Jamieson Wellness is the leading consumer health brand in Canada. It is a leading branded manufacturer, distributor and marketer of natural health products. The company also has a growing global presence with sales in more than 45 countries and regions. The segments are Jamieson Brands (~ 93% of adjusted EBITDA 2020) and Strategic Partners (~ 7%).
Jamieson has three manufacturing facilities of its own in Canada. It is the maker and marketer of Jamieson, the # 1 VMS (Vitamins, Minerals and Dietary Supplements) brands in Canada, Progressive, Precision and Iron Vegan. The company also markets the nation’s leading women’s health brand, Smart Solutions.
The company sells its products through 10,000 retail locations across Canada and also has a large digital presence. Jamieson’s international presence is growing steadily year after year with growth of more than 25% in 2019.
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Sales growth and market exposure
Jamieson’s branded business includes a range of premium branded products such as Jamieson, Progressive, Precision, Iron Vegan and Smart Solutions, while its strategic partner business includes partnerships with world leaders in consumer health.
The majority of Jamieson’s revenue comes from the sale of Jamieson branded products to dealers, retail and wholesale customers, and from contract manufacturing services and the sale of products through the Strategic Partners segment.
Jamieson has centuries of experience and is known for its quality products. It has built a strong customer base and reputation for trust. The company has a consistent history of organic sales growth, posting a CAGR of 13% in 2014-2020. Jamieson’s sales grew 17% last year. In addition, strategic acquisitions are carried out in order to further expand and diversify the product range.
Jamieson saw growth domestically, particularly in the e-commerce, grocery, drug, and bulk retail channels, as well as international markets with increased shipments to Eastern Europe and the Middle East in the fourth quarter. The company saw an increase in demand across its segments as well as its customer base as the pandemic increased daily demand for vitamins and nutritional supplements, as well as immunity and overall health. The COVID-19 pandemic has made health and wellbeing a priority for consumers around the world.
However, the Strategic Partners segment saw declining gross profits due to an unfavorable customer mix, volume reduction at the company’s powder factory, and higher costs of continuity of supply related to COVID-19. Jamieson expects revenue between $ 421 million and $ 438 million in fiscal year 2021, an annual growth rate of 4.3 to 8.6 percent. The company focuses its future growth on established brands in developed markets and the expansion of manufacturing capacities.
Jameison Wellness boasts a modest annual dividend yield of 1.3% and a reasonable payout ratio of ~ 50%. The company recently increased its dividend by 31% a year. Dividends of $ 5 million were paid last quarter.
Jamieson’s strategic partner business offers a good diversification of the main branded business. It uses the infrastructure and leads to cost optimization through co-manufacturing partnerships with many blue chip healthcare companies. Jamieson’s scalable and high quality manufacturing capabilities attract further strategic partnerships.
The company is well positioned to expand into new international markets and categories by leveraging brand equity and product innovation. Jamieson has seen sales growth of more than 2% from innovation over the past four years. International sales also doubled between 2013 and 2016. Jamieson’s domestic retail business is also seeing strong double-digit growth.
Jamieson continues to generate steady cash flow while supporting its brand expansion in Canada and internationally. The company reported cash flow from operating activities of $ 18.7 million for the fourth quarter of 2020 compared to $ 13 million for the year-ago quarter. It ended the quarter with $ 127 million in cash and total debt of $ 149 million.
Demand for Jamieson’s quality products is set to continue to grow as customers strive for better health and wellbeing. Jamieson estimates adjusted EBITDA at $ 95 to $ 100 million and adjusted diluted EPS at $ 1.24 to $ 1.32 for fiscal 2021. The company expects growth in the international brand segment of 15 to 25 percent, reflecting growth in China and remaining international markets.
VMS and sports nutrition are two large and growing segments of the consumer health industry and are extremely competitive. Jamieson competes with both public and private companies. Customer trust, quality products, an extensive retail network and strict regulatory standards form a deep moat around Jamieson’s business.
The company’s focus on changing consumer behavior is evident in its leading line of products, which focus on healthy and active lifestyles, professional and semi-professional athletes, vegan alternative specialty products and women-centric health products.
Jamieson Wellness has a 25% market share in Canada’s food, drug and bulk retail markets. Solid momentum across all companies and scalable capacity position Jamieson well to meet the growing demand for health and wellness. The company is poised to become a leading health and wellness brand in China and benefit from the support of global trends.