PR Newswire
PHOENIX, Nov. 30, 2020
-
Q3 Systemwide Pro Forma Revenue increased 18% quarter-over-quarter to
$22.3 million
, 170% year-over-year – Company became cash flow positive from operations in August
-
Company sale leaseback transaction with
Innovative Industrial Properties scheduled to close within two weeks. As a result of close, together with proceeds from the recently closed bought deal financing, the Company will have
$16 million
of cash and
$43 million
in long-term debt
-
Company is in the process of acquiring acreage to construct up to 210,000 square feet of flowering canopy and supporting manufacturing facility in
Cook County, Illinois
to exponentially increase capacity in state
-
Initial guidance for 2021 with Systemwide Pro Forma Revenue of
$170
-180 million and Adjusted EBITDA of
$40
-50 million
-
The Company’s existing projects at maturity represent a long-term revenue and EBITDA opportunity upwards of
$650 million
and
$250 million
PHOENIX
,
Nov. 30, 2020
/PRNewswire/ – 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) (”
4Front
” or the ”
Company
“) today announced its financial results for the third quarter of 2020. All financial information is presented in U.S. dollars unless otherwise indicated.
Third Quarter 2020 Financial Results Highlights
-
Systemwide Pro Forma Revenue for the third quarter 2020 increased 18% quarter-over-quarter to
$22.3 million
-
IFRS Sales for the third quarter of 2020 increased by 25% quarter-over-quarter to
$12.4 million
-
Adjusted EBITDA for the third quarter was
$3.7 million
Business Updates and Developments
Q3 2020 Systemwide Pro Forma Revenue increased 18% quarter over quarter to
$22.3 million
.
Robust revenue trends continued across the portfolio led by the launch of recreational sales in
Massachusetts
in the quarter and the re-opening of Mission South Chicago in late July.
Washington state
experienced record sales in the quarter while increasing prices. The Company achieved positive operating cash flow beginning in the month of
August 2020
and is poised to show significant operating leverage in 2021.
Strong balance sheet supports continued growth in 2020 through 2021.
As of
September 30, 2020
, 4Front’s balance sheet had cash and equivalents of
$8.5 million
with total debt of
$76.5 million
(excluding in-the-money convertible debt of
$5.8 million
). On
November 23, 2020
, the Company closed an oversubscribed bought deal led by Beacon Securities for
US$13.2 million
. The Company also announced it entered into definitive purchase and sale agreements with an affiliate of Innovative Industrial Properties, Inc., providing for the sale and leaseback of 4Front’s cultivation and production facilities in
Tumwater, Washington
and
Georgetown, Massachusetts
. The all-cash sale price of
$30 million
is on-track to close by mid-December and will be used by the Company to pay down the outstanding senior secured debt obligation to affiliates of Gotham Green Partners. As of
November 30, 2020
, pro forma for the close of the pending sale-leaseback transaction and including proceeds from the recently closed bought deal financing, the Company will have approximately
$16 million
of cash and
$43 million
of long-term debt due
May 2024
.
Company is finalizing plans to exponentially expand its cultivation and manufacturing presence in Illinois.
The Company has one of 20 cultivation licenses in
Illinois
that allows for 210,000 square feet of flowering canopy and is currently acquiring acreage for construction of a cultivation facility and state of the art manufacturing facility, adding significant blue sky to its already established presence in
Illinois
Final stages in construction of 185,000 square foot manufacturing facility in
Commerce, California
underway with completion scheduled for Q2 2021.
The Company’s fully funded state of the art 185,000 square foot manufacturing only facility in
Commerce, California
is nearing completion and should be ready to serve the
$3 billion
California
cannabis market in Q2 2021. The project is on target to be completed in
April 2021
with the Company planning for the first of its full line of edibles, tinctures and vape products to be on
California
retail shelves by
May 2021
.
Cultivation facility expansion completed in
Illinois
.
Massachusetts
facility retrofitting enters final phased approach.
The Company’s expansion at its
Elk Grove
,
Illinois
cultivation facility, which will increase the flowering canopy from 3,000 to 9,072 square feet, is substantially completed on time and under budget. The retrofitting of the Company’s
Georgetown
facility is complete and ready for the phased installation of LED lights, which are expected to increase yields by 35 – 50%. In the quarter, weighted average annualized yields from flowering canopy across the portfolio was 319 grams per square foot.
Q4 opening of second
Illinois
retail location in
Calumet City
remains on schedule.
Construction of the dispensary is substantially completed as the Company is set to open its second
Illinois
retail location in
Calumet City
(approximately one mile from the
Indiana
border) in December 2020. Final inspection is scheduled for
December 8
with a Grand Opening currently anticipated on
December 15, 2020
.
Initial guidance for 2021 with Systemwide Pro Forma Revenue of
$170
-180 million and Adjusted EBITDA of
$40
-50 million.
This guidance is fully funded and contemplates only current operations including December opening of the
Calumet City
retail location plus the opening of a
Brookline, Massachusetts
dispensary and the
Commerce
production facility in
May 2021
. This guidance includes facilities scheduled to open in 2021. If such openings are delayed due to Covid-19, guidance could be negatively affected.
Management Commentary
Leo Gontmakher
, CEO of 4Front, said, “We are incredibly pleased with our third quarter 2020 results that reflect the Company’s laser focus on execution. We have big plans for our platform, but it all starts with operational excellence and delivering to shareholders what we say we are going to deliver. While we have much more to accomplish, the hard work of our team has set the table for what I expect to be an exciting year for our company in 2021. With 4Front’s constant operational improvements and an expected strong year for the cannabis industry overall, we are pleased to provide Covid-qualified initial 2021 guidance of
$170
–
$180 million
in Pro Forma Systemwide Revenue and
$40
–
$50 million
in Adjusted EBITDA, with the longer-term opportunity in our current geographical footprint upwards of
$650 million
in revenue and
$250 million
in EBITDA.
Mr. Gontmakher added, “In addition to the strong fundamentals across our legacy markets, plus an encouraging regulatory environment, we are excited to announce the timing of our entry into
California
and will soon provide details about our aggressive expansion plans in
Illinois
, projected to be a multi-billion, medical and adult-use market.
“In summary,” said Gontmakher, “achieving robust expansion and sustained profitability through our low-cost production model has proven to be both replicable and scalable across key US cannabis markets positioning 4Front as a major MSO player. With the completion of our bought deal financing, as well as the sale-leaseback transaction, 4Front will end the year with a strong balance sheet providing the financial stability to expand the business in our key target states.”
(Please see Note Regarding Non-IFRS Measures, Reconciliation, and Discussion below.) (*Please see the Financial Statement section below, and the Company’s Third Quarter 2020 Unaudited Condensed Consolidated Financial Statements and Management Discussion and Analysis (“MD&A”), available under the Company’s
SEDAR
profile, for more information.)
Additional Details
As of the date of the MD&A, there were the equivalent of 534,177,375 Class A Subordinate Voting Shares outstanding when calculated as if all share classes were converted to Subordinate Voting Shares. For further details regarding 4Front’s share structure, please see its profile at
www.thecse.
com
.
Conference Call
The Company will also host a conference call and webcast on
Monday, November 30, 2020
at
5:00 p.m. ET
to review its operational and financial results and provide an update on current business trends.
To join the call, dial 1-877-407-0792 toll free from
the United States
or
Canada
or 1-201-689-8263 if dialing from outside those countries. The webcast can be accessed at
this link
.
The call will be available for replay until
Monday, December 7, 2020
. To access the telephone replay, dial 1-844-512-2921 toll free from
the United States
and
Canada
, or 1-412-317-6671 if dialing from outside those countries, and use this replay pin number: 13712867.
Financial Statements
The condensed consolidated interim financial statements for the three and nine months ended September 30, 2020 and 2019, have been prepared in accordance with IAS 34 – Interim Financial Reporting. These statements have not been reviewed by an auditor.
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
||
|
|
|
||
|
|
|||
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|||
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|||||||
|
|
|||||||
|
|
|||||||
|
|
|||||||
|
|
|
||||||
|
|
|
|
|
||||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|||||||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|||||||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Note Regarding Non-IFRS Measures, Reconciliation, and Discussion
In this press release, 4Front refers to certain non-IFRS financial measures such as Systemwide Pro Forma Revenue, Adjusted EBITDA These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. 4Front defines Systemwide Pro Forma Revenue as total revenue plus revenue from entities with which the Company has a management contract, or effectively similar relationship (net of any management fee or effectively similar revenue) but does not consolidate the financial results of per IFRS 10 – Consolidated Financial Statements. 4Front considers this measure to be an appropriate indicator of the growth and scope of the business.
Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization less share-based compensation expense and one-time charges related to acquisition and financing related costs, excluding fair value adjustments for biological assets. 4Front considers these measures to be an important indicator of the financial strength and performance of our business.
About 4Front Ventures Corp.
4Front (CSE: FFNT) (OTCQX: FFNTF) is a national multi-state cannabis operator and retailer, with a market advantage in mass-produced, low-cost quality branded cannabis products. 4Front manufactures and distributes a portfolio of over 25 cannabis brands including Marmas,
Crystal Clear
, Funky Monkey, Pebbles, and the Pure Ratios wellness collection, distributed through retail outlets and their chain of strategically positioned Mission branded dispensaries.
Headquartered in
Phoenix, Arizona
, 4Front has operations in
Illinois
,
Massachusetts
,
California
,
Michigan
and
Washington state
. From plant genetics to the cannabis retail experience, 4Front’s team applies expertise across the entire cannabis value chain. For more information, visit 4Front’s website
www.4frontventures.com
.
This news release was prepared by management of 4Front Ventures, which takes full responsibility for its contents. The Canadian Securities Exchange (“CSE”) has not reviewed and does not accept responsibility for the adequacy of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in
the United States
.
Forward Looking Statements
Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in 4Front Ventures’ periodic filings with securities regulators. When used in this news release, words such as “will, could, plan, estimate, expect, intend, may, potential, believe, should,” and similar expressions, are forward-looking statements.
Forward-looking statements may include, without limitation, statements related to future developments and the business and operations of 4Front Ventures, statements regarding when or if transactions will close or if/when required conditions to closing are attained, the impact of the transactions on the business of 4Front and other statements regarding future developments of the business. The closing of the transactions described in this news release is subject to customary conditions and there can be no guarantee that such transactions will close.
Although 4Front Ventures has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on satisfying closing conditions, [obtaining regulatory approvals]; and engagement in activities currently considered illegal under U.S. federal laws; change in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry and; regulatory or political change.
There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.
Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. 4Front Ventures disclaims any intention or obligation to update or revise such information, except as required by applicable law, and 4Front Ventures does not assume any liability for disclosure relating to any other company mentioned herein.
View original content to download multimedia:
http://www.prnewswire.com/news-releases/4front-announces-third-quarter-2020-results-and-business-update-301181889.html
SOURCE 4Front
