Mr. Roger Hardy reports

KITS EYECARE REPORTS RECORD THIRD QUARTER 2024 FINANCIAL RESULTS

Kits Eyecare Ltd. has released its results for the third quarter ended Sept. 30, 2024.

Third quarter 2024 financial and operational highlights

For the third quarter of 2024, compared with the third quarter of 2023:

• Revenue increased by 34.4 per cent to a record $41.9-million, compared with $31.2-million.
• Gross profit was $13.8-million or 32.9 per cent of revenue, compared with $10.7-million or 34.3 per cent of revenue.
• Marketing expenses as a percentage of revenue improved by 30 basis points to 13.4 per cent, compared with 13.7 per cent.
• Fulfilment expenses as a percentage of revenue improved by 180 basis points to 10.8 per cent, compared with 12.6 per cent.
• General and administrative expenses as a percentage of revenue improved by 30 basis points to 6.2 per cent, compared with 6.5 per cent.
• EBITDA (earnings before interest, taxes, depreciation and amortization) was $900,000, compared with $1.4-million.
• Adjusted EBITDA increased by $1.0-million to $1.6-million, compared with $600,000.
• Net income was $100,000, compared with $500,000.
• Glasses revenue increased by 43.2 per cent to a record $5.7-million, compared with $4.0-million.
• The company had a record revenue milestone of $15.9-million from new customers.

Year-to-date 2024 financial and operational highlights

For the nine months ended Sept. 30, 2024, compared with the nine months ended Sept. 30, 2023:

• Revenue increased 28.9 per cent to $114.5-million, compared with $88.8-million.
• Gross profit was $37.4-million or 32.6 per cent of revenue, compared with $29.7-million or 33.4 per cent of revenue.
• Marketing expenses as a percentage of revenue declined by 60 basis points to 13.3 per cent, compared with 13.9 per cent.
• Fulfilment expenses as a percentage of revenue declined by 130 basis points to 11.3 per cent, compared with 12.6 per cent.
• General and administrative expenses as a percentage of revenue were 6.7 per cent, compared with 6.7 per cent. Excluding share-based compensation, general and administrative expenses as a percentage of revenue were 5.9 per cent, compared with 6.2 per cent.
• Adjusted EBITDA increased by $2.1-million to $3.5-million, compared with $1.4-million.
• Net income was $400,000, compared with a net loss of $1.7-million.
• The company had a strong quarter-end cash balance of $19.1-million, compared with $19.3-million.
• It generated positive cash flow from operations of $9.2-million, compared with $4.7-million.

Management commentary

"Reflecting on our third quarter results, I'm incredibly proud of the progress we've made as a team. Achieving a record 34.4-per-cent revenue growth and significant operational efficiencies highlights the strength of our approach in reaching new customers while continually optimizing our business," said Roger Hardy, co-founder and chief executive officer of Kits. "This quarter, we achieved a milestone in glasses revenue, up 43.2 per cent year over year, and welcomed a record number of new customers. These achievements underscore the impact of our dedicated focus on product expansion and customer retention. We're excited to build on this momentum as we continue scaling Kits and driving value for our shareholders."

Third quarter 2024 financial results

Revenue increased by 34.4 per cent to $41.9-million, compared with $31.2-million in the third quarter of 2023 (the prior-year period). The increase was primarily attributable to strong repeat customer revenue in both contact lens and eyeglasses, with higher average order values.

Gross profit increased by 29.2 per cent to $13.8-million, compared with $10.7-million in the prior-year period.

Net income was $100,000, compared with a net income of $500,000 in the prior-year period. EBITDA was $900,000, compared with $1.4-million in the prior-year period, while adjusted EBITDA improved to $1.6-million, compared with $600,000 in the prior-year period. The bottom-line improvements were primarily attributable to the increase in revenue and gross profit, along with achieving marketing and fulfilment efficiencies as a percentage of revenue.

On Sept. 30, 2024, cash and cash equivalents totalled $19.1-million, compared with $16.0-million on Dec. 31, 2023, and $19.3-million on June 30, 2024.

Fourth quarter 2024 outlook

For the fourth quarter of 2024, Kits management expects revenue to be in the range of $43.0-million to $45.0-million, with adjusted EBITDA as a percentage of revenue between 3 per cent and 5 per cent.

Conference call

Kits management will host the conference call followed by a question-and-answer period. To access the call instantly, please register your name and phone number on-line.

The conference call will also be webcast live with a presentation and available for replay via the investor relations section of the company's website.

Date:  Wednesday, Nov. 6, 2024

Time:  9 a.m. Eastern Time (6 a.m. Pacific Time)

North American toll-free number:  1-888-510-2154

Local Toronto dial-in number:  1-437-900-0527

Confirmation No.:  46190 followed by the pound key

Financial highlights

The selected financial information in the attached table is qualified in its entirety by and should be read conjunction with the company's consolidated financial statements for the three and nine months ended Sept. 30, 2024, and Sept. 30, 2023, and the accompanying notes, and management's discussion and analysis (MD&A), which may be viewed on SEDAR+.

About Kits Eyecare Ltd.

Kits makes eyecare easy. Kits is a leading, vertically integrated digital eyecare brand providing eyewear for eyes everywhere. The company offers customers access to a vast selection of contact lenses and eyeglasses, including its own exclusive Kits-designed products, as well as a robust suite of on-line vision tools. Kits's efficient digital platform, backed by its industry-leading manufacturing and designs, removes intermediaries and enables it to offer great prices and deliver made-to-order personalized products with incredible care and accuracy. The company is creating disruption in the industry by constantly pursuing cutting-edge technologies to enable the best customer experience, including on-line eyewear fitting tools and virtual try-on for glasses. Kits strives to delight its customers with its competitive prices, a convenient digital shopping experience, fast and reliable delivery options, and an unrelenting focus on earning its customers' lifelong trust.

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