earnings Archives - Green Market Report

Debra BorchardtDebra BorchardtJuly 8, 2020
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5min2060

KushCo Holdings, Inc. (OTCQX:KSHB) reported that its net revenue dropped 46% in its fiscal third-quarter ending May 31, 2020. The net revenue of $22 million was also lower than what the company has forecast in March when it told investors that it would be roughly $30 million. Analysts according to Yahoo Finance had estimated that revenue on the low end would be $29 million.

The company attributed the drop to the adoption of the 2020 Plan, which meant tighter credit terms being extended to smaller customers. the company is focused on larger, more financially healthier customers.

In addition to that, the drop in revenue was also driven by lower sales from vape and natural products, as well as order lumpiness from KushCo’s larger customers. Compounding the quarter’s decision to tighten credit, COVID-19 caused travel and regulatory restrictions in the markets that the company operates.

Net losses increased to $13.5 million versus last year’s $10.6 million in the same time period for last year. The basic loss per share was $0.11 compared to $0.12 in the prior-year period. This also missed analysts’ estimates, which averaged at a loss of -$0.10.

Nick Kovacevich, KushCo’s CEO said, “We substantially reduced our cost structure, consolidated our vendors and warehouses, vastly improved our inventory to align with our actual sales, ramped up our collections activity, stemmed the cash burn, and drove meaningful operating leverage. Revenue for the quarter came in lower than we anticipated due to regulatory and travel restrictions in various markets in which we operate due to the COVID-19 pandemic, as well as order lumpiness from some of our larger customers who pushed out their orders due to a general lack of visibility in their businesses.”

The company said it finished the cost-cutting initiatives as part of the 2020 plan and as such the SG&A dropped more than 50% sequentially from $27.2 million in the second quarter to $12.7 million in the fiscal third quarter. The decrease was driven by reductions in headcount, executive salaries, consulting spend, and travel and entertainment expenses, as a result of the COVID-19 pandemic.

“Despite the sequential decline in revenue, however, we have started Q4 on the front foot with a healthy level of purchase orders secured thus far, leading us to believe that Q3 will be the bottom in terms of revenue for fiscal 2020,” said Kovacevich. “More importantly, we continue to focus on the things we can better control, such as gaining more efficiencies in our business, significantly right-sizing the organization, and reducing our overall cash burn.”

Balance Sheet Moves

The company strengthened its balance sheet and liquidity by proactively converting 18.5%, or $5 million, of the total principal amount of the Company’s senior note due April 2021 into equity with limited dilution and zero warrants. Cash was approximately $11.1 million as of May 31, 2020, compared to approximately $11.4 million as of February 29, 2020, and $3.9 million as of August 31, 2019.

Looking Ahead

KushCo said it expects net revenue for the fourth quarter of its fiscal 2020 to be between $24.0 million and $26.0 million. In addition, the company said it expects cash SG&A to be between $6.5 million and $7.5 million, and adjusted EBITDA to be between ($1.0) million and $1.0 million.

“Looking ahead, we expect to realize revenue growth in Q4 not just by recognizing the customer orders that were pushed out, but also by signing additional supply agreements with our customers and focusing more on the areas that we believe we are good at, such as our core businesses of vape, packaging, and energy,” said Kovacevich. “We are also going to be focusing even more on controlling our costs and deploying a prudent capital allocation policy, so that we can continue to support the business with the cash and liquidity resources currently at our disposal. The end result of these efforts should lead to what could be a pivotal Q4 for KushCo, and one in which we can achieve our goal of positive adjusted EBITDA.”

KushCo stock moved higher by 10% on the day’s trading ahead of the earnings announcement and was lately selling at $0.82 . The average analyst price target is $2.50.

 


Debra BorchardtDebra BorchardtJuly 7, 2020
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5min1220

Jushi Holdings Inc. (JUSHF) announced its financial results for the first quarter ending March 31, 2020, and pre-announced its second-quarter 2020 revenues. Total revenue for Jushi increased 43% sequentially to $8.6 million, while the company delivered a net loss for the quarter of $15.8 million. The net losses were down slightly from the fourth quarter’s net losses of $17 million.

The company attributed the increase in revenue to the acquisition of two medical marijuana dispensaries in Illinois, one of which began serving adult-use customers in March, and strong revenue growth at the Company’s BEYOND/HELLO stores in Pennsylvania.

“Our 43 percent quarterly revenue growth in the first quarter was driven by strong sales at our BEYOND/HELLO stores in Pennsylvania and the acquisition of two Illinois dispensaries,” said Jim Cacioppo, Chairman and Chief Executive Officer of Jushi. “I’m encouraged by the continued momentum we have seen coming out of our second-quarter results, where despite short-term headwinds such as the closure of two of our Philadelphia stores and several in-store initiatives aimed at prioritizing the health and safety of our employees, patients, and customers, we nearly doubled our sequential quarterly revenue growth rate to 74 percent with Q2 revenues of $15.0 million.”

Second Quarter Forecast

Jushi said that it expects to report total revenue of $15.0 million in the second quarter, an increase of 74% sequentially. The company also said that the annualized revenue run-rate for June 2020 of approximately $69 million, was a 38% increase over the March annualized run-rate and includes the negative impact of two closed Philadelphia stores due to break-ins at the end of May.  Adjusting for the closed stores, annualized revenue run-rate for June 2020 would have been approximately $78 million.

In addition to the second-quarter forecast, Jushi said it is also reaffirming its 2021 revenue guidance of $200 to $250 million. As of March 31, 2020, the company said it had $35.7 million of cash and cash equivalents as well as $13.6 million in short-term investments.

Management Comments

Mr. Cacioppo added, “While we are pleased with our topline results, we have also been implementing several cost reduction initiatives across our network of retail stores that are focused on strengthening our financial rigor and driving long-term profitability. These include the implementation of strategic purchasing practices, optimizing our labor model, improving our in-store product mix, creating additional targeted promotions, and further leveraging our beyond-hello.com online platform. While the impact of these changes are not significantly reflected in our Q1 results, I expect these changes to become more evident in the second quarter and as we enter into second half of the year.”

Mr. Cacioppo concluded, “We are also focused on further enhancing our customer experience at our existing dispensaries. During the second quarter, we relaunched Beyond-Hello.com which now features a vastly improved customer experience, real-time access to store inventory, and importantly online reservations. I can say with full confidence that the online roll-out has been a big success with online pre-ordering making up a very large percentage of our sales. We believe the online system has increased sales, operating efficiencies, and improved employee, patient, and customer safety. The BEYOND/HELLO retail brand has a reputation for providing a superior customer experience in Pennsylvania that we look to expand beyond the Commonwealth and into our Illinois, California, and Virginia markets.”


Debra BorchardtDebra BorchardtJune 26, 2020
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4min3161

Following the company’s heavily discounted deal with Canopy Growth and the departure of co-founder and CEO Kevin Murphy, Acreage Holdings, Inc. (OTCQX: ACRGF) reported first-quarter 2020 reported revenue of $24.2 million, an increase of 88% increase compared to the same period in 2019, and a 15% sequential increase. The earnings were unaudited.

The revenue that was reported paled in comparison to the company’s charges, which were almost double what Acreage had told investors they could expect.  Acreage reported a one-time, non-cash pre-tax charge of $196.0 million, or $164.7 million after taxes. The company had originally told the market it could expect to see a charge between $80-$100 million. Acreage blamed the discrepancy on current fair market value in certain states and the write-down
for its services agreement in Maine, which was not initially contemplated.

The net losses were equally eye-popping at $172 million. These results explain the departure of Murphy and his replacement by Bill Van Faasen.

“With the COVID-19 pandemic affecting millions across the U.S., the cannabis industry was faced with yet another significant challenge. Our dispensary and processing and cultivation associates quickly adapted to these changing dynamics ensuring our patients and customers in need were still served with dignity and respect, while maintaining a safe environment for everyone. Additionally, I am pleased with the reacceleration of our reported and pro forma revenue as our wholesale business continues to ramp and our dispensaries continue to mature,” said Bill Van Faasen, interim Chief Executive Officer of Acreage.

The company continues to report pro forma numbers, however, many past deals in which Acreage included those pro forma numbers have been terminated or sold. At this point, the company that once claimed to be the largest cannabis business in the country only has (assuming completion of pending acquisitions), 15 operational dispensaries. Acreage has or will have management or consulting services agreements, (including pending acquisitions), with entities operating 12 dispensaries.

Murphy’s Voting Shares

Not unlike the structure that was originally established at MedMen (OTC:MMNFF), Murphy, he exercises a significant majority of the voting power in respect
of the Acreage Shares. According to the company’s May MD&A, “The Subordinate Voting Shares are entitled to one vote per share, the Proportionate Voting Shares are entitled to 40 votes per share, and the Multiple Voting Shares are entitled to 3,000 votes per share. As a result, Mr. Murphy has the ability to control the outcome of all matters submitted to the Company’s shareholders for approval, including the election and removal of directors and any arrangement or sale of all or substantially all of the assets of the Company.”

“As a shareholder, even a controlling shareholder, Mr. Murphy will be entitled to vote his shares, and shares over which he has voting control, in his own interests, which may not always be in the interests of the Company’s shareholders generally. Because Mr. Murphy holds most of his economic interest in the Company’s business through High Street, rather than through the Company, he may have conflicting interests with holders of the Acreage Shares.”

The company is hosting a call to discuss the earnings on Friday morning. The stock closed higher by 23% on Thursday to end the day at $2.88.


Debra BorchardtDebra BorchardtJune 26, 2020
LibertyHealthSciences.jpg

4min1510

Liberty Health Sciences Inc. (OTCQX: LHSIF) reported net sales of $50 million for the fiscal year 2020 ending February 29, 2020, versus $10 million for 2019. The company also delivered net income for the fiscal year 2020 of $22.2 million, which included the gain on the sale of a property of $14.2 million. The earnings per share reported were $0.06. This was an improvement over the net loss of $22 million for the fiscal year 2019. All figures are in Canadian dollars.

The company attributed the increase in revenue to the introduction of 200 new products the opening of new dispensaries, expanded delivery infrastructure, as well as an upsurge in same-store sales volume and an increase in the registered patient base for Medical Marijuana Use in Florida. The company also said that its expenses dropped from $25.5 million in 2019 to $25.1 million in 2020.

“End of year fiscal 2020 proved to be the highest net revenue increase in the Company’s history and reflects our customer loyalty and strength of our brand,” said Victor Mancebo, Chief Executive Officer of Liberty. “Liberty’s continued growth directly ties to the strategic initiatives we have set in place, which has been increasing our Florida production, retail base, and delivery footprint along with expanding our product portfolio and brand partnerships. We continue to work on innovative strategies that complement our expansion plans while at the same time provide our patients a more accessible medicine platform.”

Dispensary Expansion

Liberty currently operates 25 dispensaries throughout Florida and has lease agreements in place for 10 additional locations and is negotiating for another ten locations. The company said it has implemented health and safety measures for employees, patients and facilities following guidance from public health officials worldwide in response to the COVID-19 pandemic to ensure adequate in-store product supply and customer convenience due to increased demand.

The latest location opened this month in Stuart Florida with a 5,000 square foot dispensary featuring a spacious display and retail area, two private consultation rooms, and one large waiting. Locally inspired wall-art will be featured throughout the store on a rotating basis.

“We are excited to open our doors to new friends and patients in our first dispensary to be situated in Martin County ,” said Mancebo. “We are thrilled to expand our dispensary footprint along Florida’s Treasure Coast during these trying times and have remained committed to ensure our patients safe and reliable access to our premium products. We continue to take steps to keep our employees and our patients safe as the state continues to reopen.”

As of February 29, 2020, Liberty had $24,957,245 of cash and cash equivalents compared to $13,291,426 in cash and cash equivalents at February 28, 2019.

Looking Ahead

The cultivation production capacity of the company is currently approximately 19,500 kilograms annually (dry weight), and the Company made further investments in fiscal 2020 to increase its plant yield, targeting an increase of production of approximately 25% by first quarter of 2021. Retrofit activities associated with processing continued through the fourth quarter of fiscal 2020, adding additional drying rooms.

 

 


Debra BorchardtDebra BorchardtJune 19, 2020
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5min2030

Earnings were reported by both Emerald Health Therapeutics (OTCQX: EMHTF) and Terra Tech (OTC:TRTC). This is a quick summary of what the companies reported.

Terra Tech

With cash dwindling at Terra Tech and expenses rising, the company announced it would begin selling assets in order to focus on the properties with the highest returns. The company also said it was postponing its plans to enter the CBD market.

Terra Tech Corp. reported revenues of $4.31 million versus $2.05 million for the quarter ending March 31, 2019, an increase of approximately $2.26 million. The net loss for the quarter was $17.33 million, or $0.11 per basic and diluted share versus $11.74 million, or $0.13 per basic and diluted share, for the three months ending March 31, 2019.

The company had $0.95 million in cash as of March 31, 2020. Expenses were approximately $9.04 million, compared to approximately $8.59 million for the same quarter last year, an increase of approximately $0.45 million.

Matthew Morgan, Chief Executive Officer of Terra Tech, commented, “Our first-quarter results demonstrate continued improvement in our cannabis operations, driven by both medical and adult-use sales from our San Leandro Blüm dispensary as well as wholesale revenues. Following the COVID-19 pandemic, which has resulted in many retailers delaying purchase decisions and reversing plans to launch new CBD products in stores, it has become clear to us that we must focus on our THC business in California to maximize near-term revenues. We have therefore chosen to postpone our expansion strategy in the CBD market through our OneQor business.”

Morgan went on to add, “For us to advance our strategy, we are now completing a number of asset sales in order to strengthen the Company’s cash position and redirect resources to assets that generate the highest returns. We expect to have approximately $24 million coming in from asset sales over the next 12 months from our Blüm dispensaries in Nevada and Santa Ana, California, as well as various sales of non-core licenses and properties. This is expected to set the Company on a path to sustainability that will allow us to be lean and cost-effective. We intend to complete the build out of our Hegenberger cultivation facility in California and leverage our existing capital base to ramp revenues from wholesale THC products as well as sales at our Blüm dispensaries in San Leandro and Oakland.”

Emerald Health

Emerald Health net sales increased 36% to $2.9 million over last year’s $2.1 million for the same time period. The net loss for the quarter was still elevated at $4.9 million, which included a $2 million loss on the dilution of joint venture ownership and a $1.1 million inventory write-down.

The company reported that its total SG&A expenses of $6.0 million showed a decrease of $2.3 million over $8.3 million expense in the comparable first quarter of 2019. Total SG&A expense included $2.1 million of non-cash or non-recurring items.

“In the first quarter and year to date, the benefits of Emerald’s significant restructuring and cost-rationalization are strongly emerging. While these benefits were not fully realized in our Q1 financials, we can see our operational metrics and financial results clearly moving in the desired direction,” said Riaz Bandali, President and Chief Executive Officer of Emerald. “In not even two full quarters, our two newly launched and scaled-up cultivation facilities in BC and Quebec have been achieving important milestones and are positioned to move us toward profitably. On top of that we own over 41% of one of the premiere large-scale cannabis cultivation operations in the country.”

The company said that revenue for the quarter was driven by increased sales from the adult-use market where sales were up 35% as compared to 4Q19. 30% of revenue in the adult-use channel from SYNC oils contributed to improving margins, as this high CBD, low THC oil is not subject to excise duty. A higher proportion of sales from the branded SYNC oil, coupled with the lower cost of dried flower contributed to improved margins compared to 1Q19. Significant harvests from the newly operational production sites led to capitalized inventory, which reflected as a further improvement in production costs. Emerald recognized $5.2 million as its share of net income from Pure Sunfarms, as compared to $5.8 million recognized 1Q19.

 

 


StaffStaffJune 17, 2020
InnerSpirit.jpg

4min830

Inner Spirit Holdings Ltd. (OTC:INSHF) filed its interim Financial Statements and corresponding Management’s Discussion and Analysis for the quarter ended March 31, 2020. The company delivered sales of $17.2 million, which was an increase of 814% from last year’s $1.9 million for the same time period. Inner Spirit reported a total net loss of $1.9 million, or $0.01 per share versus $2.0 million, or $0.01 per share, in the first quarter of 2019.

“The Company’s financial results for the first quarter show impressive year over year growth with more than $17 million recorded in system-wide retail salesfor the Spiritleaf network. We are making steady progress with our business strategy and towards achieving profitability. We continue to expand the Spiritleaf network of franchised and corporate-owned stores due to the excellent support and loyalty of our customers, investors, franchise partners, strategic partners and employees. We have built a strong platform which we will leverage in 2020 to generate future growth and opportunity with more than 30 additional store locations projected to be added by the end of the year,” said Darren Bondar, President, and CEO of Inner Spirit.

The company reported an adjusted EBITDA loss of $0.1 million compared with an adjusted EBITDA loss of $1.5 million in the first quarter of 2019. The cash and cash equivalents were 3.8 million at the end of the period, which includes a short-term deposit of $1.2 million that is redeemable into cash at any time.

Inner Spirit said that six additional Spiritleaf stores have completed construction and are in the final stages of licensing in Calgary and Red Deer, Alberta and in Toronto, Ottawa, and London, Ontario. The Spiritleaf retail cannabis store network includes franchised and corporate-owned stores operating in Alberta, British Columbia, Saskatchewan, and Ontario.

Due to the COVID-19 pandemic, Spiritleaf stores are operating with enhanced customer service processes to ensure the safety of employees and customers. Spiritleaf’s Select & Collect service enables customers to pre-shop and order online prior to pick-up. Customers can also connect with their local Spiritleaf store through The Collective customer benefits program to further streamline and individualize their shopping experience.

“We are excited to continue our expansion of the Spiritleaf brand into Newfoundland and Labrador and into Ontario as well as to complete the acquisition of the Spiritleaf store in Kingston which had previously operated under a licensing agreement with one of the province’s initial lottery winners. Along with recognizing these store openings and for being the first retailer to surpass the 50-store milestone in Canada, we are pleased to announce our third contribution to the Gord Downie & Chanie Wenjack Fund as a legacy partner in this important venture. With a portion of every sale invested back into our communities, it’s great to be putting roots into additional communities and to provide a premier retail cannabis experience to customers with our educated and passionate local owners and employees,” said Bondar.

The company’s key industry partners and investors include Auxly Cannabis Group Inc. (TSX.V:XLY), HEXO Corp (TSX:HEXO), Tilray, Inc. (NASDAQ:TLRY) and Prairie Merchant Corporation.


Debra BorchardtDebra BorchardtJune 17, 2020
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4min1800

High Tide Inc. (OTCQB: HITIF)  reported its financial and operating results for the second quarter of fiscal 2020 ending April 30, 2020 with revenue increasing by 197%, to $19.57 million from $6.60 million for the same quarter last year. The company delivered a net loss of $5 million for the quarter versus a net loss of $3.3 million for the same time period in 2019. The company reported a loss per share of $0.02, which was flat from last year’s second quarter.

“The second fiscal quarter of 2020 marks a historic moment in High Tide’s history. I am fiercely proud of our team for delivering adjusted EBITDA well ahead of the Company’s peer group and positive cash flow from operations through their unwavering commitment to our core strategy, especially throughout the pandemic. A decade of experience with cannabis consumers has been the key ingredient to our substantial year-over-year increase in revenue and enhanced gross margin.” said Raj Grover, President, and Chief Executive Officer.

The company delivered an adjusted EBITDA for the quarter that increased by 156%, to $1.94 million from an Adjusted EBITDA loss of ($3.49 million) for the same quarter last year.

Canna Cabana

The company bought and integrated the branded Canna Cabana locations in Hamilton and Sudbury. The company has since opened four new Canna Cabana retail locations in Ontario: Niagara Falls, Toronto – Parliament, Burlington, and Toronto – Bayview Avenue, bringing the current total to 7 Ontario stores and achieving 9% provincial market share by location as of June 9, 2020.

Despite the challenging conditions of COVID-19 pandemic the company said that existing Canna Cabana locations have remained operational and efficient. High Tide said it has approximately 47,000 members in the Cabana Club, with 55% of our average daily transactions conducted by Club members.

Grover added, “We are grateful to the many customers, employees, shareholders, and other stakeholders who believed in High Tide’s vision and today share in our success. We remain focused on continuing to strengthen our balance sheet and delivering value by furthering our retail expansion across Ontario.”

Looking Ahead

High Tide said it remains focused on the fundamentals of profitable retail, while continuing to leverage cannabis and its related accessories through the company’s manufacturing and e-commerce portfolio. The company said it believes that the senior secured credit facility advanced by Windsor Capital, the proceeds from the sale of the common shares of Halo Labs, and achieving positive cash flow from operations has positioned High Tide to execute on its strategic growth objectives in 2020. The company is well-positioned and funded to further its expansion in Ontario, as Canada’s largest and most underserved market.


Debra BorchardtDebra BorchardtJune 16, 2020
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4min1620

Vireo Health International, Inc. (OTCQX: VREOF) reported total revenue for the quarter ending in March of $12.1 million increased 34% sequentially and 110% year-over-year versus $5.8 million in the first quarter of 2019. The first-quarter net loss was $2.0 million versus the net loss of $3.4 million in the same time period in 2019. Adjusted net loss for Q1 2020 was $8.1 million, as compared to a loss of $4.8 million in the prior-year quarter.

“Our first-quarter results demonstrate the improving trajectory of our business, with sequential revenue growth of 34 percent representing the strongest quarter of growth in Vireo’s history,” said Founder & Chief Executive Officer, Kyle Kingsley, M.D. “As we continue to focus on optimizing our core medical markets, we believe there is significant untapped potential for Vireo to improve revenue growth and profitability as we increase scale in these attractive, limited-license jurisdictions.”

Expenses rose in the first quarter to $9.7 million versus $3.7 million in the first quarter of 2019, with the increase primarily attributable to increased salaries and wages, professional fees, and general and administrative expenses necessary to support the company’s growth. While the company was raising salaries for some, it also laid off 9% of its workforce. During the first quarter, the company closed its New York corporate office and the related termination of an office lease.

The company has cash on hand of $11.7 million. Total current liabilities were $7.0 million, with zero debt currently due within 12 months. The company recently completed a C$10 million private placement.

Dr. Kingsley concluded, “With most of the major development projects in our core markets effectively complete, we expect minimal capital expenditures during the remainder of the fiscal year 2020, and we should also begin to see the benefits of recent cost reduction initiatives materialize more substantially in our second-quarter results. The optionality of our valuable collection of state-based cannabis licenses and intellectual property continues to provide substantial opportunities to improve our cash position and future financial performance, and we believe our six core market strategy will enable us to begin generating positive cash flow in the first half of next year.”

The company made no mention of its recent decision to part ways with Bruce Linton. Many within the industry grumbled that the company brought in Linton in order to get the C$10 million private placement it received in March. That once it received the money, it had no need for the industry icon. Linton has his fans and detractors, but any company that aligns with him is sure to get a great deal of attention and there is no argument on that.


Debra BorchardtDebra BorchardtJune 16, 2020
FireFlower.jpg

4min1980

Fire & Flower Holdings Corp. (OTCQX: FFLWF) reported total revenue of $23.1 million for the first-quarter fiscal 2020 ending May 2, versus revenue of $9.5 million in the first quarter of fiscal 2019 – representing a 142% increase in revenue year-over-year. Unfortunately, the cost of those goods increased 166% for the quarter.

Fire & Flower delivered a net comprehensive loss of $(12.7) million, or net loss per share of $0.08. The company attributed the losses in part to expenses including $4.3 million of impairment charges. Other expenses were made up of finance costs of $6.7 million, partially offset by gains on derivative liabilities.

“Fire & Flower’s financial and operational results for the first quarter, fiscal 2020 demonstrates that the Company continues to show positive growth quarter over quarter and over its previous fiscal year. We will continue to work towards positive operating EBIDTA delivered through four-wall retail economics,” said Trevor Fencott, Chief Executive Officer of Fire & Flower. “The Ontario market presents a key growth opportunity for the Company and we will continue to focus on all major markets for private retail across Canada. Both the Open Fields Distribution Platform and Hifyre Digital Retail and Analytics platform provide additional independent revenue opportunities for the Company.”

The company reported an 83% increase in wholesale revenue through Open Fields Distribution in Saskatchewan from $2.1 million in Q4-2019 to $3.9 million in Q1-2020.

The company instituted a restructuring plan in the retail platform during the fourth quarter of 2019 and said that it was beginning to see results. Fire & Flower said it expects to keep building out its retail network, focusing on markets in Ontario with a significant number of cannabis consumers. However, the development of retail stores in the province of Ontario was affected by the slowdown in construction due to the COVID-19 public health crisis.  The company said it intends to prioritize expansion in the Ontario market for the current fiscal year, and also expects to enter the British Columbia market once final licensing is complete, and other Canadian markets as regulations permit.

COVID Update

Fire & Flower said it continued to see meaningful sales with basket sizes increasing with the increased popularity of large format cannabis products and the decrease of preroll cannabis products. “There continues to be meaningful demand for “cannabis 2.0″ new product formats such as edibles, vapes and beverages.”

As consumer interactions with cannabis retail took a digital focus during the COVID-19 public health crisis, Hifyre rapidly responded by deploying technologies such as “click-and-collect”, curbside pick-up and home delivery using proven models already in use in the province of Saskatchewan. With the focus of Hifyre resources shifted to these technologies during the quarter, the company saw a decrease in its digital revenue.

Fire & Flower stock has been slowly recovering from the lows it hit in March when the shares dipped into the twenty cent range. The stock was lately trading at roughly $0.55.


Debra BorchardtDebra BorchardtJune 15, 2020
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4min1820

Multi-state operator 4Front Ventures (OTC:FFNTF) reported its fourth-quarter and full-year fiscal 2019 results, plus the company gave preliminary first-quarter numbers. The fourth-quarter revenue increased 525% to $17.5 million over last year’s revenue for the same time period. 2019 revenue increased 786% to $31 million over 2018’s revenue of $3 million.

The company delivered a fourth-quarter net loss of $5.4 million and included a non-cash impairment charge of $146.3m related to the timing of the closing of the Cannex transaction. 4FRont delivered a 2019 net loss of $180 million. The company reported a net loss per share of $0.43 for the year versus a net loss of $0.03. The company did say that demand was robust despite the COVID-19 pandemic.

The company though isn’t out of the woods just yet. Its balance sheet had cash and equivalents of $11.5 million with total debt of $80.1 million.

“2019 was a transformative year for our company. With the acquisition of Cannex in July and its subsequent integration into 4Front during the second half of the year, 4Front became a leader in the mass-production of low-cost, high quality, branded cannabis products,” said Leo Gontmakher, CEO of 4Front. “Entering 2020, we have been laser-focused on leaning out and replicating our low-cost cultivation and production model in targeted states. The implementation of this model at our facilities in Georgetown and Worcester, Massachusetts, and in Elk Grove Village, Illinois, is expected to enable us to increase the production of cannabis products to meet the new adult-use demand expected in those two states.”

Looking Ahead

4Front gave preliminary first quarter 2020 results with total systemwide pro forma sales increasing 36% sequentially to $23.8m. The preliminary IFRS Sales for the first quarter of 2020 increased by 37% quarter-over-quarter to $17.6m. Gross profit, less the impact of adjustments for biological assets, for the first quarter were $9.7m. The adjusted EBITDA for the first quarter was a loss of $3.8m.

The company said it owns and controls highly attractive real estate in Washington state consisting of 176,000 square feet of state-of-the-art industrial space built for cultivation, production and distribution. The assets, however, are encumbered by senior secured debt associated with Gotham Green Partners. 4Front said a sale and leaseback of these assets would likely enable it to remove the senior secured debt from its capitalization table, creating the benefit of removing significant debt from the balance sheet while giving the company flexibility to more freely pursue non or minimally dilutive project financing options. The company is in active discussions with multiple partners on a transaction.

Mr Gontmakher added: “The work our team has done over the past six months to focus our business model, streamline our cost structure and fortify our balance sheet has set the stage for us to accelerate growth across our core markets of WashingtonIllinoisMassachusettsMichigan and California. Reducing debt, in particular the elimination of the senior secured convertible debt, will greatly improve our financial flexibility and will allow us to consider a wider range of financing funding options as we look to expand deeper into those core markets. 4Front has never been stronger than it is today, supported by a strengthened balance sheet, proven expertise, and streamlined operations.”

 



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