Earnings call transcript: Jameson Wellness posts strong Q4 2024 revenue growth

Jameson Wellness reported a robust financial performance for the fourth quarter of 2024, with significant revenue growth and improved earnings. According to InvestingPro analysis, the company’s stock is currently trading below its Fair Value, suggesting potential upside opportunity despite recent volatility. The company highlighted its strategic initiatives and market expansion efforts, which contributed to a positive outlook for the upcoming year, reflected in its impressive 77.7% price return over the past six months.

Key Takeaways

• Consolidated revenue for Q4 2024 increased by 11.1% to $244.8 million.
• Record adjusted EBITDA of $141 million with margins surpassing 19%.
• International revenue saw a notable increase, particularly in China and Europe.
• The company anticipates 9-14.5% growth in consolidated revenue for 2025.

Company Performance

Jameson Wellness demonstrated a strong performance in 2024, with consolidated revenue rising by 9% to $734 million. While InvestingPro data indicates the company’s overall financial health score is currently weak at 1.72, the company’s strategic focus on international markets and innovative product lines, such as the U Theory expansion, fueled this growth. The health and wellness sector’s global trends further supported Jameson’s market position, allowing for significant gains in market share across key regions. With a modest market capitalization of $6.51 million, the company maintains a conservative debt-to-equity ratio of 0.1.

Financial Highlights

• Revenue: $734 million for 2024, up 9% year-over-year.
• Q4 Revenue: $244.8 million, up 11.1% year-over-year.
• Adjusted EBITDA: $141 million, with margins over 19%.
• Cash from operations: $37.8 million in Q4, a 45% increase.

Outlook & Guidance

For 2025, Jameson Wellness projects consolidated revenue between $800 million and $840 million, reflecting a growth rate of 9-14.5%. The company also expects adjusted EBITDA to range from $157 million to $163 million, indicating an 11-15.5% increase. These projections are underpinned by continued investment in brand development and operational efficiencies.

Executive Commentary

CEO Mike Pilato stated, "Twenty twenty four closed with tremendous momentum at the consumer level across all major markets," emphasizing the company’s strong market position. CFO Chris Snowden highlighted the importance of the Chinese market, noting, "Health and wellness is a priority for Chinese consumers," which aligns with the company’s strategic focus on international expansion.

Risks and Challenges

• Potential tariff impacts on strategic partner segments could affect profitability.
• Economic downturns in key markets like China may pose challenges.
• Supply chain disruptions could impact manufacturing and distribution efficiency.
• Market saturation in health and wellness products might limit growth opportunities.
• Currency fluctuations could affect international revenue streams.

Jameson Wellness remains optimistic about its growth prospects, driven by a strong strategic plan and a focus on innovation and market expansion. The company’s ability to navigate economic challenges and capitalize on global health trends will be critical in sustaining its upward trajectory.

Full transcript - Jowell Global Ltd. (JWEL) Q4 2024:

John, Conference Call Moderator, Jameson Wellness: Good afternoon, everyone. Welcome to the Jameson Wellness Conference Call to discuss the Financial Results for the Fourth Quarter and Full Year 2024. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time.

Please be advised that the reproduction of this call in whole or in part is not permitted without written authorization from the company. As a reminder, today’s call is being recorded. On the call today from management are Mike Pilato, President and Chief Executive Officer and Chris Snowden, Chief Financial Officer and Corporate Secretary. Before I turn the call over to Mr. Pilato, please note that a press release covering the company’s fourth quarter twenty twenty four financial results was issued this afternoon and a copy of that press release can be found in the Investor Relations section on the company’s website.

Please note that the prepared remarks which will follow contain forward looking statements and management may make additional forward looking statements in response to your questions. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. We refer you all to risk factors contained in Jameson’s press release issued this afternoon and in filings with the Canadian Securities Administrators for a more detailed discussion of the factors that could cause actual results to differ materially from those of projections and any forward looking statements. The company undertakes no obligation to publicly correct or update the forward looking statements made during the presentation to reflect future events or circumstances, except as it may be required under applicable securities laws. Finally, we would like to remind listeners that the company may refer to certain non IFRS financial measures during this teleconference.

A reconciliation of these non IFRS financial measures was included with the company’s press release issued earlier today. Also, please note that unless otherwise stated, all figures discussed today are in Canadian dollars and are occasionally rounded to the nearest million. I will now turn the call over to Mr. Pilato to get started. Please go ahead, sir.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Thanks, John. Hello, everyone, and thanks for taking the time to join us for our Q4 and 2024 results. On today’s call, I will share our strong 2024 performance with you in some detail before turning it over to Chris for a review of our Q4 financials and guidance for 2025. Then I’ll conclude with some additional color around our key operational and strategic initiatives before taking your questions. 2024 was another strong year for Jameson Wellness as global consumer demand for our products reach new highs and health and wellness continue to dominate consumer trends.

Our strategic execution and brand strength drove market share gains across all key markets, delivering 14% branded revenue growth in the year. Importantly, this performance also translated into substantial cash generation with record cash flows and EBITDA margins exceeding our expectations. Looking at the year from a high level, consolidated revenue increased nearly 9% crossing the $700,000,000 mark to $734,000,000 Adjusted EBITDA was a record high of $141,000,000 with adjusted EBITDA margins of over 19%. Adjusted diluting earnings per share was $1.61 and diluted earnings per share was $1.19 Strong results in 2024 stemmed from consistent coordinated execution of our strategy, driving growth across all branded business units. Branded revenue continued its momentum with growth of just over 14%, offset by 16% lower strategic partners revenue as expected and discussed on past calls.

We began shipping to a new customer in the strategic partner segment in Q4, driving 7% growth and we anticipate this portion of our business to reach 2023 highs again in 2025. We further expanded our Canadian market leadership in 2024 through targeted marketing programs that celebrated our heritage of domestic manufacturing, quality and trust. This business delivered strong revenue growth exceeding overall market performance with increases in both dollar and unit consumption, reflecting sustained consumer interest in foundational health products and innovative natural solutions and the success of in market pricing during the year. The continued successful implementation of our accelerated investment strategy in China delivered nearly 80% reported revenue growth in this key market. Our targeted investments to drive brand awareness and increase market penetration in traditional retail channels yielded strong results.

We continue to see growth through successful demand driving marketing initiatives, supporting our cross border e commerce programs, particularly during promotional windows like the six eighteen and eleven eleven events. Our eleven eleven campaign in Q4 grew by 51% comping impressive growth in the prior year as well. Our U Theory expansion continued to gain traction in 2024 with new distribution, e commerce and international expansion revenue increasing by almost 20%. Consumer consumption within our traditional customer set continued to outpace market growth, particularly for trending products like Ashwagandha and Shilajit. In Q4, we continued to see distribution gains drive growth, partially offset by the timing of promotional purchases within our traditional distribution base and we were proud to get our GLP-one support products to market as a test launch.

Innovation and consumption growth were the core drivers of our international growth of plus 16% on a constant currency basis in 2024 with notable gains in both The Middle East and Europe as consumers deepened their engagement with the Jameson brand. This strong performance complemented by market expansion demonstrates continued momentum throughout our global footprint. Looking at the year ahead, we’re executing from an even stronger foundation. The global megatrends propelling our industry continue to gain momentum, creating unprecedented opportunities for growth. Our strategic marketing investments are already delivering tangible results, driving revenue growth, improving profitability metrics and generating sustained improvements in cash flow.

The remarkable journey we’ve been on since 2017 is truly just the beginning of what this exceptional company will achieve. With our latest guide for 2025 showing revenue and adjusted EBITDA growth of 144130% respectively since our IPO. With that, I’m going to turn it over to Chris for some more details on our financials. Chris?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Thank you, Mike, and good afternoon, everyone. In the fourth quarter, consolidated revenue increased by 11.1% to $244,800,000 driven by growth in both Jameson Brands and our strategic partners segment. Jameson brands revenue increased by 11.9% to $202,600,000 Jameson Canada revenue increased 11.4% to $105,000,000 driven by strong consumer consumption and in market pricing. View theory revenue was $56,300,000 in the quarter with international new distribution and e commerce revenue increasing by over 25% in the quarter through innovation and expanded offerings. Total (EPA:TTEF) Youth Theory growth was 2.3% or 9% year to date despite double digit consumption growth.

This was offset by the impact of pricing changes associated with our new e commerce partnership and the timing of promotional purchases within our traditional customer base. In China, revenue increased 38.9% on a constant currency basis. This is in addition to the 90% pro form a growth in the fourth quarter of twenty twenty three. This reflects the successful investment strategy to drive trial, brand awareness, market penetration and our highly successful eleven eleven e commerce programs. Jameson International revenue increased by 14.2% on a constant currency basis, driven by innovation and growth in The Middle East and Europe.

Strategic Partners revenue grew 7.1% in the quarter, driven by customer ordering patterns and the initial shipment of new programs commencing during the fourth quarter. Normalized gross profit margin increased by 400 basis points after adjusting for the normalization of fair value inventory acquired in the prior year. Within the Jameson brand segment, gross profit margin increased by six twenty basis points to 46.6%, while normalized gross profit margin increased by four ninety basis points, mainly driven by volume growth, operating efficiencies and favorable channel mix in China. Gross profit margin in the strategic partners segment decreased by 130 basis points to 13.8% in Q4, impacted by lower volumes in year. SG and A expenses of $49,100,000 in Q4 increased by $6,800,000 or 16% compared to Q4 twenty twenty three.

Excluding the impact of specified costs, SG and A expenses increased by $9,100,000 mainly driven by the timing of variable compensation and investments to grow our brands as we continue to prioritize our global expansion initiatives. Specified costs of $3,800,000 in Q4 are mainly comprised of $2,100,000 in developmental costs associated with our IT system implementation to augment our system infrastructure. Adjusted net earnings were $34,600,000 in the quarter, representing a year over year increase of 21%. Our adjusted earnings per diluted common share was $0.8 and 19% increase compared to the prior year. A reconciliation of adjusted EBITDA and adjusted net earnings is provided in today’s press release announcing the company’s fourth quarter results.

Turning to the balance sheet and cash flow. We generated $37,800,000 in cash in the fourth quarter from operations, an increase of almost 45% compared to the prior year. Cash from operations before working capital considerations of $41,300,000 was more than double the $20,400,000 generated in the prior year’s fourth quarter. Higher cash flow was primarily related to higher earnings as volumes and expanded margins drove growth in the bottom line. Excluding non cash items, cash invested in working capital increased by $9,200,000 driven by timing of sales and customer collections in the quarter, partially offset by higher outstanding payables.

In the fourth quarter, we distributed almost $9,000,000 in dividends and ended up with $237,000,000 in cash and available operating lines. Based on our strong cash flow and earnings, we have announced a dividend of $0.21 per common share payable on 03/14/2024 to all shareholders of record as of March 7. Now turning to guidance. In 2025, we remain focused on profit contribution, driving operating efficiency at the gross margin level, while continuing to invest to drive growth in our Jameson and U. Theory brands.

In fiscal twenty twenty five, we expect consolidated revenue between $800,000,000 and $840,000,000 representing nine percent to 14.5% growth adjusted EBITDA of between $157,000,000 and $163,000,000 or growth of 11% to 15.5% adjusted EBITDA margins to range from 19% to 19.5% Adjusted diluted earnings per share of $1.82 to $1.93 or growth of 13% to 20%. We expect our Jameson brand segment to deliver revenue growth of 9% to 14.5% in 2025, driven by ongoing traction in China and growth in The U. S. Through our focus on expanded digital e commerce. We expect strategic partners revenue to grow between 1015% driven by new customer initiatives and programs.

Our 2025 guidance does not consider any potential impact of tariffs imposed on trade between Canada and The United States. As such, actual results may differ from those expressed or implied in this guidance due to unforeseen changes in trade policies or economic conditions. A complete discussion of our 2025 and our Q1 twenty twenty five guidance, as well as factors impacting our expected performance is included in the outlook section of our MD and A filed this evening. Now with that, I will turn the call back to Mike.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Thanks, Chris. Twenty twenty four closed with tremendous momentum at the consumer level across all major markets, driven by our strategic investments to maximize our potential, particularly in China. We are driving accelerated growth in these markets through Jameson management, best practices and operational excellence. As we move through 2025, our growth initiatives remain firmly on track. We continue to monitor and adapt to the evolving macroeconomic environment, including ongoing trade tensions.

I want to emphasize that our business model positions us well to navigate these challenges. We manufactured the vast majority of our branded products for Canada and our Canadian facilities and for The U. S. In our U. S.

Manufacturing facility. With no materials imported from China to The U. S, this structure insulates our branded business from significant risk. Based on recent potential tariff announcements, we do not see any material pressures on our direct cost of goods. However, if this were to change, our global supply chain provides flexibility to adjust and protect our margins.

A portion of our lower margin, low growth priority strategic partner segment could experience some pressures in the short term as U. S. Customers could be facing tariffs on import into The United States. However, I’m confident in our team’s ability to mitigate any potential long term effects such as cycling into new contracts globally. Taking a step back to view the bigger picture, history has shown that consumers continue to prioritize health and wellness even during economic uncertainty.

The global megatrends driving our category continue to accelerate, not slow down and we remain uniquely positioned to capture this opportunity. Our journey from a primarily Canadian company in 2017 to a global force today with a clear path to continued growth demonstrates the power of our approach. We’ve built world class capabilities by bringing together vitamin, mineral and supplement industry experts and broad consumer goods veterans from global leaders, all united by an entrepreneurial spirit and our distinctive culture of rolling up our sleeves to get things done. In closing, our ability to navigate and deliver exceptional results in this constantly changing global environment is a testament to the strength of our strategy and the solid execution by our team. The resilience and grit of the Jameson team has enabled us to completely transform this organization over the past eight years, particularly the last five, while maintaining above market growth in our Canadian home market.

I want to thank everyone for their unwavering commitment to delivering best in class products and best in class results. Thank you for joining tonight’s call and we’ll now turn it over to questions.

John, Conference Call Moderator, Jameson Wellness: Thank you. Ladies and gentlemen, we will now begin the question and answer Your first question comes from the line of Derek Lessard from TD Cowen. Your line is now open.

Cheryl, Analyst, TD Cowen: Hi, good afternoon. This is Cheryl calling in for Derek. Thanks so much for taking our question. So our first question is on U-three. In the press release you noted that U-three shipment was impacted by timing of promotional purchases.

Could you maybe elaborate on that? And based on Nielsen data we see your POS numbers in The U. S. Actually look fairly strong. So what is the disconnect there?

Stephen MacLeod, Analyst, BMO Capital Markets: Yes. So thank you for

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: that question, Cheryl. Thanks for joining us. Yes. So the timing of promotional period orders comes down to the way that customers order for the big Q1 promotional window that we talk about every year, right? So the order in Q4 and then that promotional window hits the market in Q1.

Sometimes those the timing of how those orders come in can cross fiscal years. So typically we have a bit of a bigger December than we had this year. This year some of that ordering will shift into the next quarter. It’s just some timing order in the way that accounts are handling their inventory through that promotional window this year. When you talk about consumption, you’re right.

And I alluded to that even in the script, where we have been expanding distribution over the last couple of years, we have seen great POS growth, double digit POS growth, even in our traditional channels in some of the distribution points, the main distribution points that we inherited when we bought U Theory. We continue to see very strong POS growth there as well, also in the double digit range. So from a market perspective, POS and consumption is continuing to trend very strong. We’re just seeing some timing on some shipments right now around promotional windows.

Cheryl, Analyst, TD Cowen: Okay. Thank you. That’s very helpful. So would it be fair to say we can probably see a stronger growth in Q1 because the overflow from Q4?

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: The only thing I’ll caution on Q1, we’re not we don’t give specific guidance by business unit, but the one thing I will caution on Q1 is that we did have a big pipe fill last year on a new innovation in Q1 that will be lapping. So we’ll have to parse that out when we report our Q1 results and explain excluding that pipe fill what the growth rate look like.

Cheryl, Analyst, TD Cowen: Okay, got it. Thank you. And just one more before I re queue. So you’ve been through a couple of Double eleven events in China now and did really well this time. But I’m curious how does this year’s industry environment different from the prior years?

Are there any changes in consumer behavior or what about the competitive and promotional environment? Thank you.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: No, I mean, we didn’t see any material changes. I mean that China continues to be a very competitive marketplace. The one thing we have picked up on, I would say throughout the year is, as everyone knows, China is going through a bit of an economic downturn. Our business has continued to grow, you’re 80% in the year. We’ve been extremely resilient in this time period.

I think us being in that market now for multiple years helps in a time like this. We’re a brand that is known. We’re a brand that has awareness. The consumer knows who Jameson is. They’re resonating with our high quality message with our made in Canada message and continuing to grow our brand.

So I think us being there for some time definitely has helped us during these times of a bit of economic bumpiness in China. And we continue to drive great growth with plus 55% growth in that 11%, eleven % promotional window. We’re quite proud of the work that the team has done there.

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: I I think the other thing to think about, Cheryl, is that while other consumer products type businesses have not seen the growth or maintained consumer interest, health and wellness is a priority for Chinese consumers. And we continue to see strong industry growth in VMS and we continue obviously to outpace that.

Cheryl, Analyst, TD Cowen: Great. Thank you both for the color.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: You’re welcome.

John, Conference Call Moderator, Jameson Wellness: Your next question comes from the line of Stephen MacLeod from BMO Capital Markets. Your line is now open.

Stephen MacLeod, Analyst, BMO Capital Markets: Thank you. Good evening, everyone. Just wanted to pick up on The U. S. Just some of your commentary in the outlook section was around changes to the company to that segment’s revenue reporting structure on a new e commerce partnership.

So I’m just curious if you could just let us give us some color on what those changes are. And it sounds like excluding these changes, would growth be different than what you expect to report, which is the 5% to 15 guidance?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Yes. So we started talking about this a little bit last quarter, Steve. And what it relates to is how we fund our presence online. Before our partnership, we would report a gross revenue net of promotional costs and things like distribution and marketing would be on the individual lines of the P and L. With our new partnership, all of that is rolled into one number and they get a net revenue number off of that.

So that falls further down from a cost perspective. Those other elements aren’t broken out in our P and L. They’re netted against revenue And that business continues to have the same profitability on a dollar basis and actually better profit margins under the new structure.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: But when it comes to 2025 guidance, Steve, to the second part of your question, if we wouldn’t have made that change, that revenue growth would be higher in 2025 by about four to six percentage points is kind of the rough math.

Stephen MacLeod, Analyst, BMO Capital Markets: Okay. Okay. That’s helpful. Thank you. And then maybe just turning to Canada, can you talk a little bit about kind of the volume and pricing breakdown you saw in Q4?

It sounds like you continue to have both strong consumption as well as pricing in the quarter?

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Yes. We had full sorry, we had strong volume and pricing growth in the full year, and we continue to see that through the fourth quarter. I would say kind of high single digit growth in dollars and low single digit growth in units is the best way to think about that, with the difference being the pricing that we put into market.

Stephen MacLeod, Analyst, BMO Capital Markets: Right. Okay. Okay. Got it. Thank you.

And then maybe just thinking about 2025 and the gross mark and the overall Jameson brands business, you’ve highlighted obviously higher gross margin for the year. Do you expect maybe not all of that to flow to the EBITDA margin line just because of the SG and A investments that you continue to make? Is that the right way to think about it?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: I think first and foremost, it’s necessary to point out that we did exceed our margin expectations in fiscal twenty twenty four. So when you look at our expectations for 2025, we’re maintaining a similar margin profile in fiscal twenty twenty five. Gross profit margin growth that’s based on the efficiency and operational initiatives is being reinvested in the business to grow our brands.

Stephen MacLeod, Analyst, BMO Capital Markets: Okay. That’s great. Thanks, Chris. Great. Thanks, guys.

I’ll turn it back over. Appreciate it.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Thanks, Steve.

John, Conference Call Moderator, Jameson Wellness: Your next question comes from the line of Tanya Armstrong Keytar from Canaccord Genuity. Please go ahead.

Tanya Armstrong, Analyst, Canaccord Genuity: Hi guys. Thanks for taking the question. First off, I just wanted to confirm, so that e commerce partner in The U. S. That you referenced on a previous question, Did that have any impact in Q4 twenty twenty four as well or is that purely a 2025 thing?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Yes, that absolutely impacted Q4 as well.

Cheryl, Analyst, TD Cowen: Could you quantify to what extent it impacted Q4?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Similar to what Mike would have said, a mid single digit impact in the quarter.

Cheryl, Analyst, TD Cowen: Okay, perfect.

Tanya Armstrong, Analyst, Canaccord Genuity: And then on pricing, could you discuss what kind of pricing you plan to take for 2025 in the Canadian market if that’s been rolled out yet and how you plan to roll that out?

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: We currently have no pricing built into 2025, Tanya. We have not seen a climate or an environment where our cost of goods are increasing in any material way based on the contracts that we have signed for next year and any of the pricing that we have seen. We say this every year when we don’t price. Right now, we don’t see any reason to price. We don’t see any cost going up.

We do remain confident though if there was any change in that throughout the year or any other cost impacts were to hit us, such as a direct impact of some type of tariff announcement that we have not had yet to date. We’re quite confident that we can react in market and ensure that we protect our margins.

Tanya Armstrong, Analyst, Canaccord Genuity: Okay, that’s great. That makes sense. Holding off on those price increases for when you actually need them. And then lastly, on the tariffs, I know you’ve talked about the strategic partner segment potentially having some modest impact if those U. S.

Customers decide to cycle out of their contracts. What is that kind of lag period? I know you have some pent up demand elsewhere globally that you can backfill it with, but once that U. S. Partner cycles out, how long does it take to bring on a new customer?

I know you had some shifts in strategic partners in years prior and there is a bit of a lag period.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Yes. I think there’s a couple of pieces to that. There’s a period of cycling out, like if someone decides they’re going to cycle out of a contract, it does take some time because it’s not this isn’t the type of business you just pick up and move overnight, right? There’s formulas, there’s stability. There’s a whole bunch of moving the quality.

There’s a lot of moving parts that have to work out. So there’s a lag period of probably call it anywhere from three to twelve months to rotate something out of the system depending on the complexity of that formula. And we can roll something in probably in the same period. The way I like to think about it right now is if we had any impact due to tariffs on that strategic partners business, we could probably keep this business whole over a twelve to twenty four month period is probably a good way to think about it.

Tanya Armstrong, Analyst, Canaccord Genuity: That’s excellent insight. Okay. Thank you

Cheryl, Analyst, TD Cowen: so much. I will get back in the queue.

Stephen MacLeod, Analyst, BMO Capital Markets: Thank you. Thank you.

John, Conference Call Moderator, Jameson Wellness: Your next question comes from the line of Rylan Conrad from RBC Capital Markets. Your line is now open. Yes. Thanks very much and good evening. So just two questions on my end.

Firstly, just with consumer sentiment in Canada softening through February, just with all the tariff uncertainty, Just curious what you’re seeing there. I believe you did mention some channel shifting through 2024, but is that still kind of what you’re seeing? Or are you seeing any trade down activity in 2025 as well? And then just secondly, obviously, I know it’s still early days, but is there anything incremental you could share on just the initial traction with GLP-one products as those started to ship in Q4?

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Yes. Thanks for the questions, Rylan. Both great questions. So from a Canadian consumer perspective, as we talked about in the script there in the prepared remarks, we don’t typically see a downturn in our category in economically an economic bumpy period. We have not seen anything new in the early parts of 2025 or the late parts of 2024.

We do continue to see some shifting in channels. I mean, you continue to see consumers looking for value at a club channel, a discount, a traditional discount grocery banner or online. That has been going on for some time now. And as we’ve talked about before, we’re pretty margin agnostic the way we manage our business. So we’re fine when that happens.

The one thing I would say about consumer sentiment is, I mean, we’re in a very interesting time right now in Canada with Canadians rallying around Canadian companies. So we’ll see how that plays out over the course of the year. Obviously, in our Canadian business, we’re sitting in a good situation for that. And we are our new advertising campaign that we put into the market in Q3 of last year, was celebrating our Canadian manufacturing locations and the employees here that make the team members of ours here that make these products for us at high quality standard. We were celebrating that before this even became a thing and I believe that will help us.

When it comes to the initial GLP ones, there’s really nothing to share right now. We launched in Q4. We have some early distribution. We’ll wait and see as we get through probably a couple of quarters how it does. We are talking about more and we are talking to more and more customers about listing the products.

We’re starting to see a push online around the products and really nothing more to report at this time as we watch and learn. Okay, great. Thank you. Thank you.

John, Conference Call Moderator, Jameson Wellness: Your next question comes from the line of Zachary Evershed from National Bank Financial. Your line is now open.

Zachary Evershed, Analyst, National Bank Financial: Hey, everybody. Congrats on the quarter and thanks for taking my question.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Thank you. Nice to hear from you, Zai.

Zachary Evershed, Analyst, National Bank Financial: So just two quick ones on The U. S. Without getting into guidance for Q1 of twenty twenty five, maybe we can talk about how much the pipe fill contributed in The U. S. In Q1 last year?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Yes. We had really strong growth last year in Q1. It was between 3040%. So that is an indication of how much that pipe fill was. When you look at year on year, our expectations for Q1 twenty twenty five for The U.

S. Business will show growth on 2023.

Zachary Evershed, Analyst, National Bank Financial: Got you. Thanks. And then on the U Theory e commerce partnership, does that change your four to six year organic growth targets for the segment given the changes to revenue recognition?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: No, I think it’s just lapping in this year and last year that are slightly affected. But once we’re fully on the new pricing program, growth should be back on pace with our long term target of 10% to 20%.

Stephen MacLeod, Analyst, BMO Capital Markets: Yes, I would just add

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: to that. The one thing I would say, Zack, is consumption through that channel is going to be much higher than the revenue growth as we lag through this. So, we’re monitoring obviously the revenue growth on the business, but what matters right now to us is the POS growth and the consumption growth year over year under the two different models. That’s the number that would be apples to apples for us that we’re monitoring very closely.

Zachary Evershed, Analyst, National Bank Financial: Makes sense. Thanks. And maybe I’ll just throw in one more. With the NIH funding block, any potential knock on impact expected there maybe on the GLP-one related research?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Sorry, what was the beginning of the question?

Zachary Evershed, Analyst, National Bank Financial: Related to the NIH funding block in The U. S.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Sorry, Zack, we’re not I’m not following the question, but there is nothing in the regulatory world in The U. S. Right now that we have seen or heard of that would have any impact on our business. I do know that we’ve been in contact and talking to some of our customers about our products and the favorable kind of geopolitical world that they sit in The U. S.

Right now. And we have ensured that all of our formulas are high quality and meeting all regulatory standards in The U. S. And in most cases we exceed any of those standards. So we feel pretty good about our business from that perspective.

Zachary Evershed, Analyst, National Bank Financial: Perfectly clear. Thanks.

Stephen MacLeod, Analyst, BMO Capital Markets: I’ll turn

John, Conference Call Moderator, Jameson Wellness: it over.

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Thank you. Thanks,

John, Conference Call Moderator, Jameson Wellness: Zack. Your next question comes from the line of Justin Keywood from Stifel. Your line is now open.

Stephen MacLeod, Analyst, BMO Capital Markets: Hi, thanks for taking my questions. Maybe just to follow-up on the tariffs. Is there any sales from The U. S. To China?

And then also is or maybe this answers it as well. Is Utheory relatively contained in The U. S. Or is there any cross border product shifts there?

Mike Pilato, President and Chief Executive Officer, Jameson Wellness: Most of the business for U. Theory like a vast majority of it, Justin, is sold in The U. S. We did run a very small test in 2024 in China. It remains very small.

We’re gathering those learnings and figuring out what to do with U. Theory in China for the longer term. Nothing of any risk there at all. We do ship some product internationally, including to Canada. And there is no risk today based on any of the potential tariff announcements to date.

We also have the flexibility of moving any of that product into our Canadian facilities if it became an issue. We make all of the same formats they make in The United States, we make here in Canada. So we feel pretty insulated from that perspective and don’t see any risk there.

Stephen MacLeod, Analyst, BMO Capital Markets: Okay. Thank you. And then on capital allocation, the cash flow improved pretty significantly in 2024. Cash from ops was up 100%. Leverage is looking pretty good right now, less than two times.

What are some of the capital allocation priorities for 2025?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: We’re going to continue to invest in the business. That’s our priority to drive organic growth. With the incremental cash, we will continue to return cash to our investors through dividends and we will consider the NCIB when it is pertinent.

Stephen MacLeod, Analyst, BMO Capital Markets: And M and A would not be part of that strategy?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Certainly, we’re always kind of on the lookout for M and A. I think as we get closer to the end of fiscal twenty twenty five, that becomes more of a priority for the organization. But early twenty twenty five, while we’re dealing with this, with the trade issues between Canada and The U. S, I think we’ll probably stand bet.

Stephen MacLeod, Analyst, BMO Capital Markets: That’s understandable. And just for working capital in 2025, any large differences to note that could be different from 2024?

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Yes. So 2024 included a pretty sizable reduction in our inventory. So we’ve guided 2025 working capital investment between $25,000,000 and $35,000,000 more reflecting top line growth and the need to expand working capital to meet our consumer fill rates and our customer needs.

Stephen MacLeod, Analyst, BMO Capital Markets: Okay. Thank you very much.

Chris Snowden, Chief Financial Officer and Corporate Secretary, Jameson Wellness: Thank you.

John, Conference Call Moderator, Jameson Wellness: Thank you for your questions. This ends our Q and A session for today. This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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