Last week, Red White & Bloom Brands Inc. (OTCQX: RWBYF) delivered its fourth-quarter and full-year results, and today the company has delivered its first-quarter financial results. RWB said that the revenue for the first quarter was $11.8 million which fell from the fourth quarter’s revenue of $15.7 million. The company blamed the decrease as a result of the manner in which it recognizes revenue under IFRS in the state of Michigan for its Platinum Vape branded product sales and a decrease of approximately $1 million due to the strengthening Canadian dollar over the fourth quarter.
RWB said that its adjusted sales for the first quarter were $32.7 million, a sequential increase of 14.5% from the prior quarter’s adjusted sales of $28.6 million in the fourth quarter. The increase was reduced by the strengthening Canadian dollar and would have been about $1 million higher using a constant dollar comparison.
Brad Rogers, Chairman & CEO, said, “This was another great quarter for the Company as we continued to see strong traction for our brands. We are building on that momentum and working towards finalizing our revised asset purchase of our Michigan investee to bring their revenue, as well as adjusted sales into IFRS revenue format before the end of this current quarter. Once complete, and the expansion of our Florida operations come on stream, we can finally report in our quarterly results the strength of what we have built and accomplished thus far.”
RWB noted that it uses a third-party licensee in Michigan and that the revenue it can recognize is product sales less inventory purchases and direct expenses. “As a result, the company’s revenue in Michigan is always understated by inventory purchases made and direct expenses incurred during the period. In the first quarter of 2021, product sales in just Michigan increased by 18% from the prior quarter, and the company significantly increased inventory purchases to secure sufficient inventory which reduced revenue as per the licensing agreement.” This timing difference in revenue will continue until the company becomes fully licensed in Michigan. RWB said that once it is licensed in Michigan, it will be able to recognize full product sales as revenue under IFRS. As such, investors are provided adjusted sales for additional insight into the results of the company’s performance.