good natured Products Q3 Loss Widens; Shares Plunge

good natured Products (GDNP) saw strong revenue growth in the third quarter of 2021, but its loss widened from a year ago.

The company offers a wide assortment of earth-friendly options made from plants instead of petroleum. (See Analysts’ Top Stocks on TipRanks)

Revenues & Earnings

Revenues for Q3 2021 came in at C$18 million, an increase of 286% from revenues of C$4.7 million reported in Q3 2020. The company benefited from strong market demand, a full fiscal quarter of contribution from the recent acquisition of Ex-Tech Plastics Inc., and the addition of a range of new customers accounts.

Gross margin for the quarter ended October 31 increased 129% to C$4 million, while gross margin as a percentage of sales was 22.3%.

The company’s adjusted EBITDA was a loss of C$0.6 million in the third quarter of 2021, compared to a loss of C$0.3 million in the prior-year quarter.

Net loss increased to C$2.9 million from C$1.7 million year-over-year.

CEO Commentary

good natured Products CEO Paul Antoniadis said, “The team delivered record setting revenue growth for Q3 2021 and just under 240% growth for the first nine months of the year. We did see some temporary changes in our Q3 2021 product and customer revenue mix with the recent addition of Ex-Tech, whose business is more heavily weighted to National customers and Industrial products with somewhat lower margin rates.

“The integration of a first full quarter of Ex-Tech’s financials, combined with sustained increases in inflationary costs, resulted in our variable gross margin rate dipping to the low end of our targeted range at just under 29% for Q3 2021. Variable gross margins for YTD 2021 are holding above 33%, which remains at the upper end of our targeted range.”

The company also implemented several price adjustments and shipping surcharges to compensate for the rapid increase in raw material and logistics costs that are being felt throughout the industry.

Wall Street’s Take

Earlier in November, Raymond James analyst Steven Hansen maintained a Buy rating on GDNP and a price target of C$1.50. This implies 76.5% upside potential.

The rest of the Street is bullish on GDNP with a Strong Buy consensus rating, based on three Buys. The average good natured Products price target of C$1.62 implies upside potential of about 90.6% to current levels.