The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF)
(“
Flowr” or the “
Company”) herein
announces its financial and operational results for the fourth
quarter and fiscal year ended December 31, 2020.
“2020 was very much a transitional year for the
Company where we successfully completed our ambitious capital
expenditure programs in Canada and Portugal. In the second quarter
of 2020, the last grow room at the 85,000 sq. ft. facility in
Kelowna, known as the K1 facility, was commissioned. In the fourth
quarter of 2020, we completed the build out of the Aljustrel and
Sintra facilities in Portugal, which included the largest known
outdoor medical cannabis harvest in the European Union. In
addition, the R&D facility in partnership with Hawthorne Canada
Limited (“Hawthorne”) was commissioned in the
fourth quarter of 2020. Now that these state-of-the-art facilities
are built out and the Company has the financial capacity to ramp up
operations, we are planning to have 2021 see us reach our true
potential,” commented Steve Klein, Chair of the Company. “The first
quarter has seen us move quickly to refocus the business on our
Canadian and E.U. operations. We were able to raise additional
capital in the quarter and are now well funded to pursue our
operations. We are also pleased to have been able to add Darryl
Brooker to the team as our new Chief Executive Officer commencing
in May 2021 and have made additional key operational hires. Flowr
is well-positioned in 2021 from a financial and leadership
perspective to take advantage of our unique assets in Canada and
Portugal.”
“We continue to be very excited about Portugal
and the E.U. opportunity given the recent developments in Portugal.
Medical cannabis is now being sold in pharmacies in Portugal, which
we believe is a watershed moment for cannabis in the E.U.,”
commented Pauric Duffy, Managing Director, Holigen Holdings Limited
(“Holigen”). “With the acquisition of Terrace
Global Inc. (“Terrace”) we consolidated our joint
venture in Portugal and have approximately 2,700 kilograms of high
THC dry flower biomass from the operations that we expect to sell
in the second quarter. In addition, we are moving forward with
several tolling arrangements and our strategic warehousing
agreement with Tilray Inc. (“Tilray”) has given us
our first revenue out of the E.U. We continue to believe that
Holigen is a very unique asset for us in the E.U. where we now have
seen another country beyond Germany open up its medical cannabis
market.”
Key financial and operating highlights in the
fourth quarter and full year 2020:
- The Company generated gross revenue
of approximately $2.1 million in the fourth quarter, and recorded
its first revenues from its European operations.
- Full year gross revenue was $9.4
million and represents a 15% increase compared to the prior
year.
- Net revenue in the fourth quarter
of 2020 was $1.6 million, and $7.54 million on an annual basis
which is a 44% increase as compared to annual 2019.
- During the quarter, the Company
sold 311 kilograms of dried flower an increase of 44% as compared
to the same period in 2019. 70% of product sold in the fourth
quarter was the Company’s flagship BC Pink Kush strain. Total
annual dried flower sales were 1,405 kilograms.
- The average Flowr branded gross
price per gram less excise in the fourth quarter was $6.91 which
continues to reflect the Company’s positioning in the premium
segment. The Company did not experience price erosion versus
2019.
- The Company also transitioned to an
innovative glass jar packaging for its dried flower sales, further
differentiating itself in the ultra premium and premium
segment.
- Normalized cash cost per gram in
Canada was $3.84 in the fourth quarter, an increase versus the
third quarter due to lower production volume.
- SG&A and transaction costs of
$5.5 million in the fourth quarter of 2020 were $2.0 million higher
than in the third quarter of 2020 due to professional fees to close
the Terrace acquisition and other one-time expenses. 2020 annual
SG&A expenses and transaction costs of $19.5 million were 12.6%
lower than fiscal 2019.
- The Company completed the
acquisition of Terrace thereby improving the financial position of
the Company by consolidating $18.9 million in cash (net of
transaction costs), without any material increase to liabilities.
In connection with the Terrace acquisition, Flowr completed an
early conversion of $16.64 million of subordinated convertible
debentures and negotiated further covenant flexibility with
its senior lending syndicate.
- During the fourth quarter of 2020,
Flowr completed the first floor of the R&D facility, in
partnership with Hawthorne, a wholly-owned subsidiary of The Scotts
Miracle-Gro Company. The R&D facility is North America’s first
dedicated cannabis R&D facility focused on cultivation
techniques and systems.
- Holigen, in partnership with
Terrace, operated the largest known outdoor medical cannabis
operation in the E.U. yielding more than 2,700 kilograms of medical
cannabis biomass which is in the process of being sold.
Subsequent financial and operational highlights
post end of the fourth quarter:
- On April 15, 2021, Flowr announced
the appointment of Darryl Brooker as Chief Executive Officer of the
Company. Darryl brings an extensive track record of building
regulated CPG businesses in Canada with a hands-on approach to
management. The Company is also pleased to announce that Bonnie
Donovan has joined the Kelowna team as Vice-President, Operations.
Bonnie is a senior operations and logistics professional with
leadership experience in manufacturing operations, logistics,
contract management and finance. Bonnie was previously with such
companies as AB InBev and Canopy Growth Corp.
- Flowr shipped its first commercial
order into Quebec in January 2021.
- In January 2021, Flowr launched its
newest strain to market, BC Black Cherry. The first lot of BC Black
Cherry contained more than 24% THC and more than 3% terpenes.
- In January 2021, Flowr won three
awards at the ADCANN Awards 2020 including the coveted Brand of The
Year award. The annual awards, which are voted on by the public,
exist to celebrate the best marketing and advertising across
Canada’s growing cannabis industry. Alongside the Brand of The Year
Award, Flowr also won Campaign of the Year.
- On March 16, 2021, the Company
closed its previously announced bought deal short form prospectus
offering for gross proceeds of $15.9 million including the partial
exercise of the over-allotment option.
- On April 13, 2021, the Company
announced its filing of a final short form base shelf prospectus
(the “Final Shelf Prospectus”), pursuant to which
the Company is able to offer and issue up to $100,000,000 of common
shares, preferred shares, debt securities, subscription receipts
and warrants, or any combination thereof, at prices, and on terms
to be determined based on market conditions at the time of the
offering and as set out in an accompanying prospectus supplement,
during the 25-month period that the Final Shelf Prospectus remains
effective.
- On April 14, 2021, the Company
announced the results of a strategic review process designed to:
(i) reduce corporate overhead and headcount; (ii) dispose of
non-core assets, including duplicative licenses in the E.U.; and
(iii) implement further cost savings strategies with a view to
preserving cash and cash equivalents.
- On April 28, 2021, the Company
entered into an agreement with Rodeo Capital Limited (a member of
the Redfield Group of companies) to sell TCann Pty Ltd. for
AUD$500,000 representing the Company’s exit from the Australian
medical cannabis market and ending any further operating or capital
expenditures in Australia. Hyperion Capital Inc. advised the
Company with respect to the transaction.
FOURTH QUARTER AND FULL YEAR 2020
RESULTS
The following table summarizes the
Company’s key financial and operational results:
In thousands of CAD
dollars, |
|
Three months ended |
|
|
|
|
|
Year ended |
|
(except loss per share and
grams harvested) |
|
December 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Grams harvested - K1* |
|
1,195,260 |
|
|
665,325 |
|
|
4,336,240 |
|
|
1,851,895 |
|
Grams harvested - Flowr
Forest** |
|
— |
|
|
3,323,669 |
|
|
— |
|
|
3,323,669 |
|
Grams sold |
|
311,308 |
|
|
215,761 |
|
|
1,405,495 |
|
|
993,387 |
|
Gross revenue |
|
2,066 |
|
|
1,589 |
|
|
9,441 |
|
|
8,231 |
|
Net revenue*** |
|
1,600 |
|
|
51 |
|
|
7,513 |
|
|
5,205 |
|
Cost of sales |
|
2,904 |
|
|
2,685 |
|
|
11,468 |
|
|
7,609 |
|
Impairment of inventory |
|
842 |
|
|
5,303 |
|
|
3,517 |
|
|
5,303 |
|
Gross (loss) profit before
fair value adjustments |
|
(2,146 |
) |
|
(7,937 |
) |
|
(7,472 |
) |
|
(7,707 |
) |
SG&A |
|
4,614 |
|
|
6,616 |
|
|
18,614 |
|
|
21,670 |
|
Share-based compensation |
|
396 |
|
|
2,767 |
|
|
3,020 |
|
|
11,803 |
|
Transaction and listing
costs |
|
917 |
|
|
686 |
|
|
917 |
|
|
686 |
|
Restructuring costs |
|
— |
|
|
— |
|
|
726 |
|
|
— |
|
Impairment of assets |
|
83,979 |
|
|
— |
|
|
83,979 |
|
|
— |
|
Net loss |
|
(99,750 |
) |
|
(27,292 |
) |
|
(127,855 |
) |
|
(36,967 |
) |
Basic and diluted loss per
share |
|
(0.62 |
) |
|
(0.12 |
) |
|
(0.94 |
) |
|
(0.30 |
) |
Cash used in investing
activities |
|
20,524 |
|
|
(14,584 |
) |
|
6,241 |
|
|
(61,742 |
) |
Cash
from financing activities |
|
1,469 |
|
|
16,737 |
|
|
28,720 |
|
|
79,110 |
|
* Excludes trim**
Excludes trim, includes 1,904,662g dry gram equivalent
of fresh frozen cannabis calculated based on the historical drying
loss*** Net of excise tax, sales return and
concessions.
For a full discussion of Flowr’s operational and
financial results for the twelve months ended December 31, 2020,
please refer to the Company’s fourth quarter 2020 Management’s
Discussion & Analysis and Consolidated Financial Statements,
which have been filed on SEDAR.
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and
webcast to review these results today at 5:30 p.m. Eastern
Time.
Conference call and live webcast details
are as follows:
Webcast:
flowrcorp.com/investors/events-and-presentationsOnline
registration:
http://www.directeventreg.com/registration/event/8493169Conference
call and webcast replay details are as follows:
Toll Free: 1-800-585-8367Toll/International:
1-416-621-4642Passcode: 8493169Webcast: flowrcorp.com/investors
The replay of the conference call will be
available through midnight on Friday, May 7, 2021.
About The Flowr Corporation
The Flowr Corporation is a Toronto-headquartered
cannabis company with operations in Canada and Europe. 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 that is awaiting licensing from Health Canada. From
this campus, Flowr produces recreational and medicinal
products. Internationally, Flowr intends to service the
global medical cannabis market through its subsidiary Holigen,
which has a license for cannabis cultivation in Portugal and
operates GMP licensed facilities in Portugal.
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:Lance
EmanuelPresident and Interim CEO
CONTACT INFORMATION:
INVESTORS & MEDIA:Irina HossuChief Financial
OfficerIrina.hossu@flowr.ca
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 addition of a new chief executive officer commencing
in May, 2021; 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.
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.
The Flowr (TSXV:FLWR)
Historical Stock Chart
From Mar 2024 to Apr 2024
The Flowr (TSXV:FLWR)
Historical Stock Chart
From Apr 2023 to Apr 2024