TGOD Archives - Green Market Report

After the close on Wednesday, The Green Organic Dutchman Holdings Ltd.  (TSX: TGOD) (US: TGODF) reported its unaudited interim financial results for the first quarter ending March 31, 2021. TGOD said its revenue increased 194% year over year to $8.98 million. However revenues decreased 18% sequentially to $10.92 million. The stock was falling by almost 5% to lately sell at 27 cents. 

The company blamed the decline on store restrictions and stay-at-home orders related to COVID-19, combined with some provincial listing mandates being revised at the start of the year. TGOD said it expects growth to rebound for the remainder of 2021 with restrictions anticipated to be lifted as vaccination rates increase and retail stores reopen.

TGOD went on to say that the decrease appears to be within the range of what has been observed and reported by many peer companies to date in 2021. The company still delivered a net income of $12.46 million for the quarter versus a loss of $73.44 million for the same period during the prior year, comprised primarily of the reversal of impairment, and a loss from operations of $5.89 million. On a per-share basis, TGOD recorded a net income of $0.02 compared to a loss of $(0.23) for Q1-2020 and $(0.05) for Q4-2020.

“This quarter’s improving financials demonstrate how we are strengthening TGOD’s foundations by executing our turnaround plan. From monetizing under-utilized assets to streamlining our organizational structure and strengthening our balance sheet, our new leadership team is making great strides towards completing the transformation of TGOD into a profitable and agile organic cannabis producer that stands to benefit from accelerated growth in Canada and abroad with opportunities in Germany, Mexico, Australia, and the United States,” commented Sean Bovingdon, TGOD’s CEO and Interim CFO. “The achievement of net income reflects the positive outlook for our cashflows in relation to our right-sized operations. We look forward to the potential lifting of COVID restrictions as vaccinations increase, which will allow for better access for consumers to our organically grown quality products, that are now consistently achieving THC levels greater than 20%.”

While the company seems to be turning a corner as revenues have mostly risen over last year, the company is still restructuring as it sells assets. On April 29, TGOD provided an update on the potential sale of its Valleyfield Quebec Facility, stating that it had received multiple viable bids. Management said it is currently working through the details of the bids and anticipate  closing by the end of June 2021. The company also recorded a net non-cash reversal of previous impairment of $21.81 million triggered by its Quebec Facility being classified as assets held for sale.

TGOD has also said it may sell or spin-off for an Initial Public Offering of HemPoland, its wholly owned subsidiary, for which it has retained Canaccord Genuity as an advisor, and the potential for mergers and acquisitions in the Canadian cannabis LP sector.

The Green Organic Dutchman Holdings Ltd.  (OTC: TGODF) reports its results after the market close on Tuesday for the fourth quarter and fiscal year ended December 31, 2020. In the fourth-quarter, TGOD said its revenues increased 236% to $10.92 million versus $3.25 million in Q4-2019. This was also a 91% increase over the third-quarter revenue of $5.71 million. The Green Organic Dutchman fourth-quarter net loss improved to $23.68 million versus $144.75 million for the same period in 2019. The company attributed it to a loss from operations and a write-down of $8.65 million in goodwill related to HemPoland.

Annual revenue for fiscal 2020 was $24.51 million versus $11.16 million for 2019. The net loss for the year was $183 million. The company said that the loss was due to a non-cash impairment charge of $120 million on the Canadian cash-generating unit. “The non-cash impairment charges recognized during the period are primarily attributable to the changes in the timing of accessing market demand, as a result of various factors including regulatory changes, production and supply chain impediments, COVID-19 impacts on retail store openings, and, sales price compression across the industry, resulting in a slower revenue ramp-up and growth than originally forecasted by management.”

Lowered Sales Forecast Outlined

In February, TGOD also lowered its estimates for revenues in 2021. The revised Canadian cash flow forecast, from November 1, 2020 to October 31, 2021, assumed that it would achieve $40 million in net sales over the 12-month period versus the $61.5 million previously forecast in the Base Shelf Prospectus. The reasons for the decline were listed below:

• The company’s forecast assumes between 5% and20% of price compression into 2021 across its various product lines.
• Pandemic restrictions reduced order levels for the first quarter of 2021. The company believes these measures will hamper the rate of revenue growth in Canada that was expected in the first half of 2021 and impact the timing of market penetration for its new sativa strains and some cannabis 2.0 products.
• the sales volume forecast consists primarily of product mix premium flower, mainstream Highly Dutch flower, and 2.0 products expected to be sold and includes hash sales, which mix has shifted towards proportionately more mainstream Highly Dutch products that have a lower margin.
• The company’s latest forecast further reflects the shift in its medical business from sales to patients directly to medical wholesaling, such as the company’s distribution agreement with Medical Cannabis by Shoppers Drug Mart. Medical wholesale generates narrower gross margins compared to direct patient sales.

Permanent CEO Named

The company appointed Sean Bovingdon as Chief Executive Officer (CEO), and member of the board, effective immediately. Mr. Bovingdon had previously been appointed as Interim CEO in November 2020 while continuing to serve as CFO. He will continue as interim CFO while the company undertakes a search for a permanent Chief Financial Officer.

The Green Organic Dutchman Holdings Ltd.  (TGOD) (OTC: TGODF) announced preliminary unaudited revenue for the fourth quarter of 2020 and provided an update to the previously provided twelve-month Canadian revenue forecast for the period of November 1, 2020, to October 31, 2021.

TGOD said that the unaudited consolidated gross revenue for the fourth quarter of 2020 is expected to be approximately $10.9 million, reflecting growth of 235% over the prior year, and an increase of 91% over the third quarter of 2020. The company said it reflected the significant progress and growth achieved in Canadian operations and sales, which accounted for $8.6 million of the fourth quarter 2020 gross revenue total.

“Our increase in revenue reflects the collective efforts of the TGOD team, resulting in improvements in the quality of our flower which is being well received by the market,” said Sean Bovingdon, CFO and Interim CEO of TGOD. “We are also encouraged by the traction we are gaining with our Highly Dutch flower and hash, and look to continue expanding distribution of these along with new premium flower strains and 2.0 product offerings, though we are monitoring the effects that the COVID crisis is having on this progress.”

Lowers Guidance

Despite the encouraging news for the fourth quarter, TGOD wasn’t completely ready to celebrate. The company said that continuing pandemic challenges existed and that many provincial governments were imposing lockdowns and stay-at-home mandates. The company said it believes these measures will hamper the rate of revenue growth in Canada that was expected in the first half of 2021 and impact the timing of market entry for its new sativa strains and some 2.0 products.

In a statement, TGOD said, “Without these conditions, TGOD would expect to be able to meet the Prospectus Forecast, however, TGOD now notes an increased risk in achieving the Prospectus Forecast of $61.5 million net sales for the period November 1, 2020, to October 31, 2021. As such, it expects revenue to grow at a slower rate with the revised Canadian net revenue forecast for that period being in a range of $40 million to $45 million. The company expects that due to these changing conditions, it will not meet its previous expectation of achieving positive monthly Canadian operating cash flow by the end of Q1 2021.”