Whole Earth Brands (FREE) 3rd quarter 2020 earnings report review
Category: Whole Earth (FREE)
Date: 17 November 2020 Stock price of Whole Earth: $8.34 We take a look at the 3rd quarter 2020 earnings report of Whole Earth Brands (FREE), a global platform of branded products and ingredients focused on the consumer transition towards healthier lifestyles, such as free from sugar, natural solutions, plant-based and clean label. The group reported revenue of $67 million for the quarter and reported a loss of -$2.87 million.
|
Irwin Simon, Executive Chairman - We are excited to deliver our first full quarter as a public company. I’m proud of our team – they’ve been working diligently to build the necessary infrastructure to support our rapidly growing enterprise and the evidence of this work is the speed by which we were able to close the Swerve acquisition "
More About Whole Earth Brands (FREE)
Whole Earth Brands is a global platform of branded products and ingredients focused on the consumer transition towards healthier lifestyles, such as free from sugar, natural solutions, plant-based and clean label. Whole Earth Brands Inc. is one of the world’s leading manufacturers of zero/low sugar and calorie sweeteners as well as reduced sugar products with brands including Whole Earth®, Swerve®, Pure Via®, Equal®, and Canderel®. The Company’s branded product line Magnasweet® offers versatile masking agents, sweetness intensifiers and extenders and flavor enhancers. The company has a vision to expand its branded portfolio globally through investment opportunities in additional categories, with better for you clean label alternatives in the quest to “Open a World of Goodness®” to consumers and their families.
Overview of Whole Earth (FREE) 3rd quarter 2020 earnings report
THIRD QUARTER 2020 HIGHLIGHTS
Our consolidated financials reflect both predecessor and successor periods indicative of the June 25, 2020 business combination date. The third quarter results disclosed below compare the successor’s 2020 third quarter results ended September 30, 2020 to the predecessor’s 2019 third quarter results ended September 30, 2019.
Our consolidated financials reflect both predecessor and successor periods indicative of the June 25, 2020 business combination date. The third quarter results disclosed below compare the successor’s 2020 third quarter results ended September 30, 2020 to the predecessor’s 2019 third quarter results ended September 30, 2019.
- Consolidated product revenues of $67.0 million, an increase of 4.6% compared to the prior year third quarter; an increase of 3.6% on a constant currency basis.
- Branded CPG segment product revenues of $41.0 million, an increase of 1.8%; an increase of 0.1% on a constant currency basis. Constant currency results reflect the combination of strong growth in Western Europe, and North American foodservice channel softness associated with the COVID-19 pandemic.
- Flavors & Ingredients segment product revenues of $26.0 million, an increase of 9.4% in the third quarter, driven by strong growth in derivative product lines.
- Consolidated operating income of $1.1 million and a consolidated net loss of $2.8 million in the third quarter of 2020 reflect non-cash purchase accounting adjustments which are not comparable to prior year’s predecessor period.
- Consolidated Adjusted EBITDA increased 6.7% to $16.5 million driven by increased sales and expense reduction actions.
Whole Earth (FREE) management commentary on their 3rd quarter 2020 earnings
CHICAGO, Nov. 16, 2020 (GLOBE NEWSWIRE) -- Whole Earth Brands, Inc. (the “Company” or “we” or “our”) (Nasdaq: FREE), today announced its financial results for its third quarter ended September 30, 2020. Additionally, on November 10, 2020 the Company announced the completion of its acquisition of Swerve®, a rapidly growing manufacturer and marketer of a portfolio of zero sugar, keto-friendly, and plant-based sweeteners and baking mixes.
Irwin Simon, Executive Chairman, stated, “We are excited to deliver our first full quarter as a public company. I’m proud of our team – they’ve been working diligently to build the necessary infrastructure to support our rapidly growing enterprise and the evidence of this work is the speed by which we were able to close the Swerve acquisition. We are poised for a strong year ahead, supported by our internal organic growth initiatives which are complemented by Swerve, a high-quality asset that is highly synergistic with our ‘freefrom…’ strategy.”
Irwin Simon, Executive Chairman, stated, “We are excited to deliver our first full quarter as a public company. I’m proud of our team – they’ve been working diligently to build the necessary infrastructure to support our rapidly growing enterprise and the evidence of this work is the speed by which we were able to close the Swerve acquisition. We are poised for a strong year ahead, supported by our internal organic growth initiatives which are complemented by Swerve, a high-quality asset that is highly synergistic with our ‘freefrom…’ strategy.”
Albert Manzone, Chief Executive Officer of Whole Earth Brands, commented, “Our Branded CPG segment performance was highlighted by strong market share gains within our natural products business. All of our top seven markets grew share of natural in the year-to-date period, underscoring the powerful healthy-living macro trends that are supporting our brands. Additionally, our Flavors & Ingredients segment experienced a very strong quarter driven by the resiliency of our diverse end-markets. Looking ahead to the fourth quarter, we are anticipating a strong finish to 2020, marked by a nice sequential lift in revenue within our Branded CPG segment, which is indicative of the distribution gains that we’ve been planning for ahead of the holiday season.”
Mr. Manzone concluded, “We were thrilled to close Swerve last week, which is our first strategic acquisition. This is a significant value creation event for Whole Earth Brands as we integrate one of the leading brands within our core sweeteners and ingredients businesses. We believe this transaction enhances our ability to generate long-term sustainable growth, while positioning Whole Earth Brands to create additional value for our shareholders. Our integration is already underway – we are engaging with customers on our expanded portfolio, and we are extremely excited about our broader presence in the better-for-you sweetener market. We are just getting started – there are some great opportunities in the market, and we’re excited to continue exploring additional prospective M&A targets as we pursue our long-term vision of penetrating the adjacent opportunities in the massive ‘freefrom…’ marketplace. We have great confidence in our plan to grow Whole Earth Brands and are proud of our organization’s ability to act quickly while still maintaining focus on our customers and growth initiatives.”
Mr. Manzone concluded, “We were thrilled to close Swerve last week, which is our first strategic acquisition. This is a significant value creation event for Whole Earth Brands as we integrate one of the leading brands within our core sweeteners and ingredients businesses. We believe this transaction enhances our ability to generate long-term sustainable growth, while positioning Whole Earth Brands to create additional value for our shareholders. Our integration is already underway – we are engaging with customers on our expanded portfolio, and we are extremely excited about our broader presence in the better-for-you sweetener market. We are just getting started – there are some great opportunities in the market, and we’re excited to continue exploring additional prospective M&A targets as we pursue our long-term vision of penetrating the adjacent opportunities in the massive ‘freefrom…’ marketplace. We have great confidence in our plan to grow Whole Earth Brands and are proud of our organization’s ability to act quickly while still maintaining focus on our customers and growth initiatives.”
Stock price history of Whole Earth Brands (FREE) since their listing
The image below obtained from Google, shows Whole Earth Brands stock price since their listing. And its not been a good time for Whole Earth Brands stockholders. At listing Whole Earth Brands was trading at around $9.90 a stock and its currently trading at $8.34. That's a loss of -15.7% suffered by Whole Earth Brands stockholders since their listing earlier in the year
The stock of Whole Earth Brands is trading a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term momentum and sentiment towards Whole Earth Brands stock is positive right now
The stock of Whole Earth Brands is trading a lot closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term momentum and sentiment towards Whole Earth Brands stock is positive right now
Latest stock valuation of Whole Earth Brands
So based on Whole Earth Brands latest earnings report what do we value Whole Earth Brands stock at? The fact that Whole Earth Brands (FREE) is loss making makes it harder to value the stock. Our base position when a firm is loss making is to use its stockholders equity per share as the base of our valuation. In the case of Whole Earth Brands they stockholders equity per share is $7.58
We therefore believe that the stock of Whole Earth Brands is slightly overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $7.58. A good entry price into Whole Earth Brands would therefore be at $6.80 or below.
We expect the stock of Whole Earth Brands to pull back in coming weeks and months to levels closer to our target price (full value price) in coming weeks and months. Since the stock of Whole Earth Brands is trading at well above our suggested entry point we rate the stock of Whole Earth Brands as a sell
We therefore believe that the stock of Whole Earth Brands is slightly overvalued. We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $7.58. A good entry price into Whole Earth Brands would therefore be at $6.80 or below.
We expect the stock of Whole Earth Brands to pull back in coming weeks and months to levels closer to our target price (full value price) in coming weeks and months. Since the stock of Whole Earth Brands is trading at well above our suggested entry point we rate the stock of Whole Earth Brands as a sell
Next earnings release of Whole Earth Brands (FREE)
It is expected that Whole Earth Brands will release their 4th quarter 2020 earnings report in mid February 2021
Related Topics