Bubs Australia says its 3Q24 results show the company is on track to exceed its FY24 forecast of $100 million gross revenue with an underlying gross margin of 40 per cent.
Bubs CEO Reg Weine said Q3 had been “another strong quarter” with gross revenue up 25.9 per cent on the prior corresponding period (pcp) and its US operations recording a new quarterly record of $1.1 million scale sales per week.
“Gross revenue was 82.8 per cent higher ($5.8 million) higher than the same period last year. We continue to see strong demand for our products and brands in the USA,” Weine said.
Snapshot
- Q3 group gross revenue: $19.9m, up 25.9% pcp;
- Year to date gross revenue: $69.1m, up 29% pcp;
- US gross revenue: $10.6m, up 82.8% pcp (Q3 FY23: $5.8m);
- US now represents 53% of group gross revenue;
- China gross revenue: $2.3m, down 28.1% pcp (Q3 FY23: $3.2m);
- Australia gross revenue: $5.6m, down 5.1% pcp (Q3 FY23: $5.9m); and
- rest of World gross revenue: $1.4m, up 55.6% pcp (Q3 FY23: $0.9m).
The company forecasts Q4 group gross revenue will exceed $30 million, due to positive feedback from retailers on new products, support from major customers, and additional store ranging.
It anticipates FDA approval for permanent access to the US infant milk formula market will come through before October 2025.
Weine said the company had simplified and refreshed its US product portfolio to make it easier for consumers to choose the right formula for their child.
“The changes will enhance our shelf appeal and highlight our clean label credentials, which we know American parents really care about. Production of our new products, new packaging and new tin sizes for the US market commenced in Q3 FY24 and the “sell-in” or transition to the new tins, will commence in Q4 FY24.
“Pleasingly, based on the incredibly positive retailer feedback, our major customers support and the ranging of our new products and tin sizes, we expect our Q4 group gross revenue will be at least 58 per cent higher than Q3,” he said.
Weine said the capital raise in Q2 provided enough working capital for the company to start a second production shift at Deloraine to service the growing US market.
It has also started a sixth day of production every fortnight to mitigate future stock shortages.
“On a two-shift basis, Deloraine is operating at 91 per cent utilisation, with the option of adding a third shift when necessary, providing an additional 30 per cent capacity,” Weine said.
The company is confident it will be cash flow positive and trading Earnings Before Interest and Taxes (EBIT) positive by FY25.
