Jamieson Wellness Inc. Reports Fourth Quarter and Full Year 2022 Financial Results

TORONTO--(BUSINESS WIRE)--Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX: JWEL) today reported financial results for its fourth quarter and year ended December 31, 2022. 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.

Highlights of Fourth Quarter 2022 Results versus Fourth Quarter 2021 Results

• Revenue increased by 48.5% to $192.8 million;
• Jamieson Brands revenue increased by 56.3%, with organic growth of 5.6%;
• Adjusted EBITDA⁽¹⁾ increased by 44.7% to $48.9 million;
• Net earnings were $22.1 million and Adjusted net earnings⁽¹⁾ increased 30.6% to $26.8 million; and
• Diluted earnings per share were $0.52, and Adjusted diluted earnings per share⁽²⁾ increased 26.5% to $0.62

Highlights of Full Year 2022 Results versus Full Year 2021 Results

• Revenue increased by 21.4% to $547.4 million;
• Jamieson Brands revenue increased by 27.9%, with organic growth of 8.1%;
• Adjusted EBITDA⁽¹⁾ increased by 23.6% to $123.8 million;
• Net earnings were $52.8 million and Adjusted net earnings⁽¹⁾ increased 18.0% to $65.1 million; and
• Diluted earnings per share were $1.25, and Adjusted diluted earnings per share⁽²⁾ increased 17.4% to $1.55

“2022 was a transformative year for Jamieson Wellness,” said Mike Pilato, President and CEO of Jamieson Wellness. “In addition to celebrating our 100th year of improving the world’s health and wellness with our Jamieson brand, we made significant advancements in our primary growth pillars as we continue to expand our category leadership globally beyond this milestone year.

“Throughout 2022, we saw consistent growth in our brands in Canada, as Canadian consumers continued to trust Jamieson for their health and wellness needs. In July, we closed on our acquisition of the youtheory brand, providing us with a strong platform and premium brand offering in the United States. In just a few short months we have identified and begun to execute multiple opportunities to leverage our combined strengths across channels, product innovation and capabilities to drive revenues and profitability in 2023 and beyond. In November, we announced the pending acquisition of our Chinese distributor’s assets. This is a natural evolution of our strategy and supports significant brand expansion as we transition to full control of the value chain, enabling us to capitalize on our strong momentum in the world’s second largest VMS market.

“These major strategic actions defined our centennial year and have placed us in a strong position for growth as we enter our next century of helping consumers around the world optimize their health and wellness. We delivered solid performance across our business in 2022 with total revenues up 21%, while profitability was similarly strong with adjusted EBITDA increasing 24%. We are extremely proud of our team for our achievements in 2022, and equally excited for the future. In 2023, we will continue to invest in our long-term opportunities, with a focus on our four primary growth pillars of Canada, U.S., China and International. We will continue to build our world-class brands by leveraging our best-in-class marketing, innovation and omni channel distribution capabilities to drive significant global expansion of our high-quality products and enhance value for all stakeholders.”

Fourth Quarter 2022 versus Fourth Quarter 2021 Results

Revenue increased 48.5% to $192.8 million in the fourth quarter of 2022 driven by 56.3% growth in the Jamieson Brands segment and 22.4% growth in the Strategic Partners segment.

• Jamieson Brands segment revenue increased by $56.2 million or 56.3% driven by the following:
  • Jamieson Canada revenue growth of 6.3%, reflecting continued consumer demand, higher average retailer inventories in conjunction with a severe cold & flu season, and in-year pricing;
  • Jamieson China revenue growth of 41.5%, reflecting strong consumer demand as COVID-19 related lockdowns were eliminated in the quarter;
  • Jamieson International revenue decline of 21.0%, largely resulting from geopolitical and economic pressures in eastern Europe and delayed entry into certain markets due to regulatory changes;
  • Newly acquired youtheory business in 2022 contributed revenue of $50.6 million driven by seasonally higher promotions ahead of new year offset by lower customer inventory levels as specific partners reduced stocks on-hand in support of 2023 innovation plans.
• Strategic Partners segment revenue increased by $6.7 million or 22.4%, to $36.8 million reflecting pricing to maintain existing margin structure and volume changes of customer products.

Gross profit increased 44.1% to $71.2 million in the fourth quarter of 2022. Gross profit margin⁽³⁾ decreased by 120 basis points to 36.9% in the fourth quarter of 2022, driven by 80 basis points from youtheory gross profit margins which are inherently lower than the base business and 40 basis points due to a higher proportion of Strategic Partner sales.

Selling, general and administrative (“SG&A”) expenses increased by $13.2 million to $32.8 million in the fourth quarter of 2022. Normalized SG&A⁽¹⁾ increased by $8.8 million driven by the inclusion of the youtheory acquisition of $7.0 million while expanding its resources and marketing activity plus $1.8 million in the base business.

Earnings from operations increased 28.5% to $37.1 million in the fourth quarter of 2022 and operating margin⁽³⁾ decreased by 300 basis points to 19.2% due to factors affecting gross profit margin and higher SG&A investments discussed above. Normalized earnings from operations⁽¹⁾ increased by $13.4 million or 46.2% in the fourth quarter of 2022 and normalized operating margin⁽²⁾ was 22.0% compared with 22.4% in the fourth quarter of 2021.

Adjusted EBITDA increased by 44.7% to $48.9 million in the fourth quarter of 2022 and Adjusted EBITDA margin⁽²⁾ was 25.4% compared with 26.0% in the fourth quarter of 2021 as youtheory Adjusted EBITDA margins are inherently lower than the base business.

Interest expense and other financing costs increased by $4.4 million to $5.8 million due to higher average borrowing rates and higher borrowings to support the youtheory acquisition.

Net earnings for the fourth quarter of 2022 were $22.1 million compared with $20.2 million in the fourth quarter of 2021. Adjusted net earnings increased by $6.3 million, or 30.6%, to $26.8 million in the fourth quarter of 2022.

Adjusted net earnings in the quarter exclude costs associated with foreign exchange gain/loss, acquisition related costs, IT system improvements, and other non-operating earnings or expenses net of related tax effects. A quantitative reconciliation of reported net earnings to EBITDA, Adjusted EBITDA, and non-IFRS normalized gross profit, normalized SG&A, normalized earnings from operations and Adjusted net earnings are included in the table accompanying this release under the heading “Non-IFRS and Other Financial Measures”.

Balance Sheet & Cash Flow

The Company generated $40.8 million in cash from operations during the fourth quarter of 2022 compared with $34.3 million generated in the fourth quarter of 2021. Cash from operating activities before working capital considerations⁽¹⁾ of $29.1 million was $4.5 million higher due to increased earnings in the current quarter. Cash generated from working capital increased by $1.9 million mainly driven by favourable timing of payables and accelerated inventory purchases realized earlier in 2022. The Company’s cash as at December 31, 2022 was $26.2 million compared with $6.8 million on December 31, 2021 due to foreign currencies (U.S. dollars) held for short-term obligations in Canada as well as the impact of its expanded global operations. The Company ended the year with approximately $126.2 million in cash and available operating lines and net debt⁽¹⁾ of $373.8 million.

	Three months ended
	December 31
($ in 000's, except as otherwise noted)	2022		2021		$ Change		% Change
Cash, beginning of period	7,316		9,150		(1,834	)	(20.0	%)
Cash flows from (used in):
Operating activities	40,799		34,309		6,490		18.9	%
Investing activities	(2,692	)	(5,399	)	2,707		50.1	%
Financing activities	(19,183	)	(31,285	)	12,102		38.7	%
Cash, end of period	26,240		6,775		19,465		287.3	%
Cash flows from operating activities	40,799		34,309		6,490		18.9	%
Net Change in non-cash working capital	(11,741	)	(9,799	)	(1,942	)	(19.8	%)
Cash from operating activities before working capital considerations	29,058		24,510		4,548		18.6	%
($ in 000's, except as otherwise noted)					As at December 31, 2022		As at December 31, 2021
Long-term debt					400,000		149,125
Cash					(26,240	)	(6,775	)
Net debt					373,760		142,350

Fiscal 2023 Outlook

The Company is introducing its outlook for fiscal 2023 and anticipates revenue in a range of $670.0 to $700.0 million, which represents annual growth of 22.0% to 28.0%. The Company estimates Adjusted EBITDA in a range of $140.0 to $146.0 million representing approximately 13.0% to 18.0% growth and Adjusted diluted earnings per share in a range of $1.62 to $1.72.

This outlook for revenue growth reflects the following assumptions:

• Jamieson Brands segment revenue growth of 24.0% to 30.0%, driven by the following:
  • Jamieson Canada revenue growth of 3.0% to 6.0%, reflecting continued consumer demand, marketing plans, innovation, and the impact of prior year pricing;
  • Youtheory revenue of between $145.0 and $155.0 million (approximately 11.5% to 19.0% on a pro-forma basis) driven by product innovation, expanded e-commerce initiatives and distribution gains;
  • Jamieson China revenue to increase by 65.0% to 75.0%, reflecting a transition to an owned distribution model and the related step-up in distributor level pricing realized on revenues beginning the second quarter of 2023 along with continued consumer demand in e-commerce and distribution gains in the domestic retail channels (approximately 25.0% to 30.0% growth on a pro-forma basis);
  • Jamieson International revenue growth of 5.0% to 20.0% driven by marketing, innovation, and distribution into new markets as well as expansion across key regions.
• Strategic Partners segment revenue growth of 15.0% to 20.0%, reflecting pricing to maintain existing margin structure and program changes with existing customers.

The outlook for Adjusted EBITDA growth and Adjusted diluted earnings per share reflect the following assumptions:

• Gross profit margin to remain consistent with the prior year as the expected decline in Jamieson Brands margins is offset by favourable customer and program mix impacting Strategic Partners. Jamieson Brands margins will be approximately 100 basis points lower impacted by the full year inclusion of youtheory and the transition to an owned distribution model in China;
• Normalized SG&A including marketing expenses are expected to increase 35.0% to 40.0% based on the acquisition of youtheory and an accelerated investment in marketing, resources and infrastructure to support long-term growth opportunities in the United States and in China;
• Based on the resource and marketing investments being made to drive long term growth, adjusted EBITDA margins are expected to decline by 175 basis points in 2023. The decline includes the margin profile of the acquired businesses and proportionate revenue growth within Strategic Partners;
• Interest expense of $17.5 to $18.5 million reflecting incremental debt to fund the acquisition and higher prevailing interest rates.

For additional details on the Company’s fiscal 2023 outlook, including guidance for the first quarter of 2023, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“2022 MD&A”) for the three and twelve months ended December 31, 2022.

Declaration of Fourth Quarter Dividend

The board of directors of the Company authorized and declared a cash dividend for the fourth quarter of 2022 of $0.17 per common share, or approximately $7.1 million in the aggregate. The dividend will be paid on March 15, 2023 to all common shareholders of record at the close of business on March 3, 2023. The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (Canada).

New Partnership with DCP Capital to Support Strategic Growth Plan in China

Also announced today, the Company has entered into a partnership with DCP Capital (“DCP”), a leading international private equity firm with a long-term track record of success in Greater China and broader Asian markets. DCP will purchase a minority interest in the Company’s Chinese operations and make a preferred share investment in Jamieson Wellness. In conjunction with these investments, DCP will be granted warrants to purchase a fixed number of common shares of the Company. The partnership will leverage the combined expertise of both companies and is expected to accelerate Jamieson Wellness' strong organic growth in China. Details on the pending transaction can be found in a separate media release issued this afternoon.

Consolidated Financial Statements and Management’s Discussion and Analysis

The Company’s audited consolidated annual financial statements and accompanying notes as at and for the three and twelve months ended December 31, 2022 and related MD&A are available under the Company’s profile on SEDAR at www.sedar.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 fourth quarter and full year 2022 results at 5:00 p.m. ET today, February 23, 2023. The call can be accessed live over the telephone by dialing 1-888-394-8218 from Canada and the U.S. or 1-323-994-2093 from international locations. A replay will be available shortly after the call and can be accessed by dialing 1-844-512-2921 from Canada and the U.S. or 1-412-317-6671 from international locations. The passcode for the replay is 1883631 and it will be available until Thursday March 9, 2023.

Interested parties may listen to a simultaneous webcast of the conference call by logging on via the Investor Relations section of the Company's website at https://investors.jamiesonwellness.com or directly at https://viavid.webcasts.com/starthere.jsp?ei=1594444&tp_key=5d1e64a28e. A replay of the webcast will be available for approximately 30 days following the call.

About Jamieson Wellness

Jamieson Wellness is dedicated to improving the world's health and wellness with its portfolio of innovative natural health brands. Established in 1922, Jamieson is the Company's heritage brand and Canada's #1 consumer health brand. Jamieson Wellness also offers a variety of VMS products under its youtheory, 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 2023 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 29, 2022 and under the “Risk Factors” section in the MD&A filed today, February 23, 2023. 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.

____________________
⁽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.

Jamieson Wellness Inc. Selected Consolidated Financial Information In thousands of Canadian dollars, except share and per share amounts
	Three months ended				Twelve months ended
	December 31				December 31
	2022		2021		2022		2021
Revenue	192,775		129,838		547,369		451,032
Cost of sales	121,586		80,422		349,031		288,591
Gross profit	71,189		49,416		198,338		162,441
Gross profit margin	36.9	%	38.1	%	36.2	%	36.0	%
Selling, general and administrative expenses	32,768		19,521		110,239		80,739
Share-based compensation	1,317		1,021		4,910		5,672
Earnings from operations	37,104		28,874		83,189		76,030
Operating margin	19.2	%	22.2	%	15.2	%	16.9	%
Foreign exchange loss/(gain)	978		352		269		(92	)
Interest expense and other financing costs	5,757		1,366		12,417		5,657
Earnings before income taxes	30,369		27,156		70,503		70,465
Provision for income taxes	8,278		6,966		17,695		18,383
Net earnings	22,091		20,190		52,808		52,082
Adjusted net earnings	26,759		20,489		65,149		55,217
EBITDA	41,201		32,225		100,168		90,396
Adjusted EBITDA	48,871		33,771		123,761		100,096
Adjusted EBITDA margin	25.4	%	26.0	%	22.6	%	22.2	%
Weighted average number of shares
Basic	41,683,753		40,371,018		40,998,065		40,150,724
Diluted	42,817,044		41,921,765		42,116,350		41,680,934
Earnings per share attributable to common shareholders:
Basic, earnings per share	0.53		0.50		1.29		1.30
Diluted, earnings per share	0.52		0.48		1.25		1.25
Adjusted diluted, earnings per share	0.62		0.49		1.55		1.32

Jamieson Wellness Inc. Consolidated Statements of Financial Position In thousands of Canadian dollars
	December 31, 2022	December 31, 2021
Assets
Current assets
Cash	26,240	6,775
Accounts receivable	160,798	104,186
Inventories	154,488	119,006
Derivatives	6,580	2,149
Prepaid expenses and other current assets	4,298	5,029
	352,404	237,145
Non-current assets
Property, plant and equipment	111,709	96,977
Goodwill	272,916	122,975
Intangible assets	367,205	192,676
Deferred income tax	3,029	2,702
Total assets	1,107,263	652,475
Liabilities
Current liabilities
Accounts payable and accrued liabilities	142,566	74,533
Income taxes payable	7,387	2,896
Derivatives	-	3,317
Current portion of other long-term liabilities	4,852	2,876
	154,805	83,622
Long-term liabilities
Long-term debt	400,000	149,125
Post-retirement benefits	929	3,544
Deferred income tax	58,007	53,291
Other long-term liabilities	61,931	20,872
Total liabilities	675,672	310,454
Shareholders' equity
Share capital	307,200	268,214
Contributed surplus	17,115	14,786
Retained earnings	85,483	58,998
Accumulated other comprehensive income	21,793	23
Total shareholders' equity	431,591	342,021
Total liabilities and shareholders' equity	1,107,263	652,475

Jamieson Wellness Inc. Segment Information In thousands of Canadian dollars, except as otherwise noted
Jamieson Brands
	Three months ended December 31
	2022		2021		$ Change		% Change
Revenue	155,996		99,784		56,212		56.3	%
Gross profit	65,345		45,157		20,188		44.7	%
Gross profit margin	41.9	%	45.3	%	-		(3.4	%)
Normalized gross profit	66,138		45,157		20,981		46.5	%
Normalized gross profit margin	42.4	%	45.3	%	-		(2.9	%)
Selling, general and administrative expenses	31,165		17,905		13,260		74.1	%
Normalized selling, general and administrative expenses	26,583		17,781		8,802		49.5	%
Share-based compensation	1,317		1,021		296		29.0	%
Earnings from operations	32,863		26,231		6,632		25.3	%
Operating margin	21.1	%	26.3	%	-		(5.2	%)
Normalized earnings from operations	38,238		26,355		11,883		45.1	%
Normalized operating margin	24.5	%	26.4	%	-		(1.9	%)
Adjusted EBITDA	43,832		30,468		13,364		43.9	%
Adjusted EBITDA margin	28.1	%	30.5	%	-		(2.4	%)
Strategic Partners
	Three months ended December 31
	2022		2021		$ Change		% Change
Revenue	36,779		30,054		6,725		22.4	%
Gross profit	5,844		4,259		1,585		37.2	%
Gross profit margin	15.9	%	14.2	%	-		1.7	%
Selling, general and administrative expenses	1,603		1,616		(13	)	(0.8	%)
Normalized selling, general and administrative expenses	1,603		1,567		36		2.3	%
Earnings from operations	4,241		2,643		1,598		60.5	%
Operating margin	11.5	%	8.8	%	-		2.7	%
Normalized earnings from operations	4,241		2,692		1,549		57.5	%
Normalized operating margin	11.5	%	9.0	%	-		2.6	%
Adjusted EBITDA	5,039		3,303		1,736		52.6	%
Adjusted EBITDA margin	13.7	%	11.0	%	-		2.7	%

Jamieson Brands
	Twelve months ended December 31
	2022		2021		$ Change		% Change
Revenue	439,147		343,245		95,902		27.9	%
Gross profit	184,039		148,371		35,668		24.0	%
Gross profit margin	41.9	%	43.2	%	-		(1.3	%)
Normalized gross profit	184,832		149,024		35,808		24.0	%
Normalized gross profit margin	42.1	%	43.4	%	-		(1.3	%)
Selling, general and administrative expenses	103,996		74,056		29,940		40.4	%
Normalized selling, general and administrative expenses	86,423		70,854		15,569		22.0	%
Share-based compensation	4,910		5,672		(762	)	(13.4	%)
Earnings from operations	75,133		68,643		6,490		9.5	%
Operating margin	17.1	%	20.0	%	-		(2.9	%)
Normalized earnings from operations	93,499		73,412		20,087		27.4	%
Normalized operating margin	21.3	%	21.4	%	-		(0.1	%)
Adjusted EBITDA	113,088		90,301		22,787		25.2	%
Adjusted EBITDA margin	25.8	%	26.3	%	-		(0.5	%)
Strategic Partners
	Twelve months ended December 31
	2022		2021		$ Change		% Change
Revenue	108,222		107,787		435		0.4	%
Gross profit	14,299		14,070		229		1.6	%
Gross profit margin	13.2	%	13.1	%	-		0.1	%
Selling, general and administrative expenses	6,243		6,683		(440	)	(6.6	%)
Normalized selling, general and administrative expenses	6,195		6,417		(222	)	(3.5	%)
Earnings from operations	8,056		7,387		669		9.1	%
Operating margin	7.4	%	6.9	%	-		0.5	%
Normalized earnings from operations	8,104		7,653		451		5.9	%
Normalized operating margin	7.5	%	7.1	%	-		0.4	%
Adjusted EBITDA	10,673		9,795		878		9.0	%
Adjusted EBITDA margin	9.9	%	9.1	%	-		0.8	%

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, 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 twelve months ended December 31, 2022 and December 31, 2021.

Reconciliation of Non-IFRS Financial Measures In thousands of Canadian dollars
	Three months ended				Twelve months ended
	December 31				December 31
	2022		2021		2022		2021
Net earnings	22,091		20,190		52,808		52,082
Add:
Provision for income taxes	8,278		6,966		17,695		18,383
Interest expense and other financing costs	5,757		1,366		12,417		5,657
Depreciation of property, plant, and equipment	3,579		2,629		12,153		10,006
Amortization of intangible assets	1,496		1,074		5,095		4,268
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	41,201		32,225		100,168		90,396
Add EBITDA adjustments:
Share-based compensation^(1)	1,317		1,021		4,910		5,672
Foreign exchange loss (gain)	978		352		269		(92	)
Acquisition related cost^(2)	3,165		-		12,919		-
IT system implementation^(3)	1,417		-		4,527		-
COVID-19 related costs^(4)	-		72		175		2,409
Business integration^(5)	-		-		-		1,852
Amortization of fair value adjustments^(6)	793		-		793		-
Other	-		101		-		(141	)
Adjusted EBITDA	48,871		33,771		123,761		100,096
Provision for income taxes	(8,278	)	(6,966	)	(17,695	)	(18,383	)
Interest expense and other financing costs	(5,757	)	(1,366	)	(12,417	)	(5,657	)
Depreciation of property, plant, and equipment	(3,579	)	(2,629	)	(12,153	)	(10,006	)
Amortization of intangible assets	(1,496	)	(1,074	)	(5,095	)	(4,268	)
Share-based compensation^(7)	(1,317	)	(1,108	)	(6,309	)	(5,497	)
Tax effect of normalization adjustments	(1,685	)	(139	)	(4,943	)	(1,068	)
Adjusted net earnings	26,759		20,489		65,149		55,217
	Three months ended				Twelve months ended
	December 31				December 31
	2022		2021		2022		2021
Gross profit	71,189		49,416		198,338		162,441
Business integration^(5)	-		-		-		653
Amortization of fair value adjustments^(6)	793		-		793		-
Normalized gross profit	71,982		49,416		199,131		163,094
Normalized gross profit margin	37.3	%	38.1	%	36.4	%	36.2	%
Selling, general and administrative expenses	32,768		19,521		110,239		80,739
Acquisition related cost^(2)	(3,165	)	-		(12,919	)	-
IT system implementation^(3)	(1,417	)	-		(4,527	)	-
COVID-19 related costs^(4)	-		(72	)	(175	)	(2,409	)
Business integration^(5)	-		-		-		(1,200	)
Other	-		(101	)	-		141
Normalized selling, general and administrative expenses	28,186		19,348		92,618		77,271
Earnings from operations	37,104		28,874		83,189		76,030
Acquisition related cost^(2)	3,165		-		12,919		-
IT system implementation^(3)	1,417		-		4,527		-
COVID-19 related costs^(4)	-		72		175		2,409
Business integration^(5)	-		-		-		1,853
Amortization of fair value adjustments^(6)	793		-		793		-
Share based compensation	-		-		-		914
Other	-		101		-		(141	)
Normalized earnings from operations	42,479		29,047		101,603		81,065
Normalized operating margin	22.0	%	22.4	%	18.6	%	18.0	%

(1)	Pertains to the expenses relating to our equity based long-term incentive plan (the “LTIP”), along with associated payroll taxes.
(2)	Expenses relating to the youtheory acquisition and integration.
(3)	Relates to system implementation costs to advance our supply chain planning infrastructure. Unlike other system improvement projects with costs capitalized, due to its cloud-based nature, these system implementation costs are expensed accordingly.
(4)	Costs related to COVID-19 which do not reflect the ongoing costs of operation.
(5)	Prior year expenses mainly pertained to start-up costs to complete our transition to a third-party logistics provider to make room for capacity expansion at our existing operations.
(6)	Represents the post-closing amortization of the fair value increase of acquired inventories related to the youtheory acquisition.
(7)	Costs pertaining to our LTIP and tax benefits realized on the vesting of certain share-based awards. Prior year expenses included the acceleration of share-based compensation expense in relation to our CEO transition.