Vancouver-based Christina Lake Cannabis Corp. (CSE: CLC) (OTCQB: CLCFF) (FRANKFURT: CLB) saw its revenues rise in the second quarter ending May 31, 2023, amid a mixed Canadian landscape, according to financial results released Tuesday.
Despite market price compression in distillate, the company achieved revenue growth of 36% to $5.4 million from the same period last year, with an 81% increase sequentially. The company pointed to an expanding customer base and increased demand in distillate inputs for vape and infused pre-rolls. The firm saw a 118% increase in the volume of distillate sold for the first half of the year, versus the same six-month period last year.
“In Q2, our dedication to executing strategic initiatives has been validated through an impressive surge in sales growth,” said CEO Mark Aiken. “As we advance into the second half of fiscal 2023, we maintain our unwavering commitment to meeting the escalating sales demand for our premium distillate products while driving operating efficiencies throughout our processes, and to expand our product lines available to our valued customers.”
Still, it wasn’t all positive news. The Q2 gross margin before fair value adjustments was 42.8%, a decrease from 55.4% in the prior year period. The decline is mainly attributed to a drop in the price of wholesale distillate. The cost of goods sold increased by 74% from the comparative period, reflecting the increase in distillate volume produced and sold.
Christina Lake managed to reduce its general and administrative expenses by $189,000, or 8%, compared to the same period in the previous year, with expenses amounting to 39% of the revenue, down from 58% last year.
The company reported a loss of $2 million during the quarter, a meaningful rise from a loss of $794,000 in the same period last year. The increase in loss is primarily driven by an increase in changes in the fair value of inventory sold.
The company reported working capital of $1.71 million consisting of cash, receivables, prepaid expenses, and inventory. But the company’s current liabilities, including accounts payable, current portion of loan, and current portion of convertible debentures, stood at $6.16 million.
Management said it remains confident in its strategic growth initiatives, continually working towards production efficiencies and expanding its product lines. The company owns 32 acres of cultivation land, nestled between two intersecting valleys in British Columbia’s lower interior.