Good Natured Products Inc (GDNP.V) claims to offer the widest assortments of consumer products and packaging made from plant-based materials with the highest percentage of renewable (up to 35% recycled content), containing no BPAs, phthalates or other chemicals of concern.
GDNP.V operates in two verticals: Food Packaging and Home & Office Products with over 130 SKUs. The company reports 120+ customers across 20 states & provinces ranging from large chains to small business retailers. Manufacturing and part of the R&D is outsourced via various partners.
We initiated coverage in November 2018. Here's an update.
Nov. 22 - Earnings results for the three & nine months ended September 30, 2018. Q3 FY18 & YTD revenues increased 24% and 47% to $1,0M and $3,1M relative to $0.80M and $2,1M YOY. Gross profit margins for Q3 FY18 & YTD were 31.3% and 32.8% versus 32.1% and 32.0% YOY.
Q3 FY18 and YTD net losses before interest, depreciation, and stock compensation, were $454,183 and $1,431,861 compared to $586,017 and $1,931,468 YOY, an improvement of 22% and 26%, respectively. The Company had cash of $3,323,357 on September 30, 2018.
Nov. 27 - Leading U.S. herb producer transitions to good natured plant-based packaging. One of the largest herb growers in the Midwest U.S., Mariposa Farms, has made the switch away from petroleum-based PET packaging to good natured® plant-based materials
Dec. 18 - Engages Questrade INC., IIROC Dealer #124, for Market Maker Services. Questrade will trade shares of good natured® on the TSXV with the guarantee to limit the difference between bid price and offer price of the Company's shares to $0.01. The Company has terminated its prior market making services provider announced on August 7th, 2018 (ITG - Independent Trading Group).
Jan 15 - Announces Preliminary Fourth Quarter and Full Year 2018. Revenue for Q4 is expected to be between $1.85 and $1.95M, an increase of 151% to 165% over the Comparative Period. Revenue for FY2018 is anticipated at $5.0 to $5.1 million, an increase of 72% to 76% over the Comparative Period. Gross margins for Q4 and FY2018 are estimated between 31.5% and 33.5% compared to 30.7% and 31.6% for the Comparative Periods.
This growth can be largely attributed to net new customer acquisitions across our national, regional and small business segments. We've built our team, approach and supply chain to scale, positioning us well to capture the growing market demand for alternatives to petroleum-packaging.
Feb. 5 - Joins RangeMe Platform for Retailers Seeking Plant-based Product Alternatives. RangeMe is being adopted by leading North American retailers including Albertsons, Whole Foods, Target, CVS, HEB, Publix, Safeway, Sam's Club and Wegmans. It allows GDNP.V to showcase its new and innovative plant-based packaging and products directly to retailers and those retailers to search new offerings based on their requirements.
Apr. 28 - Announces year ended December 31, 2018 audited financial results. Revenues for the twelve months ended December 31, 2018 increased 106% to $5,10M compared to $2,47M for the Comparative Period. Gross profit for the twelve months ended December 31, 2018 was $1,72M compared to $0.76M for the Comparative Period. Net loss of $3,10M compared to a net loss of $2,93M for the Comparative Period.
May 28 - Announces New Record Quarterly Revenue for the Three Months Ended March 31, 2019. Revenues for Q1 FY19 increased 84% to $2,05M compared to $1,11M YOY. Gross profit for Q1 FY19 was $0.77M compared to $0.37M for the three months ended March 31, 2018.
Net loss of $0.72M compared to a net loss of $0.76M YOY. Both US and Canadian market indicators remain strong due to regulatory pressure on petroleum-based plastic packaging, and we anticipate this trend to drive a large portion of our organic customer growth.”
June 11 - Announces Closing of $10 Million USD Financing from Business Development Bank of Canada (BDC). To further accelerate organic growth and, in the longer term, expand the Company’s customer base, product assortment and market reach.
The BDC Financing will be drawn down in up to three tranches. The first tranche of $5 million USD is expected to be advanced to the Company upon receipt of final TSX Venture Exchange approval regarding the related amendments to the Company's outstanding convertible debentures, described below. The remaining $5 million USD may be advanced at a later date for use in funding acquisition opportunities to expand the Company’s customer base, product assortment and market reach, subject to satisfaction of certain conditions described below. Debentures: (c) the price at which the Debentures can be forced to convert into common shares of the Company is increased to $0.25 from $0.15;
In the last three quarters, GDNP.V doubled revenues, reduced its net loss while retaining a healthy cash balance.
"This growth can be largely attributed to net new customer acquisitions across our national, regional and small business segments. We've built our team, approach and supply chain to scale, positioning us well to capture the growing market demand for alternatives to petroleum-packaging." - GDNP.V's CEO.
As such, the recent announcement of the closing of $10M USD financing from the BDC had a significant impact on valuation. It provides for a notable re-structuring of existing financing terms, as well as, potentially funds GDNP.V with $5M USD to pursue acquisition opportunities.
Central to deal was the amendment of convertible debentures due in 2022:
The Debenture Holders, by written resolution, have agreed with the Company as follows (such amendments subject to final approval of the TSX Venture Exchange): (a) that the first tranche (US$5mm) of the BDC Financing is approved; (b) in the event of any failure to pay amounts due, or other event of default under the BDC Financing (or any other senior debt facility), the interest payments on the Debentures will be temporarily suspended; (c) the price at which the Debentures can be forced to convert into common shares of the Company is increased to $0.25 from $0.15; and (d) each warrant certificate held by a Debenture Holder (to the extent not previously expired or exercised) will be deemed to have been amended, so that the number of common shares that are subject to purchase under the warrant certificate is increased by 122.22% (provided that, for greater certainty, the exercise price per common share will not decrease).
The conversion of debentures to common share being raised from $0.15 to $0.25 cents is a significant achievement for the company.
At the current price GDNP.V has ample room for "good" growth.
DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.