Supreme Archives - Green Market Report

The Supreme Cannabis Company, Inc. (FIRE.TO) (SPRWF) reported net revenue of $19 million for the fourth quarter ending June 30, 2019, a 90% increase sequentially. The net loss for the quarter was $421,000. Supreme Cannabis’ core recreational flower brand, 7ACRES, accounted for the company’s marked increase in revenue, growing 443% year-over-year from $3.5 million in Q4 2018 to $19 million in Q4 2019.

In the fourth quarter, 7ACRES continued to transition sales from its legacy wholesale contracts to recreational sales channels, increasing revenue from recreational markets by 51% between Q3 2019 and Q4 2019.

“We end fiscal 2019 as one of the few Canadian cannabis businesses building sustainable operations and valuable brands, reporting $3.2 million in Adjusted EBITDA for the fourth quarter,” said Navdeep Dhaliwal, CEO of Supreme Cannabis. “Our positive Adjusted EBITDA and significant revenue growth in the fourth quarter reflects the rapid scale of our 7ACRES business and continued strong sales pricing for our brands from the provinces as we transition our premium supply to recreational sales channels.”

The company said in its statement, that with its partnership with Khalifa Kush Canada ULC,it expanded its product offerings beyond whole flower with the launch of premium KKE Oil. The company’s KKE Sensi Star Oil was the first oil launched under the KKE brand. It will create other ultra-premium products for recreational consumers under the KKE brand, including pre-rolls, derivative products, and flower.

Anticipating the next phase of cannabis regulations and the legalization of derivatives products, the company prepared to enter the cannabis extracts category through its partnership with Pax Labs, Inc. (“PAX”). Pursuant to this partnership, 7ACRES became one of only four license holders to supply cannabis pods for the Pax Era vaporizer in Canada. Supreme said it will benefit from PAX’s strong brand recognition, reputation, and market-leading vaporizer technology, selling more than 500,000 Era devices and over one million devices in the flower vaporizer category.

Looking Ahead

Supreme Cannabis said it is projecting net revenue of between $150 million and $180 million in fiscal 2020. The company also said it expected to be positive Adjusted EBITDA¹ on aggregate over the course of the year. 7ACRES’ is to complete its transition from a wholesale business to premium consumer brand by third-quarter fiscal 2020, with complete in-house packaging capabilities for all flower products under the 7ACRES’ brand.

“With strong confidence in our core business, we began fiscal 2020 with two accretive acquisitions that expanded our addressable markets, provided valuable licensed operating assets and focused expertise,” Mr. Dhaliwal added. “As we integrate these businesses and realize further efficiencies from our scaled 7ACRES operations, we expect all of our brands to meaningfully contribute to the revenue we have forecasted for fiscal 2020. Amidst the noise of this new marketplace, Supreme Cannabis has taken a strategic and disciplined approach to develop a focused business with clear pillars: best-in-class infrastructure, top consumer brands, advanced intellectual property, and high-impact and capital-light exposure to developing international markets.”

The Supreme Cannabis Company, Inc. (TSX: FIRE) (OTCQX: SPRWF) announced it expects revenue to increase 449% to $19 million for the fiscal fourth quarter ending June 30, 2019. The revenue is expected to increase by 97% sequentially over the third quarter of 2019. The company said it also anticipates reporting positive adjusted EBITDA on a consolidated basis for fourth quarter 2019. The company said it would release audited results on September 17.

“Our Company has taken deliberate steps to grow in a focused, responsible and compliant manner, building a strong core business and an authentic brand and then expanding into new lines of business and international markets,” said Navdeep Dhaliwal, CEO of Supreme Cannabis. “In a sector dominated by headlines, our measured approach to capital deployment and brand-building sets us apart. We believe our preliminary results demonstrate the strength of our business during an inflection point within the industry, path towards profitability and continued disciplined growth. Looking forward, we remain focused on building our portfolio of premium consumer experience-driven brands.”

2020 Guidance

Supreme Cannabis said that it expects net revenue of between $150 million and $180 million for fiscal 2020 and expects positive Adjusted EBITDA on aggregate over the course of the year. The company will pursue non-dilutive financing with tier-one banks and other lenders to provide financial flexibility for future growth initiatives. The company said it is fully funded to execute on all planned initiatives.

The Supreme Cannabis Company, Inc.  (OTCQX: SPRWF) reported a 359% increase in revenue to $7.72 million for the second quarter ending December 31, 2018. This was a 50% sequential increase over the first quarter revenue of $5.14 million.

The company trimmed its losses by delivering a net loss for the quarter of $1.55 million versus a loss of $2.03 million for the same time period last year. The losses dropped sequentially as well from the first quarter net loss of $5.39 million.

“We’re pleased with our second quarter results, which show meaningful revenue growth quarter-over-quarter and continues to reflect our strong operational execution,” said Navdeep Dhaliwal, CEO of Supreme Cannabis. “Since Supreme received its license over two years ago, we have been one of the fastest scaling Licensed Producer’s in Canada, demonstrated by one of the strongest first years of revenue in the sector.”

During the quarter, the company was able to raise $100 million of gross proceeds through a bought deal offering of 6% unsecured convertible debentures due 2021 and led by GMP Securities L.P. and BMO Capital Markets. The company also uplisted from the TSX Venture Exchange to the Toronto Stock Exchange.

“During the second quarter, we made our first shipments of 7ACRES-branded product to adult-use markets in six provinces. The consumer feedback has been overwhelmingly positive. Cannabis enthusiasts are vocal about their passion for high-quality cannabis. We believe 7ACRES has quickly established itself as Canada’s only premier cannabis producer at scale. With construction on the flowering room at 7ACRES scheduled to be completed by the end of March, we’re looking forward to increasing our production capacity to help meet consumer demand and drive further revenue growth throughout the year.”

7Acres

The company’s flagship brand 7ACRES, was named Brand of the Year at the 2018 Canadian Cannabis Awards.  7ACRES also entered into a supply agreement with the New Brunswick Liquor Corporation and has been registered as a supplier in the province of Saskatchewan, expanding distribution into eight provinces.

Subsequent To The Quarter End

Supreme contracted Medipharm Labs Co. to facilitate the launch of the Company’s cannabis oil products line. Supreme Cannabis and Khalifa Kush Enterprises announced an international partnership agreement to develop and launch premium cannabis products for the Canadian and international markets excluding the United States.

Stock Performance

Supreme stock was lately trading at C$2.26, up from the company’s 52-week low of C41.15, but below the year’s high of C$2.43.