TORONTO - Borealis Foods Inc. (Nasdaq: BRLS), a food technology company, has announced the launch of a stock buyback program, with immediate effect. The initiative authorizes the repurchase of up to $3 million of its common shares, subject to market conditions and other factors.
This strategic move, as described by CEO Reza Soltanzadeh, is a response to what the company perceives as a mismatch between the current market valuation of its shares and the company's actual business potential and inherent strength. The buyback is viewed by the management and Board of Directors as a means to correct this undervaluation and to optimize the capital structure for the benefit of shareholders.
The repurchase program will be conducted in adherence to Rule 10b-18 under the Securities Exchange Act of 1934, as well as other applicable regulations. The transactions may occur through various methods, including open market purchases, privately negotiated transactions, and block trades, and may be executed under a Rule 10b5-1 trading plan.
Borealis Foods has not committed to buying any specific number of shares or amount of capital and may adjust the program as market conditions change. The program is set to expire on May 30, 2025, but may be modified, suspended, or terminated at any time.
The company's progress since its inception five years ago includes the development of valuable intellectual property, the launch of advanced manufacturing facilities, and the successful introduction of two nationwide ramen brands. Borealis Foods has diversified its revenue streams and expanded its distribution across North America and recently into Europe.
The information regarding the stock buyback program is based on a press release statement from Borealis Foods Inc. Investors should note that forward-looking statements involve risks and uncertainties, and actual events or results may differ materially from those expressed or implied by such statements. Borealis Foods has emphasized that it does not undertake any obligation to update forward-looking statements, except as required by law.
In other recent news, Borealis Foods Inc. has shared updates on its growth initiatives and recent developments. The CEO's letter to shareholders emphasized a strategic shift in the company's product mix, leading to an improved gross margin and profit for the past two quarters.
Borealis has been investing in research, development, and marketing, including a partnership with celebrity chef Gordon Ramsay, to drive consumer demand for their Chef Woo ramen brand.
The company also anticipates a sales boost in the upcoming back-to-school season with their award-winning Woodles™ product. Borealis is also exploring institutional sales channels, including food distributors, military, correctional facilities, and humanitarian food programs, supported by partnerships with Food Systems for the Future (FSF) and Feeding America®.
A significant development includes the resolution of a going concern issue, which the CEO attributes to the near total redemption of shares following a recent business combination transaction. This issue is expected to be fully resolved by the end of 2024 with the support of majority shareholders. These updates present a snapshot of the company's recent strategic moves and financial health.
InvestingPro Insights
Borealis Foods Inc. (Nasdaq: BRLS), while embarking on a new stock buyback program, presents a mixed financial landscape according to the latest metrics from InvestingPro. With a market capitalization of $194.76 million, the company is trading at a high Price / Book multiple of 12.02 as of the last twelve months leading up to Q1 2024. ]
This indicates that the market values the company significantly higher than its net asset value, which could be a factor in the management's decision to initiate a buyback, aiming to adjust the perceived valuation mismatch.
Despite a slight revenue growth of 1.11% in the same period, Borealis Foods has been grappling with weak gross profit margins, currently at -2.43%. This, coupled with the fact that the company has not been profitable over the past twelve months, might raise concerns about its financial health in the short term. Moreover, the firm's stock generally trades with high price volatility, as evidenced by a striking 127.75% return over the last month, contrasted by a 19.45% year-to-date price total return decrease.
Investors looking to delve deeper into Borealis Foods' financials can find more InvestingPro Tips, which can help make informed decisions about the company's performance and potential investment opportunities.
For instance, Borealis Foods does not pay a dividend to shareholders, which may influence investment strategies focused on income generation. Furthermore, there are 8 additional InvestingPro Tips available, providing a comprehensive analysis of the company’s financial standing and future outlook. To access these insights, visit https://www.investing.com/pro/BRLS and remember to use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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