Jamieson Wellness Inc. Reports Second Quarter 2024 Results and Raises Quarterly Dividend

Branded revenue growth of over 100% in China supports Company’s increased investments in fastest-growing VMS market globally

TORONTO--(BUSINESS WIRE)--Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX: JWEL) today reported its second quarter results for the period ended June 30, 2024. All amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS and other financial measures. See “Non-IFRS and Other Financial Measures” below.

“We are pleased to announce consolidated revenue of $185 million in the second quarter, with branded revenue growth of over 17%,” said Mike Pilato, President and CEO of Jamieson Wellness. “We drove growth across all branded business units in the quarter, with China at over 107%. Our accelerated investments in the world’s second-largest VMS market are showing strong returns, led by a highly successful consumer promotional window in June, product innovation, and new distribution. We remain enthusiastic about the opportunity this market provides to help further our Company purpose of Inspiring Better Lives Every Day, and will continue to invest in growing our brand and consumer base as planned to support it.

“Today, we are also announcing an 11% increase in our quarterly dividend. With all our business units meeting or exceeding our expectations, we are confident in our outlook for the year and remain committed to providing value for all our stakeholders.”

Second Quarter Highlights

• Expanded the Company’s market leadership position in Canada in conjunction with continued innovation and consumption growth
• More than doubled the Company’s revenues in China, led by marketing investments and successful June promotional activity which significantly outpaced market growth
• Grew the youtheory brand led by increased consumer demand, new distribution, and product innovation
• International innovations including a vitamin B12 complex and an omega turmeric product exceeded Company expectations and continued to drive demand in key growth markets
• Conducted an ESG materiality and risk assessment to identify and prioritize future sustainability initiatives

Second Quarter Financial Results Consolidated Summary

All comparisons are with the second quarter of 2023

• Consolidated revenue increased 10.3% to $184.8 million, driven by 17.2% growth in Jamieson Brands and an expected 16.3% decline in Strategic Partners
• Gross profit increased by $10.2 million to $65.0 million; normalized gross profit increased by $9.4 million largely driven by higher revenues
• Gross profit margin³ increased by 250 basis points; normalized gross profit margin increased 190 basis points due to a higher mix of Jamieson Brands sales
• EBITDA¹ increased by $2.1 million to $24.4 million, mainly driven by higher revenues and gross profit; Adjusted EBITDA¹ increased by $0.5 million to $31.6 million, reflecting the impact of higher sales and increased gross profit, partially offset by higher investments in demand driving SG&A
• Net earnings was $8.3 million; Adjusted net earnings¹ was $14.7 million, or $1.0 million higher, reflecting higher normalized earnings from operations, foreign exchange loss in the prior year, and lower interest rates in the current period
• Diluted earnings per share was $0.20; Adjusted diluted earnings per share² was $0.35

Summary of Segment Results

All comparisons are with the second quarter of 2023

Jamieson Brands

• Revenue increased 17.2% or $22.9 million to $155.8 million
  • Canada revenue increased by 10.1% to $80.0 million, driven by continued strong consumer consumption, pricing, and the previously noted shift in revenue due to the Q1 labour disruption
  • China revenue increased 106.6% to $20.6 million on a constant currency basis, driven by the Company’s investment strategy in the country
  • youtheory revenue increased 5.6% to $44.5 million (+17% in the front half), reflecting increased consumer demand partially offset by the initial fill of a key innovation in the prior year
  • International revenue increased by 34.3% to $10.7 million on a constant currency basis, driven by innovation and the previously noted shipment timing shifts due to the Q1 labour disruption
• Gross profit increased by $11.6 million to $61.3 million; normalized gross profit increased by $10.8 million mainly due to higher revenues
• Gross profit margin³ increased by 190 basis points to 39.3%; normalized gross profit margin increased by 130 basis points to 40.4%, mainly driven by significant volume growth in China
• Adjusted EBITDA¹ increased by $2.0 million to $28.7 million, driven by higher gross profit partially offset by investments in SG&A to drive brand awareness and growth in the U.S. and China; Adjusted EBITDA margin² was 18.4%, a decrease of 170 basis points due to higher SG&A as a percentage of revenue

Strategic Partners

• Revenue was $29.0 million, an expected decrease of 16.3% or $5.6 million as the Company prioritized the normalization of branded shipments after the Q1 labour disruption and transitioned away from a customer contract as previously announced
• Gross profit was $3.7 million, a decrease of $1.4 million; gross profit margin³ was 12.9%, a decrease of 190 basis points impacted by customer mix
• Adjusted EBITDA¹ was $2.9 million, a decrease of $1.5 million; Adjusted EBITDA margin² was 9.9%, a decrease of 280 basis points
  

Balance Sheet and Cash Flow

All comparisons are with the second quarter of 2023

• As at June 30, 2024, the Company had approximately $190.1 million in cash and available revolving and swingline facilities and net debt¹ of $309.9 million
• The Company generated $6.9 million in cash from operations compared to $11.7 million generated in Q2 2023
• Cash from operating activities before working capital considerations of $17.1 million increased by $4.4 million mainly due to higher gross profit
• Cash used in working capital increased by $9.3 million driven by timing of accounts receivable collections, partially offset by the drawdown of inventory

^1 This is a non-IFRS financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS financial measure.

^2 This is a non-IFRS ratio. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS ratio.

^3 This is a supplementary financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each supplementary financial measure.

Maintaining Outlook for Fiscal 2024 and 2025

The Company is maintaining its outlook for the 2024 fiscal year and continues to anticipate the following:

• Revenue in a range of $720.0 to $760.0 million, which represents annual growth of 6.5% to 12.5%
• Adjusted EBITDA in a range of $138.0 to $144.0 million
• Adjusted diluted earnings per share in a range of $1.55 to $1.65

In fiscal 2025, the Company continues to anticipate the following:

• The return of low double-digit growth with Adjusted EBITDA of between $155.0 and $165.0 million
• Profitability driven by Jamieson Brands and Strategic Partners volume growth, and manufacturing efficiencies
• SG&A and marketing investments consistent with Jamieson Brands revenue growth rates

For additional details on the Company’s fiscal 2024 and 2025 outlook, including guidance for the third quarter of 2024, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the three and six months ended June 30, 2024.

Declaration of Second Quarter Dividend

The board of directors of the Company authorized a 2.0 cent or a 11% increase in the quarterly dividend and declared a cash dividend for the second quarter of 2024:

• $0.21 per common share, or approximately $8.8 million in the aggregate
• Paid on September 13, 2024 to all common shareholders of record at the close of business on August 30, 2024
• The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (Canada)

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s unaudited condensed consolidated interim financial statements and accompanying notes as at and for the three and six months ended June 30, 2024 and related MD&A are available under the Company’s profile on SEDAR+ at www.sedarplus.com and on the Investor Relations section of the Company’s website at https://investors.jamiesonwellness.com.

Conference Call

Management will host a conference call to discuss the Company’s second quarter 2024 results at 5:00 p.m. ET today, August 8, 2024. To access:

• By phone: [phone] from Canada and the U.S. or 1-646-307-1865 from international locations
• Online: https://investors.jamiesonwellness.com or https://viavid.webcasts.com/starthere.jsp?ei=1679583&tp_key=b72d7910d4

About Jamieson Wellness

Jamieson Wellness is dedicated to Inspiring Better Lives Every Day with its portfolio of innovative natural health brands. Established in 1922, the Jamieson brand is Canada's #1 vitamins, minerals and supplements (“VMS”) brand. The Company’s youtheory brand, acquired in 2022, is an established and growing lifestyle brand in the U.S. Combined, these global brands are available in more than 50 countries worldwide. The Company also offers a variety of innovative VMS products as well as sports nutrition products to consumers in Canada with its Progressive, Smart Solutions, Iron Vegan and Precision brands. The Company is a participant of the United Nations Global Compact and adheres to its principles-based approach to responsible business. For more information please visit www.jamiesonwellness.com.

Jamieson Wellness’ head office is located at 1 Adelaide Street East Suite 2200, Toronto, Ontario, Canada.

Forward-Looking Information

This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company’s anticipated results and its outlook for its 2024 revenue, Adjusted EBITDA and Adjusted diluted earnings per share. Words such as “expect”, “anticipate”, “intend”, “may”, “will”, “estimate” and variations of such words and similar expressions are intended to identify such forward-looking information. This information reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated March 28, 2024 and under the “Risk Factors” section in the MD&A filed today, August 8, 2024. This information is based on the Company’s reasonable assumptions and beliefs in light of the information currently available to it and the statements are made as of the date of this press release. The Company does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law or regulatory authority.

The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company’s results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “Forward-looking Information” and “Risk Factors” within the MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.

Jamieson Wellness Inc.
Selected Consolidated Financial Information
In thousands of Canadian dollars, except share and per share amounts
	Three months ended				Six months ended
	June 30				June 30
	2024		2023		2024		2023
Revenue	184,806		167,577		312,844		304,302
Cost of sales	119,778		112,711		205,031		200,920
Gross profit	65,028		54,866		107,813		103,382
Gross profit margin	35.2	%	32.7	%	34.5	%	34.0	%
Selling, general and administrative expenses	43,867		34,832		83,425		67,224
Share-based compensation	1,744		1,425		3,493		2,921
Earnings from operations	19,417		18,609		20,895		33,237
Operating margin	10.5	%	11.1	%	6.7	%	10.9	%
Foreign exchange (gain)/ loss	(180	)	1,482		(951	)	1,645
Interest expense and other financing costs	4,647		6,008		9,520		12,310
Accretion on preferred shares	2,121		827		4,340		827
Earnings before income taxes	12,829		10,292		7,986		18,455
Provision for income taxes	4,516		3,088		3,392		4,186
Net earnings	8,313		7,204		4,594		14,269
Net earnings attributable to:
Shareholders	8,653		8,186		4,540		15,251
Non-controlling interests	(340	)	(982	)	54		(982	)
	8,313		7,204		4,594		14,269
Adjusted net earnings	14,654		13,632		18,569		22,478
EBITDA	24,358		22,277		31,507		41,583
Adjusted EBITDA	31,555		31,056		47,652		55,564
Adjusted EBITDA margin	17.1	%	18.5	%	15.2	%	18.3	%
Weighted average number of shares
Basic	41,456,594		41,943,971		41,468,227		41,860,444
Diluted	41,456,594		42,890,029		42,304,411		42,745,685
Earnings per share attributable to common shareholders:
Basic, earnings per share	0.20		0.17		0.11		0.34
Diluted, earnings per share	0.20		0.17		0.11		0.33
Adjusted diluted, earnings per share	0.35		0.32		0.44		0.53

Jamieson Wellness Inc.
Consolidated Statements of Financial Position
In thousands of Canadian dollars
	June 30, 2024	December 31, 2023
Assets
Current assets
Cash	22,711	36,863
Accounts receivable	146,502	164,499
Inventories	190,602	182,456
Derivatives	1,150	3,707
Prepaid expenses and other current assets	6,501	5,335
Income taxes recoverable	5,775	-
	373,241	392,860
Non-current assets
Property, plant and equipment	103,234	106,903
Goodwill	279,604	274,411
Intangible assets	370,035	366,521
Deferred income tax	3,683	2,879
Total assets	1,129,797	1,143,574
Liabilities
Current liabilities
Accounts payable and accrued liabilities	109,393	135,520
Income taxes payable	1,933	2,263
Derivatives	127	-
Current portion of other long-term liabilities	4,791	7,546
	116,244	145,329
Long-term liabilities
Long-term debt	332,587	325,000
Post-retirement benefits	1,137	1,078
Deferred income tax	60,301	60,532
Redeemable preferred shares	93,749	89,409
Other long-term liabilities	41,509	41,031
Total liabilities	645,527	662,379
Equity
Share capital	313,799	312,593
Warrants	14,705	14,705
Contributed surplus	22,366	19,089
Retained earnings	69,466	80,654
Accumulated other comprehensive income	21,341	11,892
Total shareholders' equity	441,677	438,933
Non-controlling interests	42,593	42,262
Total equity	484,270	481,195
Total liabilities and equity	1,129,797	1,143,574

Non-IFRS and Other Financial Measures

This press release makes reference to certain financial measures, including non-IFRS financial measures that are historical, non-IFRS measures that are forward-looking, non-GAAP ratios and supplementary financial measures. Management uses these financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing the Company’s business performance and trends. 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 the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses the following non-IFRS financial measures: “EBITDA”, “Adjusted EBITDA” and “Adjusted net earnings”, the most directly comparable financial measure for each that is disclosed in its financial statements being net earnings, “normalized gross profit”, “normalized SG&A”, “normalized earnings from operations”, “cash from operating activities before working capital considerations” and “net debt”, the most directly comparable financial measures for each that is disclosed in its financial statements being gross profit, SG&A, earnings from operations, cash flows from operating activities, and long-term debt, respectively, the following non-IFRS ratios: “Adjusted EBITDA margin”, “Adjusted diluted earnings per share”, “normalized gross profit margin”, “normalized operating margin”, and the following supplementary financial measures: “gross profit margin” and “operating margin” to provide supplemental measures of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non-IFRS and supplementary financial measures in order to prepare annual operating budgets and to determine components of management compensation. For an explanation of the composition of each such measure and the usefulness and additional uses of each by management, see the “How we Assess the Performance of our Business” section of the MD&A, which is incorporated by reference. See below for a quantitative reconciliation of each non-IFRS financial measure to its most directly comparable financial measure disclosed in the Company’s financial statements to which the measure relates.

The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA, and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings from operations to normalized earnings from operations and net debt, each of which are non-IFRS financial measures (see the “Non-IFRS and Other Financial Measures” of this press release for further information on each non-IFRS financial measure) for the three and six months ended June 30, 2024 and June 30, 2023.

Jamieson Wellness Inc.
Segment Information
In thousands of Canadian dollars, except as otherwise noted
Jamieson Brands
	Three months ended June 30
	2024		2023		$ Change		% Change
Revenue	155,787		132,916		22,871		17.2	%
Gross profit	61,284		49,719		11,565		23.3	%
Labour relations costs ^(1)	1,414		-		1,414		100.0	%
Amortization of fair value adjustments ^(2)	165		2,315		(2,150	)	(92.9	%)
Normalized gross profit	62,863		52,034		10,829		20.8	%
Gross profit margin	39.3	%	37.4	%	-		1.9	%
Normalized gross profit margin	40.4	%	39.1	%	-		1.3	%
Share-based compensation^(3)	1,744		1,425		319		22.4	%
Selling, general and administrative expenses	42,262		33,279		8,983		27.0	%
Acquisition and divestiture related costs ^(4)	(324	)	(2,307	)	1,983		86.0	%
IT system implementation^(5)	(3,449	)	(1,429	)	(2,020	)	(141.4	%)
Other	-		179		(179	)	(100.0	%)
Labour relations costs ^(1)	(281	)	-		(281	)	(100.0	%)
Normalized selling, general and administrative expenses	38,208		29,722		8,486		28.6	%
Earnings from operations	17,278		15,015		2,263		15.1	%
Acquisition and divestiture related costs ^(4)	489		2,307		(1,818	)	(78.8	%)
IT system implementation^(5)	3,449		1,429		2,020		141.4	%
Labour relations costs ^(1)	1,695		-		1,695		100.0	%
Amortization of fair value adjustments ^(2)	-		2,315		(2,315	)	(100.0	%)
Other	-		(179	)	179		100.0	%
Normalized earnings from operations	22,911		20,887		2,024		9.7	%
Operating margin	11.1	%	11.3	%	-		(0.2	%)
Normalized operating margin	14.7	%	15.7	%	-		(1.0	%)
Adjusted EBITDA	28,691		26,656		2,035		7.6	%
Adjusted EBITDA margin	18.4	%	20.1	%	-		(1.7	%)
Strategic Partners
	Three months ended June 30
	2024		2023		$ Change		% Change
Revenue	29,019		34,661		(5,642	)	(16.3	%)
Gross profit	3,744		5,147		(1,403	)	(27.3	%)
Gross profit margin	12.9	%	14.8	%	-		(1.9	%)
Selling, general and administrative expenses	1,605		1,553		52		3.3	%
Earnings from operations	2,139		3,594		(1,455	)	(40.5	%)
Operating margin	7.4	%	10.4	%	-		(3.0	%)
Adjusted EBITDA	2,864		4,400		(1,536	)	(34.9	%)
Adjusted EBITDA margin	9.9	%	12.7	%	-		(2.8	%)

Jamieson Brands
	Six months ended June 30
	2024		2023		$ Change		% Change
Revenue	271,135		241,026		30,109		12.5	%
Gross profit	102,414		93,520		8,894		9.5	%
Labour relations costs ^(1)	4,667		-		4,667		100.0	%
Amortization of fair value adjustments ^(2)	-		2,315		(2,315	)	(100.0	%)
Acquisition and divestiture related costs ^(4)	165		-		165		100.0	%
Normalized gross profit	107,246		95,835		11,411		11.9	%
Gross profit margin	37.8	%	38.8	%	-		(1.0	%)
Normalized gross profit margin	39.6	%	39.8	%	-		(0.2	%)
Share-based compensation ^(1)	3,493		2,921		572		19.6	%
Selling, general and administrative expenses	80,323		63,942		16,381		25.6	%
Acquisition and divestiture related costs ^(4)	(324	)	(5,108	)	4,784		93.7	%
IT system implementation^(5)	(6,429	)	(2,099	)	(4,330	)	(206.3	%)
Labour relations costs ^(1)	(1,721	)	-		(1,721	)	(100.0	%)
Other	(297	)	179		(476	)	(265.9	%)
Normalized selling, general and administrative expenses	71,552		56,914		14,638		25.7	%
Earnings from operations	18,598		26,657		(8,059	)	(30.2	%)
Acquisition and divestiture related costs ^(4)	489		5,108		(4,619	)	(90.4	%)
IT system implementation^(5)	6,429		2,099		4,330		206.3	%
Labour relations costs ^(1)	6,388		-		6,388		(100.0	%)
Amortization of fair value adjustments ^(2)	-		2,315		(2,315	)	(100.0	%)
Other	297		(179	)	476		265.9	%
Normalized earnings from operations	32,201		36,000		(3,799	)	(10.6	%)
Operating margin	6.9	%	11.1	%	-		(4.2	%)
Normalized operating margin	11.9	%	14.9	%	-		(3.0	%)
Adjusted EBITDA	43,815		47,307		(3,492	)	(7.4	%)
Adjusted EBITDA margin	16.2	%	19.6	%	-		(3.4	%)
Strategic Partners
	Six months ended June 30
	2024		2023		$ Change		% Change
Revenue	41,709		63,276		(21,567	)	(34.1	%)
Gross profit	5,399		9,862		(4,463	)	(45.3	%)
Gross profit margin	12.9	%	15.6	%	-		(2.7	%)
Selling, general and administrative expenses	3,102		3,282		(180	)	(5.5	%)
Other	-		(72	)	72		100.0	%
Normalized selling, general and administrative expenses	3,102		3,210		(108	)	(3.4	%)
Earnings from operations	2,297		6,580		(4,283	)	(65.1	%)
Other	-		72		(72	)	(100.0	%)
Normalized earnings from operations	2,297		6,652		(4,355	)	(65.5	%)
Operating margin	5.5	%	10.4	%	-		(4.9	%)
Normalized operating margin	5.5	%	10.5	%	-		(5.0	%)
Adjusted EBITDA	3,837		8,257		(4,420	)	(53.5	%)
Adjusted EBITDA margin	9.2	%	13.0	%	-		(3.8	%)

Reconciliation of Non-IFRS Financial Measures
In thousands of Canadian dollars
	Three months ended				Six months ended
	June 30				June 30
	2024		2023		2024		2023
Net earnings:	8,313		7,204		4,594		14,269
Add:
Provision for (recovery of) income taxes	4,516		3,088		3,392		4,186
Interest expense and other financing costs	4,647		6,008		9,520		12,310
Accretion on preferred shares	2,121		827		4,340		827
Depreciation of property, plant, and equipment	3,236		3,659		6,752		7,126
Amortization of intangible assets	1,525		1,491		2,909		2,865
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	24,358		22,277		31,507		41,583
Share-based compensation^(3)	1,744		1,425		3,493		2,921
Foreign exchange loss/(gain)	(180	)	1,482		(951	)	1,645
Acquisition and divestiture related costs ^(4)	489		2,307		489		5,108
Labour relations costs ^(1)	1,695		-		6,388		-
IT system implementation^(5)	3,449		1,429		6,429		2,099
Amortization of fair value adjustments ^(2)	-		2,315		-		2,315
Other	-		(179	)	297		(107	)
Adjusted EBITDA	31,555		31,056		47,652		55,564
Provision for income taxes	(4,516	)	(3,088	)	(3,392	)	(4,186	)
Interest expense and other financing costs	(4,647	)	(6,008	)	(9,520	)	(12,310	)
Depreciation of property, plant, and equipment	(3,236	)	(3,659	)	(6,752	)	(7,126	)
Amortization of intangible assets	(1,525	)	(1,491	)	(2,909	)	(2,865	)
Share-based compensation^(3)	(1,622	)	(1,303	)	(3,249	)	(2,757	)
Tax deduction from vesting of certain share-based awards	-		-		-		(1,022	)
Tax effect of normalization adjustments	(1,355	)	(1,875	)	(3,261	)	(2,820	)
Adjusted net earnings	14,654		13,632		18,569		22,478
	Three months ended				Six months ended
	June 30				June 30
	2024		2023		2024		2022
Gross profit	65,028		54,866		107,813		103,382
Labour relations costs ^(1)	1,414		-		4,667		-
Amortization of fair value adjustments ^(2)	-		-		-		2,315
Acquisition and divestiture related costs ^(4)	165		2,315		165		-
Normalized gross profit	66,607		57,181		112,645		105,697
Normalized gross profit margin	36.0	%	34.1	%	36.0	%	34.7	%
Selling, general and administrative expenses	43,867		34,832		83,425		67,224
Acquisition and divestiture related costs ^(4)	(324	)	(2,307	)	(324	)	(5,108	)
IT system implementation^(5)	(3,449	)	(1,429	)	(6,429	)	(2,099	)
Labour relations costs ^(1)	(281	)	-		(1,721	)	-
Other	-		179		(297	)	107
Normalized selling, general and administrative expenses	39,813		31,275		74,654		60,124
Earnings from operations	19,417		18,609		20,895		33,237
Acquisition and divestiture related costs ^(4)	489		2,307		489		5,108
IT system implementation^(5)	3,449		1,429		6,429		2,099
Labour relations costs ^(1)	1,695		-		6,388		-
Amortization of fair value adjustments ^(2)	-		2,315		-		2,315
Other	-		(179	)	297		(107	)
Normalized earnings from operations	25,050		24,481		34,498		42,652
Normalized operating margin	13.6	%	14.6	%	11.0	%	14.0	%

(1)	These expenses are mainly comprised of third-party legal, security fees, unavoidable facility expenditures, customer fines and penalties, along with freight charges to expedite shipments to customers as it relates to a labour disruption in Q1 2024.
(2)	This cost represents the post-closing amortization of the fair value increase of acquired inventories related to the April 28, 2023 transaction with a former distribution partner in China.
(3)	The Company’s share-based compensation expense pertains to the long-term incentive plan (the “LTIP”) (refer to “Share-based compensation”), with stock options, performance-based share units (“PSUs”), time-based restricted share units (“RSUs”), and deferred share units (“DSUs”) expenses, along with associated payroll taxes.
(4)	Current period mainly pertains to legal, consulting and integration costs associated with the acquisition and integration of a former distributor partner in China on April 28, 2023, while prior year included the integration costs relating to the acquisition of youtheory in the U.S. which closed on July 19, 2022.
(5)	Mainly pertains to development costs associated with IT system implementation to augment the system infrastructure. Unlike other system improvement projects with costs capitalized, due to their cloud-based nature, these system implementation costs are expensed accordingly.

Reconciliation of Net Debt
In thousands of Canadian dollars
($ in 000's)	As at June 30,		As at December 31,
	2024		2023
Long-term debt	332,587		325,000
Cash	(22,711	)	(36,863	)
Net debt	309,876		288,137