Cansortium Reports Second Quarter 2021 Financial Results
Q2 Revenue up 24% YoY to $16.5 Million; Adjusted EBITDA up ~2x to $5.2 Million
Management to Host Conference Call Tomorrow at 8:30 A.M. Eastern Time
MIAMI, Aug. 24, 2021 /PRNewswire/ - Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated cannabis company operating under the Fluent™ brand, today announced financial results for the second quarter ended June 30, 2021, as well as recent operational highlights. Unless otherwise indicated, all results are presented in U.S. dollars.
"We continued to drive growth and profitability in our key markets during the second quarter, as reflected by another month of record sales in May," said CEO Robert Beasley. "Our continued focus on providing differentiated, high-quality flower and wellness products has been well received by our patients. Additionally, we are now offering several boutique strains that have never been sold in the Florida market."
Cansortium significantly improved its balance sheet during the quarter with debt and equity financings of nearly $90 million, which enabled the Company to cancel legacy debt and extend maturities to 2025, as well as redeem all outstanding convertible notes. Cansortium now has both the capital and flexibility needed to execute its expansion plans.
Mr. Beasley continued, "Our core operations in Florida are performing well and our expansion plans are fully-funded. There have been minor supply chain and construction delays for several projects in Florida, which will delay the expected timing of our production ramp and push our schedule back by approximately two months. In addition, we have experienced delays in the Michigan market which, albeit a small market for us, will also impact our guidance for 2021 as we continue to hold product for sale to hedge against volatile pricing.
"Overall, we continue to expect significant growth in 2021. Our revised outlook for 2021 calls for $70-80 million of revenue with $18-26 million of adjusted EBITDA1, reflecting year-over-year growth of approximately 43% and 114%, respectively. We see upside to these numbers if the construction market opens up earlier than our current projections.
_________________________________ |
1 Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted EBITDA from EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus (minus) certain one-time non-operating expenses, as determined by management. A reconciliation from adjusted EBITDA to net loss is included in the accompanying financial schedules. |
"Other progress on various initiatives includes last week's opening of a new dispensary in Mechanicsburg, Pennsylvania, and securing our third Pennsylvania location in Annville, which we expect to open by the end of the year. In addition, we expect to open our 27th dispensary in Florida by the end of the third quarter and have identified four additional sites for continued growth in the first half of 2022."
Q2 2021 Financial Highlights (vs. Q2 2020)
- Revenue increased 24% to $16.5 million compared to $13.2 million.
- Florida revenue increased 22% to $14.6 million compared to $12.0 million.
- Adjusted gross profit2 increased 24% to $10.7 million or 65.1% of revenue, compared to $8.7 million or 65.5% of revenue.
- Adjusted EBITDA approximately doubled to $5.2 million or 31.8% of revenue, compared to $2.6 million or 19.7% of revenue.
- At June 30, 2021, the Company had approximately $26 million of cash and cash equivalents and $71 million of total debt, with approximately 264 million fully diluted shares outstanding (based on treasury stock method and share price on June 30, 2021).
Recent Operational Highlights
- Launched Sweetwater, a new line of premium cannabis whole flower.
- Hired a new Head of Cultivation.
- Appointed multiple new board members, including Mark Eckenrode, Alex Spiro, and the Company's new Executive Chairman of the Board, William Smith.
- In July, the Company opened its 26th Florida dispensary in Deerfield Beach.
- All convertible notes from the Company's capital structure were converted to shares during the second quarter. A total of approximately $18.0 million of debt was converted into common shares of the Company.
- The Company sold approximately 2,600 lbs. of biomass from Michigan inventory in July.
____________________________________ |
2 Adjusted gross profit is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted gross profit from gross profit plus (minus) the changes in fair value of biological assets, as presented in the consolidated statement of operations. |
2021 Outlook
The Company is revising its 2021 outlook for revenue to range between $70-$80 million, with adjusted EBITDA ranging between $18-$26 million. This compares to approximately $52 million of revenue and $10 million of adjusted EBITDA in 2020.
In Florida, Cansortium continues to expect a total of 27 dispensaries to be operational by the end of 2021 and has identified four additional locations to be opened in 2022. In Michigan, the Company is holding 900 lbs. of flower prepared for sale. However, due to the pricing volatility, the Company is timing the sales cycle to realize optimal value.
The Company's unaudited consolidated financial statements and accompanying notes, along with the Management Discussion and Analysis (MD&A), will be available under the Company's profile on SEDAR at www.sedar.com and are also accessible through the Investor Relations section of the Company's website at www.getfluent.com.
Conference Call
The Company will host a conference call and live audio webcast tomorrow at 8:30 a.m. Eastern time to discuss its financial results and operational highlights.
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10016120
Link: Cansortium Q2 2021 Earnings Call
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Elevate IR at (949) 200-4603.
The conference call will also be available for replay via the News & Events section of the Company's investor relations website at https://investors.getfluent.com/.
About Cansortium Inc.
Cansortium is a vertically-integrated cannabis company with licenses and operations in Florida, Pennsylvania, Michigan and Texas. The Company operates under the Fluent™ brand and is dedicated to being one of the highest quality cannabis companies for the communities it serves. This is driven by Cansortium's unrelenting commitment to operational excellence in cultivation, production, distribution and retail. The Company is headquartered in Miami, Florida.
Cansortium Inc.'s common shares trade on the CSE under the symbol "TIUM.U" and on the OTCQX Best Market under the symbol "CNTMF." For more information about the Company, please visit www.getfluent.com.
Forward-Looking Information
Certain information in this news release may constitute forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates, and projections regarding future events.
Forward-looking information is necessarily based on many opinions, assumptions, and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in the public documents of the Company available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.
For further information: www.getfluent.com
CANSORTIUM INC. |
||||||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
||||||||
(USD '000) |
||||||||
June 30, |
December 31, |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
26,004 |
$ |
3,392 |
||||
Accounts receivable |
122 |
148 |
||||||
Inventory, net |
5,560 |
5,006 |
||||||
Biological assets |
2,495 |
1,914 |
||||||
Note receivable |
4,462 |
3,859 |
||||||
Prepaid income taxes |
1,598 |
- |
||||||
Prepaid expenses and other current assets |
1,267 |
1,365 |
||||||
Total current assets |
41,508 |
15,684 |
||||||
Investment held for sale |
200 |
200 |
||||||
Property and equipment, net |
25,309 |
19,517 |
||||||
Intangible assets, net |
96,269 |
97,035 |
||||||
Right-of-use assets |
19,008 |
19,094 |
||||||
Deposit |
2,727 |
1,050 |
||||||
Goodwill |
1,526 |
1,526 |
||||||
Other assets |
486 |
425 |
||||||
Total assets |
$ |
187,033 |
$ |
154,531 |
||||
Liabilities |
||||||||
Current liabilities |
||||||||
Accounts payable |
4,530 |
4,808 |
||||||
Accrued liabilities |
6,834 |
7,614 |
||||||
Income taxes payable |
- |
8,925 |
||||||
Derivative liabilities |
- |
7,412 |
||||||
Current portion of notes payable |
375 |
38,583 |
||||||
Lease obligations |
2,181 |
1,894 |
||||||
Total current liabilities |
13,920 |
69,236 |
||||||
- |
||||||||
Notes payable, net of current portion and loan issuance costs |
53,410 |
13,182 |
||||||
Lease obligations, net of current portion |
20,889 |
20,811 |
||||||
Deferred income taxes |
24,430 |
23,471 |
||||||
Total liabilities |
112,649 |
126,700 |
||||||
Shareholders' equity |
||||||||
Share capital |
196,588 |
137,835 |
||||||
Share-based compensation reserve |
5,717 |
4,675 |
||||||
Equity conversion feature |
11,044 |
11,044 |
||||||
Warrants |
30,148 |
13,265 |
||||||
Accumulated deficit |
(168,723) |
(138,609) |
||||||
Accumulated other comprehensive loss |
(390) |
(379) |
||||||
Total shareholders' equity |
74,384 |
27,831 |
||||||
Total liabilities and shareholders' equity |
$ |
187,033 |
$ |
154,531 |
||||
CANSORTIUM INC. |
|||||||||||||||
STATEMENT OF OPERATIONS |
|||||||||||||||
USD ('000) |
|||||||||||||||
For the three months |
For the six months |
||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenue, net of discounts |
$ |
16,469 |
$ |
13,241 |
$ |
31,584 |
$ |
23,404 |
|||||||
Cost of goods sold |
5,745 |
4,567 |
11,152 |
8,227 |
|||||||||||
Gross profit before fair value adjustments |
10,724 |
8,674 |
20,432 |
15,177 |
|||||||||||
Realized fair value of increments on inventory sold |
(4,727) |
(4,953) |
(9,320) |
(12,515) |
|||||||||||
Unrealized change in fair value of biological assets |
(1,224) |
7,572 |
5,655 |
19,682 |
|||||||||||
Gross profit |
4,773 |
11,293 |
16,767 |
22,344 |
|||||||||||
Expenses |
|||||||||||||||
General and administrative |
2,868 |
3,064 |
6,156 |
6,202 |
|||||||||||
Share-based compensation |
285 |
2,362 |
3,517 |
3,249 |
|||||||||||
Sales and marketing |
3,515 |
3,481 |
7,061 |
6,602 |
|||||||||||
Depreciation and amortization |
1,547 |
1,572 |
3,078 |
3,074 |
|||||||||||
Total expenses |
8,215 |
10,479 |
19,812 |
19,127 |
|||||||||||
Loss from operations |
(3,442) |
814 |
(3,045) |
3,217 |
|||||||||||
Other expense (income) |
|||||||||||||||
Interest expense, net |
4,719 |
3,798 |
7,849 |
7,557 |
|||||||||||
Change in fair market value of derivative liability |
(1,143) |
(828) |
(1,551) |
1,007 |
|||||||||||
Loss on debt settlement |
10,751 |
- |
10,751 |
- |
|||||||||||
Private placement issuance expense |
6,640 |
- |
6,640 |
- |
|||||||||||
Equity loss on investment in associate |
- |
31 |
- |
215 |
|||||||||||
Loss on debt restructuring |
- |
- |
- |
8,065 |
|||||||||||
(Gain)/Loss on disposal of assets |
1 |
(54) |
50 |
(54) |
|||||||||||
Other (income) expense |
(18) |
(8) |
(131) |
7 |
|||||||||||
Total other expense (income) |
20,950 |
2,939 |
23,609 |
16,797 |
|||||||||||
Loss before income taxes |
(24,392) |
(2,125) |
(26,654) |
(13,580) |
|||||||||||
Income taxes |
594 |
3,308 |
3,431 |
6,141 |
|||||||||||
Net loss |
(24,986) |
(5,433) |
(30,085) |
(19,721) |
|||||||||||
(Gain)/Loss from discontinued operations |
33 |
34 |
31 |
(342) |
|||||||||||
Net loss after discontinued operations |
$ |
(25,019) |
$ |
(5,467) |
$ |
(30,115) |
$ |
(19,379) |
|||||||
Other comprehensive loss: |
|||||||||||||||
Foreign exchange translation gain (loss) |
(16) |
254 |
(11) |
184 |
|||||||||||
Comprehensive loss |
$ |
(25,035) |
$ |
(5,213) |
$ |
(30,126) |
$ |
(19,195) |
|||||||
Net loss per share |
|||||||||||||||
Basic |
$ |
(0.11) |
$ |
(0.03) |
$ |
(0.14) |
$ |
(0.10) |
|||||||
Diluted |
$ |
(0.11) |
$ |
(0.03) |
$ |
(0.14) |
$ |
(0.10) |
|||||||
CANSORTIUM INC. |
||||
STATEMENTS OF CASH FLOWS |
||||
(USD '000) |
||||
For the six months ended June 30, |
||||
2021 |
2020 |
|||
Operating activities |
||||
Net loss |
$ |
(30,115) |
$ |
(19,379) |
Adjustments to reconcile net loss to net cash used in operating activities: |
||||
Unrealized gain on changes in fair value of biological assets |
(5,655) |
(19,682) |
||
Realized gain on changes in fair value of biological assets |
9,320 |
12,515 |
||
Share-based compensation |
3,517 |
3,249 |
||
Depreciation and amortization |
4,675 |
4,059 |
||
Discontinued operations |
31 |
(342) |
||
Accretion of convertible debentures |
2,242 |
3,834 |
||
Interest on lease liabilities |
1,257 |
1,987 |
||
Change in fair market value of derivative |
(1,551) |
1,007 |
||
Loss on investment in associate |
- |
215 |
||
Loss on debt restructuring |
- |
8,065 |
||
Loss on debt settlement |
10,751 |
- |
||
(Gain)/Loss on disposal of assets |
50 |
(54) |
||
Deferred tax expense |
959 |
1,862 |
||
Changes in operating assets and liabilities: |
||||
Accounts receivable |
26 |
11 |
||
Inventory |
(554) |
(5,401) |
||
Biological assets |
(4,246) |
5,265 |
||
Prepaid expenses and other current assets |
1,875 |
(646) |
||
Right-of-use assets |
(1,280) |
(728) |
||
Right-of-use liabilties |
1,262 |
- |
||
Other assets |
(61) |
(84) |
||
Accounts payable |
(278) |
968 |
||
Accrued liabilities |
(651) |
1,083 |
||
Income taxes |
(10,523) |
4,410 |
||
Other liabilities |
- |
115 |
||
Net cash provided by (used in) operating activities |
(18,949) |
2,329 |
||
Investing activities |
||||
Purchases of property and equipment |
(8,408) |
(2,126) |
||
Payment of notes receivable |
284 |
150 |
||
Proceeds from sale of property and equipment |
24 |
- |
||
Notes receivable |
(1,020) |
(696) |
||
Proceeds from sale of subsidiary |
- |
600 |
||
Net cash used in investing activities |
(9,120) |
(2,072) |
||
Financing activities |
||||
Proceeds from issuance of shares and warrants |
23,730 |
4,351 |
||
Proceeds from issuance of debt, net of loan issuance costs |
63,133 |
62 |
||
Payment of lease obligations |
(2,154) |
(2,133) |
||
Exercise of warrants |
1,365 |
- |
||
Principal repayments of notes payable |
(35,382) |
(35) |
||
Net cash provided by financing activities |
50,692 |
2,245 |
||
Effect of foreign exchange on cash and cash equivalents |
(11) |
184 |
||
Net increase (decrease) in cash and cash equivalents |
22,612 |
2,686 |
||
Cash and cash equivalents, beginning of period |
3,392 |
2,516 |
||
Cash and cash equivalents, end of period |
$ |
26,004 |
$ |
5,202 |
CANSORTIUM INC. |
||||||
ADJUSTED EBITDA RECONCILIATION |
||||||
USD ('000) |
||||||
Three months ended |
||||||
June 30, |
June 30, |
|||||
2021 |
2020 |
Variance |
||||
Net loss |
$ |
(25,019) |
$ |
(5,467) |
$ |
(19,552) |
Interest expense |
4,719 |
3,798 |
921 |
|||
Income taxes |
594 |
3,308 |
(2,714) |
|||
Depreciation and amortization |
2,429 |
2,064 |
365 |
|||
EBITDA |
$ (17,277) |
$ |
3,702 |
$ |
(20,979) |
|
Three months ended |
||||||
June 30, |
June 30, |
|||||
2021 |
2020 |
Variance |
||||
EBITDA |
$ |
(17,277) |
$ |
3,702 |
$ |
(20,979) |
Change in fair value of biological assets |
5,951 |
(2,619) |
8,570 |
|||
Change in fair market value of derivative |
(1,143) |
(828) |
(315) |
|||
Loss on debt settlement |
10,751 |
- |
10,751 |
|||
Private placement issuance expense |
6,640 |
- |
6,640 |
|||
Share-based compensation |
285 |
2,362 |
(2,077) |
|||
Discontinued operations |
33 |
34 |
(1) |
|||
Loss on disposal of assets |
1 |
$ |
(54) |
55 |
||
Other non-recurring expense/(income) |
(18) |
31 |
(49) |
|||
Adjusted EBITDA |
$ |
5,223 |
$ |
2,628 |
$ |
2,595 |
SOURCE Cansortium Inc
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