Hydralyte Worldwide (ASX:HPC) Investor Overview

Overview

Hydralyte Worldwide (ASX:HPC) is an ASX-listed speedy hydration options enterprise targeted on the profitable North American market. With a longtime provide chain in Canada and america, the corporate consolidated its market place in FY23 with a 10 p.c improve in internet gross sales to $10 million. The spectacular improve in group gross sales was achieved with a disciplined value focus which flowed via to a major US$5.7 million in money financial savings. And there was ongoing momentum within the first quarter of FY24, with constant development in internet gross sales to US$2.17 million on sturdy gross margins of 56 p.c.

Hydralyte’s multi-channel distribution technique features a focused development via ecommerce. Its speedy rehydration product has been the primary SKU within the hydration class on Amazon Prime Day in Canada, the place it is the quantity two hydration model total with a 21 p.c market share. Beginning on Prime Day, Hydralyte delivered ~US$140,000 in product sales over 48 hours.

It is also price noting that each one this income development – alongside a partnership with Shay Mitchell – occurred with an ongoing discount in advertising expenditure. In 2024, advertising prices as a proportion of internet income decreased to 37 p.c from 48 p.c in Q1 2023. That is due partially to the corporate’s strong management staff, that includes professionals with many years of experience in well being and wellness, in addition to heavy model investments which have been made all through 2022.

In Australia, New Zealand and elements of Southeast Asia, Status Shopper Healthcare (NYSE:PBH) holds the unique gross sales and distribution rights to Hydralyte merchandise. PBH is an American over-the-counter healthcare advertising and distribution firm, relationship again greater than 100 years.

Hydralyte Worldwide’s strong provide chain, gross sales trajectory, manufacturing strategy and product technique are removed from the one causes it exhibits such promise as an funding. Present market tendencies additionally considerably favor the corporate’s core worth proposition. Valued at US$1.68 billion in 2023, the world electrolyte hydration drinks market is anticipated to achieve US$2.78 billion by 2033 as shoppers flip away from high-sugar, low-electrolyte drinks and in the direction of extra medical hydration merchandise.

Roughly 75 p.c of People are dehydrated at any given time. The explanations are many and various, starting from journey and train to alcohol and sickness. Its signs are one thing many people have merely discovered to dwell with – irritability, mind fog, dizziness, elevated thirst, dry mouth and fatigue, to call just some.

Hydralyte matches the invoice completely for these shoppers. Based with the purpose of constructing a distinction via higher hydration, Hydralyte is ready to deal with dehydration extra successfully than nearly all of sports activities drinks in the marketplace. Due to its proprietary formulation – which makes use of a exact ratio of water, electrolytes and glucose based mostly on the World Well being Group’s advisable formulation for speedy rehydration.

Hydralyte is offered in three types: ready-to-drink, pill and dissolvable powder stick. All three are extensively accepted within the medical group. Hydralyte can also be continuously utilized by skilled athletes as a substitute for sports activities drinks.

Briefly, because of its market place, sturdy management and science-based formulation, Hydralyte represents the proper alternative for traders to enter the approach to life sports activities market.

Firm Highlights

• Hydralyte Worldwide is a speedy hydration drink enterprise with a give attention to North America and established provide chains in each america and Canada.
• The corporate’s newest financials present a constant upward trajectory with respect to its key development targets:
  • 10 p.c improve in FY2023 internet gross sales to US$10 million
  • 2ppt improve in gross margin to 54 p.c leading to a 15 p.c improve in gross revenue from US$4.7 million to $5.4 million
  • Web gross sales of US$2.17 million in Q1 2024, up 2 p.c on in This fall 2023 with an uplift in gross margins to 56% (adjusted for one-off gadgets)
  • Sturdy momentum in FY24 with underlying gross sales development for Q1 2024 of US$2.62 million, a rise of 23 p.c from the earlier quarter.
• Appointment of main well being and wellness merchandise dealer LeBeau Excel as new nationwide gross sales dealer for Canada, giving Hydralyte the flexibility to considerably broaden its footprint within the Canadian market.
• Ongoing product growth with a give attention to high-margin development channels, together with Hydralyte Speedy Rehydration, a singular formulation to make the most of the profitable ready-to-drink class for hydration merchandise
• Along with a strong manufacturing base and provide chain, Hydralyte is supported by leaders with many years of expertise in well being and wellness.
• Hydralyte merchandise are extensively accepted in each the medical and athletic communities. Because of this, the corporate is well-positioned to leverage the fast-growing electrolyte hydration drinks market.

Core Product Providing

Hydralyte Speedy Rehydration

Hydralyte is predicated on the World Well being Group’s advisable formulation for speedy rehydration. Created from all-natural elements, it accommodates the exact ratio of glucose and electrolytes essential to rehydrate. Its progressive formulation accommodates as much as 75 p.c much less sugar and 4 occasions extra electrolytes than nearly all of sports activities drinks.

Highlights:

• A number of SKUs: Accessible as a pill, powder and premade drink, Hydralyte is available in a variety of various flavors and formulations, together with:
  • Liver Assist: 7 key electrolytes, six antioxidants, ginger, turmeric, milk thistle and prickly pear.
  • Apple Cider Vinegar: 4 key electrolytes, apple cider vinegar, nutritional vitamins B12, B6 and C.
  • Collagen: 5 key electrolytes, Verisol collagen, vitamin C and zinc.
  • Immunity with Elderberry: 7 key electrolytes, vitamin C, magnesium and zinc.
  • SPORT: Launched in 2022, these tablets are designed with the wants of athletes in thoughts.
  • Underneath growth: Hydralyte Speedy Rehydration, a singular formulation with inherent benefits compared to competitor merchandise within the profitable ready-to-drink product class
• Promising Partnerships: In December 2022, Hydralyte launched a model partnership with Shay Mitchell, a Canadian actress and entrepreneur with over 36 million Instagram followers. The 2 events launched a co-branded product via HPC eCommerce channels and Amazon USA to leverage Ms Mitchell’s excessive profile within the North American wellness market.
• Strategic Agreements: Just lately appointed LeBeau Excel as its new gross sales dealer to considerably broaden Hydralyte’s footprint within the Canadian market. Together with a robust gross sales staff and in-store assist, the Lebeau Excel appointment is anticipated to generate further margin development via extra streamlined distribution.

Administration Crew 

Oliver Baker – CEO

Oliver Baker is the previous common supervisor of Swisse Wellness USA, a vitamin, complement and skincare model that in 2015 bought for US$1.7 billion. Throughout his tenure at Swisse, Baker employed a devoted eCommerce technique that enabled a profitable US launch. He additionally led the mixing staff in Guangzhou, migrating ~US$73 million in gross sales and constructing an area staff within the Chinese language market.

Previous to his place at Swisse, Baker labored in a number of world and nationwide gross sales and advertising roles with a give attention to sports activities sponsorships.

Adem Karafili – Unbiased, Non-executive Chairman

A registered CPA and enterprise skilled with greater than 15 years of expertise, Adem Karafili has operated in management positions throughout a variety of various sectors and industries. Most lately, he spent a number of years at Swisse Wellness, starting as chief monetary officer earlier than changing into chief working officer and managing director. Whereas there, he helped to ascertain Swisse as a number one world well being and wellness model. Karafili holds a Bachelor of Enterprise Administration in accounting and is chairman of a number of well being and wellness companies.

Chris Kavanaugh – CFO

Chris Kavanaugh has over 20 years of expertise working finance and operations for rising startups from inception to US$30M+ in income. He has labored with Hydralyte for over 5 years, beginning as a controller earlier than being promoted to chief monetary officer in 2021. Previous to his place at Hydralyte, he served as a director of finance for firms together with Fullbridge, Training Included and OneVision Sources. Kavanaugh has a bachelor’s diploma in accounting and administration with a double main in info techniques from Indiana College of Pennsylvania.

Nick Berry – Non-executive Director

Nick Berry brings over 19 years of expertise within the Australian finance business, specialising in fairness and debt capital markets, mergers and acquisitions and strategic planning. With a confirmed monitor file in elevating capital and structuring and negotiating advanced monetary transactions, Nick has demonstrated in depth experience and management within the discipline. He beforehand served as an Government Director at Nomura Australia and is at present a Director of PURE Asset Administration Pty Ltd.

Margaret Hardin – Unbiased, Non-executive Director

Margaret Hardin has served as CEO and CFO for quite a few main product firms in america together with Child Tremendous Manufacturers, ERGObaby Service Included and Munchkin. With over twenty years of expertise, Hardin has a well-established fame for driving development via innovation, strategic acquisitions and geographic growth. She holds a BBA from New Mexico State and an MBA from the Sales space Graduate College of Enterprise on the College of Chicago.

Brandon Fishman – US Advisor

Brandon Fishman is the Founder and CEO of VitaCup, a vitamin-infused purposeful espresso and tea model that surpassed US$20 million in gross sales in 5 years. Fishman has labored with a number of Fortune 500 manufacturers in a variety of various capacities, within the course of build up appreciable entrepreneurial knowledge. Different firms based by Fishman embrace NewCondosOnline and Web Advertising and marketing Included. Fishman holds a Bachelor of Enterprise Administration and Finance from Emory College and a Grasp’s in Actual Property & Enterprise from the College of San Diego.