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• Yerbaé reported strong Q2 financials that were in line with our estimates on sales ($4.1M) and beat our expectations for gross margins (56%).
• YERB.U released multiple updates subsequent to the quarter including record Amazon Prime Day sales, the closing of the first tranche of its celebrity investment round, and a partnership with Richmond Flowers.
• We are increasing our target price to $2.75/share based on 6.0x sales.
Yesterday, Yerbaé Brands Corp. (YERB.U:TSXV, YERBF:OTC) reported Q2/23 financial results that were in line with our estimates for net revenue and beat our estimates for gross margin. The quarter largely reaffirmed our confidence that the management team will continue to execute on the brand and distribution development, while boasting industry-leading gross margins. We are maintaining our BUY rating and increasing our target price to $2.75/share (previously $2.50/share) based on 6.0x 2024E sales (previously 5.5x).
Key Highlights
• YERB.U reported $4.1M in net revenue in the quarter, compared to our estimate of $4.2M and $1.8M in Q2/22 (+122% YoY and +17% QoQ). This was driven by a 122% volume increase based on strong consumer demand, higher velocities in retail, and increased points of distribution. The new Lemonade and Yuzu Lime flavours also supported the growth. Through H1/23, Yerbaé has already exceeded full-year 2022 revenue.
• Gross revenue came in at $4.3M vs. our estimate of $4.5M with the promotional rate at 4% compared to our estimate of 7%.
• SPINS retail data showed Yerbaé sales up 161% YoY YTD compared to the energy drinks category which was up only 16%.
• Gross margin for Q2/23 came in at 56% compared to our estimate of 54% and 50% last quarter. This puts YERB.U back on track with its historical gross margin levels and confirms that it is the clear gross margin leader in the energy drinks industry.
• Adj. EBITDA for the quarter came in at ($2.9M) vs. our estimate of ($2.2M) due to continued spending on brand development and marketing.
• During the quarter, YERB.U announced a strategic partnership with Farrel Distributing, launched its two new flavours into 348 Sprouts locations, and extended its CrossFit partnership. Read our full note on the updates here.
• Yerbaé ended the quarter with $1.0M in cash and $4.5M in debt (not including its recent equity financing).
YERB.U: Strong Q2 Financials; Increasing Target Price
What you need to know:• Yerbaé reported strong Q2 financials that were in line with our estimates on sales ($4.1M) and beat our expectations for gross margins (56%).
• YERB.U released multiple updates subsequent to the quarter including record Amazon Prime Day sales, the closing of the first tranche of its celebrity investment round, and a partnership with Richmond Flowers.
• We are increasing our target price to $2.75/share based on 6.0x sales.
Yesterday, Yerbaé Brands Corp. (YERB.U:TSXV, YERBF:OTC) reported Q2/23 financial results that were in line with our estimates for net revenue and beat our estimates for gross margin. The quarter largely reaffirmed our confidence that the management team will continue to execute on the brand and distribution development, while boasting industry-leading gross margins. We are maintaining our BUY rating and increasing our target price to $2.75/share (previously $2.50/share) based on 6.0x 2024E sales (previously 5.5x).
Key Highlights
• YERB.U reported $4.1M in net revenue in the quarter, compared to our estimate of $4.2M and $1.8M in Q2/22 (+122% YoY and +17% QoQ). This was driven by a 122% volume increase based on strong consumer demand, higher velocities in retail, and increased points of distribution. The new Lemonade and Yuzu Lime flavours also supported the growth. Through H1/23, Yerbaé has already exceeded full-year 2022 revenue.
• Gross revenue came in at $4.3M vs. our estimate of $4.5M with the promotional rate at 4% compared to our estimate of 7%.
• SPINS retail data showed Yerbaé sales up 161% YoY YTD compared to the energy drinks category which was up only 16%.
• Gross margin for Q2/23 came in at 56% compared to our estimate of 54% and 50% last quarter. This puts YERB.U back on track with its historical gross margin levels and confirms that it is the clear gross margin leader in the energy drinks industry.
• Adj. EBITDA for the quarter came in at ($2.9M) vs. our estimate of ($2.2M) due to continued spending on brand development and marketing.
• During the quarter, YERB.U announced a strategic partnership with Farrel Distributing, launched its two new flavours into 348 Sprouts locations, and extended its CrossFit partnership. Read our full note on the updates here.
• Yerbaé ended the quarter with $1.0M in cash and $4.5M in debt (not including its recent equity financing).
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Atrium Research Corporation
Atrium Research provides institutional quality issuer paid research on North American public equities using deep fundamental analysis. Our research reports are disseminated through Bloomberg, FactSet, Capital IQ, Reuters and many more, as well as through our social media and email distribution lists.
Nicholas Cortellucci, CFA
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