DayDayCook Provides Financial Update and Corporate Highlights
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The reported 25.5% increase in revenues and the shift to EBITDA profitability for DDC Enterprise, Ltd. are significant indicators of the company's financial health and operational efficiency. The growth in gross profit margin from 22.3% to 26.4% suggests improved cost management and potentially higher scalability of the business model. Investors should note the positive EBITDA turnaround from a $10.1 million loss to a $0.6 million gain, reflecting a substantial improvement in the company's core earnings excluding non-cash expenses like depreciation and amortization.
However, it is crucial to consider the sustainability of this growth trajectory. The company's M&A strategy, targeting acquisitions in the Asian food and cooking categories, can be a double-edged sword. While it may provide immediate revenue boosts and market expansion, the integration of these acquisitions and the realization of synergies will be key to maintaining profitability. The entry into the Italian market through a 51% acquisition of GLI also diversifies the company's portfolio but adds complexity to operations.
Investors should assess the effectiveness of DDC's post-IPO capital utilization, particularly the $33.15 million raised, which could fuel further growth or lead to dilution if not managed effectively.
The acquisitions of Nona Lim, Yuli and Yai’s Thai, as well as the planned acquisition of GLI, indicate DDC's aggressive expansion into various segments of the Asian food market. The focus on ready-to-cook (RTC) and ready-to-eat (RTE) product lines aligns with current consumer trends favoring convenience and authenticity. The presence in major retailers like Whole Foods Market, Target and Kroger enhances the brand's visibility and accessibility, which is likely to drive sales volume.
It is important to analyze the competitive landscape within the Asian food category to understand DDC's market position. The company's ability to differentiate its offerings and maintain a loyal customer base amidst intense competition will be a determining factor in its long-term success. Market penetration strategies, especially in the U.S. where there is a growing interest in ethnic cuisines, will be critical.
Stakeholders should monitor the anticipated revenues of the newly acquired companies, as they are projected to contribute significantly to DDC's top line. The projected $8-10 million from Yai’s Thai and $11 million from GLI should be evaluated against actual performance in the coming periods to gauge the accuracy of these forecasts and the success of the integration.
The positive financial results reported by DDC Enterprise, Ltd. reflect broader economic trends, such as increased consumer spending on premium and specialty food products. The company's strategy to acquire brands with established distribution networks taps into the growing demand for Asian cuisine in the Western market, which can be seen as a response to globalization and changing demographic profiles.
DDC's IPO and subsequent capital raise suggest investor confidence in the company's growth prospects and the increased capital could support further expansion. However, the long-term economic impact will depend on the company's ability to manage operational costs and potential market saturation. The food industry's notoriously low margins require careful financial planning and execution to maintain profitability, especially when expanding through acquisitions.
Additionally, the impact of macroeconomic factors such as inflation, supply chain disruptions and currency exchange rates on the cost of goods sold and overall profitability cannot be overlooked. The company's future financial statements will need to be scrutinized for signs of how these factors are being managed.
Revenues +
NEW YORK, Jan. 19, 2024 (GLOBE NEWSWIRE) -- DDC Enterprise, Ltd., (NYSEAM: DDC) (“DayDayCook,” “DDC,” or the “Company”), a leading content-driven food consumer brand, provides a financial and corporate update coincident with the filing of the Company’s financial results for the nine months ended September 30, 2023. These financial results are for periods prior to DayDayCook’s IPO in November of 2023.
Financial Highlights:
- Total revenues were
$23.7 million for the nine months ended September 30, 2023, representing25.5% increase from the same period in 2022 - Gross Profit was
$6.3 million for the nine months ended September 30, 2023, representing a48.4% increase from the same period in 2022. Gross profit margin increased from22.3% for the nine months ended September 30, 2022, to26.4% for the nine months ended September 30, 2023 - EBITDA (non-GAAP) was a positive
$0.6 million for the nine months ended September 30, 2023, compared to a negative EBITDA (non-GAAP) of$10.1 million in the same period of 2022
Corporate Highlights:
- Successful IPO in Q4 2023: The Company completed its initial public offering on NYSE American and raised
$33.15 million (before deducting underwriting discounts and commissions and other offering expenses payable by the Company) in new funding - Continued execution of the Company's Mergers and Acquisitions (“M&A”) strategy which primarily focuses on the acquisition of complimentary brands in the Asian food and cooking categories as well as sales channel access with the following acquisitions:
- Q3 2023: Completed the acquisition of Cook San Francisco, LLC. (“Nona Lim”), an Asian food brand company based in San Francisco, USA which sells RTC Asian noodle meal kits and a variety of soup bases to its customers through an established distribution network in the United States, including major retailers such as Whole Foods Market, Target, and Kroger
- Q3 2023: Completed the acquisition of Shanghai Yuli Development Limited (“Yuli”), a Chinese company principally engaged in sales of RTC and RTE product gift boxes
- Q1 2024: Completed the acquisition of Yai’s Thai, which provides Thai-based pantry staples in the U.S. market such as curries and stir-fry sauces. The company’s products may be found at Costco, Whole Foods Market, Safeway, Sprouts, and Kroger. The company has anticipated revenues of
$8 million to$10 million in 2023 - Q1 2024: Entered into agreement to acquire
51% of Italian company GLI for approximately US$9.3 million in cash over the next three years, plus an additional potential consideration of cash and stock based on GLI’s revenue and EBITDA over that period. GLI produces Asian-style ready-meals. GLI anticipates revenue of approximately of US$11 million in 2023
Norma Chu, DDC’s Chairwoman and Chief Executive Officer said, “These financial results are from a pre-IPO period, and we look forward to continuing financial success now that we are trading on the NYSE American. We are very excited about our recent acquisitions as well as the significant number of opportunities we see in the U.S. and international markets. As a newly listed company, we are focused on executing our growth strategy to deliver value for our shareholders.”
About DayDayCook – A Leader in Food Innovation
Founded in 2012, DayDayCook is a leading content-driven consumer brand offering easy and convenient ready-to-heat, ready-to-cook and ready-to-eat Asian food products. The company focuses on innovative and healthy meal solutions with a fast-growing omnichannel sales network in China and the U.S., and through a strong online presence globally. The Company builds brand recognition through culinary and lifestyle content across major social media and e-commerce platforms.
Use of Non-GAAP Financial Measure
We use earnings before interest expenses and income, income tax expense/(benefit) and depreciation, and amortization (“EBITDA”), a non-GAAP financial measure, in evaluating our operating results and for financial and operational decision-making purposes. EBITDA represents net loss excluding income tax expense/(benefit), interest expenses, interest income and depreciation and amortization. The Company provides EBITDA because we believe that investors and analysts may find it useful in measuring operating performance without regard to items such as income tax expense/(benefit), interest expenses and interest income and depreciation and amortization.
| Reconciliation from net loss to EBITDA for the nine months ended September 30: | |||||||
| 2022 | 2023 | ||||||
| US$ | US$ | ||||||
| Net loss | (14,435,292 | ) | (2,234,685 | ) | |||
| Add: | |||||||
| Income tax (benefit)/expense | (18,556 | ) | 621,840 | ||||
| Interest expenses | 3,953,458 | 2,183,911 | |||||
| Interest income | (52,533 | ) | (226,240 | ) | |||
| Depreciation and amortization | 400,277 | 301,490 | |||||
| EBITDA | (10,152,646 | ) | 646,316 | ||||
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements, including, for example, statements about completing the acquisition, anticipated revenues, growth and expansion. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. These forward-looking statements are also based on assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. Investors can find many (but not all) of these statements by the use of words such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC.
Contact:
Investors:
CORE IR
Matt Blazei
mattb@coreir.com
Media:
CORE PR
Kati Waldenburg
pr@coreir.com
FAQ
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