----------------------------- -------- ----- ----------- ----- ---------- ----- -----------
Adjusted EBITDA(1) (471) 4,316 (653) 3,647
----------------------------- -------- ----- ----------- ----- ---------- ----- -----------
Earnings per share
Basic $ (0.04) $ $ 0.20 $ $ (0.10) $ $ 0.03
Diluted $ (0.04) 0.19 (0.10) 0.03
------------------------ --- -------- ----- ----------- ----- ---------- ----- -----------
Weighted average number
of common shares
outstanding
Basic 20,761,085 20,648,448 20,667,337 20,665,803
Diluted 20,761,085 21,796,236 20,667,337 21,995,583
------------------------ ------------- ----- ----------- ----- ---------- ----- -----------
Selected Balance Sheet
Information
Cash and cash equivalents,
end of period 12,236 13,856
Selected Cash Flow
Information
Cash provided by (used in)
operating activities (189) 4,693 (1,128) 5,043
Cash used in investing
activities (581) (1) (624) (62)
Cash used in financing
activities (104) (90) (306) (382)
----------------------------- -------- ----- ----------- ----- ---------- ----- -----------
Revenue
We have three reportable segments: 1) Commercial Skincare ("Commercial"), which manufactures and sells branded non-prescription skincare products in both the Canadian and international markets, while also commercializing Pliaglis(R) and New Cellular Treatment Factor(R) ("NCTF") in Canada; 2) Licensing and Royalties ("Licensing"), which includes revenues generated from licensing our intellectual property related to Pliaglis or to our transdermal delivery technologies; and 3) Manufacturing and Services ("Manufacturing"), which includes revenue from contract manufacturing and product development services.
For the three months ended September 30, 2021, total revenue was $2,993 compared to $7,301 for the three months ended September 30, 2020, representing a decrease of $4,308. The decrease came primarily from our Licensing segment in the amount of $4,680, largely due to the impact of the Taro Amendment of $4,483 in Q3-F2020 which did not repeat. Revenue from our Commercial segment posted an overall decrease of $219, mainly due to lower export and protective personal equipment sales year-over-year, while the performance of our core
brands continued to improve in the Canadian market. These reductions were partly offset by an increase of $591 in our Manufacturing segment from higher volumes with new and existing clients.
Gross Profit
For the three months ended September 30, 2021, gross profit was $1,525, representing a gross margin of 51.0%, compared to $6,129 and 83.9%, respectively, for the three months ended September 30, 2020. The decrease of $4,604 in gross profit was mainly due to the full margin benefit of the Taro Amendment recognized in Q3-F2020, which did not repeat, and to a lesser extent from the uptake in the Manufacturing segment sales year-over-year. The decrease in gross margin of 32.9% was mainly driven by the decrease in full-margin licensing revenue and the unfavourable revenue mix of having higher revenue in our Manufacturing segment year-over-year.
Operating Expenses
For the three months ended September 30, 2021, total operating expenses were $2,385 compared to $2,259 for the three months ended September 30, 2020, representing a slight increase of $126. The increase was primarily driven by higher selling, general and administrative ("SG&A") expenses of $277, mainly reflecting investments in advertising and promotion to grow our brands, in various key positions across the organization, incremental legal fees in support of business development activities, and lower government subsidies in Q3-F2021 versus Q3-F2020. These additional costs were partly offset by lower research and development ("R&D") spend of $86 and by lower depreciation and amortization expense of $65.
Other (Income) Expenses
In Q3-F2020, we recognized $668 (US$500) in connection with the termination of a non-financial clause as part of the Taro Amendment regarding the supply of Pliaglis to non-U.S. territories.
Cash and Cash Equivalents
Cash and cash equivalents were $12,236 at September 30, 2021, reflecting a net change for the quarter of $(847), mainly due to the investment in a secured convertible promissory note in the amount of $500.
Non-IFRS Financial Measures
We report our financial results in accordance with International Financial Reporting Standards ("IFRS"). However, we use certain non-IFRS financial measures to assess our Company's performance. We believe these to be useful to management, investors, and other financial stakeholders in assessing Crescita's performance. The non-IFRS measures used in this press release do not have any standardized meaning prescribed by IFRS and are therefore not comparable to similar measures presented by other issuers. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS. The following are the Company's non-IFRS measures along with their respective definitions:
1. EBITDA is defined as earnings before interest, income taxes, depreciation,
and amortization.
2. Adjusted EBITDA is defined as earnings before interest, income taxes,
depreciation and amortization, other (income) expenses, share-based
compensation costs, goodwill and intangible asset impairment, and foreign
exchange (gains) losses, as applicable.
Management believes that Adjusted EBITDA is an important measure of operating performance and cash flow and provides useful information to investors as it highlights trends in the underlying business that may not otherwise be apparent when relying solely on IFRS measures. Below is a reconciliation of EBITDA and Adjusted EBITDA to their closest IFRS measures.
Three months ended Nine months ended
September 30, September 30,
=========================== ------------------------ -----------------------
2021 2020 2021 2020
----------- ----------- ------------- --------
In thousands of CAD dollars $ $ $ $
=========================== =========== =========== ============= ========
Net income (loss) (900) 4,208 (2,048) 629
Adjust for:
--------------------------- ----------- ----------- ------------- --------
Depreciation and
amortization 350 415 1,032 1,243
Interest (income) expense,
net 27 (5) 40 (10)
Deferred income tax expense - 399 - 579
--------------------------- ----------- ----------- ------------- --------
EBITDA (523) 5,017 (976) 2,441
--------------------------- ----------- ----------- ------------- --------
Adjust for:
--------------------------- ----------- ----------- ------------- --------
Share-based compensation 39 31 149 121
Foreign exchange (gain)
loss 13 (64) 174 (165)
Impairment of intangible
assets - - - 1,918
Taro Amendment - (668) - (668)
--------------------------- ----------- ----------- ------------- --------
Adjusted EBITDA (471) 4,316 (653) 3,647
--------------------------- ----------- ----------- ------------- --------
Caution Concerning Limitations of Summary Financial Results Press Release
This summary earnings press release contains limited information meant to assist the reader in assessing Crescita's performance, but it is not a suitable source of information for readers who are unfamiliar with Crescita and is not in any way a substitute for the Company's Condensed Consolidated Interim Financial Statements and notes thereto, MD&A and our latest Annual Information Form ("AIF").
About Crescita Therapeutics Inc.
Crescita (TSX: CTX and OTC US: CRRTF) is a growth-oriented, innovation-driven Canadian commercial dermatology company with in-house R&D and manufacturing capabilities. The Company offers a portfolio of high-quality, science-based non-prescription skincare products and early to commercial stage prescription products. We also own multiple proprietary transdermal delivery platforms that support the development of patented formulations to facilitate the delivery of active ingredients into or through the skin.
Forward-looking Statements