The Valens Company Archives - Green Market Report

Debra BorchardtDebra BorchardtFebruary 25, 2021
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5min2120

The Valens Company Inc. (OTCQX: VLNCF) report its fourth quarter and fiscal year financial results for the period ended November 30, 2020. Valens reported gross revenue for the fourth fiscal quarter fell to $17.9 million from $18.5 million in the third quarter of 2020. The net loss increased to $16.6 million sequentially over the third quarter’s net loss of $3 million.

Full Fiscal Year

Sales for the full fiscal year ending in November were $86 million versus the 2019 fiscal year-end sales of $58 million. The net loss for the full fiscal year of 2020 was $20.6 million versus 2019’s net loss of $6.5 million. Product sales increased 237% to $54.7 million in the fiscal year 2020 over 2019

“In fiscal year 2020, we transformed Valens from a leading extraction company into the industry’s most trusted third-party manufacturer of cannabis consumer packaged goods. Over the course of the year, we strategically employed our human and capital resources to strengthen our platform and build the infrastructure required to offer what we believe are the most innovative and cost-competitive product manufacturing capabilities in the market today,” said Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company. “Moving into 2021 with a transformed business model, a growing international presence, and over 77,000 square feet of manufacturing space, Valens is focused on three key initiatives – growing unit volumes per SKU, increasing Cannabis 2.0 and 3.0 product market share, and driving revenues in new consumer verticals. We expect to do this by expanding our provincial distribution capabilities, entering new international markets including the US, and broadening our custom manufacturing and white label partnership network.”

Valens said that it increased its market share to ~4.9% of the Cannabis 2.0 market in AlbertaBritish Columbia, and Ontario in the fourth quarter based on Headset data and not including B2B LP manufacturing, and grew cannabis-infused beverage market share in Canada to approximately 5.2% in the quarter for its product lineup with only one customer in this category to date. the company also said it cemented its position as the largest third-party vape manufacturer in Canada. Valens said in a statement that it transitioned from shipping bulk distillate in the first quarter of 2020 to shipping hundreds of thousands of finished product units per month in the fourth quarter, resulting in revenue that is expected to be recurring in nature

Looking Ahead

Valens reiterates its previously announced guidance for the first fiscal quarter with revenue projected to be between $19 million to $23 million, driven by the company’s newly launched and operational K2 Facility which is expected to give Valens the ability to increase production capabilities and unit volumes. The company said it ended the year with a current cash balance of $48.7 million, including gross proceeds of $39.7 million from the bought deal financing that closed subsequent to the quarter-end.

Jeff Fallows, President of The Valens Company, said, “Moving into fiscal year 2021, we have already executed on step one of our strategic plan for the year with the announcement of our agreement to acquire LYF and are focused on quickly integrating and realizing on the incredible opportunity we see in adding their edibles platform to our capabilities. With our recent bought deal financing, we are also well-positioned to aggressively pursue available and future growth opportunities, including potential acquisitions.”


Debra BorchardtDebra BorchardtJanuary 25, 2021
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The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) entered into an agreement with ATB Capital Markets Inc. to purchase 17,080,000 units at a price of C$2.05 per Unit for gross proceeds of C$35,014,000. Then following that announcement, Valens said it was buying LYF Food Technologies Inc. in a cash and share transaction for C$24.9 million, plus up to an additional C$17.5 million in consideration upon the business achieving certain earn-out EBITDA milestones. Valens said in a statement that the LYF Acquisition is expected to be accretive in 2021, and if all of the Milestones are met, the transaction represents an approximate ~4.2x multiple on the last milestone achieved.

LYF is an edibles manufacturer based in Kelowna, British Columbia with expertise in novel product creation, white label manufacturing, and infusion technologies. Similar to Valens, LYF operates a product development and manufacturing platform focused on consumer-driven innovation, and product safety and consistency. LYF says it brings a proven team with significant experience producing high throughput food products, in addition to experience operating and working with major Canadian grocery chains, health and wellness retailers, and pharmacies. Just minutes away from Valens’ headquarters, LYF’s purpose-built manufacturing facility produces innovative edible products using the highest quality ingredients and cannabis extracts, offered in proprietary delivery methods.

Tyler Robson, Chief Executive Officer and Chair of the Board of The Valens Company said, “LYF has set the standard of what high quality edibles should be and has developed a diverse and flexible manufacturing platform to play a dominant role in the Canadian edibles market. LYF stood out for its product innovation and marketing teams, as well as its broad range of edible products which will introduce new formats to Canadian consumers that are typically only available in more mature markets. We look forward to further developing our product offering to reach more consumers with high-quality and unique cannabis edibles as this product segment continues to gain in popularity.”

These moves come right after the company said it made the strategic decision to liquidate the majority of its cannabis oil inventories at market-clearing prices in the fourth quarter of 2020. The stock was falling over 9% on the news to lately sell at $1.92. This company said that the decision will lead to a related one-time financial statement impact in the fourth quarter of 2020 between $9.0 million and $10.0 million, including a $2.9 million to $3.2 million loss from the sale of bulk cannabis oil, an inventory write-down of $4.7 million to $4.9 million, and a provision on previously entered biomass commitments of $1.4 million to $1.9 million.

 

 


Debra BorchardtDebra BorchardtJanuary 20, 2021
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5min4020

The Valens Company Inc.  (OTCQX: VLNCF)  provided an update on its corporate initiatives following the close of the market on Tuesday. The Valens Company said it made the strategic decision to liquidate the majority of its cannabis oil inventories at market-clearing prices in the fourth quarter of 2020. The stock was falling over 9% on the news to lately sell at $1.92.

This company said that the decision will lead to a related one-time financial statement impact in the fourth quarter of 2020 between $9.0 million and $10.0 million, including a $2.9 million to $3.2 million loss from the sale of bulk cannabis oil, an inventory write-down of $4.7 million to $4.9 million, and a provision on previously entered biomass commitments of $1.4 million to $1.9 million.

Valens said it came to this decision based on the anticipated increase in outdoor cannabis volumes and continued overall decline in dried cannabis pricing, the strong success of its value-priced product offerings with partners, and the near-term launch of several new product formats that will leverage both strain and terpene specific profiles.

Tyler Robson, Chief Executive Officer said, “Looking into 2021, we wanted to clear the deck and increase our flexibility to make a much more aggressive push into the market with new, innovative products, including several exciting opportunities in the Health & Wellness category, at highly competitive prices. Adding low-cost inputs to our already low-cost manufacturing infrastructure makes us tough to beat and will help us secure a cost leadership position in the market. While this decision resulted in a one-time financial statement impact in the quarter, we now enjoy the increased opportunity to capture market share, drive future product margin expansion and generate shareholder value as one of the most flexible, lowest-cost cannabis platforms in the Canadian market focused on 2.0 and 3.0 cannabis derivative products.”

Earnings

Valens said that for the fourth quarter of 2020, preliminary gross revenue will be between approximately $17 million and $18.5 million, with preliminary net revenue between $15 million and $16.5 million. An approximate quarter-over-quarter increase of 250% in provincial product sales in the fourth quarter worked to offset some of the loss attributed to lower bulk oil revenues as a result of market-clearing pricing for the inventory liquidation. The company noted that various reintroduced provincial COVID-19 restrictions to cannabis storefronts also negatively impacted revenue in the quarter and led to a delay in achieving purchase orders originally planned for the fourth quarter, resulting in these purchase orders being shifted into the first quarter of 2021.

“Revenue for the first quarter of 2021 is expected to be between $19 million to $23 million, driven by the company’s newly launched and operational K2 Facility which is expected to give Valens the ability to increase product and provincial sales, enter into new innovative product verticals, and increase output volumes. The company expects the K2 Facility to continue to unlock revenue growth throughout the remainder of fiscal 2021.” The Valens Company said it expects to report its fiscal 2020 fourth-quarter results in late February.



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