TORONTO, Aug. 30, 2021 (GLOBE NEWSWIRE) -- The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) (“Flowr” or the “Company”) herein announces its financial and operational results for the three and six months ended June 30, 2021. All financial information in this news release is reported in Canadian dollars and represents results from continuing operations, unless otherwise indicated.
Darryl Brooker, Chief Executive Officer of Flowr, commented, “The first half of 2021 represented a transition period for Flowr as we looked to focus our strategy of producing premium and ultra-premium dried flower cannabis in Canada, improve operational efficiencies, and explore opportunities to achieve revenue growth in Portugal.”
“We achieved gross revenue of $7 million and net revenue of $6 million in the first half of 2021, doubling the net revenue for the same period of 2020. Net revenue for the second quarter of 2021 however came in below our expectations at approximately $2.2 million, as we saw a decrease in sales of retail products in Canada offset by bulk sales of aged and lower tier inventory. Sales in the second quarter of 2021 was impacted by a slower than expected rollout in Quebec and increased competition for dried flowers at higher THC levels, while we worked to introduce new strains and product formats and expand our sales coverage in the third and fourth quarter of 2021.”
“Operationally, the K1 Facility has been planted to full capacity since early July, which is the first time we have had the facility at full utilization. We have seen very promising results from our pillar strains BC Pink Kush and BC Black Cherry, and are even more excited about the newest strain, BC Strawnana, which saw its first shipment in August. In addition to BC Strawnana, we are targeting to introduce multiple new, high-THC strains in 2021 and the first half of 2022. We have also expanded our product formats to 14 gram and 28 gram bags for dried flowers, and a new innovative style of pre-rolls to meet consumer demand. In June, Flowr entered into a supply agreement with Focus Medical Herbs Ltd., a company affiliated with IM Cannabis Corp. (collectively, “IMC”), to export at least five hundred kilograms of high quality dried flowers to Israel in bulk at very favourable prices, providing another sales channel for our premium products. In July, Flowr entered into an agreement with Green Hedge Education & Distribution Services Ltd. (“Green Hedge”) to act as our external sales agent in Ontario, Alberta, British Columbia, and Saskatchewan, significantly increasing our sales coverage in each province.”
“During the second quarter, we continued our efforts to improve operational efficiency and reduce SG&A costs. As part of the strategic review that was previously announced, for the year to date, we have achieved over $3.3 million in annualized SG&A and other cash savings, through rightsizing, reduction and relocation of various senior roles, sale of non-core assets and licenses, and subleasing of office and warehouse spaces. In addition, we have sold or are in advance stages of selling non-core assets with total estimated gross price of over $7 million.”
“In Portugal, Holigen Holdings Limited (“Holigen”) signed a medical cannabis supply agreement for the sale of cannabis biomass cultivated in 2020 for €500,000, representing the largest bulk medical cannabis sale in Portugal to date. On August 16, 2021, we announced a new partnership agreement with the popular US cannabis brand Cookies for the exclusive right to cultivate and distribute Cookies branded medical cannabis and merchandise in Portugal, with the opportunity to also supply the E.U. and other jurisdictions on a wholesale basis. The Cookies partnership is testament to the capability and our confidence in growing Holigen’s presence in the E.U. market.”
“As we look ahead to the second half of 2021, we are excited about the opportunities to continue growth in Canada and Portugal. Our focus will remain on executing our strategy to increase sales through new strain and product offerings, improving operational efficiency to ensure a consistent supply of high-grade premium products and healthy margins, and maximizing the potential of Holigen.”
Second Quarter and First Half 2021 Highlights
Subsequent to Second Quarter 2021
SELECTED FINANCIAL AND OPERATIONAL RESULTS
In thousands of CAD dollars, | Three months ended | Six months ended | ||||||||||||||||||
(except loss per share and grams harvested) | June 30, | June 30, | ||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||
Grams harvested - K1 | 1,251,416 | 1,345,567 | 1,920,723 | 1,835,668 | ||||||||||||||||
Grams sold | 2,239,376 | 419,264 | 2,911,943 | 541,778 | ||||||||||||||||
Gross revenue | 2,406 | 2,960 | 7,021 | 3,972 | ||||||||||||||||
Net revenue(1) | 2,172 | 2,314 | 6,006 | 3,090 | ||||||||||||||||
Cost of sales | 6,034 | 2,896 | 9,526 | 4,629 | ||||||||||||||||
Impairment of inventory | 129 | 461 | 878 | 1,127 | ||||||||||||||||
Gross loss before fair value adjustments | (3,991 | ) | (1,043 | ) | (4,398 | ) | (2,666 | ) | ||||||||||||
Selling and marketing and G&A | 4,195 | 4,417 | 8,795 | 10,436 | ||||||||||||||||
Share-based compensation | (1,553 | ) | 745 | (1,132 | ) | 1,602 | ||||||||||||||
Restructuring costs | — | (11 | ) | — | 726 | |||||||||||||||
Gain from disposal of subsidiary | 1,113 | — | 1,059 | — | ||||||||||||||||
Net loss | (7,484 | ) | (5,438 | ) | (16,186 | ) | (17,930 | ) | ||||||||||||
Basic and diluted loss per share | (0.02 | ) | 0.04 | (0.04 | ) | (0.13 | ) |
(1) Gross revenue net of excise tax, provision for returns and concessions
For a full discussion of Flowr’s operational and financial results, please refer to the Company’s Management’s Discussion & Analysis and Interim Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021, which have been filed on SEDAR at www.sedar.com.
About The Flowr Corporation
The Flowr Corporation is a Canadian cannabis company with operations in Canada and the European Union. Its Canadian operating campus, located in Kelowna, BC, includes a purpose-built, GMP-designed indoor cultivation facility, an outdoor and greenhouse cultivation site, and a state-of-the-art R&D facility. From this campus, Flowr produces recreational and medicinal products. Internationally, Flowr services the global medical cannabis market through its subsidiary, Holigen Holdings Limited, which has a license for cannabis cultivation in Portugal and operates a GMP licensed facility in Portugal. In 2020, Flowr’s BC Pink Kush was recognized as the top indica strain in Canada by KIND magazine.
Flowr aims to support improving outcomes through responsible cannabis use and, as an established expert in cannabis cultivation, strives to be the brand of choice for consumers and patients seeking the highest-quality craftsmanship and product consistency across a portfolio of differentiated cannabis products.
For more information, please visit flowrcorp.com or follow Flowr on Twitter: @FlowrCanada and LinkedIn: The Flowr Corporation.
On behalf of The Flowr Corporation:
Darryl Brooker
Chief Executive Officer
CONTACT INFORMATION:
INVESTORS & MEDIA:
John Chou
Chief Financial Officer
[email protected]
Forward-Looking Information:
Certain statements made in this press release may constitute “forward-looking information”, “future oriented financial information” or “financial outlooks” (collectively, “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information may relate to anticipated events or results including, but not limited to: the Company’s expectation that it will build on its achievements as it continues to invest in sales and marketing; the Company’s expectations for sales of product in Quebec; Flowr servicing the global medical cannabis market and operating GMP facilities in Portugal; Flowr’s business, production and products; Flowr’s plans to provide premium quality cannabis to adult use recreational and medical markets; EU-GMP certification opening the medicinal cannabis opportunity for the Company in global markets; the Company being well positioned to distribute EU-GMP compliant product into underserviced markets; Flowr’s ability to realize revenue from the Company’s European operations within the anticipated timeframe or at all; Flowr’s ability to establish sales and distribution channels in Europe to deliver medicinal cannabis to underserviced markets; expectations with respect to the anticipated timing for harvests, propagation, completion of construction and installation of extraction infrastructure at the Company’s Sintra facility; the Company being unable to commence GMP packaging and commercial sales within the anticipated timeframe or at all; Flowr’s ability to service the global medical cannabis market and/or operate GMP-designed manufacturing facilities in Portugal; the sale of medical cannabis in pharmacies in Portugal representing a watershed moment for cannabis in the E.U.; the Company’s ability to complete offering(s) of its securities under the Final Shelf Prospectus; the expected impact of the strategic review decisions on the Company; the actual costs of savings from the Company’s restructuring initiatives, including with respect to its workforce; the Company’s plans to divest its interests in certain of its subsidiaries; the Company’s ability to obtain licensing from Health Canada and other regulatory authorities with respect to its properties and facilities; future legislative and regulatory developments in Canada and elsewhere; the cannabis industry in Canada generally; the ability of Flowr to implement its business strategies; and the ability of Flowr to produce or sell premium quality cannabis. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities is forward-looking information. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “believe”, “estimate”, “plan”, “could”, “should”, “would”, “outlook”, “forecast”, “anticipate”, “foresee”, “continue” or the negative of these terms or variations of them or similar terminology. Forward-looking information is current as of the date it is made and is based on reasonable estimates and assumptions made by us at the relevant time in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances. To the extent any forward-looking information in this press release constitutes “future oriented financial information” or “financial outlooks”, within the meaning of applicable securities laws, the purpose of such information being provided is to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. However, we do not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. There can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking information as discussed in the “Risk Factors” section of the Company’s 2020 Annual Information Form dated April 28, 2021 (the “AIF”). A copy of the AIF and the Company’s other publicly filed documents can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information.
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