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Cansortium Reports Second Quarter 2022 Financial Results

·12 min read

- Q2 Revenue up 14% QoQ and 36% YoY to a Record $22.4 Million -

- Q2 Adjusted EBITDA up 64% QoQ and 95% YoY to a Record $10.2 Million, with $4.3 Million of
Cash from Operations -

- Reaffirms 2022 Guidance of $90-$95 Million of Revenue and $25-$28 Million of
Adjusted EBITDA -

MIAMI, Aug. 29, 2022 /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 and operating results for the second quarter ended June 30, 2022. Unless otherwise indicated, all results are presented in U.S. dollars.

"We generated a record quarter of results in Q2, highlighted by double-digit revenue growth, margin expansion and a material increase in adjusted EBITDA and cash flow generation," said CEO Robert Beasley. "The investments we have made to add scale and improve cultivation in Florida are paying dividends. Our Sweetwater indoor cultivation facility is now fully operational and the yields in our Tampa facility have doubled from the start of 2022, all of which has led to dramatically improved productivity at the store level and a consistent increase in new patient count. In fact, revenue in Florida was up 16% from Q1 without adding a single new store during the quarter."

Beasley continued: "I am very proud of what our team has accomplished this year, however we still have significant room to grow. We remain on track to open 4-5 new stores in Florida by year-end, and the final phase of our cultivation expansion in Tampa is nearly complete. We expect product from this new space to hit shelves in the next couple of months, just in time for one of our strongest periods of the year in Florida as we enter the holidays."

Q2 2022 Financial Highlights (vs. Q2 2021)

  • Revenue increased 36% to $22.4 million compared to $16.5 million.

  • Florida revenue increased 33% to $18.8 million compared to $14.2 million.

  • Adjusted gross profit1 increased 40% to $15.0 million or 67.0% of revenue, compared to $10.7 million or 65.1% of revenue.

  • Adjusted EBITDA increased 95% to $10.2 million or 45.4% of revenue, compared to $5.2 million or 31.7% of revenue.

  • Cash from operations increased significantly to $4.3 million compared to cash used of $(0.7) million.

  • At June 30, 2022, the Company had approximately $8.9 million of cash and cash equivalents and $69.3 million of total debt, with approximately 252.3 million fully diluted shares outstanding (based on treasury stock method and share price on July 31, 2022).

Operational Highlights

  • In Florida, the Company anticipates opening 4-5 new stores by the end of 2022. All of these locations are currently under contract and going through construction.

  • In Pennsylvania, the Company opened its third dispensary in Annville in April.

  • In August, the Company discontinued its operations in Michigan due to unfavorable market conditions. By ceasing operations in Michigan, Cansortium is expected to save approximately $0.5 million in operating expenses per year.

  • As highlighted in the chart below, the Company has experienced ten consecutive quarters of revenue growth in addition to material improvements in adjusted EBITDA, reaching record levels for both metrics.

Revenue and Adjusted EBITDA (CNW Group/Cansortium Inc)
Revenue and Adjusted EBITDA (CNW Group/Cansortium Inc)

______________________________

1 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.

2022 Outlook

The Company continues to expect revenue in 2022 to range between $90-$95 million, reflecting an approximate 42% increase from 2021 at the midpoint. Cansortium also continues to expect adjusted EBITDA in 2022 to range between $25-$28 million, reflecting an approximate 35% increase from 2021.

Conference Call

The Company will host a conference call and live audio webcast today at 4:30 p.m. Eastern time to discuss its financial and operational results, followed by a question-and-answer period.

Date: Monday, August 29, 2022 
Time: 4:30 p.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10020139 
Link: Cansortium Conference 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 (720) 330-2829.

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 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 within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. 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 the Company's expectations, estimates, and projections regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control.

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.

Company Contact 
Robert Beasley, CEO 
(850) 972-8077 
investors.getfluent.com

Investor Relations Contact 
Sean Mansouri, CFA 
Elevate IR 
(720) 330-2829
investors@cansortiuminc.com

CANSORTIUM INC.







CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of June 30, 2022 and December 31, 2021


(USD '000)

























June 30,
2022


December 31,
2021

Assets







Current assets







Cash and cash equivalents

$            8,858


$                 9,024

Trade receivable




59


26

Inventory, net




12,209


8,981

Biological assets




4,118


3,297

Investment held for sale


200


200

Prepaid expenses and other current assets

1,178


2,007

Total current assets




26,622


23,535















Property and equipment, net

33,846


34,160

Intangible assets, net




95,057


95,822

Right-of-use assets, net


19,480


19,169

Note receivable




-


4,886

Deposit




-


2,727

Goodwill




1,526


1,526

Other assets




628


632

Total assets




$       177,158


$            182,457








Liabilities







Current liabilities







Trade payable




8,889


8,518

Accrued liabilities




7,723


5,846

Income taxes payable


7,747


2,120

Derivative liabilities




8,669


3,960

Current portion of notes payable

634


619

Current portion of lease obligations

2,657


2,500

Total current liabilities




36,319


23,563





-



Notes payable




55,459


53,674

Lease obligations




21,573


21,091

Deferred tax liability




21,259


21,563

Total liabilities




134,610


119,891








Shareholders' equity






Share capital




180,792


180,657

Share-based compensation reserve

6,276


6,176

Equity conversion feature


6,677


4,933

Warrants




28,939


28,869

Accumulated deficit




(179,802)


(157,649)

Foreign currency translation reserve

(334)


(421)

Total shareholders' equity 


42,548


62,565








Total liabilities and shareholders' equity

$       177,158


$            182,457

 

CANSORTIUM INC.











STATEMENT OF OPERATIONS







FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
















 For the three months ended
June 30, 


 For the six months ended
June 30, 










2022


2021


2022


2021












Revenue, net of discounts




$         22,416


$              16,469


$           42,128


$         31,584

Cost of goods sold




7,405


5,745


15,571


11,152












Gross profit before fair value adjustments

15,011


10,724


26,557


20,432












Fair value adjustments on inventory sold

(8,594)


(4,727)


(15,418)


(9,320)

Unrealized gain on changes in fair value of biological assets

9,467


(1,224)


10,666


5,655

Gross profit




15,884


4,773


21,805


16,767












Expenses











General and administrative

2,319


2,868


5,160


6,156

Share-based compensation

-


285


100


3,517

Sales and marketing



4,190


3,515


8,277


7,061

Depreciation and amortization

1,694


1,547


3,358


3,078

Total expenses




8,203


8,215


16,895


19,812












(Loss) income from operations




7,681


(3,442)


4,910


(3,045)












Other expense (income)











Finance costs, net




3,843


4,719


7,500


7,849

Loss (gain) on change in fair value of derivative liability

3,007


(1,143)


4,709


(1,551)

Equity loss on investment in associate

-


-


-


-

Private Placement issuance expense

-


6,640


-


6,640

Loss on debt settlement


1,136


10,751


1,136


10,751

Loss on disposal of assets




-


1


-


50

Other (income) expense 




(373)


(18)


(373)


(131)

Total other expense




7,613


20,950


12,971


23,608












Loss before income taxes


68


(24,392)


(8,061)


(26,653)












Income tax expense



3,504


594


5,516


3,431












Net loss from continuing operations

(3,436)


(24,986)


(13,577)


(30,084)












Net loss (income) from discontinued operations




8,574


33


8,576


31












Net loss




$        (12,010)


$             (25,019)


$         (22,153)


$        (30,115)












Other comprehensive gain that may be reclassified 

to profit or loss in subsequent years





Exchange differences on translation of foreign operations
and reporting currency




62


(16)


87


(11)












Comprehensive loss




$        (11,948)


$             (25,035)


$         (22,066)


$        (30,126)












Net loss per share











Basic and diluted - continuing operations

$            (0.05)


$                 (0.11)


$              (0.09)


$            (0.14)























Weighted average  number of shares





Basic number of shares


252,276,742


225,401,664


252,276,742


213,945,477

Diluted number of shares


308,755,503


274,403,491


307,984,934


246,123,568

 

CANSORTIUM INC.



STATEMENTS OF CASH FLOWS


(USD '000)







 For the six months ended June 30, 


2022

2021

Operating activities



Net loss from continuing operations

$                      (22,153)

$                      (30,115)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:



Unrealized gain on changes in fair value of biological assets

(10,666)

(5,655)

Realized gain on changes in fair value of biological assets

15,418

9,320

Share-based compensation

100

3,517

Depreciation and amortization

6,072

4,675

Accretion and interest of convertible debentures

-

2,242

Interest and debt issuance costs of term loan

6,219

-

Interest income on notes receivable

(71)

-

Loss on disposal of assets

-

50

Loss on debt settlement

1,136

10,751

Discontinued operations 

8,576

31

Change in fair market value of derivative

4,709

(1,551)

Interest on lease liabilities

1,310

1,239

Deferred tax expense

(304)

959

Changes in operating assets and liabilities:

Trade receivable

(33)

26

Inventory

1,044

(554)

Biological assets

(9,290)

(4,246)

Prepaid expenses and other current assets

117

1,875

Other assets

5

(61)

Trade payable

374

(278)

Accrued liabilities

1,877

(651)

Income taxes payable

5,627

(10,523)

Net cash provided by (used in) operating activities

10,067

(18,949)




Investing activities



Purchases of property and equipment

(4,214)

(8,408)

Payment of notes receivable

119

284

Proceeds from sale of property and equipment

-

24

Advances for notes receivable 

(94)

(1,020)

Net cash used in investing activities

(4,189)

(9,120)




Financing activities



Proceeds from issuance of shares and warrants

-

23,730

Proceeds from issuance of debt, net of loan issuance costs

-

63,133

Proceeds from issuance of convertible debenture and warrants

4,656

-

Payment of lease obligations

(2,521)

(2,154)

Exercise of Options

135

-

Exercise of warrants

-

1,365

Principal repayments of notes payable

-

(35,382)

Repayments of principal and interest of Senior Secure Term loan

(8,401)

-

Net cash provided by (used in) financing activities

(6,131)

50,692

Effect of foreign exchange on cash and cash equivalents

87

(11)

Net increase (decrease) in cash and cash equivalents

(166)

22,612

Cash and cash equivalents, beginning of period

9,024

3,392

Cash and cash equivalents, end of period

$                          8,858

$                       26,004

 

CANSORTIUM INC.


ADJUSTED EBITDA RECONCILIATION


(USD '000)



Three months ended


June

June

Variance


30, 2022

30, 2021

Net loss

$      (12,010)

$      (25,019)

$      13,009

Finance costs, net

3,843

4,719

(876)

Income taxes

3,504

594

2,910

Depreciation and amortization

3,366

2,429

937

EBITDA

$         (1,297)

$      (17,277)

$      15,980










Three months ended


June
30, 2022

June
30, 2021

Variance

EBITDA

$         (1,297)

$      (17,277)

$      15,980

Change in fair value of biological assets

(873)

5,951

(6,824)

Change in fair market value of derivative

3,007

(1,143)

4,150

Loss on debt settlement

1,136

10,751

(9,615)

Private placement issuance expense

-

6,640

(6,640)

Share-based compensation

-

285

(285)

Discontinued operations

8,574

33

8,541

Loss on disposal of assets

-

1

(1)

Other non-recurring expense/(income)

(373)

(18)

(355)

Adjusted EBITDA

$        10,174

$          5,223

$        4,951

 

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Cansortium Logo (CNW Group/Cansortium Inc)
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SOURCE Cansortium Inc