After the market closed on Monday, The Valens Company Inc. (TSX: VLNS) (Nasdaq: VLNS) delivered its fourth quarter and fiscal year financial results for the period ending November 30, 2021. Valens reported total revenue of $23.3 million for the fourth quarter, which fell sequentially from the third quarter’s total revenue of $24.5 million.
The net loss for the quarter increased to $21 million from the third quarter’s net loss of $12 million. Valens said that despite the decrease in net revenue quarter-over-quarter, the adjusted gross profit increased by 9.1% to $6.3 million from $5.7 million in the third quarter. The earnings per share for the quarter were ($0.34) and the company noted that the per share dollar amounts have been adjusted for the 3-for-1 consolidation announced on November 15, 2021
The total sales for the full year of 2021 were $90.1 million, an increase over 2020’s full-year total sales of $86 million. The net loss for the full year though rose to $49 million over last year’s net loss of $20 million. Net revenue of $78.2 million in the fiscal year 2021, represented a decrease of 12.3% over the third quarter and was driven by a decline in B2B as Valens aggressively moved to align with the ‘fewer, bigger, better’ strategy for customers. Both provincial sales and Green Roads showed strong growth in contributed revenue in Q4 2021 as discussed above.
“This quarter showcases the progress we have made in our business plan in key areas despite a competitive and challenging operating environment in Canada and globally,” said CEO Tyler Robson. “Net revenue slightly declined quarter-over-quarter as we completed the transition of our B2B business to align with the ‘fewer, bigger, better’ strategy and was negatively impacted by the floods in British Columbia which resulted in supply chain disruptions. However, in our two key revenue segments, we are very pleased with the industry-leading growth in provincial sales revenue and the full quarter revenue generated by our Green Roads US CBD business. With the B2B transition largely behind us, we expect to have more sustained growth in 2022.”
Valens had a cash and marketable securities position of $19.1 million at the end of the quarter and after the quarter raised $40 million in debt financing. Proceeds from the debt financing were used to repay previous existing debt and for general working capital purposes.
Robson continued, “A bright spot in the quarter was our adjusted gross profit margin which increased from 27.4% in Q3 2021 to 34.1% in Q4 2021. I am very proud of our operations and logistics teams which have had to deal with a significant business transition over 2021 as well as automation delays, inflationary cost pressures, supply chain disruptions, and the flooding in British Columbia. With further automation and our recently announced integration initiative, we are now heading down the path towards profitability. This supports our confidence and commitment to achieving both positive adjusted EBITDA by Q4 2022 and our revenue guidance for 2023 of at least $225 million.”
All the numbers reported were in Canadian dollars.