ALUULA Reports Fourth Quarter and Fiscal Year 2023 Financial Results

Feb 27, 2024 | Financial News

Victoria, British Columbia–(Newsfile Corp. – February 27, 2024) – ALUULA Composites Inc. (TSXV: AUUA) (the “Company” or “ALUULA“) today reported its financial results for the fourth quarter (“Q4 2023”) and year ended October 31, 2023 (“FY2023”). All currency amounts are listed in Canadian dollars.

“Reflecting on FY2023, ALUULA saw significant growth, with sales increasing by 168% compared to fiscal year 2022, due to a combination of acquisition activity and organic growth,” said Richard Myerscough, CEO and director of ALUULA. “The past year was not just about numbers; it proved our commitment to building a solid foundation that is setting us up for great success. At the same time, we also expanded into new sales pipelines and commercialized multiple windsport products, proudly maintaining our position as a leader in windsport innovation.”

During FY2023, ALUULA made the decision to diversify into additional markets, including the outdoor, aerospace, and sailing industries. The decision was due to increased demand for the Company’s high-performing and recyclable materials.

“Our collaboration with Arc’teryx is noteworthy for two reasons; It highlights the progress that ALUULA has made selling in these new verticals and it proves that great products are possible when an innovative material meets product design expertise,” said Myerscough.

Last quarter, ALUULA focused on the continuous innovation of its products and manufacturing processes. This included finalizing the specifications for its ALUULA Durlyte® and ALUULA Graflyte™ materials, developed specifically for the demands of its new vertical markets. Additionally, no-sew seams were introduced, as the result of new manufacturing techniques. These seams will continue to increase the Company’s product development efficiency and cost-effectiveness.

“As we embark on 2024, ALUULA is well-positioned to capitalize on sales opportunities in our strong non-windsport sales pipeline, particularly in the outdoor industry, while remaining dedicated to excellence and growth,” said Myerscough. 

Key FY2023 Highlights:

  • Sales increased 168% or $4,603,819 to $7,347,300, compared to $2,742,481 in fiscal year 2022 (“FY2022”). The increase was primarily due to the inclusion of Ocean Rodeo’s sales of $3,185,614 in the FY2023 consolidated results. ALUULA acquired Ocean Rodeo on October 31, 2022, and as such, FY2022 does not include Ocean Rodeo’s sales.
  • ALUULA’s standalone sales increased by 52% or $1,418,205, compared to FY2022. The increase is primary due to the Company onboarding three new customers representing five windsport brands.
  • Cost of sales increased to $5,472,007 compared to $1,649,542 in FY2022.
  • Gross margin decreased to 26%, compared to 40% in FY2022. The year-over-year decrease was primarily due to inventory write-offs, discounted pricing to clear out older Ocean Rodeo stock, accounting adjustments and an increase in small batch production of ALUULA materials, which yield lower margins, resulting from more prospects in the sales pipeline.
  • Net loss and comprehensive loss was $5,155,427 for the fiscal 2023 year compared to $481,570 for fiscal 2022. The increase in net loss was primarily due to $2,053,903 expenses incurred to obtain and maintain its public listing on the TSX Venture Exchange, the inclusion of $1,729,029 net losses incurred by Ocean Rodeo and increased salaries and benefits and marketing costs incurred by ALUULA on a standalone basis.
  • Increased several vertical markets including Outdoor, Sailing, and Airships. Working in partnership with these customers to successfully replace incumbent materials in these new markets, ALUULA developed additional products including ALUULA Durlyte™ and ALUULA Graflyte™.
  • Onboarded six new windsport brands, bringing the total at the end of FY2023 to eight brands that are offering premium priced windsport products featuring ALUULA materials.
  • Engaged with over 10 prominent Outdoor brands spanning various stages of the sales cycle, from initial needs analysis to field testing prototype products.

Key Q4 2023 Highlights:

  • Sales increased 148% or $1,027,462 to $1,720,612, compared to $693,150 in Q4 2022. The increase was primarily due to the inclusion of Ocean Rodeo’s sales of $839,417 which were not included in Q42022, due to the timing of ALUULA’s acquisition of Ocean Rodeo.
  • ALUULA’s standalone sales increased by 27% or $188,045 when compared to Q4 2022. The increase was primarily due to an increase in sales to the windsport market.
  • Cost of sales increased to $1,519,177, compared to $382,395 in Q4 2022.
  • Gross margin decreased to 12%, compared to 45% in Q4 2022. The quarter-over-quarter decrease was driven by the same factors influencing the year-over-year margin decline described above.
  • Net loss and comprehensive loss was $844,251 for Q4 2023 compared to net income of $359,812 for Q4 2022. The Q4 2023 net loss was primarily due to lower gross margins, higher warranty provisions, and an increase in overall operating expenses due to the inclusion of Ocean Rodeo’s costs which were not included in Q4 2022 results.
  • Strong sales pipeline with six new brands commercializing products with the ALUULA Gold™ material and an additional five expected to commercialize in the first half of 2024.
  • Introduced new products which includes a fire-retardant soft composite material, a new interface film that allows for the bonding of dissimilar materials for use primarily in inflatable rafts and structures, and new materials with unique helium gas-holding capabilities targeted for the Airship industry.
  • New manufacturing techniques developed for use with specific ALUULA products, including no-sew seams, which enable more efficient and cost-effective production while yielding a lighter stronger finished good.

Fiscal 2024 Outlook

The Company is focused on continuing to work with its growing list of brand partners to develop and deliver innovative and high-performing products across industries.

Windsport will continue to be the largest vertical for the Company and a gradual rebound in end-user demand is expected in 2024. Larger market opportunities include developing outdoor recreation products with ALUULA materials, including backpacks, tents, and sailing gear. These developments will also contribute to revenue for the Company during fiscal 2024. Market opportunities in industrial and commercial applications, which are currently in the early stages of development, also offer substantial growth potential.

The Company will continue to grow its line of innovative composite materials based on the market need for materials that are high-performing and recyclable. Ongoing innovation in the Company’s products and patented manufacturing processes will ensure their products appeal to a broader range of customers and future brand partners.

Financial Statements & Management’s Discussion and Analysis

 This earnings press release should be read in conjunction with ALUULA’s interim financial statements for the three and twelve months ended October 31, 2023 (the “Financial Statements “) and the related management’s discussion & analysis (the “MD&A “), which can be found on ALUULA’s issuer profile on the System for Electronic Document Analysis and Retrieval Plus (“SEDAR+“) at www.sedarplus.ca.

ALUULA’s Brand Partners

 The term “brand partners” does not refer to formal partnerships with our customers. The term refers to marketing relationships with our customers who use ALUULA’s technology as a brand ingredient in their products.

About ALUULA Composites

 ALUULA Composites Inc. (TSXV: AUUA) is a leader in textile innovation. Partnering with world-class brands, ALUULA is quickly becoming the top choice for product developers seeking to set a new standard of performance and design.

Ready to perform in every situation, ALUULA’s mono-polymer materials are ultra-lightweight, durable, UV-resistant, and waterproof. ALUULA is opening up the world of product design with exciting, no-sew construction possibilities thanks to their material’s unique ability to bond to itself and to be heat molded, allowing for fabrication into a multitude of products across industries.

ALUULA is a Canadian company founded by a team of highly experienced chemists and engineers who share a passion for sustainability. Because ALUULA textiles are mono-polymers and made without adhesives, they can be recycled at the end of their useful life.

Visit aluula.com to learn more about the possibilities of ALUULA.

On behalf of the Board of Directors,

Richard Myerscough
Chief Executive Officer

For investor inquiries please contact:

Investor Relations
1-888-724-2470, ext. 4
IR@aluula.com

TSX Venture Exchange

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

The information in this news release includes certain information and statements about management’s view of future events, expectations, plans and prospects that constitute forward-looking statements. These statements are based on assumptions subject to significant risks and uncertainties as described in the Company’s management discussion and analysis. Because of these risks and uncertainties and as a result of a variety of factors, including the timing and receipt of all applicable regulatory, corporate, and third-party approvals, the actual results, expectations, achievements, or performance may differ materially from those anticipated and indicated by these forward-looking statements. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statement will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise.

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