Flow Beverage FY2021 Revenue Rises 86%; Shares Pop

Flow Beverage Corp. (TSE: FLOW) posted higher revenues in the year ended October 31, 2020, but the North American water company incurred higher losses.

Fiscal Year 2021 Results

Net revenue came in at C$42.7 million in Fiscal Year 2021, an increase of 86% from 2020. Gross margin grew to 26% compared to 6% a year earlier.

Meanwhile, Flow posted an adjusted EBITDA net loss of C$27 million for the year, compared to a loss of C$27.3 million in the prior year.

Fiscal Year 2022 Outlook

The company’s strategy is to focus on the profitable growth of the Flow brand, which remains one of the fastest-growing brands in the premium water category.

Flow has increased its net revenue target for Flow-branded products in Fiscal 2022 to 45%-55%, from 35%-45% previously.

EBITDA losses are expected to decrease by 45% to 50% in Fiscal 2022 compared to Fiscal 2021 as the company generates increased gross profit from higher net revenue and maintains its disciplined approach to cost management.

CEO Commentary

Flow CEO Maurizio Patarnello said, “We are very encouraged with our efforts at increasing velocity in target distribution channels and maintaining industry-leading growth. We remain fully committed to accelerating the profitable growth of Flow-branded products and aligning with the needs and aspirations of our consumers. Combined with a continued focus in our disciplined approach to cost management, we are confident that we can drive higher net revenue while significantly improving our EBITDA.”

Wall Street’s Take

On January 25, Stifel Canada analyst Martin Landry kept a Buy rating on FLow and lowered the price target to C$3 (from C$8.50). This implies 92% upside potential.

As Landry is the only analyst to have offered a stock rating for FLOW in the last three months, the average Flow Beverage price target is C$3. 

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