Good Natured Products Inc (GDNP.V) produces and distributes one of North America's widest assortments of better everyday products® made from the highest possible percentage of renewable, plant-based materials and no BPAs, phthalates or other chemicals of concern potentially harmful to human health and the environment.
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.
We initiated coverage in November 2018 with an additional note on June 2019. Here's an update of the activities since.
Aug. 27 - Announces Over 100% YOY Growth for the Three and Six Months Ended June 30, 2019 “We’ve seen the momentum from Q1 continue into Q2 to deliver our second quarter of over $2 million in revenue,” said Paul Antoniadis, CEO of good natured®. “Demand for both our plant-based food packaging and consumer products is strong, and we anticipate this trend continuing through Q3.” Sep. 16 - Present at Singular Research Midwestern Values Conference on September 19, 2019 Oct. 10 - Announces Convertible Debenture Unit Private Placement Financing. Convertible debenture units with each Unit being comprised of a CAD$1,000 principal amount, 10% subordinated unsecured convertible debenture due sixty (60) months from the closing date and 938 common share purchase warrants.
The Company intends to raise a maximum of CAD$5,300,000 in gross proceeds in the Offering. The proceeds of the Offering will be utilized to redeem the Company’s existing 10% convertible unsecured debentures due February 2022, of which a $4,874,000 principal amount is currently outstanding.
Each Debenture will be convertible, at a conversion price of $0.23 per common share. Each Warrant shall entitle the holder thereof to purchase one common share at 0.16 cents. Closing of the Offering is expected to occur on or about October 31, 2019 and remains subject to TSX-V approval.
Nov. 22 - Singular Research Initiates Coverage. A "Buy" with long-term price target of $0.20 ccnts.
Nov. 27 - Announces 217% YOY Growth for the Three Months Ended September 30, 2019. “As anticipated, Q3 has delivered another record-breaking quarter of growth,” said Paul Antoniadis, CEO of good natured®.
Dec. 9 - To Present at Singular Research Best of the Uncovered Conference on December 12, 2019. Dec. 31 - Announces First Tranche Closing of Convertible Debenture Financing: gross proceeds of $2,740,000.
The Company expects to close the remaining tranche of the Offering on or about January 31, 2020. Jan. 13 - Announces Preliminary Full Year 2019 Unaudited Revenue Results. Preliminary Revenue for FY2019 is expected at $9.9 million to $10.2 million, an increase of 94% to 100% compared with the year ended December 31, 2018.
The Company expects to release its audited FY2019 financial results in April 2020. Jan. 23 - Announces Closing of Final Tranche of Convertible Debenture Financing. Announced on October 10, 2019 for aggregate gross proceeds of $3,930,000. The Company has issued a total of 3,930 Units in the Offering. Feb 5 - Signs Two Multi-Year Commercial Agreements with US Food Producers. The Company estimates the agreements will deliver between $1.7 million to $2.0 million in organic growth on an annualized basis, and between $1.0 million to $1.2 million in the current fiscal year. The agreements have an average term of 3 years.
“We continue to hear from a growing number of food producers and grocers with a keen interest in finding more eco-friendly packaging solutions for their proprietary product lines,” said Paul Antoniadis, CEO ofgood natured®. Feb. 18 - Beacon Securities Initiates Coverage The research coverage on good natured® is prepared by an analyst at Beacon Securities and represents the views of the analyst. Price targets: $0.40 cents. Mar. 3 - Announces Acquisition of Shepherd Thermoforming & Packaging Inc. Acquire 100% of Shepherd and all its real estate assets for CAD$9.5 million in cash. The assets include machinery, molds and a 42,000 square foot manufacturing facility, all located on 2.31 acres of land in the Greater Toronto Area of Brampton, Ontario. Shepherd generated average annual revenue of over CAD$5.5 million and average annual adjusted EBITDA of CAD$420,000 in the prior three fiscal years. The Company also intends to redeem the remaining $1.18 million in principal amount of its convertible debentures issued February 2018 at the closing of the transaction. Mar. 26 - Continues to Process & Ship Food Packaging as Essential Business During COVID-19. Food Packaging is considered an essential business that must be maintained to protect food supply.
As announced on March 3, 2020, the Company is working through the final closing conditions to acquire Shepherd Thermoforming and Packaging and 100% of its real estate assets no later than April 30, 2020. Mar. 31 - Signs Commercial Agreement with U.S. Based Food and Beverage Packaging Provider. To supply earth-friendly packaging material to SmartPac Inc. Led by industry veteran, Carey Edwards, The Company estimates the one-year agreement will deliver between CAD$650,000 and CAD$1,300,000 revenue with gross margins of 25%- 30%.
Summary
GDNP.V's valuation ranged from $0.09 to $0.215 cents for the period. The earnings, especially Q2 and Q3 2019, demonstrates that the company continues to aggressively grow its top line revenues. The performance is notable relative to the respective periods in 2018 and also points to significant quarterly organic growth from Q1 2019.
As depicted in the chart, Q3 2019 Earnings (Nov. 27th) were a strong catalyst for the stock price. Valuation went from $0.12 cents to $0.215 cents. Subsequently, the closing of the first tranche of the debenture financing (Dec. 31st) and the preliminary earnings for FY 2019 (Jan. 13th) kept the momentum going.
However, preliminary FY 2019 results ($10M) suggests that Q4 2019 will likely be softer than Q3 2019. This with the announcement of the closing of the second tranche of the Debenture Financing (Jan. 23rd) did not help . Overall, 75% ($3.93M) of the targeted amount ($5.3M) was raised. Hence, two major announcements: 1) two multi-year deals with US Food Producers (Feb. 5th), and 2) acquisition of Thermoforming & Packaging Inc. (Mar. 3rd) had limited impact.
An early March market sell-off affected the company. It sent the GDNP.V to a 52 week low; $0.09 cents. Furthermore, the releases of its essential business status (Mar. 26th) and the commercial agreement with SmartPac Inc (Mar. 31st) seemed almost immaterial. Nonetheless, the trend appears to reverse itself in the past week.
As a reminder, Singular Research ($0.20 cents) and Beacon Securities ($0.40) initiated coverage in the last six months and the vertical's appetite for renewable and plant-based materials is very much on the rise.
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