earnings Archives - Page 2 of 23 - Green Market Report

Debra BorchardtDebra BorchardtNovember 20, 2019
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3min2880

TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF)  reported that its third-quarter for 2019 increased 53% sequentially to $26.8 million from $17.6 million in the second quarter. It was a large increase over the $1.8 million delivered in the third quarter of 2018.  All figures are reported in Canadian dollars. The company attributed the increase to higher overall sales in Canada as well as strong sales in the U.S.

The net loss for the quarter was $17 million. Total operating expenses were $25 million, which also increased from $18 million in the second quarter.

“Two weeks into my new role, I continue to be impressed with TerrAscend’s unique assets and competitive positioning in both the United States and Canada,” said Jason Ackerman, TerrAscend’s Executive Chairman. “I see even greater potential for our business as we sharpen our focus on the U.S., where we are extremely well-positioned to become a leader in the markets we serve. My top priority now is to operationalize the company’s strategy while driving continued growth, improving profitability and fortifying our financial strength.”

As of September 30, 2019, TerrAscend said it had $6.9 million in cash and cash equivalents. Subsequent to quarter-end, the company said it closed on two tranches of the previously announced non-brokered private placement for total proceeds of approximately $18.0 million

Michael Nashat, CEO of TerrAscend added, “We are on track to deliver a year of tremendous progress for the overall company both operationally and financially. This has been especially evident in recent months, where we expanded our portfolio of U.S. assets with the addition of Ilera Healthcare in Pennsylvania, booked our first international shipment of medical cannabis to Europe, and received Health Canada approvals which tripled the licensed space at our Mississauga facility enabling future sales of new product formats and extracts for the Canadian Cannabis 2.0 market. Meanwhile, we have grown total sales in the third quarter to nearly $27 million from less than $2 million a year ago with improving margins.”

Ilera Healthcare

Late in the third quarter, TerrAscend acquired Ilera Healthcare, the owner of one of five fully vertically integrated licenses in the State of Pennsylvania. Ilera operates a retail dispensary in Plymouth Meeting, PA, with plans to open two additional dispensary sites in the Philadelphia area. The operations include a 67,000 sq. ft. site for cultivation and processing in Waterfall, PA with planned expansion to over 120,000 sq. ft. in 2020. In addition to selling its cannabis products in its own dispensary, Ilera distributes to 70 dispensaries throughout Pennsylvania.

 


StaffStaffNovember 15, 2019
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9min3780

The Supreme Cannabis Co.

The Supreme Cannabis Company, Inc. (TSX: FIRE) (OTCQX: SPRWF) reported a year-over-year increase in net revenue, growing 122% from $5.1 million in Q1 2019 to $11.4 million in Q1 2020. The net revenue achieved during Q1 2020 was comprised of $10.5 million from 7ACRES and $0.9 million from Blissco.

Sequentially, net revenue decreased by 40% from $19 million in Q4 2019. The quarter-over-quarter decrease in net revenue is predominately attributable to the combination of a rapid deterioration of pricing and demand in the wholesale market and the previously announced 7ACRES mechanical failure in grow rooms 1, 2 and 3, which was an isolated one-time event with all three grow rooms recommissioned and replanted in September 2019.

In Q1 2020, in response to wholesale market conditions, the company prioritized its annual performance objectives by product planning for future quarters and holding back product from wholesale channels. In the second half of fiscal 2020, the company expects this inventory of high-quality products to serve as inputs for flower convenience products and select cannabis derivative products, including pre-rolled joints, CBD oils and vaporizer oils.

The company continues to reduce its reliance on the wholesale market as it increases packaging capacity at its 7ACRES facility and transitions 7ACRES to solely recreational sales. In Q1 2020, wholesale sales accounted for 57% of cannabis flower sales, as compared to 65% in Q4 2019 and 100% in Q1 2019.  As Supreme Cannabis transitions into a CPG company, sales from recreational markets continue to increase. In Q1 2020, the company saw strong demand for its consumer-facing brands, with net revenue from recreational sales increasing 68% quarter-over-quarter.

Village Farms International, Inc.

Village Farms International, Inc.  (TSX: VFF) (NASDAQ: VFF) reported net sales (before Village Farms’ 50% share), which consisted entirely of dried cannabis sold predominantly to other licensed producers, were C$24.0 million (US$18.1 million).  Sales for the third quarter did not include C$7.2 million that was invoiced to Emerald Health Therapeutics. The company delivered net loss (before Village Farms’ 50% share) of (C$2.4 million) ((US$1.8 million)) which included the non-cash impact of a net charge of (C$12.6 million) due to a change in value of the biological asset.

Michael DeGiglio, Chief Executive Officer, Village Farms said,  “Pure Sunfarms’ achieved its fourth consecutive quarter of positive EBITDA, with an industry leading all-in cost of production of C$0.63, gross margin of 69% and EBITDA margin of 56%.  In the 12 months since adult-use cannabis was legalized in Canada in October 2018, Pure Sunfarms has already generated C$47 million in EBITDA, an especially impressive number given that its operations were ramping up throughout most of that period.”

“In our U.S. outdoor hemp program, we recently completed harvest of our 2019 crop, highlighted by yields that were well above our projections.  We remain on track to begin generating profitable hemp sales as early as the fourth quarter of this year.  Importantly, our first growing season has provided significant learnings that will be invaluable going forward.  In our greenhouse hemp program, we continue to work with Texas Department of Agriculture on the implementation of its hemp regulatory framework subject to the recently published US Department of Agriculture rules and are optimistic that licensing could commence in the first quarter of 2020.  As we did in Canada with Pure Sunfarms, we are building a rock-solid foundation of exceptional growing operations from which to aggressively pursue our objective to launch our own white-labeled and branded CBD products in 2020.”

Jushi Holdings

Jushi Holdings Inc. (NEO: JUSH.B) (OTCQX: JUSHF) reported its financial results for the third quarter ended September 30, 2019. The company delivered revenue for the third quarter of 2019 increased 2871% to $3.6 million, compared to $0.1 million in the third quarter of 2018 due to revenue from operations. Net income for the third quarter of 2019 was $4.2 million, or $0.04 per diluted share, compared to a net loss of $2.3 million, or $0.05 per share, in the third quarter of 2018. During the quarter, the company reported a gain on a financial asset of approximately $9.2 million and a one-time other income of approximately $5 million.

Gross profit for the third quarter of 2019 was $1.5 million, resulting in gross margin of 43%, compared to $0.1 million for the third quarter of 2018. The increase over the prior year was primarily due to the increase in retail sales.

“During the third quarter of 2019, we generated revenue of $3.6 million, an increase sequentially from $0.2 million, due primarily to commencement of retail operations in Pennsylvania and New York, and cultivation and manufacturing in Nevada. Additionally, we reported a net gain of $13.2 million in other income primarily from sale of our minority stake in Gloucester Street Capital resulting in net income of $4.2 million for the quarter,” stated Jim Cacioppo, CEO and Chairman of Jushi.


Debra BorchardtDebra BorchardtNovember 15, 2019
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3min2820

The Green Organic Dutchman (OTCQX: TGODF)saw its shares plunge by over 9% to lately trade at 63 cents after the company reported its third-quarter earnings following the market close on Thursday. The company delivered revenue of C$2.53 million, which missed estimates by C$1.77M. TGOD also delivered a net loss of $20.1 million for the quarter, of which $4.3 million was related to non-cash stock-based compensation, depreciation and amortization.

The company said it has “reorganized to reduce general and administrative expenses by approximately $3 million per quarter starting in Q1-2020 on a path towards positive operating cash flow by the end of Q2 2020.”

“Q3 marked TGOD’s entry into the recreational cannabis market with a small pilot in Ontario. We were thrilled to witness such positive feedback on product quality and packaging from retailers and consumers across the province.  Based on the initial response, demand for high-quality flower is strong and TGOD is well-positioned to capture the premium organic segment which is significantly underserved,” commented Brian Athaide, CEO of TGOD. “Despite the challenging market conditions in Canada, TGOD has an opportunity to be one of the first cash flow positive cannabis companies as early as Q2 2020. We rightsized our production and our first hybrid greenhouse is being commissioned, allowing us to produce at optimal levels while avoiding excess inventory or incurring unnecessarily high operating expenses.  Our first harvest from the Ancaster hybrid greenhouse is expected in December, which will enhance our current product line and enable TGOD’s first material revenues in Canada in Q1 2020 which is very exciting,” continued Athaide.

HemPoland,  the company’s wholly-owned subsidiary, saw a decrease in revenues in the third quarter to $2 million from $2.9 million in the second quarter due to fewer low margin bulk CBD extract sales. However, TGOD did see an increase in the number of sales of its high margin branded CannabiGold and private label products, resulting in gross margin of 80%, up from 69%.

TGOD said that it signed arrangements for up to $103 million in funding to be used mainly as bridge financing until TGOD becomes cash flow positive which is expected by the end of Q2 2020. According to the filing, “As of September 30, 2019, the company had working capital of $24 million and an accumulated deficit of $109 million.” The company came under fire for saying it needed more money to complete its facility projects after having said in investment presentations that all projects were fully funded.

The company has a conference call scheduled for Friday morning.


Debra BorchardtDebra BorchardtNovember 15, 2019
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6min3730

Aurora Cannabis Inc.  (NYSE: ACB) stock was selling off by over 8% in pre-market trading after the Canadian cannabis company reported its earnings following the market close on Thursday. Aurora delivered total revenue for its first fiscal quarter in Canadian dollars of $75.6 million which missed analyst estimates by $17 million. The first quarter GAAP EPS of C$0.01 did beat estimates by C$0.06.

The company said its consumer cannabis revenues were $30 million in the quarter, a 33% sequential drop and contributed 40% to total consolidated net revenue. The decline in cannabis net revenues was attributed ordering that slowed considerably during the summer as distributors worked through inventories and as the industry was impacted by the slow pace of retail store licensing.

“Over the past several years, Aurora has earned its place as a global leader in the cannabis industry. Despite short term distribution and regulatory headwinds in Canada that have temporarily impacted the industry, the long-term opportunity for Aurora in the global cannabis and cannabinoids market is immense,” said Terry Booth, CEO, Aurora Cannabis. “Aurora has and will continue to focus on everything in our control. Our success in doing this was demonstrated again this quarter by continued strong improvement in our core KPIs. We delivered solid operating results this quarter, exemplified by our industry-leading cash cost to produce which declined another 25% to $0.85 per gram this quarter, as well as by our industry-leading gross margins and market share.”

Scaling Back

Aurora said it decided to stop construction activity at its Aurora Nordic 2 facility in Denmark, which is expected to save approximately $80 million over the next 12 months. Aurora Nordic 1 is fully completed and has received a production license, and the company expects to receive a license to sell shortly. Aurora also decided to defer the majority of the final construction and commissioning activities at its Aurora Sun facility for the foreseeable future which is expected to conserve approximately $110 million of cash. The company said that as global demand develops, or as Aurora’s market share in the global cannabis market increases, it will reactivate these projects.

Medical Is Strong

The company’s medical cannabis net revenue increased 3% quarter-over-quarter to over $30 million. On the company’s earnings call, CFO Glen Ibbott said the increase was “driven by our continued success in growing our patient base, which currently stands at just over 91,000 clients. Our revenue was affected by a slight decrease in the average net selling price of medical cannabis of 6%, but more than offset by patient growth. The decline in selling price was the result of temporary pricing incentives designed to support the move of valuable long-term medical patients to Aurora, and away from LPs that we’re not servicing them well.”

Cost To Produce Drops

Aurora has always had a goal to be a low-cost producer and that mission seems to be fulfilled. Booth said, “I’m also proud to report that our high-tech cultivation facilities delivered on our promise to provide industry-leading indoor cash cost to produce below $1 a gram. And in fact, this quarter we came in well ahead of our expectations at $0.85 a gram.”

Looking Ahead

Aurora said that it knew this quarter would be tough and that it expected a growth plateau. Vapes and edible products will soon be available for sale and the company said that this will bring back sales.

Mr. Booth added, “In order to capitalize on this global market, we recognize the need to be nimble and proactive. To enhance our financial flexibility and position us to take maximum advantage of future growth opportunities, we have also taken decisive steps to immediately strengthen our balance sheet. Specifically, these steps include: (1) the announcement of a formal plan to settle our 5.0% convertible debentures due March 2020, (2) a reduction in our capital investments over the next several quarters by over $190 million to better match near-term capacity expansion with anticipated demand, while maintaining our long-term demand outlook, and (3) raising over US$124 million in gross equity proceeds since the start of fiscal 2020 through our at-the-market (“ATM”) financing program.”

“We view these as short-term headwinds and despite them, Aurora has continued to maintain our position as the leading producer and supplier of high quality medical and consumer cannabis products,” said Booth on the earnings call.


StaffStaffNovember 14, 2019
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5min7100

Canadian-based venture capital firm Canopy Rivers Inc. (TSX: RIV)(OTC: CNPOF) reported that it generated operating income of $930 thousand in Canadian dollars versus last year’s $23 million for the same time period. The company also delivered a net loss of $4.4 million versus last year’s net income of $10.9 million. The stock dropped over 6% to lately trade at USD$1.

The company said that the income was “primarily driven by royalty, interest, and lease income of $2.2 million from: royalty and debenture agreements with Agripharm Corp., Greenhouse Juice Company, James E. Wagner Cultivation Corporation and Radicle Medical Marijuana Inc. a lease agreement with Spot Therapeutics Inc. and a shareholder loan agreement with PharmHouse, Inc. This income was partially offset by a $559 thousand net decrease in the fair value of certain financial assets that are reported at fair value through profit or loss.”

The company went on to say that the “Operating income was further offset by a $682 thousand share of loss from the Company’s equity method investees. This share of loss was recorded one quarter in arrears, which includes the Company’s common equity positions in Canapar Corp., Herbert Works, High Beauty, Inc., LeafLink Services International ULC, PharmHouse and Radicle.” Canopy Rivers said it also expects to continue to generate losses during the remainder of the year.

“Headlined by our graduation to the TSX, our business matured during the second quarter as we launched our Strategic Advisory Board and continued to work closely with our portfolio companies as they achieved new milestones,” said Narbé Alexandrian, President & CEO, Canopy Rivers. “There were numerous achievements for our portfolio companies this quarter. Several of these companies received licenses and amendments from Health Canada for the sale of cannabis oils, while others made key acquisitions, launched their Canadian business, or brokered agreements with companies both inside and outside of the Canopy Rivers ecosystem.”

Expenses Decline

The company noted that its operating expenses for the quarter were $6.1 million, which dropped from last year’s $8.9 million.  $3.0 million of that was related to share-based compensation. Other operating expenses, which include consulting and professional fees and other general and administrative expenses, were $3.2 million, representing an increase from the comparative quarter last year due to the build-out of the Company’s management team and employee base and enhanced public company compliance, marketing and business development, and regulatory costs.

Other operating expenses also increased from the previous quarter due to certain non-recurring costs relating to the Company’s graduation to the Toronto Stock Exchange and the launch of a formal branding and marketing campaign.

Other comprehensive income, which captures the net changes in fair value of financial assets that are reported at fair value through other comprehensive income, was a loss of $28.3 million, net of tax. The fair values of Canopy Rivers’ investments in Eureka 93 Inc., JWC, YSS Corp., Les Serres Vert Cannabis Inc. and TerrAscend Corp. were negatively impacted by downward trends in public market valuations for cannabis companies during the period.

The company made no mention of its investment in the cannabis media outlet Civilized, which is said to be merging with New Frontier Data. Civilized recently laid off several staff members and moved to smaller offices in California. The rumor is that the planned combination will try to go public, which would attempt to make investors whole.

 

 


Debra BorchardtDebra BorchardtNovember 14, 2019
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6min3200

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) fell over 9% on news that the company’s second-quarter earnings missed analysts’ estimates. The Canadian-based cannabis company reported (in Canadian dollars) gross revenue of $118 million, a 6% increase sequentially and a 408% increase over last year’s $23 million for the same time period ending in September. The net revenue of $76 million fell 15% sequentially and missed estimates by $29 million. It did increase by 229% over last year’s $23 million. The stock was lately trading at USD$16.68.

The net loss decreased sequentially from $1.2 billion in the first quarter to $374 million in the second quarter. It also increased by 13% from last year’s net loss of $330 million.

“The last two quarters have been challenging for the Canadian cannabis sector as provinces have reduced purchases to lower inventory levels, retail store openings have fallen short of expectations, and Cannabis 2.0 products are yet to come to market,” said Mark Zekulin, CEO, Canopy Growth. “However, we believe these conditions are a short-term headwind in what is a brand-new industry, and Canopy continues to be best positioned with cash-on-hand, a world-class infrastructure, and a portfolio of intellectual property to deliver sustained long-term market leadership.”

Restructuring Charge

Canopy Growth said it has “taken a restructuring charge of $32.7 million for returns, return provisions, and pricing allowances primarily related to its softgel & oil portfolio. Additionally, management has recorded an inventory charge of $15.9 million to align the portfolio with the new strategy.” The company said that the new strategy included new retail pricing architecture, a rationalized package assortment, and a focused marketing/educational strategy to further develop this category. The second-quarter gross margin impact of the portfolio restructuring costs is $40.4 million.

Added Zekulin: “We took the necessary steps to address inventory levels on our oils and softgels; looking beyond this, the fundamentals are strong: our retail store sales are growing on an overall and same-store basis, our Canadian medical revenues are up, and international medical sales are growing on both an organic and inorganic basis.  And, even though revenue is muted during the quarter due to the restructuring charge, actual cannabis shipments grew quarter-over-quarter, which is a great accomplishment in light of the inventory reset that’s occurring at the provinces.   We believe our fundamentals are strong and are confident we’re moving in the right direction.”

Cash Burn

The company is still sitting on a healthy war chest 0f $2.7 billion, but that is after a drop of $404.7 million from June 30, 2019.  The primary uses of cash were operations and capital spending of $228.3 million as the company finishes its build-out in Canada by constructing manufacturing and beverage production facilities. Operating expenses for the quarter were $269 million, a 48% increase year over year and a 15% increase sequentially. Consider that this is 100% over the revenue coming in.

Research and development costs increased 526% year over year, G&A increased 137% year over year and sales and marketing increased 50% over last year.

“After five years of investment in market research, product development, product marketing, production engineering, as well as production facility design, construction and qualification, we are ready to bring our Cannabis 2.0 product offerings to market,” said Zekulin.  “This marks the end of significant expansion investments in Canada and we are confident that the high quality, differentiated beverage, vape and edible products that we are bringing to market combined with a retail channel that we expect to grow significantly next fiscal year, will drive the next leg of growth for our business.”

Sales Mix

The revenue was a mixed bag between increases and decreases. Medical marijuana sales were up across the board sequentially. The only drop was a year over year decline in dry cannabis revenue. With recreational cannabis, the consumer side mostly saw sequential increases, with oil and softgels declining slightly by 1%. The B2B recreational sales saw sequential declines in each category except dry cannabis sales.

“International medical cannabis gross revenue was $18.1 million in Q2 2020, with the 72% growth driven primarily by the acquisition in May 2019 of C3, which contributed a full quarter of revenue in the amount of $14.0 million to our results in Q2 2020.”

 

 


Debra BorchardtDebra BorchardtNovember 13, 2019
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2min3160

Acreage Holdings, Inc. (CSE: ACRG.U) (OTCQX: ACRGF) reported third-quarter revenue of $22.4 million, a 307% increase over last year’s $5.5 million for the same period in 2018. The company also reported a net loss of $39.9 million versus last year’s net loss of $4.5 million and the EBITDA loss was $44 million.

CEO Kevin Murphy said in a statement, “The third quarter was highlighted by tremendous progress of our long-term plan. We launched great cannabis brands that are receiving strong influencer praise, continued building out our wholesale businesses across our national footprint, and achieved 100 percent retail distribution in the fast-growing market of Pennsylvania. Importantly, we also have a path to secure the capital resources necessary to fund our future expansion and acquisition activities. The last six months have been challenging for the entire industry, but as I have emphasized since day one, this is a long game and I have never been more optimistic about the future of Acreage.”

The third quarter Non-GAAP EPS of -$0.17 beat estimates by $0.03 and the GAAP EPS of -$0.45 missed by $0.13.

Compensation expenses caused a large increase in the company’s earnings for the quarter and accounted for roughly $23 million.

The revenue breakout was as follows:

New England    $4.5m

Mid-Atlantic     $2.2m

Midwest             $2.1m

West                    $712k

 

The stock was rising by 1% to lately trade at $4.88


Debra BorchardtDebra BorchardtNovember 13, 2019
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4min4300

Charlotte’s Web Holdings, Inc. (TSX: CWEB)(OTCQX: CWBHF)  reported that its revenue rose 41.8% to $25.1 million in the third quarter that ended September 30, 2019, versus $17.7 million for the same period in 2018. Still, the company delivered a net loss of $1.3 million versus last year’s net income of $1.8 million.

Rising Expenses

The operating expenses soared to $19.6 million over last year’s $9.8 million for the same time period. The company said in a statement that its “third-quarter operating expenses were $4.7 million”, but that isn’t the number that appeared in the financial table. The company did say that the rising expenses were “to support the Company’s growth and transition to a consumer-packaged goods operating company.

During the quarter Charlotte’s Web moved into larger office facilities in Boulder and added senior CPG management to the leadership team along with related personnel.  “Employee headcount was 307 on September 30, 2019, a 35.8% increase from 226 at September 30, 2018.”

“In an increasingly crowded, noisy and confusing CBD market, brands matter, and Charlotte’s Web is the most trusted hemp extract in the world,” said Deanie Elsner, Chief Executive Officer of Charlotte’s Web. “Consumer education is increasing and a 68% year-over-year increase in traffic through our online store drove Q3 B2C sales to new highs. As the CBD category’s flagship brand, we saw a similar 66% increase in sales pull into our B2B segment which includes the food/drug/mass (“FDM”) and natural health retail channels. This helped drive Q3 growth to 42% year-over-year.”

The revenue breakdown was as follows: Human consumables, topicals, and pet products grew by 43.6%, 156.7%, and 57.5%, respectively. On a year-over-year basis for the quarter ended September 30, 2019, B2C sales grew by 38.7% and accounted for 51.2% of total revenue in the quarter as online traffic increased 68% through expanded marketing and social media programs. B2B sales grew by 66.4% year-over-year and accounted for 48.8% of total revenue in the quarter as mass retailers including Kroger Co., Vitamin Shoppe and CVS Pharmacy locations entered the market in 2019.

Pets Performing

The company said that early sales traction for the new 12 SKU pet line from Charlotte’s Web has been encouraging with a 57% year-over-year increase in revenue with notable success in the independent retail channel.

Lowering Guidance

Ms. Elsner updated the Company’s revenue guidance: “We’re pleased with our growth of 42% for Q3 and 49.6% year-to-date. We expect full-year revenue for 2019 to be in the range of $95 to $100 million and to maintain growth rates for 2020 in the 40% to 50% range or until clear regulations are set.” In the last quarterly report, Rich Mohr, Chief Financial Officer said, “Our previously communicated revenue guidance for 2019 of between $120 million and $170 million remains in place.”

Elsner added, “We are prudently investing in the expansion of our production and distribution capacities as planned, ahead of anticipated FDA regulatory clarity that could enable wider adoption of our product portfolio. We remain hopeful that broad political support will help drive quick regulatory resolutions in 2020.”


Debra BorchardtDebra BorchardtNovember 12, 2019
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3min2420

Canadian-based Tilray, Inc. (Nasdaq: TLRY) reported that second-quarter revenue increased 371.1% to $45.9 (C$60.9) million versus last year’s $9.7 million. Tilray said that the increase in revenue was driven by the Manitoba Harvest acquisition, the legalization of the Canadian adult-use market, and growth in international medical markets, particularly in Europe. Excluding excise tax, revenue was $42.0 (C$55.8) million.

Net Losses Rise to $35 Million

The company delivered a net loss for the quarter of $35.1 million or $0.36 per share versus last year’s loss of $12.8 million or $0.17 per share. The adjusted net loss for the quarter was $31.2 million or $0.32 per share for the second quarter of 2019. The adjustments to the net loss are non-recurring acquisition-related charges and a non-recurring non-cash charge related to purchase accounting for the fair value of inventory. Adjusted EBITDA was a loss of $17.9 million compared to a loss of $4.7 million the prior-year period. The company said that the increased net loss and Adjusted EBITDA declines were primarily due to the increase in operating expenses related to growth initiatives, interest expense from our convertible notes, the addition of Manitoba Harvest and Natura businesses, and the expansion of international operations.

“We are pleased with our second-quarter results and strong business momentum,” said Brendan Kennedy, Tilray President, and Chief Executive Officer. “Our team has executed against our plan, with adult-use revenue nearly doubling in the second quarter compared to the first quarter and gross margin increasing sequentially for the second quarter in a row. As we continue to grow, we remain focused on our long-term strategic objectives and deploying capital to maximize stockholder value.”

Prices Fall

The average net selling price per gram decreased to $4.61 (C$6.12) versus last year’s $6.38 (C$8.36). The decrease was due to a reduced mix of higher-priced extract products and a greater mix of adult-use revenue, which are at lower prices per gram compared to other channels. Total kilogram equivalents sold more than tripled to 5,588 kilograms from 1,514 kilograms in the prior-year period.

 

 


Debra BorchardtDebra BorchardtNovember 12, 2019
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4min2300

Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) reported that its third-quarter net revenue increased 238% in Canadian dollars to $12.7 million versus last year’s $3.8 million for the same time period. Cronos attributed the gain to the launch of the adult-use market in Canada and the inclusion of Redwood from the date of closing on September 5, 2019, to the end of the quarter. Sequentially, net revenue rose 24% from $10.2 million in the second quarter as the company said that improvement was due to increased sales in domestic dried cannabis and the inclusion of Redwood.

“As demonstrated by our progress in the third quarter, we are making great strides to advance the development and diversity of our portfolio and to expand our manufacturing capabilities,” said Mike Gorenstein, CEO of Cronos Group. “We are confident that our platform strategy and focus on consumer-driven innovation will continue to differentiate Cronos Group and drive growth and value creation over the long-term.”

Another area that saw a large increase was the operating expenses which came in at a loss of $54 million. Had the company not reported a ‘Gain on revaluation of derivative liabilities’ of $835 million the company wouldn’t have turned in a net income of $787 million. Still, the company is sitting on a war chest of $1.4 billion in cash and cash equivalents.

KG Sold Jumps 511%

Cronos also reported that it sold 3,142 kilograms in Canada during the third quarter, representing a 511% increase from 514 kilograms sold in 2018 for the same quarter. Kilograms sold increased by 98% sequentially, driven by increased domestic wholesale sales. The cost of sales before fair value adjustments per gram sold for the non-U.S. market was $2.27 in Q3 2019, representing a 31% decrease from $3.28 in Q3 2018 and a 25% decrease from $3.01 in Q2 2019. The decrease quarter-over-quarter was driven by lower production costs on a per gram basis.

Looking Ahead

Cronos Group announced the introduction of PEACE+, a new hemp-derived CBD brand in the U.S. PEACE+ is about more than making a better, high-quality hemp-derived CBD product; it stems from the belief that well-being can lead to a better world, full of positivity and possibility. It’s a belief that extends beyond the products and into everything the brand seeks to do and stand for. PEACE+™ will sell hemp-derived CBD tincture products through a test market of approximately 1,000 retail stores in the U.S. The company intends to utilize Altria Group, Inc.’s sales and distribution network to access the U.S. convenience store retail channel in order to gain consumer insights prior to expanding distribution more broadly.

With the completion of the Redwood acquisition, Robert Rosenheck, the co-founder and CEO of Redwood and the Lord Jones brand, will also assume responsibility for Cronos Group’s operations, marketing, and brand strategy in the U.S. hemp-derived CBD market.



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