Cannara Biotech Inc. (TSXV: LOVE) (OTCQB: LOVFF) announced its fiscal third quarter 2023 financial and operating results for the third quarter ending May 31, 2023. Cannara Biotech reported revenue of $15.8 million versus last year’s $9.9 million for the same time period. The company also reported net income of $2.9 million versus last year’s net income of $1.4 million in the same time period.
“This past quarter was a tremendous success as Cannara grew its market share by more than 30% in Quebec (7%1 to 9.3%2) and in Ontario (2%3 to 2.7%4), along with growing sales in BC and the commencement of sales in a new market, Alberta, the second largest cannabis market in Canada. With the firm’s robust and innovative pipeline leading the way, SKU listings rising and an additional three 25,000 square feet growing zones activated this year, revenues, gross profits, EBITDA, and net income all increased, paving the way for sustained growth moving forward,” said Zohar Krivorot, President & Chief Executive Officer of Cannara. “The response in the consumer market for our premium, high-quality yet affordable cannabis products has been tremendous since inception, and we expect to continue to grow market share across all provinces as we continue to introduce new and innovative products to our customers across Canada.”
Cannara reported that its free cash flow in the quarter increased 113% to $3.2 million from $1.5 million last year. Free cash flow increased by 68% sequentially from $1.9 million in the second quarter to $3.2 million in the third. The company said it has $27.1 million in working capital as of May 31, 2023, which includes $4 million of cash on hand and $10 million in accounts receivable.
Nicholas Sosiak, Chief Financial Officer of Cannara said, “Our ninth consecutive quarter of positive Adjusted EBITDA in addition to positive net income was the culmination of innovation and hard work, improved capacity utilization, improved efficiencies and increased demand for Cannara’s’ products across all markets. The initial response in the Alberta market has been spectacular, and we are excited to increase our footprint in this vibrant, growing market, with the imminent listing of 16 additional SKUs for the Alberta consumer by next month. The company’s stated goal of expanding cultivation capacity by 50% by year-end was achieved three months ahead of schedule and we continue to execute on our strategy of increasing our production capacity in line with growing demand.”
Cannara is growing at a time when many cannabis companies are shrinking. The company activated its 9th of 24 individual 25,000 square foot growing zones at its Valleyfield Facility, a 50% capacity increase at the Valleyfield Facility compared to the previous fiscal year-end, reaching a total of 225,000 square feet of active canopy. Combined with its Farnham Facility, the Company’s current annual production capacity is approximately 30,500 kg of premium-grade cannabis per year, which will increase up to 100,000 kg per year when the Valleyfield Facility is fully built out.
In addition to the increased cultivation space, Cannara increased its employee headcount from 210 employees to 270 employees in the quarter. The company said this was a 29% increase to support operational growth.
Cannara Biotech is a vertically integrated producer of premium-grade cannabis and derivative product offerings at affordable prices with two mega facilities based in Quebec spanning over 1,650,000 sq. ft.