MAV Beauty Brands Announces Preliminary Q4 2020 Results and Provides Operational Update

Board Initiates Review Process to Evaluate Potential Strategic Alternatives 

VAUGHAN, ON, Feb. 18, 2021 /CNW/ - MAV Beauty Brands Inc. ("MAV Beauty Brands" or the "Company") (TSX: MAV), a global personal care platform, today provided an operational update, including its preliminary financial highlights for the three months ended December 31, 2020, and announced that its board of directors (the "Board") has initiated a strategic review process (the "Strategic Review Process") to identify, review and evaluate potential strategic alternatives that may be available to the Company.

Operational Update

"While the Company's operations were largely resilient throughout 2020, several COVID-related factors negatively impacted fourth quarter results, including a category-wide decrease in haircare sales we believe to be the result of reduced foot traffic as well as other factors, and temporary disruptions in our third-party warehousing and manufacturing operations," stated Tim Bunch, Chief Executive Officer of MAV Beauty Brands.  "We believe the majority of these disruptions to be non-recurring as sales in the first quarter are currently trending in line with last year after excluding the strong benefit of consumer pantry loading at the onset of the pandemic in March 2020.  COVID-19 still presents risks in 2021 so we continue to monitor and adjust to the market, including taking active steps to minimize operational disruptions and increase inventory of core products to ensure supply sufficiency."

Based on preliminary results for the fourth quarter of 2020, the Company currently expects (see "Presentation of Financial Information" below):

  • Net Revenue of $22.5 million to $24.5 million; and
  • Adjusted EBITDA (non-IFRS measure) of $3.0 million to $4.0 million.

MAV will report its complete audited financial results for the fourth quarter and full-year 2020 in late March.

The overall haircare category in U.S. food, drug, and mass ("FDM") retailers experienced a sales decline of single digits in Q4 2020, the largest decline of any quarter in 2020. Sales in the drug channel, where MAV over-indexes in sales and distribution, were most severely impacted with a low double-digit decline during the same period(1), reflecting what we believe to be reduced retail foot traffic due to COVID-related restrictions and lockdowns, among other factors. These declines resulted in decreased and delayed retailer replenishment as retailers adjusted inventory levels to reflect lower sell-through. Adjusted EBITDA in the fourth quarter was also affected by a reduced gross margin primarily driven by additional costs associated with annual retailer shelf resets and higher e-commerce holiday promotional activity. Recent Q1 2021 haircare category sales are off to a better start as U.S. industry POS reports show January to be flat year over year(1). The Company remains focused on channels and retailers that are growing. E-commerce sales remain robust, led by strong Amazon sales of several of the Company's brands.

Strategic Review Process 

The Company also announced today that its Board has initiated a Strategic Review Process to identify, review and evaluate potential strategic alternatives that may be available to the Company, including without limitation, the sale of all or substantially all of the Company's securities and/or its assets.

The Board has formed a special committee (the "Special Committee") to oversee and facilitate the Strategic Review Process. The Special Committee has engaged Jefferies LLC as its financial advisor to assist with identifying and soliciting strategic alternatives to maximize shareholder value.

It is the Company's current intention not to disclose developments with respect to the Strategic Review Process unless and until the Board has approved a specific transaction, on the recommendation of the Special Committee, or otherwise determines that disclosure is necessary or appropriate. The initiation of the Strategic Review Process is not in response to any proposed transaction and there are no assurances or guarantees that the Strategic Review Process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction.

(1)  Source: AC Nielsen

About MAV Beauty Brands (TSX:MAV)

MAV Beauty Brands is a global personal care platform focused on acquiring great independent brands and helping these brands to scale and win market share. We have built an operating platform to build brands through expanded distribution, innovation, and marketing. Today, we have a diversified portfolio of four complementary personal care brands – Marc Anthony True Professional, Renpure, Cake Beauty and The Mane Choice – offering premium quality hair care, body care and beauty products. These products are sold in over 30 countries around the world and in more than 100 of the world's largest retailers.

Presentation of Financial Information

The preliminary, unaudited financial results included in this press release are based on information available to the Company as of the date of this release. Final reported results could differ from these preliminary results following the completion of year-end accounting procedures, final adjustments and other developments arising between now and the time that the Company's financial results are finalized, and such changes could be material. The Company's independent auditor, Ernst & Young LLP, has not audited, reviewed or performed any procedures with respect to the preliminary financial results included in this press release, and accordingly does not express an opinion or any other form of assurance with respect thereto. In addition, these preliminary results are not a comprehensive statement of the Company's financial results for the quarter and fiscal year ended December 31, 2020. They should not be viewed as a substitute for audited financial statements prepared in accordance with International Financial Reporting Standards and are not necessarily indicative of the Company's results for any future period.

Non–IFRS Measures 

This press release makes reference to certain non–IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non–IFRS measures including "Adjusted EBITDA". These non–IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non–IFRS measures in the evaluation of issuers. Our management also uses non–IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation.

"Adjusted EBITDA" represents, for the applicable period, EBITDA as adjusted to add back or deduct, as applicable, certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii) shareholder fees and related costs; (iii) purchase accounting adjustments; (iv) share–based compensation; and (v) unrealized foreign exchange (gain) loss.

Forward-Looking Information

Certain information in this press release, including preliminary, unaudited financial results for the fourth quarter of 2020 (see "Presentation of Financial Information" above), trends and expectations regarding sales in the first quarter of 2021, ongoing factors related to the COVID-19 pandemic, including the reoccurrence of COVID-19 related disruptions to our operations, that may affect the performance of the Company, steps the Company is taking to mitigate such factors to the extent within management's control, the Company's ability to identify and solicit strategic alternatives as part of the Strategic Review Process, and statements relating to the realization of any strategic transaction and the timing and terms thereof, constitutes forward looking information . In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events.

Although the Company believes that the forward-looking statements in this press release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond the Company's control and the effects of which can be difficult to predict: (a) the risk that completion of the year-end audit procedures will result in final audited Q4 2020 results that differ materially from the unaudited, preliminary results included in this press release, (b) the duration, severity and risks of the COVID-19 pandemic and the resulting impact on the Company's sales, operations and business, (c) risks and uncertainties relating to the Strategic Review Process, including with respect to identifying, soliciting and consummating any strategic transaction, and (d) other risks inherent to the Company's business and/or factors beyond its control which could have a material adverse effect on the Company.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by MAV Beauty Brands as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the "Risk Factors" section of the Company's Annual Information Form dated March 28, 2020 for the year ended December 31, 2019 and the Company's other periodic filings made available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect MAV Beauty Brands; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and MAV Beauty Brands expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE MAV Beauty Brands

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