Christina Lake Cannabis Corp. (CSE: CLC) (OTCQB: CLCFF) reported a revenue increase of 30% in its third-quarter financial results ending Aug. 31, marking a rise to $8.9 million over the same nine-month period last year, the company announced Tuesday.
The revenue growth is primarily driven by an 85% surge in distillate volumes sold, despite a decrease in distillate market prices, according to the Vancouver-based cannabis producer.
Gross profit stood at $4 million, or 45.2% of revenue before adjustments to the fair value of inventory, reflecting a decline in profitability from the previous year’s margin of 52.3%. This year’s margin contraction was due mainly to lower wholesale distillate prices, which also led to a 49% increase in cost of goods sold.
General and administrative expenses fell by $137,000 or 4%, a reduction attributed to lower consulting fees, management fees, insurance, marketing, share-based compensation, and repairs and maintenance costs. However, that decrease was partially offset by an uptick in depreciation, professional fees, research and development, salaries, and regulatory fees.
The company’s income for the quarter was $495,000, a significant drop from the $2.2 million reported in the same period last year. The decline is largely due to a $1.1 million increase in the changes in fair value of inventory sold, coupled with a lack of one-time income from settlements and debt modifications that benefited the previous year’s results.
Christina Lake Cannabis’s working capital was reported at $4.14 million consisting of cash, receivables, prepaid expenses, inventory, and biological assets, while facing current liabilities of $5.94 million.
CEO Mark Aiken credited the company’s response to market conditions and the introduction of new product lines for the strong sales performance, highlighting customer satisfaction and repeat business as key factors in the company’s continued success.
“Our continued success is a testament to our relentless pursuit of excellence, our continuous drive for operating efficiency, and our focus on innovation,” Aiken said in a statement Tuesday.
Early morning trading for CLCFF was up nearly 20% on the news.