Entourage Health Corp. (
TSX-V:
ENTG) (
OTCQX: ETRGF)
(
FSE:4WE) “
Entourage” or the
“
Company,” a Canadian producer and distributor of
award-winning cannabis products, today announced its financial
results for the three months and six months ending June 30, 2024.
The Company reported a total revenue of $12.2 million (net revenue
of $9.3 million, before excise duties and discounts). The Company
will host a conference call to discuss its financial and business
highlights on Tuesday, August 27, 2024, at 10 a.m. Eastern Time.
“Overall, our year-to-date performance aligns
with our expectations and prior achievements. As we move into Q3
and beyond, we are optimistic about the opportunities ahead,” said
George Scorsis, CEO and Chair. “This quarter, we focused on the
launch of new products and offerings under all our Entourage
Brands. The expansion of Dime Bag resulted in significant traction,
achieving over 90% distribution in Ontario. We remain dedicated to
bringing variety to our consumers and are confident that these
efforts will drive improved financial results as we progress
through the year.”
Summary of
Results
For the Quarter-Ended |
|
June 30, 2024 |
|
June 30, 2023 |
|
|
|
($000’s) |
|
($000’s) |
|
Total revenue |
|
12,218 |
|
13,365 |
|
*Net revenue (less
Excise Tax) |
|
9,263 |
|
10,174 |
|
Gross profit
before changes in fair value |
|
720 |
|
2,151 |
|
Gross margin %
before changes in fair value |
|
8% |
|
21% |
|
Loss and
comprehensive loss |
|
(10,325) |
|
(9,572) |
|
EBITDA** |
|
(3,238) |
|
(3,513) |
|
|
|
|
|
As at |
|
June 30, 2024 |
|
December 31, 2023 |
|
|
|
($000’s) |
|
($000’s) |
|
Cash and cash
equivalents |
|
2,694 |
|
11,254 |
|
Inventory |
|
11,157 |
|
10,010 |
|
Working
capital |
|
(163,248) |
|
(146,909) |
|
*Net revenue defined as revenue (i.e., gross
revenue less discounts and customer incentives but inclusive of
freight) less excise taxes** EBITDA is not a recognized measurement
under International Financial Reporting Standards (IFRS), and this
data may not be comparable to data presented by other companies.
Management defines EBITDA as adjusted to exclude interest, tax,
depreciation, stock compensation, fair value changes and other
non-cash items, and non-recurring items. This data is furnished to
provide additional information and does not have any standardized
meaning prescribed by IFRS. The Company uses this non-IFRS measure
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 this non-IFRS measure in evaluating companies, many
of which present similar metrics when reporting their results. As
other companies may calculate EBITDA differently than the Company,
this metric may not be comparable to similarly titled measures
reported by other companies. We caution readers that 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. See the Company management's discussion
and analysis for the three and six months ended June 30, 2024 (the
“Q2 2024 MD&A”), for a detailed reconciliation of adjusted
EBITDA to net income/(loss). The Company’s financial statements for
the three and six months ended June 30, 2024, and the Q2 2024
MD&A are available on SEDAR+ at www.sedarplus.ca.
“We have achieved stability despite a
challenging environment, highlighting the resilience of our
business model and the strength of our long-term strategy,” said
Vaani Maharaj, CFO. “Although Q2 presented its share of market
fluctuations, our steady performance over the past six months
demonstrates our commitment to overcoming these obstacles. As we
move forward, our focus on execution and capital efficiency will be
key to driving future growth and success.”
Revenue Highlights
|
|
Q2 2024 |
|
Q2 2023 |
|
Change YOY |
|
|
|
($000’s) |
|
($000’s) |
|
% |
|
Net Revenue by
Channel |
|
|
|
|
|
|
Medical |
|
4,141 |
|
4,163 |
|
(1%) |
|
Adult use |
|
4,104 |
|
5,786 |
|
(29%) |
|
Bulk |
|
1,018 |
|
225 |
|
351% |
|
Total Net Revenue |
|
9,263 |
|
10,174 |
|
(9%) |
|
|
|
|
|
|
|
|
|
Financial Highlights
- Entourage realized total revenues
of $12.2 million and $28.6 million for the three and six months
ended June 30, 2024. Despite a slight decrease of approximately 9%
in the most recent quarter, the overall six-month performance
remains consistent with the previous period, reflecting stable
operational performance and sustained revenue generation over the
six-month period.
- For the three and six months ended
June 30, 2024, the Company reported gross profit before changes in
fair value of $0.7 million, 8% of net revenue and $6.5 million, 30%
of net revenue, respectively. This compares to $2.1 million, 21% of
net revenue and $5.1 million, 23% of net revenue for the same
periods in the prior year.
- For the three months ended June 30,
2024, cost of goods sold (COGS) increased by 6% to $8.5 million
from $8.0 million in the prior year. For the six months ended June
30, 2024, COGS decreased by 8% to $15.4 million from $16.8 million,
mainly due to a reduction in provisions and write-downs, reflecting
better inventory management.
- During the three and six months
ended June 30, 2024, EBITDA increased by $274,701 or 8% to $3.2
million and $11.7 million or 159% to $4.3 million, compared to the
same periods in 2023.
Corporate Highlights During and After
the Second Quarter of 2024
- The Company announced in August
that it was in breach of certain financial covenants and other
obligations under each of its Senior Credit Agreement and
Subordinated Credit agreements with an affiliate of the LiUNA
Pension Fund of Central and Eastern Canada
(“LPF”). The Company is working collaboratively
with LPF to agree on amended debt terms. As a positive step
forward, the Company received a renewed forbearance letter dated
August 2, 2024, waiving the Company’s breaches until October 8,
2024, subject to the satisfaction or waiver of certain
conditions.
Operational and Commercial
Highlights
- Increased Production
Capacity: Entourage increased production to over 2.0
million monthly pre-rolls.
- Product Launches in
Alberta: During the second quarter, the Company introduced
six new products under Entourage Brands, including expanding 7g
flower and launching two new Color 10-pack SKUs: Sour Grapefruit
Haze and Pedro's Prima.
- Ontario Launches:
Entourage Brands rolled out three new products in Ontario,
highlighted by the launch of the latest Color Cannabis cultivar,
Pedro's Prima, a descendant of the popular Pedro's Sweet Sativa.
Additionally, Saturday introduced the Sour Blueberry-infused XL
blunt.
- Expansions in British
Columbia: In B.C., the Company launched four new SKUs,
including the expansion of Color Cannabis live resin pre-rolls and
two new 10-packs: Sour Grapefruit Haze and Phantom Sunset, now
available in over 50% of B.C.'s retail outlets.
- Dime Bag Growth in
Ontario: Dime Bag continued its strong performance in
Ontario, achieving quarter-over-quarter sales growth and reaching a
distribution milestone of over 90% coverage.
- Starseed
Medicinal: The successful launch of two new dried flower
products, Lemon Octane and Pineapple God, gained significant
traction, becoming popular choices among the medical patient
population.
Company Outlook
Entourage has demonstrated early successes that
set a strong, positive path for the remainder of 2024. The
Company's strategic initiatives, including the launch of innovative
products, the introduction of large-format offerings, and the
expansion of Saturday's portfolio, are paving the way for growth.
The favourable market response to Dime Bag, with its notable
distribution milestone, highlights the potential to grow market
share in the pre-roll segment.
The Company is strategically focusing on
expanding our distribution channels across Canada, launching
targeted products satisfying diverse consumer preferences, and
forming strategic partnerships to scale operations and meet demand.
By leveraging data-driven market insights, the Company is
well-positioned for sustainable growth and profitability.
Entourage’s focus on innovation, quality, and operational
excellence aims to strengthen the Company’s position within the
industry.
Conference Call Details
A conference call will be hosted by Mr. Scorsis
and Ms. Maharaj, with management available for questions following
opening remarks:
Date: Tuesday, August 27,
2024Time: 10 a.m. Eastern
TimeToll-Free Number: 1-800-267-6316
Conference ID: ETRGFQ2
Webcast:
https://events.q4inc.com/attendee/382521020
Company Update
The Company announced today that, in accordance
with the provisions of its omnibus equity incentive compensation
plan (the "Omnibus Plan"), the Company has
authorized the issuance of an aggregate of 1,200,000 deferred share
units (“DSUs”) to certain members of its Board of Directors as
compensation for services provided in the second quarter of 2024.
The DSUs will vest on June 30, 2025, and are granted in lieu of a
portion of cash compensation for services rendered during the
quarter.
The Company earlier announced on April 24, 2024,
that in accordance with the provisions of its Omnibus Plan, an
aggregate of 1,600,000 DSUs respectively were issued to the Board
of Directors of the Company as compensation for services for the
fourth quarter of 2023 and the first quarter of 2024 with vesting
dates of December 31, 2024, and March 31, 2025, respectively. The
Company wishes to clarify that the sum of 1,331,507 DSUs were
issued to certain members of the Board of Directors as compensation
for their services for the first quarter of 2024 and not 1,600,000
DSUs. 131,507 DSUs vest on January 30, 2024, and 1,200,000 DSUs
vest on March 31, 2025.
About Entourage Health
Corp. Entourage Health Corp. is the publicly traded
parent Company of Entourage Brands Corp., a licence holder
producing and distributing cannabis products for the medical and
adult-use markets. The Company owns and operates a fully licensed
26,000 sq. ft. Aylmer, ON processing facility. With its Starseed
Medicinal medical-centric brand, Entourage has expanded its
multi-channelled distribution strategy. Starseed's industry-first,
exclusive partnership with LiUNA, the largest construction union in
Canada, along with employers and union groups, complements
Entourage's direct sales to medical patients. Entourage's elite
adult-use product portfolio includes Color Cannabis, Saturday
Cannabis – and now Dime Bag and Syndicate – sold across eight
provincial distribution agencies. Exclusive Canadian producer and
distributor of award-winning U.S.-based wellness brand Mary's
Medicinals, sold in both medical and adult-use channels. In
addition, Entourage also entered into an exclusive agreement with
Irwin Naturals, a renowned nutraceutical and herbal supplement
formulator of branded wellness products sold across North
America.
Follow Entourage and its brands on:
LinkedIn
Instagram: Color Cannabis,
Saturday Cannabis, Starseed &
Syndicate
For additional information or investor or media
inquiries:Catherine FlamanSenior Director, Communications
& Corporate
Affairs416-910-0279catherine.flaman@entouragecorp.com
Forward Looking Information
This press release contains "forward-looking
information" within the meaning of applicable Canadian securities
legislation which are based upon Entourage's current internal
expectations, estimates, projections, assumptions and beliefs and
views of future events. Forward-looking information can be
identified using forward-looking terminology such as "expect",
"likely", "may", "will", "should", "intend", "anticipate",
"potential", "proposed", "estimate" and other similar words,
including negative and grammatical variations thereof, or
statements that certain events or conditions "may", "would" or
"will" happen, or by discussions of strategy.
The forward-looking information in this news
release is based upon the expectations, estimates, projections,
assumptions, and views of future events which management believes
to be reasonable in the circumstances. Forward-looking information
includes estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance, or other statements that are not
statements of fact. Forward-looking information necessarily involve
known and unknown risks, including, without limitation, risks
associated with general economic conditions; adverse industry
events; loss of markets; future legislative and regulatory
developments; inability to access sufficient capital from internal
and external sources, and/or inability to access sufficient capital
on favourable terms; the cannabis industry in Canada generally; the
ability of Entourage to implement its business strategies;
competition; crop failure; and other risks.
Any forward-looking information speaks only as
of the date on which it is made, and, except as required by law,
Entourage does not undertake any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise. New factors emerge from
time to time, and it is not possible for Entourage to predict all
such factors. When considering this forward-looking information,
readers should keep in mind the risk factors and other cautionary
statements in Entourage’s disclosure documents filed with the
applicable Canadian securities' regulatory authorities on SEDAR+ at
www.sedarplus.ca The risk factors and other factors noted in
the disclosure documents could cause actual events or results to
differ materially from those described in any forward-looking
information.
Third Party Information
This press 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.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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