Ladies and gentlemen, welcome to the 2022 annual general meeting of Flow Beverage Corp. Please note that this meeting is being recorded. I would like to introduce Nicholas Reichenbach, Executive Chairman of this meeting. Mr. Reichenbach, the floor is yours.
Good afternoon. The meeting will now come to order. I'm Nicholas Reichenbach, Executive Chairman of the Corporation, and I will be acting as the chairman in this meeting. Once again, this year, we are conducting this meeting virtually. That said, we do look forward to seeing those of you who can attend our in-person shareholder event, which is being held later today at 4:00 P.M. at Hotel X in Toronto, Ontario. Please bear with us if we encounter technical difficulties with the platform during the meeting. We will move quick as possible to resolve them. I ask Kevin Helfand, the Corporation's Senior Vice President of Legal, to act as the Secretary of this meeting, and I've asked the TSX Trust to act as the scrutineer. If anything should happen to my Internet connection during the meeting, the Secretary will continue concluding all formal meeting business until my connection is reestablished.
As you have noted in our management information circular and the notice calling this meeting, we have three items of business to conduct today. Once the formal part of the meeting is concluded, and the start and completion of the informal part of our presentation, there will be an opportunity to ask questions verbally, or through the chat function on your panel. I think actually it's only through your chat function on panel. Everyone will be muted for the formal part of the meeting. However, please note that you have access to the question chat function and, raise your hand function is enabled, on your webinar control panel. Votes will be conducted electronically throughout the meeting. Please pay attention to your screen to participate. All polls will remain open until the end of the meeting.
To make the best use of our time, certain people have been asked to move the resolutions that we'll be considering. Notice of this meeting was sent to all shareholders of record as of close of business on March eighteenth, two thousand twenty-two. I direct that a copy of the notice with proof of mailing be kept with the record of this meeting. I now direct the Secretary to read the notice calling this meeting, unless I receive a motion to dispense with this reading.
I move that the reading of the notice calling this meeting be dispensed with.
May I have a motion seconded?
I second the motion.
The scrutineer advised me that a quorum of the shareholders is present and represented by the proxies of this meeting. I therefore declare the meeting be duly called and properly constituted. I direct the scrutineer's report of the attendance to be attached to the meeting notes of this meeting. Before I start the business of the meeting, I have the following comments on the voting protocol. Each shareholder is entitled to 10 votes of each multi-voting share and one vote of each subordinate voting shares held by the shareholder in respect to all matters to come before the meeting. Sorry. The first item of business to be considered and to be resolved is the election of the directors of the Corporation. The directors will hold office until the close of business of our next annual meeting of the Corporation's shareholders.
The articles of the Corporation provide for a minimum of one and a maximum of ten directors. There are presently six directors, and a number of directors to be elected at this meeting has been fixed to six. In accordance to the Corporation's advance notice provisions and as described in the management information circular, the following individuals have been nominated and are presented to be elected as directors. Nicholas Reichenbach, Patrick Bousquet-Chavanne, Mark Kiira, Joe Jackman, Lori O'Neill, and Ann Tracy. In accordance to the Board of Directors' majority voting policy, if any of the nominees receive four votes fewer than the majority of the votes cast in respect to his or her election, he or she must immediately tender his or her resignation to the board of directors. May I have a motion that the nominees be presented for election to the board of directors?
I move.
May I have the motion seconded?
I second the motion.
Please cast your votes for or against each of the nominees in the poll.
TSX scrutineer. Are the polls closed? The polls are closed.
The second item of business to be considered, and if deemed advisable to be resolved, is the reappointment of EY LLP as our auditors of the corporation, and the reappointment of EY LLP to hold office until the next annual meeting of our shareholders. May I have a motion that EY LLP be appointed as the auditors of the corporation until the next annual meeting of the shareholders, and that the directors of the corporation be authorized to fix the remuneration of the auditors.
I so move.
May I have a motion seconded?
I second the motion.
All those in favor of the motion, please click yes on your poll. For those that disagree, please click no.
Again, we'll wait for the scrutineer. The polls are closed.
The scrutineer has closed the polls and compiling the votes. On the first item of business pertaining to the election of the directors of the corporation, I declare the motion carried, and it is resolved that the nominees have been duly elected as directors of the corporation. On the second item of business pertaining to the appointment of EY LLP as the auditors of the corporation, I declare the motion carried, and it is resolved that EY has been appointed as our auditors. Please note that there will be an opportunity to ask questions at the end of the informal presentation to follow. This concludes the formal part of this special meeting, and I thank you for taking your time to attend and participate. The secretary will now move the final resolution.
I move that the meeting be terminated.
May I have a motion seconded?
I second the motion.
That concludes the formal part of the meeting. Now we get to the fun stuff. We prepared a presentation to update our shareholders. This presentation will be available for download on our investor relations website, flowhydration.com, under investor after the presentation. As mentioned, Devan Pennell, our CFO, at the conclusion of the presentation, will be taking Q&A, and we'll do our best to get to some of the questions. Ones that we do not get to, we will be emailing the person directly after the call in due course. After reviewing our recent milestones, Our CEO will take you through our operational updates and latest data.
Devan will provide more details on the financial results and then pass it back to Maurizio to talk about the strategic framework and some exciting growth opportunities that we've announced. Fiscal 2021 was an exciting active year for Flow. We became a public company in July 2021 on the heels of raising CAD 99.8 million from our investors to propel our growth over the course of three years. We were very grateful for those investors that have provided capital to Flow and delivered our long-term growth plans. We remain one of the fastest growing water brands in North America, which means we're putting the capital to good use. Throughout our fiscal 2021, we maintained our best-in-class ESG rating by receiving our B Corp Best for the World designation.
As a company moving past the challenges of COVID, we believe the next challenge will be tackling ESG. Flow doesn't just click the box of ESG from the packaging perspective, but we have best-in-class operations across all of our supply chains, making Flow a vendor of choice as those look to replace plastic bottled water. We continue our product innovation in 2021 and led significant growth in the US market. We launched collagen flavors, variety packs, 750 ml with partnerships like SoulCycle, and we have a very attractive innovation pipeline in the months to come. Before I move on, I would like to address the performance of the stock price. We understand that the stock price is disappointing over the last year since we went public. This performance is disappointing to me too as Flow's largest shareholder.
Since becoming public, we've seen trends change in the capital markets, which has impacted Flow's valuation and dozens of other companies in this sector. We have also seen over 30% of our previous shareholder base lock in profits by selling in the capital markets. When we went public, we treated all shareholders equally and respected the need for liquidity from our investors that have supported Flow over the long term. Now, the question that everyone asks our management team and the board, what are we doing about the stock price? What I can share today is that we are listening to feedback and equally implementing it. Feedback that makes the most amount of sense to us is that we continue to focus on driving profitable growth for the Flow core branded products.
We published our first strategic framework in September and our profitability has improved significantly since then, especially in operating expense control. We have also said in the past that we are considering an asset-backed loan facility. We have a number of other strategic initiatives in place to improve profitability and the strength of our balance sheet. As of January 31, we had CAD 38 million in cash. We believe there is sufficient working capital and we do not need additional cash. We also believe that we're executing our strategic framework and we have financial runway to implement a number of strategic changes that will accelerate the path to profitability.
On our earnings call in January thirty-first, Devan Pennell, our CFO, stated at the end of his presentation that we have 18-24 months cash burn runway on the business, which gives us a significant runway in order to execute our plan and move towards profitable growth. Flow is steadily building value as a brand. We have more and more stores, customer awareness, and increasing our conversion of purchase decisions and increasing our infrastructure to support a high level of growth. We believe all these factors are recognized. We do not believe all of these factors are recognized in our current stock price. What the management team and the board of directors are doing about the stock price and making sure that we can have the valuation that everyone is expecting over the course of time.
We will, number one, continue to focus on profitable growth as well as maintaining a consistent cost discipline in our path to profitability. We will do more rapid communication to the market on our progress of growth as well as our progress moving into reducing our EBITDA losses. The board of directors and, you know, management team led by myself, will continue to purchase stock on the market and support with our large leading shareholders continue consolidation of our cap table. Lastly, we will focus on increasing our institutional shareholders that believe in the company and hold for a mid to long-term view as we execute our business plan in accordance to our strategic framework. With all that being said, last year was an incredible year for progress at Flow.
We appointed Maurizio as our CEO, and for those that have not been on earlier calls, he had a very long history with running one of the largest water companies in the world, Nestlé Waters, as the chairman and the CEO. You know, during that process, we rolled out a national DSD with 25,000 points of distribution in North America. We've added in this calendar, 2022, an additional 5,000 stores, with Dollar General being a significant store count last month. We are also thrilled to be working with Walmart, Sprouts, Whole Foods, Loblaws, and Fresh Thyme in the coming months to activate our summer programs. That is the busiest months for Flow.
Very important Q3, Q4 for Flow as we roll out our strategic framework in support of our retailers and ultimately our customers. What you will not see reflected in our store count is our food service contracts, which we're rolling out over 70 hotels with an Accor deal in the coming months. I'll let Maurizio explain that further in his update. We believe food service will be a significant contributor to our growth moving forward. We're very excited to unlock this customer channel. With that, I will now pass it over to Maurizio, Flow's Chief Executive Officer, to update everybody on our performance.
Thank you, Nicholas. Hello, everyone, and thank you for joining us today. I will begin my presentation today with an overview of our operating and financial highlights for the fiscal year 2021. Flow was one of the fastest-growing brands in North America in fiscal year 2021. The Flow brand grew 83% in the U.S. multi-outlet channels in 2021, and 92% in the Canadian food, drug, and mass channel. The driver of the growth in the U.S. multi-outlet channel was increasing velocity as we focus our resources on in-store activation and promotion and to introduce new multi-unit SKUs. In Canada, higher all commodity volume drove our results.
Since we have been in Canadian market a couple of years more than in the U.S., our brand has developed more consumer recognition, and this makes it easier to enter gas and convenience stores and hit the ground running. In fiscal year 2021, net revenue increased 86% as compared to 2020. Net revenue growth was driven by Flow branded product sales in retail and e-commerce channels across North America, and a strong year for co-packing, especially in Q2. Flow branded retail and e-commerce net revenue increased 47% in fiscal year 2021. This growth rate accelerated into Q4, increasing to 69% as compared to prior year. The drivers contributing to accelerated net revenue growth in the retail channel are velocity in the U.S. market and growth in Canada to increase ACV.
Our e-commerce sales benefited from improved direct-to-consumer performance in the U.S. and Canada. We made significant gross margin improvements relative to 2020 as well, increasing to 26% in fiscal year 2021. With a higher volume of Flow products and co-packing, we were able to improve asset utilization, and we are getting more efficient on production runs. Additionally, our unit cost remained stable. Moving to next slide. The shelf-stable water market in North America is currently over $14 billion and is growing about 11% a year. The fastest-growing segments with shelf-stable water are enhanced and flavored. This is where Flow competes. These two segments are growing 22% and 15% respectively, and these trends are expected to continue for the foreseeable future. Moving to next slide.
We expect that Flow will be a beneficiary from the tailwinds created by growth in the premium sustainable functional water segments. You can see that the premium segment is growing at a rate of 25%. This is driven by consumers continuing to move away from soft drinks and choosing premium water instead. The premium sustainable packaged water is now growing over 70% a year as company and consumers became more mindful and their impact on the planet. Functional enhanced water is also growing at a rate over 25%. These trends all help support our confidence in achieving the financial targets we have set in our strategic framework. Moving to next slide. Flow is maintaining very high growth rates in two large markets, growing 60% in U.S. multi-outlet channels and 76% in Canada food and drug mass.
US multi-outlet channel is benefiting from very impressive velocity improvements, while the Canadian growth is attributable to increased all commodity value through big wins in the gas and convenience channel. The natural channel also stabilized. This channel suffered from worse during COVID, and is a very important channel for Flow in particular. We are back to seeing modest growth in this channel. Moving to the next slide. Whole Foods continue to be a very impressive story, and it illustrates a formula we try to achieve with all our retailers. As you can see on slide nine, Flow water is only 2% more stores than this time last year, as we are already in almost all food locations. However, our retail sales have increased 45%. We have gained considerable market share at Whole Foods. You can see our velocity has improved 11%.
This is due to consumer adoption of our multi-packs and successful activations. Moving to next slide. Moving forward to our fiscal Q1 2022 financials and operating results, we can see Flow is maintaining its position as one of the fastest-growing brands in North America. The Flow brand grew 71% in the US multi-outlet channels, and in the last 12 months, ending in January 2022, and 87% in the Canadian food and drug mass channel. The driver of the growth in the US multi-outlet market is increasing velocity as we focus our resources on in-store activation and promotion and consumers adopted new multi-unit SKUs. In Canada, higher all commodity value drove our results, with Flow benefiting from big wins in gas and convenience stores over the last year.
In Q1 2022, consolidated net revenue increased 32% as compared to prior year. Net revenue growth was driven by Flow brand and total sales in retail and e-commerce channels across North America and an increase in co-packing as compared to Q1 2021. Flow brand retail and e-commerce net revenue increased 40% in Q1 2022. Flow brand net revenue can be divided in retail, increasing 48%, and e-commerce increasing 27%. Again, the increase in Flow brand net revenue is attributable to more points of distribution and higher velocity. We made significant improvements to profitability in Q1 2022 as measured by EBITDA. Flow EBITDA loss for the period was CAD 7.9 million, a 20% improvement over the prior year and 28% improvement versus Q4 2021.
We believe the sequential improvement over Q4 2021 is more relevant as this reflects a cost structure of public company as compared to Q1 2021, when Flow was still a private company. I will now pass the call over to Devan for a more detailed review of Flow financial results. Devan?
Hello, everyone, and welcome to today's presentation. In my presentation today, I'll provide some additional detail on Flow's financial performance for fiscal 2021 and Q1 of 2022. Flow increased net revenue 86% in fiscal year 2021 to CAD 42.7 million. The net revenue growth is a result of increased sales of Flow branded products in both retail and e-commerce channels, as well as increased co-packing revenue. On a more granular level, we experienced high growth rates for Flow branded products, increasing 47% on the year. Our co-packing business was also a large contributor in fiscal year 2021, particularly in Q2, when we benefited from large orders from one customer in particular. Our results in 2020 also included sales through the barter channel, which did not recur in 2021, and we do not expect to utilize this channel going forward.
The increased net revenue translated to increased gross profit of CAD 11.3 million for fiscal year 2021 or a gross margin of 26%. Our gross margin improved significantly from the prior year as the higher sales of Flow branded products and the co-packing business improved utilization. We became more efficient on production runs, and we have been successful at stabilizing unit costs. Turning to operating expenses, sales and marketing increased as we supported our DSD with marketing campaigns and more importantly, in-store activations. Our G&A includes professional fees that we've incurred as we transition to a public company, and share-based compensation expenses also increased as we rolled out an RSU plan for the management team with a three-year vesting period and following a graded vesting profile. We realized an Adjusted EBITDA loss of CAD 27 million in fiscal year 2021.
Adjusted EBITDA excludes the impact of RTO costs, termination fees, and share-based compensation. Turning to Q1 2022, Flow increased net revenue by 32%. The Flow brand performed particularly well in the retail channel with growth of 48%. The big driver was continued expansion and growth in the US market. Our co-packing business grew 15% in Q1 2022 to CAD 6.7 million. We believe long-term value will be created by focusing on Flow brand revenue, and therefore, we utilize co-packing on an opportunistic basis to help absorb fixed costs. The increased net revenue translated to increased gross profit of CAD 3.1 million in Q1 2022 or a gross margin of 26%. Our gross margin was slightly lower than the 28% realized in Q1 2021. Similar to Q4 2021, we continue to experience elevated shipping costs for certain customers that had reopenings in the period.
We realized a gross margin improvement as compared to the prior quarter as we realized increased utilization with higher net revenues. Turning to operating expenses, sales and marketing increased from the prior year as we supported our DSD rollout with marketing campaigns and continued in-store activations. You can also see a 44% drop in sales and marketing expense from Q4 2021 as we've become more focused with how we allocate our marketing budget. General and administrative expenses include professional fees that we've incurred as we transition to a public company. In Q1 2021, we had no public company costs. Again, we improved this expense line by over 10% on a sequential basis. With respect to salaries and benefits, we continue to get more efficient. In the last six months, our headcount has gone from 236 to 203, and we have made significant sequential improvements.
We realized an Adjusted EBITDA loss of CAD 7.9 million in Q1 2022, which is a 20% improvement from Q1 2021 when we were not a public company and a 28% improvement from the prior quarter. We expect that these improvements in profitability will continue as we realize higher growth profits from increasing net revenue and maintain vigilance in our capital allocation. As of January 31st, we had CAD 38 million in cash. During the quarter, we made some large payments against our accounts payable. Accounts payable should stabilize from here. We also have some material non-trade receivables that we expect to collect in the near term, and we expect additional improvements to working capital from inventory management. Furthermore, we are entering the seasonally strong summer months, which we will expect will significantly reduce our cash burn during that period, which is Q3 and Q4.
As we indicated in our last call in March, we believe our cash position is sufficient to last 18-24 months. This assumes that we achieve the mid-range of our financial targets in fiscal 2022, and currently does not include any impact from our food service customers or the launch of Vitamin Infused Water. With that, I will pass it back to Maurizio.
Thank you, Devan. Our strategic framework remains unchanged, and I'm confident we are on the right path towards profitable growth. We are maintaining our target for Flow brand products net revenue growth of between 45% and 55% in fiscal year 2022. We are very encouraged by the new authorization we have received that will take delivery of Flow products over the coming months and especially in the back half of the fiscal year. Furthermore, we expect to continue improving velocity through innovation, but also through a more brand hands-on approach to merchandising. To date, our store activation promotion has been successful, but require follow-up to ensure that our products do not go out of stock following the activation. We are also confirming our target to reduce our EBITDA losses by 45%-50% in fiscal year 2022.
Going forward, marketing and advertising as well as salary and benefit expenses should continue to improve. General and administrative expenses should stabilize, and stock-based compensation should also decline. We expect that the biggest improvements to be in the back half of the fiscal year 2022 as we compare our cost structure against periods of being a public company. Regarding capital efficiency, we have significantly improved accounts receivable with net trade receivables decreasing 12% from Q4 2021. CapEx was only CAD half a million in Q1 2022, and a significant decline compared to CAD 2 million in the prior year. Before we move on, I want to reiterate our confidence in executing this strategic framework. However, on a note of caution, recent geopolitical events demonstrate that there are certain factors that are out of our control.
Energy and commodity prices have risen sharply in the recent months and may continue to rise, and this could begin to have an impact above and beyond what is in our capacity to forecast. This could have an impact on our cost structure on and household economics for our consumers. We are managing the risk to our business with the rigor that you would expect, and we remain confident in the long-term potential. Moving to next slide. Many of you have already seen the announcement of our agreement with Accor earlier this week. Accor is a very large hospitality company with operations in 110 countries and over 3,000 locations. Like many organizations, they are seeking to lower their environmental footprint across its operations.
These also operate a number of premium brands, so it's also important to offer their customer products that align with a premium experience. This is why they choose Flow. The rollout of Accor properties in North America has already begun, and we are initially targeting 71 luxury hotels in North America and Caribbean. Moving to next slide. Turning to Vitamin Infused Water. Our current plan is to launch by the end of calendar Q2 in the U.S. retail channel and direct to consumer via our e-commerce platform. We have commitments from Kroger's grocery chain with an expected launch across 130 locations. Our Vitamin Infused Water flavors are delicious, and you will be offered a chance to sample them after this presentation, if you join our in-person meeting.
Flow's Vitamin Infused Water is a very healthy vitamin-infused water option with zero sugar, no preservatives, including vitamin C and zinc, and with organic, certified ingredients. Moving to next slide. New product SKUs are also an important part of our key growth pillars. In May, we are launching peach blueberry and strawberry rose flavors in one-liter format. Sprouts will be the first retailer to carry these new SKUs in the U.S., and they will also be available direct-to-consumer on our e-commerce platform. Moving to next slide. Turning to ESG. We are very proud to be improving our world-class ESG credentials. Our view of the CPG market is that this credential will become increasingly important for large purchasers of bottled waters as they look to reduce their environmental footprint, and Flow's best-in-class ESG practices are going to be a significant growth driver.
Moving to next slide. I will conclude today my presentation with a summary of the upcoming milestone to Flow. It's going to be a very busy next few months, including activations with important customers and important sport events. That concludes our presentation. Thank you very much for joining us today.
We will now take a couple of the questions, so please feel free to use the Q&A box within the platform. The first question is how significant is the Accor agreement to Flow and how does it impact us?
Well, first of all, let me be very proud and happy of having signed this agreement with a very important and high-profile food service and hospitality group, one of the largest in the world, and especially focusing on the premium locations and that they have in North America. We are, you know, at the beginning of this relationship. We have good expectations in terms of image, reputation and volumes for the future. It's a bit early to give you an exact forecast, but let's say the good thing to say is that, you know, when a group like Accor choose a brand like Flow, this seems to be really the beginning of a long and successful marriage between these, you know, premium brands.
The next question, will the vitamin water be offered in Canada?
It will eventually. We will start first with the U.S. As I mentioned in my presentation, we are working hard to make sure that we're gonna have also the necessary regulatory authorization to introduce Vitamin Water in Canada. We are working you know around the clock to make sure that this will happen soon. In the meantime with no delay, we're gonna launch it in the U.S., and we expect that this product will be well accepted by our consumers, considering that it's very much in line with the image of the brand and is a very innovative product.
Excellent. I think that concludes our questions. As we mentioned, we'll email the rest of the questions out directly to the participants. With that, it concludes our AGM informal presentation and formal presentation. I wanna take the time to thank everyone for participating and their continued support of shareholders as we move through a very exciting period for Flow and the brand over the course of the next year. Thank you.
Thank you.
Thank you. Okay.
Ladies and gentlemen, thank you for attending today's meeting. You may now disconnect.