Cansortium Reports Second Quarter 2021 Financial Results

    Author microcapwatchPosted on Categories CannabisTags , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

    <br /> Cansortium Reports Second Quarter 2021 Financial Results<br />

    PR Newswire


    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 EBITDA

    1

    , 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 27

    th

    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 profit

      2

      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 26

      th

      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,

    2021



    December 31,

    2020



    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

    ended June 30,


    For the six months

    ended June 30,



    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

    Cision
    View original content to download multimedia:

    https://www.prnewswire.com/news-releases/cansortium-reports-second-quarter-2021-financial-results-301361999.html

    SOURCE Cansortium Inc

    PR Newswire
    August 24, 2021 – 1:05 PM PDT