93% from $4.7 million (margin 2.8%) in FY23.

• Net loss narrowed to $3.4 million from $16.5 million in FY23.

• Adjusted free cash flow for the year was $7.6 million, up $12.1 million from the prior year.

Outlook and guidance

• Strategy for fiscal 2025 focuses on expanding the Value Plan, chef partnerships, and platform growth through acquisitions.

• Margin improvement is expected through margin-accretive acquisitions and incremental SG&A efficiencies.

• Initiatives to reduce customer acquisition costs and enhance digital experience have led to double-digit percentage reductions in acquisition costs year-over-year.

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

• Industry research projects Canadian meal kit household penetration to rise from 3.5% to 4.2% by 2029, implying high single-digit CAGR.