Clever Leaves Holdings Inc. (Nasdaq: CLVR) (“Clever Leaves” or the
“Company”), a multinational operator, or MNO, and licensed producer
of pharmaceutical-grade cannabinoids, today reported financial and
operating results for the first quarter ended March 31, 2021. All
financial information is provided in US dollars unless otherwise
indicated.
First Quarter 2021 Summary vs. Same Year-Ago
Quarter
- Revenue increased 19% to $3.5 million compared to $2.9 million,
primarily attributed to significant growth in cannabinoids
revenue.
- All-in cost per gram of dry flower improved to $0.13 compared
to $0.15.
- Gross profit increased 3% to $2.2 million.
- Net loss was $13.8 million. Net loss (excluding $4.9 million
loss on remeasurement of warrant liability) improved to $8.9
million compared to $10.2 million, with the improvement primarily
resulting from a reduction in operating expenses.
- Adjusted EBITDA (a non-GAAP financial measure defined and
reconciled herein) improved to $(5.4) million compared to $(6.7)
million.
“The first quarter reflected continued progress
towards our growth objectives that we believe will drive the next
stage of our journey to become an industry-leading MNO,” said Kyle
Detwiler, CEO of Clever Leaves. “We continued to generate strong
year-over-year revenue growth driven by increased cannabinoid
shipments and improvements across key operating metrics, including
adjusted EBITDA. In addition, we inked partnership deals with major
pharmaceutical companies, such as Ethypharm in Germany, and
received a record-level export quota from Colombia, representing
approximately 18% of the world’s allocation. This strengthens our
confidence in the future as we continue to prove the export process
with initial shipments into our target markets globally.
“We also continued to realize cost efficiencies
and prioritize the successful attainment of essential government
certifications. Even as we worked to ramp our Portuguese
operations, our all-in cost of dry flower for the quarter remained
well below our industry peer group average at $0.13 per gram. Our
continued and improving cost leadership shows the potential of our
global supply chain opportunity for being a scale supplier of
pharmaceutical-grade cannabinoids. To date, we have already made
significant progress in Portugal, as we achieved GACP certification
of our Portuguese operations in the first quarter of 2021 and
generated our first revenues out of the country in April 2021. As
regulatory reforms continue to progress throughout the developed
world, we remain confident in our position to leverage the
infrastructure of shipping agreements, certifications, and
strategic partnerships that we have meticulously cultivated around
the world.
“Charting our path to success, we established a
partnership with the European pharmaceutical company, Ethypharm, to
enable our entry into the strictly regulated German market. We have
also continued to expand our distribution footprint in Latin
America, and we will continue to nurture these significant
relationships in the coming months.
“We are encouraged by the progress we have made
thus far, while recognizing that it will be a gradual journey to
realizing the full economic potential of our operating model.
Though the pace of global regulatory developments remains uneven,
the underlying long-term opportunity for our business remains
strong. We will continue to execute with maximum efficiency in our
existing markets and reinforce the foundation for our continued
expansion efforts around the globe. I could not be prouder of the
hard work and accomplishments the team has achieved thus far and I
am most enthusiastic about what lies ahead for the rest of 2021 and
beyond.”
First Quarter 2021 Financial Results
Revenue in the first quarter of 2021 increased
19% to $3.5 million compared to $2.9 million for the same period in
2020. This was primarily driven by continued significant growth in
cannabinoid sales, which have further expanded as the Company
pursues global business development opportunities and enters new
markets.
All-in cost per gram of dry flower in the first
quarter of 2021 was $0.13 per gram, an improvement from $0.15 in
the year-ago period, due largely to lower operating costs in
Colombia, partially offset by production costs associated with the
ramp up of the Company’s early-stage operations in Portugal.
Gross profit in the first quarter of 2021
increased slightly to $2.2 million compared to the same period in
2020. Gross margin in the first quarter of 2021 was 64% compared to
74% for the same period in 2020. The decrease in gross margin, as
anticipated, was driven by growth in the cannabinoid segment, where
margins have yet to fully mature relative to the non-cannabinoid
segment.
Operating expenses in the first quarter of 2021
decreased to $10.0 million compared to $11.3 million in the same
period in 2020. The improvement was due to cost control measures
established in 2020 and lower marketing and selling expenditures,
partly offset by an increase in share-based compensation, insurance
and professional fees related to being a public company.
Net loss was $13.8 million. Net loss (excluding
$4.9 million loss on remeasurement of warrant liability) in the
first quarter of 2021, improved to $8.9 million compared to $10.2
million. The improvement was driven by lower operating expenses
during the quarter as a result of cost control measures initiated
in the second quarter of 2020, partially offset by the
aforementioned increase in public company expenses.
Adjusted EBITDA in the first quarter of 2021
improved to $(5.4) million compared to $(6.7) million for the same
period in 2020. The improvement was primarily driven by the
previously discussed improvement in gross profit and reductions in
operating expenses.
Cash, cash equivalents and restricted cash was $69.2 million at
March 31, 2021, compared to $79.5 million at December 31, 2020.
This is primarily attributed to anticipated operating losses and
capital investments in the quarter, partially offset by $1.4
million in warrant exercise proceeds and a $1.2 million
Portuguese project financing.
2021 Outlook
Based on momentum achieved in the
first quarter on expansion, execution on the revenue pipeline and
cost containment measures, the Company is pleased to announce it is
on track to achieve its 2021 plan and reiterates its previously
disclosed 2021 full year guidance of $17 million to $20 million in
revenue, gross margin of approximately 61%, and adjusted EBITDA in
the range of $(24) million to $(26) million, inclusive of costs
associated with being a public company, and capital expenditures of
approximately $10 million.
Conference Call
Clever Leaves will conduct a conference call today at 5:00 p.m.
Eastern time to discuss its results for the first quarter ended
March 31, 2021.
Clever Leaves management will host the conference call, followed
by a question and answer session.
Conference Call Date: May 17, 2021Time: 5:00 p.m. Eastern
timeToll-free dial-in number: 1-877-300-8521International dial-in
number: 1-412-317-6026Conference ID: 10156553
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 Gateway Investor Relations at (949)
574-3860.
The conference call will be broadcast live and available for
replay here.
A telephonic replay of the conference call will also be
available after 8:00 p.m. Eastern time on the same day through May
24, 2021.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 10156553
About Clever Leaves Holdings
Inc.
Clever Leaves is a multinational cannabis
company with an emphasis on ecologically sustainable, large-scale
cultivation and pharmaceutical-grade processing as the cornerstones
of its global cannabis business. With operations and investments in
the United States, Canada, Colombia, Germany and Portugal, Clever
Leaves has created an effective distribution network and global
footprint, with a foundation built upon capital efficiency and
rapid growth. Clever Leaves aims to be one of the industry’s
leading global cannabis companies recognized for its principles,
people, and performance while fostering a healthier global
community. Clever Leaves has received multiple international
certifications that have enabled it to increase its export and
sales capacity from its Colombian operations, including European
Union Good Manufacturing Practices (EU GMP) Certification, a Good
Manufacturing Practices (GMP) Certification by Colombia National
Food and Drug Surveillance Institute - Invima, and Good
Agricultural and Collecting Practices (GACP) Certification. Clever
Leaves was granted a license in Portugal from Infarmed – the
Portuguese health authority – which allows Clever Leaves to
cultivate, import and export dry flower for medicinal and research
purposes. In addition, the Portuguese operation was granted
certification of compliance with GACP and IMC-GAP.
For more information, please visit
https://cleverleaves.com/en/home/ and follow us on LinkedIn.
Non-GAAP Financial Measures
In this press release, Clever Leaves refers to
certain non-GAAP financial measures including Adjusted EBITDA.
Adjusted EBITDA does not have a standardized meaning prescribed by
GAAP and is therefore unlikely to be comparable to similar measures
presented by other companies. Adjusted EBITDA is defined as
income/loss from continuing operations before interest, taxes,
depreciation, amortization, share-based compensation expense,
gains/losses on foreign currency fluctuations, gains/losses on the
early extinguishment of debt, gain/loss on remeasurement of warrant
liability, and miscellaneous expenses. Adjusted EBITDA also
excludes the impact of certain non-recurring items that are not
directly attributable to the underlying operating performance.
Clever Leaves considers Adjusted EBITDA to be a meaningful
indicator of the performance of its core business. Adjusted EBITDA
should neither be considered in isolation nor as a substitute for
the financial measures prepared in accordance with U.S. GAAP. For a
reconciliation of Adjusted EBITDA to the most directly comparable
U.S. GAAP measure, see the relevant schedules provided with this
press release. We have not reconciled the non-GAAP
forward-looking information to their corresponding GAAP measures
because the exact amounts for these items are not currently
determinable without unreasonable efforts but may be
significant.
Forward-Looking Statements
This press release includes certain statements
that are not historical facts but are forward-looking statements
for purposes of the safe harbor provisions under the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as “aim,”
“anticipate,” “believe,” “can,” “continue,” “could,” “estimate,”
“evolve,” “expect,” “forecast,” “future,” “guidance,” “intend,”
“may,” “opportunity,” “outlook,” “pipeline,” “plan,” “predict,”
“potential,” “projected,” “seek,” “seem,” “should,” “will,” “would”
and similar expressions (or the negative versions of such words or
expressions) that predict or indicate future events or trends or
that are not statements of historical matters. Such forward-looking
statements as well as our outlook for 2021 are subject to risks and
uncertainties, which could cause actual results to differ from the
forward-looking statements. Important factors that may affect
actual results or the achievability of the Company’s expectations
include, but are not limited to: (i) expectations with respect to
future operating and financial performance and growth, including if
or when Clever Leaves will become profitable; (ii) Clever Leaves’
ability to execute its business plans and strategy and to receive
regulatory approvals; (iii) Clever Leaves’ ability to capitalize on
expected market opportunities, including the timing and extent to
which cannabis is legalized in various jurisdictions; (iv) global
economic and business conditions; (v) geopolitical events, natural
disasters, acts of God and pandemics, including the economic and
operational disruptions and other effects of COVID-19 such as
travel restrictions, disruptions to physical shipments such as
outright bans on imported products, delays in issuing licenses and
permits, delays in hiring necessary personnel to carry out sales,
cultivation and other tasks, and financial pressures upon Clever
Leaves and its customers; (vi) regulatory developments in key
markets for the company's products, including international
regulatory agency coordination and increased quality standards
imposed by certain health regulatory agencies, and failure to
otherwise comply with laws and regulations; (vii) uncertainty with
respect to the requirements applicable to certain cannabis products
as well the permissibility of sample shipments, and other risks and
uncertainties; (viii) consumer, legislative, and regulatory
sentiment or perception regarding Clever Leaves’ products; (ix)
lack of regulatory approval and market acceptance of Clever Leaves’
new products; (x) the extent to which Clever Leaves’ is able to
monetize its existing THC market quota within Colombia; (xi) demand
for Clever Leaves’ products and Clever Leaves’ ability to meet
demand for its products and negotiate agreements with existing and
new customers; (xii) developing product enhancements and
formulations with commercial value and appeal; (xiii) product
liability claims exposure; (xiv) lack of a history and experience
operating a business on a large scale and across multiple
jurisdictions; (xv) limited experience operating as a public
company; (xvi) changes in currency exchange rates and interest
rates; (xvii) weather and agricultural conditions and their impact
on the Company’s cultivation and construction plans, (xviii) Clever
Leaves’ ability to hire and retain skilled personnel in the
jurisdictions where it operates; (xix) Clever Leaves’ rapid growth,
including growth in personnel; (xx) Clever Leaves’ ability to
remediate a material weakness in its internal control cover
financial reporting and to develop and maintain effective internal
and disclosure controls; (xxi) potential litigations; (xxiii)
access to additional financing; and (xxiv) completion of our
construction initiatives on time and on budget. The foregoing list
of factors is not exclusive. Additional information concerning
certain of these and other risk factors is contained in Clever
Leaves’ most recent filings with the SEC. All subsequent written
and oral forward-looking statements concerning Clever Leaves and
attributable to Clever Leaves or any person acting on its behalf
are expressly qualified in their entirety by the cautionary
statements above. Readers are cautioned not to place undue reliance
upon any forward-looking statements, which speak only as of the
date made. Clever Leaves expressly disclaims any obligations or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in its expectations with respect thereto or any change in events,
conditions or circumstances on which any statement is based.
Clever Leaves Investor
Inquiries:Cody Slach and Jackie KeshnerGateway Investor
Relations+1949-574-3860CLVR@gatewayir.com
Clever Leaves Press
Contacts:McKenna MillerKCSA Strategic
Communications+1347-487-6197mmiller@kcsa.com
Diana SigüenzaStrategic Communications
Director+57310-236-8830diana.siguenza@cleverleaves.com
Clever Leaves Commercial
Inquiries:Andrew MillerVice President Sales - EMEA, North
America, and
Asia-Pacific+1416-817-1336andrew.miller@cleverleaves.com
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheet |
|
|
|
|
|
(In thousands of United States
dollars) |
|
March 31, 2021 (Unaudited) |
|
December 31, 2020 (Audited) |
Assets |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
Cash |
|
68,724 |
|
|
79,107 |
|
Restricted cash |
|
451 |
|
|
353 |
|
Accounts receivable, net |
|
1,737 |
|
|
1,676 |
|
Prepaids and advances |
|
3,334 |
|
|
3,174 |
|
Other receivables |
|
1,552 |
|
|
1,306 |
|
Inventories, net |
|
11,555 |
|
|
10,190 |
|
Total Current Assets |
|
87,353 |
|
|
95,806 |
|
|
|
|
|
|
Investments |
|
1,542 |
|
|
1,553 |
|
Property, plant and equipment,
net |
|
27,336 |
|
|
25,680 |
|
Intangible assets, net |
|
23,889 |
|
|
24,279 |
|
Goodwill |
|
18,508 |
|
|
18,508 |
|
Other non-current assets |
|
59 |
|
|
52 |
|
Total assets |
|
158,687 |
|
|
165,878 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
Accounts payable |
|
3,430 |
|
|
4,429 |
|
Accrued expenses and other current liabilities |
|
3,447 |
|
|
4,865 |
|
Warrant liability |
|
23,912 |
|
|
19,061 |
|
Deferred revenue |
|
218 |
|
|
870 |
|
Total current liabilities |
|
31,007 |
|
|
29,225 |
|
|
|
|
|
|
Convertible notes |
|
27,266 |
|
|
27,142 |
|
Loans and borrowings |
|
7,924 |
|
|
6,701 |
|
Deferred revenue |
|
1,782 |
|
|
1,167 |
|
Deferred tax liability |
|
5,700 |
|
|
5,700 |
|
Other
long-term liabilities |
|
563 |
|
|
693 |
|
Total liabilities |
|
74,242 |
|
|
70,628 |
|
|
|
|
|
|
Shareholders'
equity |
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
167,224 |
|
|
164,264 |
|
Accumulated deficit |
|
(82,779 |
) |
|
(69,014 |
) |
Total shareholders'
equity |
|
84,445 |
|
|
95,250 |
|
|
|
|
|
|
Total liabilities and shareholders' equity |
|
158,687 |
|
|
165,878 |
|
|
|
|
|
Statement of Operations |
|
|
|
|
|
|
Three Months ended March 31,
(Unaudited) |
(In thousands of United States dollars, except for per share
data) |
|
2021 |
|
2020 |
Revenue |
|
|
3,477 |
|
|
2,914 |
|
|
|
|
|
Cost of Sales |
|
|
(1,246 |
) |
|
(753 |
) |
Gross
Profit |
|
|
2,231 |
|
|
2,161 |
|
|
|
|
|
Expenses |
|
|
|
General and administrative |
|
|
7,192 |
|
|
7,704 |
|
Share-based compensation |
|
|
1,550 |
|
|
416 |
|
Sales and marketing |
|
|
678 |
|
|
1,181 |
|
Goodwill impairment |
|
|
- |
|
|
1,682 |
|
Depreciation and amortization |
|
|
579 |
|
|
352 |
|
Total expenses |
|
|
9,999 |
|
|
11,335 |
|
|
|
|
|
Loss from
operations |
|
|
(7,768 |
) |
|
(9,174 |
) |
|
|
|
|
Other Expenses
(Income), net |
|
|
|
Interest expense, net |
|
|
978 |
|
|
836 |
|
Loss on remeasurement of warrant liability |
|
|
4,851 |
|
|
- |
|
Loss on investments / equity investment share of loss |
|
|
11 |
|
|
172 |
|
Foreign exchange loss |
|
|
759 |
|
|
48 |
|
Loss on fair value of derivative instrument |
|
|
- |
|
|
13 |
|
Other (income) expenses, net |
|
|
(602 |
) |
|
(57 |
) |
Total other expenses, net |
|
|
5,997 |
|
|
1,012 |
|
|
|
|
|
Net Loss |
|
|
(13,765 |
) |
|
(10,186 |
) |
Net loss attributable to non-controlling interest |
|
|
- |
|
|
(904 |
) |
Net loss attributable
to Clever Leaves Holdings Inc. common shareholders |
|
|
(13,765 |
) |
|
(9,282 |
) |
|
|
|
|
Net loss per share
attributable to Clever Leaves Holdings Inc. common |
|
|
|
shareholders - basic and
diluted |
|
$ |
(0.55 |
) |
$ |
(1.23 |
) |
|
|
|
|
Weighted-average common shares
outstanding - basic and diluted (in 000's) |
|
|
25,030 |
|
|
8,304 |
|
|
|
|
|
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
Three months ended March 31, (unaudited) |
(In thousands of United States dollars) |
|
2021 |
|
2020 |
|
Operating
Activities |
|
|
|
Net loss |
|
(13,765 |
) |
(10,186 |
) |
Adjustments to reconcile to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
795 |
|
352 |
|
Loss on remeasurement of warrant liability |
|
4,851 |
|
- |
|
Foreign exchange loss |
|
759 |
|
61 |
|
Stock-based compensation expense |
|
1,550 |
|
416 |
|
Goodwill impairment |
|
- |
|
1,682 |
|
Non-cash interest expense, net |
|
430 |
|
836 |
|
Loss on investment |
|
- |
|
161 |
|
Loss on equity method investment, net |
|
11 |
|
11 |
|
Loss on derivative instruments |
|
- |
|
13 |
|
Changes in operating assets and liabilities: |
|
|
|
Increase in accounts receivable |
|
(61 |
) |
(51 |
) |
(Increase) decrease in prepaid expenses |
|
(160 |
) |
777 |
|
(Increase) decrease in other receivable |
|
(253 |
) |
225 |
|
Increase in inventory |
|
(1,365 |
) |
(1,117 |
) |
(Decrease) Increase in accounts payable and other current
liabilities |
|
(2,417 |
) |
461 |
|
Decrease in other non-current liabilities and other items |
|
(1,002 |
) |
(862 |
) |
Net cash used in operating activities |
|
(10,627 |
) |
(7,221 |
) |
|
|
|
|
Investing
Activities |
|
|
|
Purchase of property, plant and equipment |
|
(2,216 |
) |
(1,655 |
) |
Net cash used in investing activities |
|
(2,216 |
) |
(1,655 |
) |
|
|
|
|
Financing
Activities |
|
|
|
Proceeds from issuance of long term debt, net of issuance
costs |
|
- |
|
16,966 |
|
Other borrowings |
|
1,223 |
|
- |
|
Proceeds from exercise of warrants |
|
1,410 |
|
- |
|
Net cash provided by financing activities |
|
2,633 |
|
16,966 |
|
Effect of exchange rate changes on cash, cash equivalents &
restricted cash |
|
(75 |
) |
(13 |
) |
(Decrease) increase in cash, cash equivalents &
restricted cash |
|
(10,285 |
) |
8,077 |
|
|
|
|
|
Cash, cash equivalents & restricted cash,
beginning of period |
|
79,460 |
|
13,198 |
|
Cash, cash equivalents & restricted cash, end of
period |
|
69,175 |
|
21,275 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Reconciliation (Non-GAAP
Measure) |
|
|
|
|
|
|
Three months ended |
|
|
March 31, (unaudited) |
(In thousands of United States dollars) |
|
2021 |
|
2020 |
|
Net Loss |
|
(13,765 |
) |
(10,186 |
) |
Loss on remeasurement of warrant liability |
|
4,851 |
|
- |
|
Net Loss (Excluding
loss on remeasurement of warrant liability) |
|
(8,914 |
) |
(10,186 |
) |
Share-based compensation |
|
1,550 |
|
416 |
|
Goodwill impairment |
|
- |
|
1,682 |
|
Depreciation & amortization |
|
795 |
|
352 |
|
Interest expense, net |
|
978 |
|
836 |
|
Loss on investments / equity investment share of loss |
|
11 |
|
172 |
|
Foreign exchange loss |
|
759 |
|
48 |
|
Loss on fair value of derivative instrument |
|
- |
|
13 |
|
Other (income) expenses, net |
|
(602 |
) |
(57 |
) |
Adjusted EBITDA (Non-GAAP Measure) |
|
(5,423 |
) |
(6,724 |
) |
|
|
|
|
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