The Valens Company Archives - Green Market Report

StaffAugust 31, 2021
citizen.jpg?fit=960%2C720&ssl=1

6min5020

The Valens Company Inc.  (OTCQX: VLNCF) is buying  Citizen Stash Cannabis Corp. (formerly Experion Holdings Ltd) (TSXV: CSC) (OTCQB: EXPFF) in an all-stock deal valued at approximately $54.3 million on an enterprise value basis. Citizen Stash shareholders will receive 0.1620 of a Valens common share for each Citizen Stash Common Share held. The Exchange Ratio implies a premium per Citizen Stash Common Share of approximately 35.1%. Valens said the Citizen Stash acquisition is expected to be accretive in 2021 and 2022 before synergies and will provide Valens with a strategic, asset-light expansion into flower and pre-rolls, the largest segments of the Canadian cannabis market currently accounting for over 70% of retail sales. Prior to the acquisition, Citizen had signed a processing agreement with The Valens Company to outsource the production of Citizen Stash pre-rolls, supporting a lower cost of goods moving forward for pre-rolls.

Citizen Stash is a licensed cultivator and processor of premium craft cannabis products based in Mission, British Columbia. Citizen Stash operates an asset-light platform made up of a network of craft contract growing partners from which it selectively sources premium bulk flower grown from Citizen Stash’s industry-leading proprietary genetics. Citizen Stash manufactures and packages flower and pre-roll products primarily through manual processes. Last month, Citizen reported that its gross revenue increased 92% in Q2 2021 to $3.3 million versus $1.7 million in Q2 2020.

“We are excited to join forces with Citizen Stash’s experienced team and broaden our offerings in the flower and pre-roll verticals with a best-in-class brand.,” said Valens CEO Tyler Robson. “The premium price tier of the flower and pre-roll segments represents the best expansion opportunity for Valens in the flower category, as premium brands are the hardest to build, while also capturing the highest margins. Citizen Stash’s asset-light model, and proprietary genetics will provide us significant operational flexibility and an opportunity to leverage the growing capabilities of our existing LP partners.  In short, this strategic acquisition will allow Valens to significantly expand its presence in the recreational market and capture a share of the largest categories of the Canadian cannabis space without the burden of a high-cost growing infrastructure. We are opportunistically expanding our product offering to align with consumer demand for high-quality craft cannabis flower and pre-rolls.”

Citizen Stash

Citizen Stash is reported to be one of the top-performing premium brands in the flower and pre-roll categories. Based on Hifyre data for the flower category during March to May 2021 in the markets of Ontario, Alberta, and British Columbia, Citizen Stash is the highest-ranked premium brand by market share in the flower category with an average selling price above $13.00 per gram and is the only brand in the top 20 by market share with an average selling price above $13.00 per gram. Within the pre-roll category during March to May 2021 in the markets of Ontario, Alberta, and British Columbia, Citizen Stash is the third-highest ranked premium brand with an average selling price above $13.00 per gram and one of only five within the top 20 overall brands.  

Jarrett Malnarich, Chief Executive Officer of Citizen Stash, said, “Combining our business with The Valens Company represents an outstanding opportunity for our company and the shareholders of Citizen Stash and is wholeheartedly endorsed by our Board of Directors. We look forward to the full integration of Citizen Stash with The Valens Company. We believe the combination will create a leading platform in the Canadian cannabis industry which spans all categories, while focusing on profitability and creating value for all shareholders. Together we look forward to taking the Citizen Stash brand to new heights that Citizen Stash could not have achieved on its own, by leveraging Valens’ best-in-class, low-cost manufacturing capabilities and industry-leading distribution scale. In our collaboration with Valens to date, Citizen Stash has come to realize the common values we share centered around providing consumers with the highest quality cannabis products.”

This acquisition is anticipated to solidify Valens’ position as a top tier cannabis company by enhancing the Company’s market share and adding an innovative, premium flower brand to its portfolio. Closing of the Citizen Stash transaction will mark the third acquisition Valens has made this year, which will accelerate Valens’ strategic initiative to create a leading global manufacturing platform, capture market share through innovative product launches with unique consumer experiences, and expand on its existing domestic and international distribution network to better capitalize on the global opportunity.


Debra BorchardtJuly 15, 2021
valens-1.png?fit=778%2C429&ssl=1

6min12360

After the markets closed on Wednesday, The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) delivered its second-quarter financial results ending May 31, 2021. Valens reported that its revenue increased 16.1% to $20.5 million versus $17.6 million in the second quarter of 2020. The net loss was $8.6 million in the quarter versus $3.5 million for the same time period in 2020.

Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company, said: “We believe that our business model remained resilient despite ongoing challenges presented by the pandemic, and our strategy continued to demonstrate its effectiveness as we gained significant market penetration across the country. We are proud to share that in the second quarter alone, Valens had 132 SKUs listed in Canada – a 76% increase in comparison to 75 SKUs listed in the first quarter of 2021. This material growth in SKU listings stands in stark contrast to many of our competitors in the sector and is a testament to the innovation and quality we are bringing consumers and retailers.”

The adjusted EBITDA was $(5.0) million in the quarter versus $2.7 million, or 15.3% of revenue in 2020 for the second quarter. President Jeff Fallows said: “Predictably, our accelerated launch of a targeted portfolio of high-volume SKUs resulted in an increase in costs which impacted our adjusted EBITDA in the quarter. However, we expect these costs to produce accelerated revenue and margin growth in the coming quarters particularly as we achieve greater utilization of our largely completed manufacturing platform.”

Green Roads

In June, Valens entered the US market with the acquisition of Green Roads for $40 million. With the Green Roads acquisition, Valens more than triples its total addressable market and secures a global leadership position in the cannabis health and wellness vertical with one of the largest CBD brands by market share. Additionally, the acquisition strengthens Valens’ capabilities to supply global markets with an expanded product offering and increased speed to market with a US-based manufacturing and cGMP certified co-manufacturing platform. Valens said it plans to invest approximately $10 million into Green Roads to strengthen its resources across various business lines, including sales and marketing. Valens said that in the back half of the year, it will introduce Green Roads’ CBD products to the Canadian market.

Looking Ahead

Fallows added, “We continue to dedicate efforts and remain keenly focused on completing our listing on the Nasdaq which we expect to be completed in the third quarter of the 2021 calendar year, and which has been fortified by our US entry. These initiatives will be instrumental in advancing global market opportunities and will lead to Valens accomplishing its strategic and operational growth objectives which we believe will be transformational for the company, generate additional sources of sustainable revenue, and drive shareholder value. We continue to maintain a strong balance sheet as we successfully raised additional capital from our bought deal financing which closed after the quarter. This equity raise provides Valens with the capital to pursue its strategic initiatives, specifically by taking an opportunistic approach to additional accretive acquisitions and to further secure our entrance into additional Cannabis 2.0 and 3.0 product verticals.”

The company noted that its recent $46 million bought deal financing was closed subsequent to quarter-end on June 1, 2021. The company said it plans to use the bulk of the net proceeds, $28 million, to pursue opportunistic acquisitions and business expansion opportunities across North America and international markets. The remaining proceeds will be used for capital expenditures, working capital, and other global general operating expenses.

Robson concluded by saying, “Importantly, we are seeing this momentum continue into the third quarter with an additional 40 SKUs accepted by the provincial boards with shipments during the third and fourth quarters. These new listings include products from four newly entered categories during the second quarter, such as flower, pre-rolls, topicals, and edibles, with many of them already receiving high consumer acclaim. Additionally, we have enhanced our platform with increased technical capabilities and greater efficiency to develop and commercialize winning products, which we expect will drive revenue growth in the second half of fiscal 2021. We look forward to continuing to drive new product innovation in the sector, specifically in the flower, pre-roll, beverage, concentrates, and edibles categories. With our recent distribution wins into New BrunswickManitoba, and Yukon, we are positioned well to capitalize on these investments.”


StaffJune 21, 2021
Green-Roads.png?fit=608%2C724&ssl=1

6min9560

The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) has closed its previously announced acquisition of  Green Roads and its manufacturing subsidiary. The value of the deal totaled $40 million, plus up to an additional $20 million in contingent consideration, which will be paid when the company hits certain EBITDA milestones. If all the milestones are met in 2022, the transaction represents approximately 4.5x fiscal 2022 EBITDA.

Based in South Florida, Green Roads is the largest privately-owned CBD company in the United States, with a focus on quality from its pharmacist-founded background.  Green Roads says it boasts a leading market share and brand platform in the US CBD industry, with an extensive distribution network consisting of over 7,000 retail stores and a robust e-commerce and marketing platform with over 30,000 five-star reviews across all its product lines. Green Roads is currently one of a small number of US CBD companies that produce their products in their own cGMP facilities, a testament to their dedication to integrity and excellence.

Valens said that over the next year it expects to invest approximately $10 million into the Green Roads business to capitalize on the anticipated growth of the US CBD market, projected to reach roughly $15.9 billion by 2026. The investment in Green Roads is expected to contribute to the further development of its highly successful e-commerce platform, support the expansion of its retail distribution network in the US, and increase the brand’s sales and marketing resources to drive market leadership in the health and wellness vertical.

“With the closing of this Acquisition, Valens now has a significant presence in the largest cannabinoid market in the world, representing a monumental step in our international expansion strategy and furthering our vision of becoming a global manufacturer of cannabis consumer packaged goods,” said Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company. “We expect to realize strong synergies and to aggressively pursue various strategic opportunities that are now available to our combined business through this transaction, including expanding the distribution of our ever-growing product offerings overseas and further disrupting the North American market with innovative cannabis products. The combination of Valens and Green Roads makes for an unbeatable team, diversified distribution network, and unparalleled product development and manufacturing platform, which we expect will provide us the footprint to become one of the biggest players in the global cannabis health and wellness market. Stay tuned for updates on anticipated synergies as we move forward as a stronger, combined company.”

The company’s strategy for buying Green Roads included a direct entry into the US market with a company that had an established manufacturing and distribution platform with a global reach, highly experienced leadership team with a strong knowledge of the US consumer landscape, and a proven track record in cannabis consumer packaged goods manufacturing. It will also strengthen its position in the Canadian market with an expanded offering through the introduction of various CBD products from Green Roads. Valens expects to launch Green Roads products in the Canadian market in the second half of fiscal 2021. Beyond Canada and the U.S., Valens is currently engaged in late-stage discussions regarding various international distribution opportunities in Latin AmericaAsia-Pacific, and Europe.

Dale Baker, President & Chief Operating Officer of Green Roads, said, “The combination of Green Roads and Valens creates a truly global company with a clear leadership position both within the US CBD market and Canada’s domestic cannabis market. With this larger platform, we look forward to launching Green Roads products in Canada in the second half of 2021 and leveraging our own manufacturing facilities to export CBD products internationally. Valens and Greens Roads have a shared ethos of keeping our customers at the heart of our strategic decision-making and offer complementary products that foster brand loyalty and drive high margins. With our enhanced platform, we look forward to accelerating our global expansion plans and bringing our growing portfolio of products to an even broader customer base.”


Debra BorchardtFebruary 25, 2021
valens-1.png?fit=778%2C429&ssl=1

5min6280

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 BorchardtJanuary 25, 2021
LYF-scaled.jpg?fit=1200%2C905&ssl=1

4min8380

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 BorchardtJanuary 20, 2021
valens-1.png?fit=778%2C429&ssl=1

5min9960

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.


Don't Miss This Week's Groundbreaking News

Join the thousands of subscribers who stay informed with GMR's exclusive news briefs delivered directly to your inbox every Friday afternoon.

We respect your privacy. See our privacy policy.


About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 3 days

Hut Hut High – Michigan’s Marijuana Tailgate Party ⁦@SkymintCannabis⁩

@GreenMarketRpt – 4 days

10 Things Not To Miss At The MJ Biz Conference ⁦@MJBizDaily⁩

@GreenMarketRpt – 4 days

‘Haul’ Of Flowers Is The B2B Expo For A Bountiful Harvest. ⁦@BritGeo⁩ ⁦@HallofFlowers_⁩

Back to Top

Don't Miss This Week's Groundbreaking News

Join the thousands of subscribers who stay informed with GMR's exclusive news briefs delivered directly to your inbox every Friday afternoon.

We respect your privacy. See our privacy policy.