Better Choice Co Inc. (BTTR)·Q2 2024 Earnings Summary

Executive Summary

• Q2 2024 net sales were $8.54M, up 8% sequentially, with gross margin at 38% (+403 bps YoY), operating loss improved to $(0.72)M, and GAAP net income of $2.65M driven by a $3.56M one-time debt extinguishment gain; diluted EPS was $2.98 .
• Adjusted EBITDA improved 98% YoY to approximately $(0.03)M (near breakeven), marking a turning point toward profitability per management .
• Free cash flow was positive at ~$0.10M; management highlighted improved working capital, $5.5M less debt, planned retirement of ~$5M accounts payable at a discount in Q3, and ~$4.5M net equity proceeds post-quarter .
• Consensus estimates from S&P Global for Q2 2024 EPS and revenue were unavailable; results are assessed vs. prior quarter and prior year [GetEstimates unavailable via S&P Global].

What Went Well and What Went Wrong

What Went Well

• Average fill rate reached 95% in Q2, up from 78% in Q2 last year, and finished goods inventory was reduced 57% YoY, reflecting improved operational discipline .
• Gross margin reached 38% (+403 bps YoY), with operating loss improving 72% YoY; CFO cited channel strategy shifts and expense tightening as key profit levers .
• Net income turned positive ($2.65M) and EPS improved to $2.98, aided by a $3.56M gain on extinguishment of debt; Adjusted EBITDA improved 98% YoY to ~$(0.03)M (near breakeven) .
• Quote (CEO): “Our second quarter performance demonstrates that our efforts to stabilize operations, revamp channel strategy, and instill greater financial governance are taking shape.”
• Quote (CFO): “The sales momentum and significant adjusted EBITDA improvement we saw in the second quarter truly reflect our strategic pivots are working.”

What Went Wrong

• YoY top-line declined as Q2 2024 net sales of $8.54M were below Q2 2023’s $10.54M, reflecting exits of unprofitable brick‑and‑mortar accounts and closure of the legacy D2C channel .
• Profitability still relies on non‑recurring items: net income benefited from the $3.56M debt extinguishment; interest expense remained $0.18M in Q2 .
• Adjusted EBITDA remained slightly negative (~$(0.03)M), indicating profit inflection is in early stages and scale is needed to sustain margin expansion .

Financial Results

Income Statement and Profitability (YoY and QoQ)

Notes:

• Q1 2024 revenue derived: H1 2024 net sales $16.45M less Q2 2024 $8.54M = ~$7.90M .
• Gross margin YoY change: +403 bps to 38% in Q2 2024 .

Channel/Segment Indicators

Operational KPIs

Balance Sheet Highlights

Guidance Changes

No explicit numerical guidance for revenue, margins, OpEx, OI&E, or tax rate was provided in Q2 materials .

Earnings Call Themes & Trends

Management Commentary

• CEO (Kent Cunningham): “Our second quarter performance demonstrates that our efforts to stabilize operations, revamp channel strategy, and instill greater financial governance are taking shape.”
• CEO: “We believe there is significant runway for increased Halo growth at both Chewy and Amazon… Halo sits at the intersection of the two megatrends fueling market growth: Humanization and Premiumization.”
• CFO (Nina/Carolina Martinez): “The company’s positive financial results are a testament to the strong underlying performance and operating leverage we are seeing in the business… Supplier input costs are coming down and we are unlocking profit through global volumes.”
• CFO: “I am pleased to report that this gain drove a positive GAAP net income of $2.7 million and EPS of $2.98 per share. Second quarter adjusted EBITDA improved 98% to a near $30,000 loss for the quarter.”

Q&A Highlights

• The transcript provided captures prepared remarks and key financial updates; Q&A content was not included in the available transcript. Notable management clarifications were embedded in remarks: FCF turned positive (~$0.1M), debt reduced by ~$5.5M, plan to retire ~$5M AP at a discount in Q3, and ~$4.5M net equity proceeds post-quarter to enhance flexibility .

Estimates Context

• Wall Street consensus estimates via S&P Global for Q2 2024 EPS and revenue were unavailable due to missing mapping; therefore, comparisons are presented vs. prior year and prior quarter [GetEstimates unavailable via S&P Global].
• Given the non-recurring $3.56M gain on debt extinguishment and ongoing operating improvements, we expect analysts to adjust models to reflect: improved gross margin trajectory, lower interest burden, and early signs of cash generation .

Key Takeaways for Investors

• Sequential revenue growth (+8%) and 38% gross margin (+403 bps YoY) indicate improving core business health, with early operating leverage evident in Adjusted EBITDA near breakeven .
• GAAP profitability in Q2 was materially aided by the non‑recurring $3.56M debt extinguishment gain; underlying earnings power remains in transition and requires continued scale to sustain .
• Operational KPIs (95% fill rate, −57% inventory YoY) and positive FCF (~$0.1M) support a more resilient liquidity profile heading into H2 2024 .
• Strategic focus on Chewy/Amazon and international markets is gaining traction (International +27% q/q; Digital +11% q/q), with subscriptions growing—a constructive driver for revenue durability .
• Balance sheet improved: liabilities down and equity up by mid‑year; management expects further relief via AP retirement at discount and capital raised (~$4.5M) .
• Near-term trading: watch for confirmation of sustained margin expansion without one‑time gains, execution of AP retirement, and continued digital momentum; volatility likely around next print given absent Street consensus .
• Medium-term thesis: if gross margin gains persist and digital/international channels scale, Adjusted EBITDA can turn positive and cash generation improve, supporting de‑risking and potential re‑rating as one‑time items fade .