Toronto, Ontario--(Newsfile Corp. - May 27, 2021) - SLANG Worldwide Inc. (CNSX: SLNG) (OTCQB: SLGWF) ("SLANG" or the "Company"), a leading global cannabis consumer packaged goods (CPG) company with a diversified portfolio of popular brands, today released financial results for the three months ended March 31, 2021. All figures in this press release are stated in Canadian dollars unless otherwise noted.
Key Financial and Operational Highlights
Financial Highlights:
Chris Driessen, CEO of SLANG, said, "We reported improved topline results, both year over year and sequentially, primarily driven by strength in both our core markets of Colorado and Oregon which benefited from the consolidated economics from our recent acquisitions. Gross profit also improved, as expected, as we fully consolidated the economics of ACG, following the execution of a merger agreement to purchase 100% of the equity interest, which is expected to close in the coming weeks. We continued to integrate and invest in the assets that we acquired in 2020 in our core markets, including launching a new e-commerce store through which we are selling our CBD products, in order to maximize the growth opportunity.
"Looking ahead, we are well-positioned to continue our growth strategy of increasing market share in our core markets and expanding in emerging markets. SLANG will continue to benefit from its leaner, more efficient business model which is allowing us effectively manage costs. Excluding expenses associated with the companies acquired in 2020 which were LBA Global, Peoria Partners, Pleasant Valley Ranch and ACG, operating expenses declined by 20% to $8.66M (or 87% of revenue) compared with Q1 2021 operating expenses of $10.78M (or 230% of revenue). All-in, operating expenses still declined in Q1 2021 compared with Q1 2020. This improved operational efficiency, together with our brand leadership and expanding product portfolio, provides us with a strong platform to support the rapid scaling of our business throughout the remainder of the year. We expect to see stronger emerging market sales in 2021 as we drive brand value creation and expand our presence in these markets. Our partnerships with Trulieve, Natura Life + Science and Gage Cannabis will further contribute to our expanded product distribution and improve our brand performance. With a strong cash balance to fuel our expansion into new states and growth in core markets, we are poised for meaningful growth in the remainder of the year."
Operational Highlights and Growth Drivers:
First Quarter 2021 Corporate Development Update
SLANG continued to grow in its core markets of Colorado and Oregon.
Nationwide, Slang launched a new e-commerce platform, through which its best-selling CBD gummies, Lunchbox Alchemy CBD, are now available for purchase online. Production and fulfilment of all e-commerce orders will be handled in-house through SLANG's Oregon and Colorado infrastructure that was acquired in 2020.
In Colorado, Slang signed a strategic partnership agreement with Avér Skin to manufacture, co-package and distribute cannabis-based skincare products, with the potential to expand into additional markets over time.
First Quarter 2021 Financial Review
The consolidated financial statements were prepared in accordance with IFRS. The following is selected presentation of the Income Statement for the quarter end March 31, 2021:
3 months ended 31-Mar-21 | 3 months ended 31-Mar-20 | |
(In thousands except per share data and percentages) | CDN$ | CDN$ |
Net Operating Revenue | $9,923 | $4,690 |
Cost of goods sold* | 6,224 | 1,836 |
Gross profit before gain on fair value of biological assets | 3,699 | 2,854 |
Realized fair value amounts included in inventory sold | 26 | - |
Unrealized gain on changes in fair value of biological assets | (11) | - |
Gross Profit | 3,714 | 2,854 |
Gross Profit Margin | 37% | 61% |
Operating expenses | 10,322 | 10,782 |
Operating Loss | (6,608) | (7,928) |
Other items (Impairment, FV adjustment, FX, gains/losses, taxes, etc.) | 2,468 | ($31,069) |
Total Comprehensive Income / (Loss) | ($9,076) | $23,141 |
Earnings Per Share | ||
Basic | ($0.02) | $0.08 |
Diluted | ($0.02) | $0.07 |
Non-IFRS Measures
EBITDA, Adjusted EBITDA, Adjusted Gross Profit, Adjusted Gross Profit Margin, Branded Unit volume and Branded Servings volume are non-IFRS financial measures that the Company uses to assess its operating performance. EBITDA is defined as net earnings (loss) before net finance costs, income tax expense (benefit) and depreciation and amortization expense. Management defines Adjusted EBITDA as EBITDA adjusted for other non-cash items such as the impact of unrealized fair values, share based compensation expense, impairments, one-time gains and losses, and one-time revenues and expenses. Management defines Adjusted Gross Profit and Adjusted Gross Margin as gross profit and gross margin adjusted for inventory fair value adjustments and fair value changes of biological assets. See the heading "Key Performance Indicators" in the Company's management's discussion and analysis for the three months ended March 31, 2021 (the "Q1 2021 MD&A") for a description of how each of Branded Unit volume and Branded Servings volume is calculated. This data is furnished to provide additional information and are non-IFRS measures and do not have any standardized meaning prescribed by IFRS. The Company uses these non-IFRS measures to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate these non-IFRS measures differently than the Company, these metrics may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities.
3 months ended 31-Mar-21 | 3 months ended 31-Mar-20 | |
(In thousands except per share data and percentages) | CDN | CDN |
Total Comprehensive Income (Loss) | ($9,076) | $23,141 |
EBITDA | (4,609) | (6,347) |
Adjusted EBITDA | (959) | (2,704) |
See the Q1 2021 MD&A for a detailed reconciliation of EBITDA and Adjusted EBITDA to Operating Income / (Loss). SLANG's financial statements and the Q1 2021 MD&A are available on SEDAR at www.sedar.com, and on the Company's Investor Relations website at www.slangww.com.
Conference Call Details
Management plans to host an investor conference call today, May 27, 2021, at 10:00 am EDT to discuss the results.
Timing: | Thursday, May 27, 2021 at 10:00 am EDT |
Dial-in: | +1.833-529-0214 (U.S. toll free) or +1.236-389-2114 (international) or +1.647-689-6824 (international) |
Conference ID: | 9672407 |
Webcast: | A live webcast can be accessed from the Investors section of Company's website at www.slangww.com or at this link. A replay of the webcast will be archived on the Company's website for one year. |
Media and Investor Inquiries
[email protected]
KCSA Strategic Communications
Phil Carlson / Elizabeth Barker
[email protected]
About SLANG Worldwide Inc.
SLANG Worldwide Inc. is a global leader in the cannabis CPG sector with a diversified portfolio of popular brands distributed across the United States. The Company specializes in acquiring and developing market-proven regional brands as well as launching innovative new brands to seize global market opportunities. For more information, please visit www.slangww.com.
To be added to SLANG's email distribution list, please email [email protected] with "SLNG" in the subject.
Forward-Looking Statements
This news release contains statements that constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Forward-looking statements included in this news release include, but are not limited to, statements in respect of the Company's prospects and the distribution of the Company's branded products in its core and emerging markets, the proposed acquisition of ACG and ongoing consolidation of its supply chain in core markets and the impact thereof.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management of SLANG at this time, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual results to differ materially from those expressed or implied in such statements. Investors are cautioned not to put undue reliance on forward-looking statements. Applicable risks and uncertainties include, but are not limited to regulatory risks, risks related to the COVID-19 global pandemic, changes in laws, resolutions and guidelines, market risks, concentration risks, operating history, competition, the risks associated with international and foreign operations and the other risks identified under the headings "Risk Factors" in SLANG's annual information form dated April 13, 2021and "Risks and Uncertainties" in the Q1 2021 MD&A and other disclosure document available on the Company's profile on SEDAR at www.sedar.com. SLANG is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Third Party Information
This news release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources.
1 Branded Units Sold and Branded Servings exclude sales in the California market, which the Company exited in 2020.
2 This includes acquisition or consolidation of LBA Global Corporation (now renamed Slang Oregon, Inc.), Peoria Partners, LLC (now renamed Slang Colorado Distribution, LLC), Pleasant Valley Ranch LLC (now renamed Slang Colorado Cultivation, Inc.) and Allied Concessions Group, Inc.
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