Cannabis Company Earnings Roundup: Golden Leaf, James E. Wagner

Golden Leaf

Golden Leaf Holdings Ltd. (CSE:GLH) (OTCQB:GLDFF) reported that its second-quarter total revenue was $4.3 million as compared to $3.7 million for the same three-month period in 2018 ending June 30.  The company said that the 17% quarter-over-quarter increase was due to strong wholesale revenue streams in Oregon and flower sales from our Canadian operations.

The company also delivered a net loss of $3.4 million or $0.01 per share, compared with a net gain of $3.2 million or US$0.01 per share for Q2 2018. The company noted that last year’s net income benefited from favorable changes in the fair value of warrants and debt liabilities of $7.3 million, versus this year’s unfavorable change of $0.1 million for the second quarter.

Gross profits were $1.7 million or 40% of total revenue for Q2 2019, compared with $0.9 million or 26% of total revenue in Q2 2018.  Gross profit improvement in Q2 2019 over prior year period is consistent with the gross profit of 41% of quarterly revenues in Q1 2019.

“The strong gross margin run-rate in the first six months of 2019 is primarily due to significant cost reductions and utilization of improved inventory controls and processes,” said John Varghese, Interim CEO, Golden Leaf Holdings. “Our increased focus on operational excellence and building out our executive team is starting to show results that we believe are sustainable for growth in the coming quarters.”

Operating expenses were $4.0 million for Q2 2019 compared with $4.6 million for Q2 2018. Q2 2019 operating expenses included $0.3M in wages and benefits related to headcount reductions and severance.

Adjusted EBITDA loss dramatically decreased to $1.5 million for Q2 2019, compared with a loss of $3.5 million for Q2 2018. As of June 30, 2019, Golden Leaf had approximately $5.2 million in cash, compared with $12.3 million at December 31, 2018.

James E. Wagner

Ontario-based  James E. Wagner Cultivation Corporation (TSX VENTURE: JWCA)(OTCQX: JWCAF) reported third fiscal quarter revenue of $749,000, up 32% sequentially from $566,000, and compared to $3,500 in the same year-ago quarter. The net and comprehensive loss was $434,000 or $(0.01) per share in fiscal Q3 2019, improving 87% sequentially from $3.4 million or $(0.04) per share, and improving 91% from $4.6 million or $(0.06) per share in the year-ago quarter.

“Q3 was a milestone quarter for JWC,” said President and CEO, Nathan Woodworth. “Revenue grew 32% sequentially and we celebrated our first harvest from our new JWC2 facility, allowing us to produce record amounts of our clean, consistent cannabis using our unique aeroponic technology.

“In fact, we achieved a 28% increase in actual yield per plant versus our previously reported estimated yields, and we expect this to be sustainable. We estimate the additional yield alone could boost revenue by at least $25 million annually once JWC2 is fully operational.

“Initial sales from the JWC2 harvest began following the end of the third quarter. However, right before the end of the quarter, we secured the additional license from Health Canada to add 11,000 sf. of flowering space, bringing the total to 22,000 sf. at JWC2. We anticipate initial sales generated by this additional capacity to begin in fiscal Q1 2020. Within the next couple of months, we expect to receive a license to double this capacity again to a total of 44,000 sf.”

Cash and equivalents at June 30, 2019, totaled $3.8 million, compared to $2.3 million at March 31, 2019, and $18.0 million at June 30, 2018. The decrease in cash is attributable to cash used in operations.

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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