Better Choice (BTTR) is a pet health and wellness company that is focused on providing pet products and services that help dogs and cats live healthier lives, notes Bryan Perry, editor of the specialty advisory service, Micro-Cap Stock Trader.
The company offers a broad portfolio of products for dogs and cats sold under the Halo brand across multiple forms, including foods, treats, toppers, dental products, chews and supplements. Halo is an Amazon’s Choice selection for pet foods.
Halo products consist of kibble and canned dog and cat food, freeze-dried raw dog food and treats, vegan dog food and treats, oral care products and supplements. Halo's core products are made with high-quality, thoughtfully sourced ingredients for natural, science-based nutrition. Each innovative recipe is formulated with leading veterinary and nutrition experts to deliver optimal health. All products are made in the United States.
The company just recently reported third-quarter results that showed excellent improvement in all aspects of the business. Lionel F. Conacher, CEO of Better Choice, stated, "In the third quarter, we generated $11.9 million in net sales, highlighted by strong performance internationally, where we delivered 31% growth. On a year-to-date basis, net sales totaled $45.4 million, an increase of 30% as compared to the same year-over-year period."
Mr. Conacher continued, "In the third quarter, we delivered a third consecutive quarter of gross margin improvement, with gross profit and adjusted gross profit margins improving to 35% and 37%. This represents a six-percentage point improvement from Q2 2022 and a twelve-percentage point improvement from Q4 2021. Subsequent to the third quarter, we also made meaningful improvements to our balance sheet by extending and upsizing our current revolving credit facility to $13.5 million.”
I spoke with the founder and Chairman Mike Young today and had a very constructive and positive call with him, detailing the quarter and the outlook for the business for the fourth quarter of 2022 and into 2023. The company had adjusted losses of $2.9 million for the quarter and is projected to breakeven and generate positive cash flow next year as sales continues to increase at a solid pace.
The stock went public on June 30, 2021, pricing eight million shares at $5.00 per share. After the recent correction in small and micro-cap stocks, the stock trades at $1.00 per share, or roughly 0.50 times price/sales. This is a dirt-cheap valuation that I can see appreciating to $3 or higher as the market improves for such stocks. DA Davidson published a Buy rating on the stock on October 22, 2022, with a $6 price target.
