- Achieves first positive Adjusted EBITDA1 quarter of
$3.2 million.
- Q4 2019 net revenue was $19
million, a 90% increase from Q3 2019 ($10 million).
- Fiscal 2019 total revenue was $41.8
million, a 370% increase from fiscal 2018 ($8.9 million).
- Forecasts net revenue for fiscal 2020 to be between
$150 million and $180 million, and positive Adjusted
EBITDA1 for fiscal 2020
TORONTO, Sept. 17, 2019 /CNW/ - The Supreme Cannabis
Company, Inc. ("Supreme Cannabis" or the "Company") (TSX: FIRE)
(OTCQX: SPRWF) (FRA: 53S1), announced today the release of its
financial and operating results for the fourth quarter and fiscal
year ended June 30, 2019.
"We end fiscal 2019 as one of the few Canadian cannabis
businesses building sustainable operations and valuable brands,
reporting $3.2 million in Adjusted
EBITDA1 for the fourth quarter," said Navdeep Dhaliwal, CEO of Supreme Cannabis. "Our
positive Adjusted EBITDA and significant revenue growth in the
fourth quarter reflects the rapid scale of our 7ACRES business and
continued strong sales pricing for our brands from the provinces as
we transition our premium supply to recreational sales
channels."
"With strong confidence in our core business, we began fiscal
2020 with two accretive acquisitions that expanded our addressable
markets, provided valuable licensed operating assets and focused
expertise," Mr. Dhaliwal added. "As we integrate these businesses
and realize further efficiencies from our scaled 7ACRES operations,
we expect all of our brands to meaningfully contribute to the
revenue we have forecasted for fiscal 2020. Amidst the noise of
this new marketplace, Supreme Cannabis has taken a strategic and
disciplined approach to develop a focused business with clear
pillars: best-in-class infrastructure, top consumer brands,
advanced intellectual property, and high-impact and capital-light
exposure to developing international markets."
Q4 and Fiscal Year End 2019 Select Financial and Operational
Results.
|
Three Months
Ended
|
Year Ended
|
|
|
|
($
thousands)
|
June 30,
2019
|
June 30,
2018
|
June 30,
2019
|
June 30,
2018
|
|
|
|
|
|
Net
Revenue
|
19,005
|
3,545
|
41,833
|
8,855
|
Operating
expenses
|
11,564
|
5,114
|
38,713
|
15,866
|
Net Loss after
taxes
|
(421)
|
234
|
(14,497)
|
(7,347)
|
Basic and Diluted
Loss per
common share
|
(0.00)
|
(0.00)
|
(0.05)
|
(0.03)
|
Adjusted
EBITDA1
|
3,195
|
(1,641)
|
(4,452)
|
(6,964)
|
Cash
|
54,822
|
55,896
|
54,822
|
55,896
|
Brands.
Supreme Cannabis' core recreational flower brand, 7ACRES,
accounted for the Company's marked increase in revenue, growing
443% year-over-year from $3.5 million
in Q4 2018 to $19 million in Q4 2019
and 90% quarter over quarter from $10
million in Q3 2019.
In the fourth quarter, 7ACRES continued to transition sales from
its legacy wholesale contracts to recreational sales channels,
increasing revenue from recreational markets by 51% between Q3 2019
and Q4 2019. As the brand continues to build equity amongst
consumers, it will bring new proprietary strains to market.
Subsequent to the fiscal year ended June 30,
2019, 7ACRES' launched its proprietary strain, Jack Haze,
the first sativa dominant strain to enter the market under the
7ACRES brand. With its novel traits, and differentiated profile,
Jack Haze is securing premium pricing in the select provinces where
available.
In the fourth quarter, under its partnership with Khalifa Kush Canada ULC ("KKE"), Supreme
Cannabis expanded its product offerings beyond whole flower with
the launch of premium KKE Oil. The Company's KKE Sensi Star Oil was
the first oil launched under the KKE brand. The Company will create
other ultra premium products for recreational consumers under the
KKE brand, including pre-rolls, derivative products and flower.
Anticipating the next phase of cannabis regulations and the
legalization of derivatives products, the Company prepared to enter
the cannabis extracts category through its partnership
with Pax Labs, Inc. ("PAX"). Pursuant to this
partnership, 7ACRES, became one of only four licence holders
to supply cannabis pods for the PAX Era vaporizer in Canada. The Company benefits from PAX's strong
brand recognition, reputation and market leading vaporizer
technology, selling more than 500,000 Era devices and over one
million devices in the flower vaporizer category.
Over the course of fiscal 2019, Supreme Cannabis explored
opportunities to grow its brand portfolio, pursuing focused
businesses that would benefit from the Company's expertise in
regulated operations, brand building, commercialization and
regulatory affairs. In May 2019, the
Company entered into a definitive arrangement agreement to
acquire Blissco. Subsequent to the fiscal year ended June 30, 2019, Supreme Cannabis closed the
acquisition of Blissco, accelerating the company's growth into the
premium wellness and global cannabidiol ("CBD") industry with an
authentic brand focused on whole plant wellness and committed to
sustainability.
Subsequent to the fiscal year ended June
30, 2019, the Company rounded out its brand portfolio,
announcing the acquisition and closing of global medical brand,
Truverra Inc. ("Truverra"). With the acquisition of Truverra,
Supreme Cannabis gains a skilled management team with decades of
pharmaceutical industry experience and a growing CBD business in
Europe. The company's existing CBD
offering includes balms, softgels and organic oils. Supreme
Cannabis expects to realize meaningful contributions from its new
brands and partnerships in the second half of fiscal 2020.
Operations.
In the fourth quarter, Supreme Cannabis continued to scale its
premium cultivation facility in Ontario. 7ACRES' hybrid greenhouse was
approved for an additional 50,000 square feet of production
capacity, growing to a total of 23 licenced flowering rooms and
230,000 square feet of licenced cultivation space. Subsequent to
the fiscal year ended June 30, 2019,
in August 2019, 7ACRES obtained
Health Canada Approval for its 24th flowering room and
has already commenced planting in this additional licenced
room.
As construction on the 7ACRES' facility nears completion,
Supreme Cannabis has chosen to build additional support
infrastructure on the six-acre property adjacent to the 7ACRES'
facility, previously referred to as Lot 16. 7ACRES' advanced
cultivation practices have consistently produced premium quality
flower well above the industry standard. With stable premium
pricing for 7ACRES' products and strong consumer validation,
Supreme Cannabis intends to use the additional acreage to further
enhance this successful operating asset. The Company expects the
7ACRES facility, including all administrative infrastructure, to be
complete by the end of 2019 and construction on the adjacent
property to begin upon completion.
Subsequent to the fiscal year ended June
30, 2019, the 7ACRES facility experienced an isolated
mechanical failure affecting three grow rooms. Standard operating
procedures were used when responding to the event and management
made the proactive decision to discard all plants in the affected
rooms. The rooms were temporarily de-commissioned while a permanent
solution was implemented. All three grow rooms have now been
recommissioned and will be replanted in September. 7ACRES'
small-batch approach to cultivation and modular design of only
10,000 square foot rooms contained the impact of this one-time
mechanical deviation.
At the beginning of the fourth quarter, Supreme Cannabis
announced the launch of Cambium Plant
Sciences ("Cambium"). Located in Goderich, Ontario, Cambium will focus on
developing the next generation of premium cannabis genetics for
recreational, medical and wellness applications. Supreme
Cannabis will invest approximately $14
million to develop a world leading facility for
cannabis-focused research and innovation. Subsequent to
quarter end, the Company commenced the retrofitting of Cambium's
facility and expects the initial phase to be complete in the third
quarter of fiscal 2020
Subsequent to the fiscal year ended June
30, 2019, Supreme Cannabis' acquisition of Blissco and
Truverra expanded the company's infrastructure with the addition of
two focused operating assets. Since receiving its licence in
August 2018, Blissco has been
extracting oils from its 12,000 square foot facility
in British Columbia. With Blissco's focused expertise and
state-of-the-art extraction lab, the Company gained a dedicated
extraction business for the production of full spectrum CBD and THC
derivative products.
Supreme Cannabis gained an additional operating asset from its
acquisition of Truverra. Truverra's subsidiary, Canadian
Clinical Cannabinoids Inc. ("CCC") operates a 5,000 square
foot licenced facility in Ontario.
In the near-term, the CCC facility will be equipped to process
high-quality inputs for concentrates.
Strategic Investments.
With the European CBD industry's projected growth of over 400%
over the next five years2, it is expected to become one
of the most lucrative spaces in the global cannabis market. To
address this market, in the fourth quarter, the Company announced
the launch of Supreme Heights, a distinct investment platform
separate from Supreme Cannabis and based in London, UK.
Supreme Heights will target investments in high-growth
potential, early-stage CBD brands across a variety of product forms
in the health and wellness space with the goal of gaining an early
leading position in the European CBD market. Target companies for
investments by Supreme Heights are those with unique branded
products, created by entrepreneurial teams who prioritize the end
consumer, value sustainability and create high-quality
products. Supreme Cannabis will support Supreme Heights
as it pursues investment opportunities by offering access to
Supreme Cannabis' regulatory, product commercialization, supply
chain, marketing, legal and capital markets expertise.
Supreme Cannabis subsequently closed this previously announced
investment in Supreme Heights on September
17, 2019, which includes an initial investment by Supreme
Cannabis. Pursuant to the terms of the investment agreement,
Supreme may nominate the majority of the board of Supreme Heights,
which will be initially comprised of Patrick Morton, Navdeep
Dhaliwal, Nick Davis,
Barinder S. Bhullar and Steve Chan.
Outlook.
Supreme Cannabis believes that the Company is well positioned to
take significant steps forward in fiscal 2020, including:
- Expected net revenue of between $150
million and $180 million.
- Expected positive Adjusted EBITDA1 on aggregate over
the course of the year.
- 7ACRES' to complete its transition from a wholesale business to
premium consumer brand by third quarter fiscal 2020, with complete
in-house packaging capabilities for all flower products under the
7ACRES' brand.
- Pursuing non-dilutive financing with tier-one banks and other
lenders to provide financial flexibility for future growth
initiatives.
- Fully funded to execute on all planned initiatives.
In addition to the above outlook, the Company has determined not
to exercise its option to pursue a consolidation of its issued and
outstanding Common Shares.
The Company's fiscal 2019 Annual Report is available in the
Investors section of the Company's website at Supreme.ca and
at www.SEDAR.com.
1 The Company defines Adjusted EBITDA as net
income (loss) excluding fair value changes on growth of biological
assets, realized fair value changes on inventory sold or impaired,
amortization of property plant and equipment & intangible
assets, share based payments, finance expense, loss on disposal of
property plant and equipment, unrealized gains or losses on
investments and income taxes.
2 Brightfield group, March
2019
Supreme Cannabis' MD&A and consolidated financial statements
for the fourth quarter and fiscal year ended June 30, 2019, along with all previous public
filings of The Supreme Cannabis Company, Inc. may be found on SEDAR
at www.SEDAR.com.
About Supreme Cannabis
The Supreme Cannabis Company, Inc. is a global diversified
portfolio of distinct cannabis companies, products and brands.
Since 2014, the Company has emerged as one of the world's
fastest-growing, premium plant driven-lifestyle companies by
effectively deploying capital, with an emphasis on disciplined
growth and high-quality products.
Supreme Cannabis' portfolio includes 7ACRES, its wholly-owned
subsidiary and multi-award-winning brand; Blissco Cannabis Corp., a
wellness cannabis brand and a multi-licenced processor and
distributor based in British
Columbia; Truverra Inc., a global medicinal cannabis brand
and licenced cultivator; Cambium Plant Sciences, a plant genetics
and cultivation IP company; Medigrow Lesotho, an cannabis oil
producer located in southern Africa; Supreme Heights, an investment
platform focused on CBD brands in the UK and Europe and a brand partnership and licensing
deal with Khalifa Kush Canada
ULC.
Supreme trades as FIRE on the Toronto Stock Exchange (TSX:
FIRE), SPRWF on the OTC Exchange in the
United States (OTCQX: SPRWF) and 53S1 on the Frankfurt Stock
Exchange (FRA: 53S1). Follow us on Instagram, Twitter,
Facebook and YouTube.
We simply grow better.
Forward-Looking Information
Certain statements made in this press release may constitute
"forward-looking information" and "forward-looking statements"
(collectively, "forward-looking statements") which are based
upon the Company's current internal expectations, estimates,
projects, assumptions and beliefs. Such statements can, in some
cases, be identified by the use of forward-looking terminology such
as "may", "will", "expect", "believe", "estimate", "intend",
"potential", "plan", "could", "would", "outlook", "forecast",
"anticipate", "continue" and other similar words, including
negative and grammatical variations thereof, or statements that
certain events or conditions "may" or "will" happen, or by
discussions of strategy. Forward-looking statements include
estimates, plans, expectations, opinions, forecasts, projections,
targets, guidance, or other statements that are not statements of
fact. The forward-looking statements included in this press release
are made only as of the date of this press release. Forward-looking
statements in this press release include, but are not limited to,
statements with respect to:
- performance of the Company's business and operations;
- the competitive and business strategies of the Company;
- intention and plans to grow the business, operations and
potential activities of the Company;
- licensing risks and expectations with respect to renewal and/or
extension of the Company's licences;
- any commentary with respect to Canada's cannabis regulatory
regime;
- expectations with respect to the cannabis market and market
risks;
- the expected growth in the number of customers and patients
using the Company's adult use and medical cannabis;
- the Company's ability to enter into and maintain strategic
arrangements with distributors and retailers and the potential
benefits of such arrangements;
- the success of the entities the Company acquires and the
Company's collaborations;
- the development of the Company's brands, product
diversification and future corporate development;
- the expansion and production capacity of the Company's sites
and the timing related thereto;
- future liquidity and financial capacity;
- the advancement of the Company's international projects and
targeting other opportunities as the laws and regulations governing
cannabis evolve internationally; and
- the competitive conditions of the medical and adult use
cannabis industry.
Certain of the forward-looking statements and other information
contained herein concerning the medical and the adult use cannabis
industry and the general expectations of Supreme Cannabis
concerning the medical and the adult use cannabis industry and
concerning Supreme Cannabis are based on estimates prepared by
Supreme Cannabis using data from publicly available governmental
sources as well as from market research and industry analysis and
on assumptions based on data and knowledge of this industry which
Supreme Cannabis believes to be reasonable. While Supreme Cannabis
is not aware of any misstatement regarding any industry or
government data presented herein, the medical and the adult use
cannabis industry involves risks and uncertainties that are subject
to change based on various factors and the Company has not
independently verified such third-party information.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct.
The Company's forward-looking statements are expressly qualified in
their entirety by this cautionary statement. In particular, but
without limiting the foregoing, statements in this press release
regarding the Company's objectives, plans and goals, including
future operating results and economic performance may make
reference to or involve forward-looking statements. A number of
factors could cause actual events, performance or results to differ
materially from what is projected in the forward-looking
statements, including general business and economic conditions,
changes in laws and regulations, product demand, changes in prices
of required commodities, competition and other risks as set out
under "Risk Factors" in the Company's Annual Information Form dated
September 17, 2019 filed on SEDAR at
www.sedar.com. The purpose of forward-looking statements are to
provide the reader with a description of management's expectations,
and such forward-looking statements may not be appropriate for any
other purpose. You should not place undue reliance on
forward-looking statements contained in this document. To the
extent any forward-looking information in this press release
constitutes future-oriented financial information or financial
outlook, within the meaning of applicable securities laws, such
information is being provided to demonstrate the potential of the
Company and readers are cautioned that this information may not be
appropriate for any other purpose. Future-oriented financial
information and financial outlook, as with forward-looking
information generally, are based on current assumptions and subject
to risks, uncertainties and other factors. Supreme Cannabis
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law.
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SOURCE The Supreme Cannabis Company, Inc.