Cansortium Reports Second Quarter 2021 Financial Results

Rhea-AI Summary

Cansortium reported a 24% year-over-year revenue growth in Q2 2021, totaling $16.5 million. The Company achieved adjusted EBITDA of $5.2 million, doubling from the previous year. The significant balance sheet improvement included nearly $90 million for debt cancellation and extended maturities to 2025. Despite minor supply chain delays pushing back production schedules, Cansortium revised its 2021 revenue outlook to $70-$80 million, with adjusted EBITDA expected between $18-$26 million. New dispensaries are opening in Florida and Pennsylvania to support growth.

Positive

• Q2 2021 revenue increased 24% to $16.5 million.
• Adjusted EBITDA rose approximately 100% to $5.2 million.
• Successfully improved balance sheet with nearly $90 million in financing.
• Expansion plans fully funded, with new dispensaries opening.

Negative

• Minor supply chain and construction delays affecting production timelines.
• Delays in the Michigan market impacting 2021 guidance.

Q2 Revenue up 24% YoY to $16.5 Million; Adjusted EBITDA up ~2x to $5.2 Million

Management to Host Conference Call Tomorrow at 8:30 A.M. Eastern Time

MIAMI, Aug. 24, 2021 /PRNewswire/ - Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated cannabis company operating under the Fluent™ brand, today announced financial results for the second quarter ended June 30, 2021, as well as recent operational highlights. Unless otherwise indicated, all results are presented in U.S. dollars.

"We continued to drive growth and profitability in our key markets during the second quarter, as reflected by another month of record sales in May," said CEO Robert Beasley. "Our continued focus on providing differentiated, high-quality flower and wellness products has been well received by our patients. Additionally, we are now offering several boutique strains that have never been sold in the Florida market."

Cansortium significantly improved its balance sheet during the quarter with debt and equity financings of nearly $90 million, which enabled the Company to cancel legacy debt and extend maturities to 2025, as well as redeem all outstanding convertible notes. Cansortium now has both the capital and flexibility needed to execute its expansion plans.

Mr. Beasley continued, "Our core operations in Florida are performing well and our expansion plans are fully-funded. There have been minor supply chain and construction delays for several projects in Florida, which will delay the expected timing of our production ramp and push our schedule back by approximately two months. In addition, we have experienced delays in the Michigan market which, albeit a small market for us, will also impact our guidance for 2021 as we continue to hold product for sale to hedge against volatile pricing.

"Overall, we continue to expect significant growth in 2021.  Our revised outlook for 2021 calls for $70-80 million of revenue with $18-26 million of adjusted EBITDA¹, reflecting year-over-year growth of approximately 43% and 114%, respectively. We see upside to these numbers if the construction market opens up earlier than our current projections.

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1 Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted EBITDA from EBITDA plus (minus) unrealized loss (gain) on embedded derivatives, plus (minus) certain one-time non-operating expenses, as determined by management. A reconciliation from adjusted EBITDA to net loss is included in the accompanying financial schedules.

"Other progress on various initiatives includes last week's opening of a new dispensary in Mechanicsburg, Pennsylvania, and securing our third Pennsylvania location in Annville, which we expect to open by the end of the year. In addition, we expect to open our 27^th dispensary in Florida by the end of the third quarter and have identified four additional sites for continued growth in the first half of 2022."

Q2 2021 Financial Highlights (vs. Q2 2020)

• Revenue increased 24% to $16.5 million compared to $13.2 million.
• Florida revenue increased 22% to $14.6 million compared to $12.0 million.
• Adjusted gross profit² increased 24% to $10.7 million or 65.1% of revenue, compared to $8.7 million or 65.5% of revenue.
• Adjusted EBITDA approximately doubled to $5.2 million or 31.8% of revenue, compared to $2.6 million or 19.7% of revenue.
• At June 30, 2021, the Company had approximately $26 million of cash and cash equivalents and $71 million of total debt, with approximately 264 million fully diluted shares outstanding (based on treasury stock method and share price on June 30, 2021).

Recent Operational Highlights

• Launched Sweetwater, a new line of premium cannabis whole flower.
• Hired a new Head of Cultivation.
• Appointed multiple new board members, including Mark Eckenrode, Alex Spiro, and the Company's new Executive Chairman of the Board, William Smith.
• In July, the Company opened its 26^th Florida dispensary in Deerfield Beach.
• All convertible notes from the Company's capital structure were converted to shares during the second quarter. A total of approximately $18.0 million of debt was converted into common shares of the Company.
• The Company sold approximately 2,600 lbs. of biomass from Michigan inventory in July.

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2 Adjusted gross profit is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The Company calculates adjusted gross profit from gross profit plus (minus) the changes in fair value of biological assets, as presented in the consolidated statement of operations.

2021 Outlook
The Company is revising its 2021 outlook for revenue to range between $70-$80 million, with adjusted EBITDA ranging between $18-$26 million. This compares to approximately $52 million of revenue and $10 million of adjusted EBITDA in 2020.

In Florida, Cansortium continues to expect a total of 27 dispensaries to be operational by the end of 2021 and has identified four additional locations to be opened in 2022. In Michigan, the Company is holding 900 lbs. of flower prepared for sale. However, due to the pricing volatility, the Company is timing the sales cycle to realize optimal value.

The Company's unaudited consolidated financial statements and accompanying notes, along with the Management Discussion and Analysis (MD&A), will be available under the Company's profile on SEDAR at www.sedar.com and are also accessible through the Investor Relations section of the Company's website at www.getfluent.com.

Conference Call
The Company will host a conference call and live audio webcast tomorrow at 8:30 a.m. Eastern time to discuss its financial results and operational highlights.

Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10016120
Link: Cansortium Q2 2021 Earnings Call

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 Elevate IR at (949) 200-4603.

The conference call will also be available for replay via the News & Events section of the Company's investor relations website at https://investors.getfluent.com/.

About Cansortium Inc.
Cansortium is a vertically-integrated cannabis company with licenses and operations in Florida, Pennsylvania, Michigan and Texas. The Company operates under the Fluent™ brand and is dedicated to being one of the highest quality cannabis companies for the communities it serves. This is driven by Cansortium's unrelenting commitment to operational excellence in cultivation, production, distribution and retail. The Company is headquartered in Miami, Florida.

Cansortium Inc.'s common shares trade on the CSE under the symbol "TIUM.U" and on the OTCQX Best Market under the symbol "CNTMF." For more information about the Company, please visit www.getfluent.com.

Forward-Looking Information
Certain information in this news release may constitute forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates, and projections regarding future events.

Forward-looking information is necessarily based on many opinions, assumptions, and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in the public documents of the Company available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

For further information: www.getfluent.com

CANSORTIUM INC.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(USD '000)
				June 30, 2021			December 31, 2020
Assets
Current assets
Cash and cash equivalents				$	26,004		$	3,392
Accounts receivable				122			148
Inventory, net				5,560			5,006
Biological assets				2,495			1,914
Note receivable				4,462			3,859
Prepaid income taxes				1,598			-
Prepaid expenses and other current assets				1,267			1,365
Total current assets				41,508			15,684
Investment held for sale				200			200
Property and equipment, net				25,309			19,517
Intangible assets, net				96,269			97,035
Right-of-use assets				19,008			19,094
Deposit				2,727			1,050
Goodwill				1,526			1,526
Other assets				486			425
Total assets				$	187,033		$	154,531
Liabilities
Current liabilities
Accounts payable				4,530			4,808
Accrued liabilities				6,834			7,614
Income taxes payable				-			8,925
Derivative liabilities				-			7,412
Current portion of notes payable				375			38,583
Lease obligations				2,181			1,894
Total current liabilities				13,920			69,236
				-
Notes payable, net of current portion and loan issuance costs				53,410			13,182
Lease obligations, net of current portion				20,889			20,811
Deferred income taxes				24,430			23,471
Total liabilities				112,649			126,700
Shareholders' equity
Share capital				196,588			137,835
Share-based compensation reserve				5,717			4,675
Equity conversion feature				11,044			11,044
Warrants				30,148			13,265
Accumulated deficit				(168,723)			(138,609)
Accumulated other comprehensive loss				(390)			(379)
Total shareholders' equity				74,384			27,831
Total liabilities and shareholders' equity				$	187,033		$	154,531

 

CANSORTIUM INC.
STATEMENT OF OPERATIONS
USD ('000)
				For the three months ended June 30,							For the six months ended June 30,
				2021				2020			2021			2020
Revenue, net of discounts				$		16,469		$	13,241		$	31,584		$	23,404
Cost of goods sold				5,745				4,567			11,152			8,227
Gross profit before fair value adjustments				10,724				8,674			20,432			15,177
Realized fair value of increments on inventory sold				(4,727)				(4,953)			(9,320)			(12,515)
Unrealized change in fair value of biological assets				(1,224)				7,572			5,655			19,682
Gross profit				4,773				11,293			16,767			22,344
Expenses
General and administrative				2,868				3,064			6,156			6,202
Share-based compensation				285				2,362			3,517			3,249
Sales and marketing				3,515				3,481			7,061			6,602
Depreciation and amortization				1,547				1,572			3,078			3,074
Total expenses				8,215				10,479			19,812			19,127
Loss from operations				(3,442)				814			(3,045)			3,217
Other expense (income)
Interest expense, net				4,719				3,798			7,849			7,557
Change in fair market value of derivative liability				(1,143)				(828)			(1,551)			1,007
Loss on debt settlement				10,751				-			10,751			-
Private placement issuance expense				6,640				-			6,640			-
Equity loss on investment in associate				-				31			-			215
Loss on debt restructuring				-				-			-			8,065
(Gain)/Loss on disposal of assets				1				(54)			50			(54)
Other (income) expense				(18)				(8)			(131)			7
Total other expense (income)				20,950				2,939			23,609			16,797
Loss before income taxes				(24,392)				(2,125)			(26,654)			(13,580)
Income taxes				594				3,308			3,431			6,141
Net loss				(24,986)				(5,433)			(30,085)			(19,721)
(Gain)/Loss from discontinued operations				33				34			31			(342)
Net loss after discontinued operations				$		(25,019)		$	(5,467)		$	(30,115)		$	(19,379)
Other comprehensive loss:
Foreign exchange translation gain (loss)				(16)				254			(11)			184
Comprehensive loss				$		(25,035)		$	(5,213)		$	(30,126)		$	(19,195)
Net loss per share
Basic				$		(0.11)		$	(0.03)		$	(0.14)		$	(0.10)
Diluted				$		(0.11)		$	(0.03)		$	(0.14)		$	(0.10)

 

CANSORTIUM INC.
STATEMENTS OF CASH FLOWS
(USD '000)
	For the six months ended June 30,
	2021		2020
Operating activities
Net loss	$	(30,115)	$	(19,379)
Adjustments to reconcile net loss to net cash used in operating activities:
Unrealized gain on changes in fair value of biological assets	(5,655)		(19,682)
Realized gain on changes in fair value of biological assets	9,320		12,515
Share-based compensation	3,517		3,249
Depreciation and amortization	4,675		4,059
Discontinued operations	31		(342)
Accretion of convertible debentures	2,242		3,834
Interest on lease liabilities	1,257		1,987
Change in fair market value of derivative	(1,551)		1,007
Loss on investment in associate	-		215
Loss on debt restructuring	-		8,065
Loss on debt settlement	10,751		-
(Gain)/Loss on disposal of assets	50		(54)
Deferred tax expense	959		1,862
Changes in operating assets and liabilities:
Accounts receivable	26		11
Inventory	(554)		(5,401)
Biological assets	(4,246)		5,265
Prepaid expenses and other current assets	1,875		(646)
Right-of-use assets	(1,280)		(728)
Right-of-use liabilties	1,262		-
Other assets	(61)		(84)
Accounts payable	(278)		968
Accrued liabilities	(651)		1,083
Income taxes	(10,523)		4,410
Other liabilities	-		115
Net cash provided by (used in) operating activities	(18,949)		2,329
Investing activities
Purchases of property and equipment	(8,408)		(2,126)
Payment of notes receivable	284		150
Proceeds from sale of property and equipment	24		-
Notes receivable	(1,020)		(696)
Proceeds from sale of subsidiary	-		600
Net cash used in investing activities	(9,120)		(2,072)
Financing activities
Proceeds from issuance of shares and warrants	23,730		4,351
Proceeds from issuance of debt, net of loan issuance costs	63,133		62
Payment of lease obligations	(2,154)		(2,133)
Exercise of warrants	1,365		-
Principal repayments of notes payable	(35,382)		(35)
Net cash provided by financing activities	50,692		2,245
Effect of foreign exchange on cash and cash equivalents	(11)		184
Net increase (decrease) in cash and cash equivalents	22,612		2,686
Cash and cash equivalents, beginning of period	3,392		2,516
Cash and cash equivalents, end of period	$	26,004	$	5,202

 

CANSORTIUM INC.
ADJUSTED EBITDA RECONCILIATION
USD ('000)
	Three months ended
	June 30,		June 30,
	2021		2020		Variance
Net loss	$	(25,019)	$	(5,467)	$	(19,552)
Interest expense	4,719		3,798		921
Income taxes	594		3,308		(2,714)
Depreciation and amortization	2,429		2,064		365
EBITDA	$        (17,277)		$	3,702	$	(20,979)
	Three months ended
	June 30,		June 30,
	2021		2020		Variance
EBITDA	$	(17,277)	$	3,702	$	(20,979)
Change in fair value of biological assets	5,951		(2,619)		8,570
Change in fair market value of derivative	(1,143)		(828)		(315)
Loss on debt settlement	10,751		-		10,751
Private placement issuance expense	6,640		-		6,640
Share-based compensation	285		2,362		(2,077)
Discontinued operations	33		34		(1)
Loss on disposal of assets	1		$	(54)	55
Other non-recurring expense/(income)	(18)		31		(49)
Adjusted EBITDA	$	5,223	$	2,628	$	2,595

 

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SOURCE Cansortium Inc

FAQ

What are the financial results for Cansortium in Q2 2021?

Cansortium reported Q2 2021 revenue of $16.5 million, a 24% increase year-over-year, and adjusted EBITDA of $5.2 million, up approximately 100%.

What is Cansortium's revenue guidance for 2021?

Cansortium's revised revenue guidance for 2021 is between $70 million and $80 million.

What operational challenges has Cansortium faced recently?

Cansortium has experienced minor supply chain and construction delays that are affecting its production ramp-up and market guidance.

When will Cansortium host a conference call about its financial results?

Cansortium will host a conference call to discuss its financial results on August 25, 2021, at 8:30 A.M. Eastern Time.