Valens Reports Record Revenue, Adjusted EBITDA and Profitability for the Third Quarter of Fiscal 2019


Ryan Allway

October 16th, 2019

News


Q3 2019 Revenue of $16.5 million, Adjusted EBITDA of $9.8 million, and Net income of $5.9 million 

KELOWNA, BC, Oct. 15, 2019 /CNW/ – Valens GroWorks Corp. (TSXV: VGW) (OTC: VGWCF) (the “Company” or “Valens“), a vertically integrated provider of industry leading extraction products and services; including a diverse suite of extraction methodologies, next generation cannabinoid delivery formats and an ISO 17025 accredited analytical lab is pleased to report its financial results for the third quarter of fiscal 2019.

Key Financial Highlights of The Third Quarter of Fiscal 2019

  • Revenue increased to $16.5 million, an 87.1% increase over the second quarter and a 641.4% increase over the first quarter of 2019.
  • Gross profit increased to $12.8 million, or 77.8% of revenue, for the third quarter of 2019 compared to $5.1 million or 57.9% of revenue in the second quarter.
  • Adjusted EBITDA(1) of $9.8 million in the third quarter, or 59.4% of revenue compared to $2.0 million or 23.0% of revenue in the second quarter of 2019.
  • Net income of $5.9 million (or $0.05 per share basic and diluted) in the third quarter, compared to a net loss of $10.5 million (or a loss of $0.10 per share basic and diluted) in the second quarter of 2019.
  • Strong balance sheet with $69.2 million in cash and cash equivalents and short-term investments and a net working capital position of $84.1 million as at August 31, 2019.

“We are extremely pleased with the roll-out of our business plan and the continued scale up in the Company’s extraction operations which have allowed us to continue our aggressive quarter over quarter growth in volumes, revenue, adjusted EBITDA and net income.” said Tyler Robson, CEO of Valens. “The Company’s performance in the third quarter clearly demonstrates our industry leading technical capabilities, the quality of our products and the earnings power of our platform. While we anticipate that our margins in future quarters will continue a strong upward trend from the levels seen in previous quarters, especially as our volumes continue to ramp and efficiencies are realized, margins in the third quarter were aided, in part, by a one-time contract opportunity which we do not anticipate recurring in future quarters. Finally, our net income in the quarter has made us the most profitable public company in the Canadian cannabis sector with the highest net income margin (excluding biological asset fair value adjustments).”

Key Operating Highlights of The Third Quarter of Fiscal 2019

  • 26,625 kilograms of dried cannabis and hemp biomass was processed in the third quarter of 2019, a 212% increase over the second quarter of 2019. The Company has already processed 13,423 kilograms of biomass in the first 45 days of the fourth quarter. During the early part of the quarter we worked with a number of our clients to process smaller, higher revenue white label product lots in preparation for the launch of edibles and concentrates later this year. This is anticipated to result in higher revenue per gram of input compared to previous quarters. Volumes are expected to accelerate into the back half of the fourth quarter, particularly as we begin to process larger white label lots for sale in 2020 and resume the processing of our previously announced contracted volumes.
  • Subsequent to the end of the quarter the Company entered into the following agreements.
    • Shoppers Drug Mart – the Company signed an agreement to become the first third party processor to supply Shoppers Drug Mart with cannabis oil products for their online medical cannabis site.
    • Iconic Brewing –the Company signed its first beverage agreement with Iconic Brewing to manufacture 2.5 million cannabis beverages over the term of the 5-year agreement.

The Company continues to be engaged in active discussions with additional partners to provide extraction services and expand our existing relationships to add further value-added product development and white label services.

  • The Company was accepted for listing the common shares and warrants of the Company on the TSX Venture exchange as a Tier 1 life sciences issuer and qualified and began trading on the OTCQX Best Markets in the US.
  • The Company has expanded its operational footprint with the addition of corporate offices located in downtown Toronto, Ontario. The corporate office will improve the Company’s ability to realize on a number of international opportunities, increases its ability to attract and retain top talent, coordinate global operations, manage international customer relationships and expand access to the institutional investment community.

“We have a clear strategic vision for the Company and with our strong balance sheet and demonstrated cash flow generating capabilities, we are well positioned to achieve that vision.” said Jeff Fallows, President of Valens. “In the near term we are focussed on delivering on our existing contracts with industry leading partners, like Shoppers Drug Mart, to provide innovative white label product development and manufacturing services for vape cartridges, tinctures, gel capsules, beverages and topicals. Looking to the future, we will to continue to make strategic capital investments, both domestically and internationally, to improve our technical capabilities and grow our intellectual property portfolio as well as expand the Valens platform to new and strategic markets with the objective of creating long term value for our shareholders and all of our stakeholders.”

Three-months ended
August 31, 2019
Q3 2019

Three-months ended
May 31, 2019
Q2 2019

Three-months ended
February 28, 2019
Q1 2019

Revenue $

16,461,626

8,800,093

2,220,200

Gross Profit $

12,806,990

5,099,028

850,525

Gross Profit %

77.8%

57.9%

38.3%

Adjusted EBITDA $ (1)

9,771,779

2,022,980

(2,029,123)

Adjusted EBITDA % (1)

59.4%

23.0%

N/A

Net income (loss) $

5,892,884

(10,529,162)

(6,366,250)

Net income (loss) %

35.8%

N/A

N/A

Basic / diluted income (loss) per share $

0.05

(0.10)

(0.07)

Cash and cash equivalents and short term investments $

69,233,165

65,522,137

20,552,286

Biomass extracted (Kilograms)

26,625

8,547

1,796

The management’s discussion and analysis for the period and the accompanying financial statements and notes are available under the Company’s profile on SEDAR at www.sedar.com.

(1)

Adjusted EBITDA is a non-GAAP measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management defines adjusted EBITDA as income (loss) and comprehensive income (loss) from operations, as reported, before interest, tax, depreciation and amortization, and adjusted for removing share-based payments, unrealized gains and losses from short term investments and other one-time and non-cash items including impairment losses. Management believes adjusted EBITDA is a useful financial metric to assess its operating performance on an adjusted basis as described above. See “Reconciliation of non-IFRS measures” in the Company’s Management’s Discussion and Analysis for the period ended August 31, 2019 for additional information.

Option Grant

On October 15, 2019, the Company granted 445,000 options to purchase common shares of the Company exercisable at a price of $2.79 per share and expiring on October 14, 2024, to certain new employees as the Company continues to strategically build out its leadership team. The options vest quarterly over a three-year period and are granted pursuant to the terms of the Company’s stock option plan, subject to regulatory approval.

Conference Call Details

The company will host a conference call on Wednesday, October 16, 2019 at 11am Eastern Time / 8am Pacific Time to discuss the financial results and business outlook.

Participant Dial-In Numbers:
Toll-Free: 1-877-407-0792
Toll / International: 1-201-689-8263
*Participants should request the Valens GroWorks Earnings Call or provide confirmation code 13695323

The call will be webcast on the Valens Investor page of the Company website at https://www.valensgroworks.com/investors or at this link. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the call will be available on the Valens Investor page approximately two hours after the conference call has ended.

Tyler Robson, Chief Executive Officer, Chris Buysen, Chief Financial Officer, Jeff Fallows, President, and Everett Knight, Executive Vice President of Strategy & Investments will be conducting a question and answer session following the prepared remarks.

About Valens GroWorks

Valens GroWorks Corp. (TSXV: VGW) (OTC: VGWCF) is a multi-licensed, vertically-integrated cannabis company focussed on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and white label product development. Valens is the largest third-party extraction Company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. Additionally, our subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. For more information, please visit http://valensgroworks.com. The Company’s investor deck can be found specifically at http://valensgroworks.com/investors/

Notice regarding Forward Looking Statements

This news release contains certain “forward-looking statements” within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as “anticipates”, “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed”, “positioned” and other similar words, or statements that certain events or conditions “may” or “will” occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Corporation is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

The TSXV or other regulatory authority has not reviewed, approved or disapproved the contents of this press release. We seek Safe Harbour.

SOURCE Valens GroWorks Corp.

For further information: Scott Young, Valens GroWorks Corp., Telephone: +1.705.888.2756; U.S. / Europe Investors, KCSA Strategic Communications, Phil Carlson / Elizabeth Barker, [email protected], +1 212.896.1233 / +1 212.896.1203; Media, KCSA Strategic Communications, Anne Donohoe, [email protected], +1 212.896.1265

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

Ryan Allway

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


Network Partners

Follow Us on Social Media

About CFN Media Group

CFN Media Group (CannabisFN), owned and operated by CFN Enterprises Inc. (OTCQB: CNFN), is the leading creative agency and media network dedicated to legal cannabis. We help marijuana businesses attract investors, customers (B2B, B2C), capital, and media visibility. Private and public marijuana companies and brands in the US and Canada rely on CFN Media to grow and succeed.

CFN launched in June of 2013 to initially serve the growing universe of publicly traded marijuana companies across North America. Today, CFN Media is also the digital media choice for the emerging brands in the space.

Learn How Your Company can Be Covered on CFN Media

Learn More About the CFN Media Sponsored Content Program

Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.

Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer

loading