Cansortium Reports Second Quarter 2024 Results

Rhea-AI Summary

Cansortium Inc. (CNTMF) reported strong Q2 2024 results with revenue up 12% YoY to a record $27.3 million. Key highlights include:

- Florida revenue increased 15% to $23.1 million
- Adjusted gross profit was $12.3 million or 48.6% of revenue
- Adjusted EBITDA rose to $7.7 million
- Cash flow from operations was $2.8 million
- The company had $8.5 million in cash and $67.5 million in total debt as of June 30, 2024

Cansortium operates 35 stores in Florida and plans to open 4 new stores by Q2 2025. The company is also progressing with its business combination with RIV Capital, expected to close in Q4 2024.

Positive

• Record Q2 revenue of $27.3 million, up 12% YoY
• Florida revenue increased 15% to $23.1 million
• Adjusted gross profit margin improved to 48.6% from 46.4% YoY
• Adjusted EBITDA increased to $7.7 million from $6.8 million YoY
• 11th consecutive quarter of positive cash flow from operations
• Plans to open 4 new stores in Florida by Q2 2025

Negative

• Cash flow from operations decreased to $2.8 million from $4.8 million YoY
• Total debt of $67.5 million as of June 30, 2024

- Q2 Revenue up 12% YoY to a record $27.3 Million

- 11^th Consecutive Quarter of Positive Cash Flow from Operations

TAMPA, Fla., Aug. 22, 2024 /PRNewswire/ - Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated, multi-state cannabis company operating under the FLUENT™ brand, today announced financial and operating results for the  quarter ended June 30, 2024. Unless otherwise indicated, all financial results are presented in U.S. dollars.

"We delivered another quarter of year-over-year revenue growth and positive cash flow generation during the second quarter as we continued to execute on our growth objectives," said CEO Robert Beasley. "We continue to lay the foundation for growth and scalability while remaining excited about the opportunities ahead."

"In Florida, we have focused on enhancing manufacturing efficiencies and cultivation yields, which has resulted in both an improvement of product quality and cost of goods sold. This has allowed us to retain high profit margins while price competition continues to heat up."

"Looking ahead, we are excited about our upcoming business combination with RIV Capital and have already begun key integration steps. Our shared focus remains on driving growth and profitability by leveraging our core strengths in cultivation, operating expertise and inventory optimization to drive results for shareholders. We remain laser focused on our existing portfolio in Florida, Pennsylvania and Texas and look forward to closing the RIV Capital agreement in the fourth quarter."

Q2 2024 Financial Highlights (vs. Q2 2023)

• Revenue increased 12% to $27.3 million compared to $24.4 million.
• Florida revenue increased 15% to $23.1 million compared to $20.1 million.
• Adjusted gross profit¹ was $12.3 million or 48.6% of revenue, compared to $10.2 million or 46.4% of revenue.
• Adjusted EBITDA was $7.7 million compared to $6.8 million, with the increase primarily driven by higher revenues due to additional production and stores. 
• Cash flow from operations for the three months ended June 30, 2024 was $2.8 million compared to $4.8 million in the prior year primarily due to settlement of tax payments that had been carried over from previous periods.
• On June 30, 2024, the Company had approximately $8.5 million of cash and cash equivalents and $67.5 million of total debt, with approximately 300 million shares outstanding.

Recent Operational Highlights

• In Florida, Cansortium currently operates 35 stores and anticipates opening 4 new stores by Q2 2025.
• In Pennsylvania, Cansortium completed renovations and expanded its Hanover store, refreshing its look and doubling its size. The store remained operational for the entirety of renovations.
• The company has begun integration activities with RIV Capital sharing best operational practices and driving efficiencies in advance of the business combination expected to close in Q4 2024.

About Cansortium Inc.
Cansortium is a vertically-integrated cannabis company with licenses and operations in Florida, Pennsylvania 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 Tampa, Florida.

Cansortium Inc.'s Common Shares trade on the CSE under the symbol "TIUM.U" and on the OTCQB Venture Market under the symbol "CNTMF". For more information about the Company, please visit www.getFLUENT.com.

________________________________________

1 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.

Forward-Looking Information
Certain information in this news release may constitute forward-looking information within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. 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 the Company's expectations, estimates, and projections regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control.

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.

Company Contact
Robert Beasley, CEO
(850) 972-8077
investors.getFLUENT.com 

Investor Relations Contact
investors@cansortiuminc.com 

Cansortium Inc.
Consolidated Statements of Financial Position
As of June 30, 2024, and December 31, 2023
 (Amounts expressed in thousands of United States Dollars unless otherwise stated)

					June 30,		December 31,
					2024		2023
	Assets
	Current assets
	Cash				$                  8,483		$                 10,521
	Trade receivable				83		215
	Inventory, net		Note 3		13,400		9,244
	Biological assets		Note 4		4,279		331
	Prepaid expenses and other current assets		Note 5		2,705		1,882
	Total current assets				28,950		22,193
	Property and equipment, net		Note 6		26,138		27,642
	Intangible assets, net		Note 7		94,845		93,593
	Right-of-use assets, net		Note 12		32,187		31,943
	Goodwill		Note 8		1,525		1,525
	Other assets				997		907
	Total assets				$           184,642		$              177,803
	Liabilities
	Current liabilities
	Trade payable				$                  5,676		$                     5,525
	Accrued liabilities				10,445		9,779
	Income taxes payable				28,666		22,009
	Derivative liabilities		Note 10		1,715		9,109
	Current portion of notes payable, net		Note 11		62,063		213
	Current portion of lease liabilities		Note 12		3,081		2,872
	Total current liabilities				111,646		49,507
	Notes payable, net		Note 11		5,489		61,189
	Lease liabilities		Note 12		37,944		37,242
	Deferred tax liability				20,365		17,398
	Other long-term liabilities		Note 20		3,447		3,882
	Total liabilities				178,891		169,218
	Shareholders' equity
	Share capital		Note 13		183,690		183,690
	Share-based compensation reserve				6,931		6,739
	Equity conversion feature				6,867		6,677
	Warrants		Notes 13		29,634		29,634
	Accumulated deficit				(221,037)		(217,821)
	Foreign currency translation reserve				(334)		(334)
	Total shareholders' equity				5,751		8,585
	Total liabilities and shareholders' equity				$           184,642		$              177,803

Cansortium Inc.
Statement of Operations
For the three- and six-months ending June 30, 2024 and 2023 
 (Amounts expressed in thousands of United States Dollars unless otherwise stated)

				For the three months ended				For the six months ended
				June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Revenue, net of discounts				$              27,269		$                 24,430		$              52,496		$                  46,486
Cost of goods sold				13,490		11,448		26,456		23,275
Gross profit before fair value adjustments				13,779		12,982		26,040		23,211
Fair value adjustments on inventory sold				(1,788)		2,211		(160)		4,552
Unrealized gain (loss) on changes    in fair value of biological assets		Note 4		8,268		(3,035)		9,315		(8,092)
Gross profit				20,259		12,158		35,195		19,671
Expenses
General and administrative		Note 14		4,607		2,571		8,570		4,883
Sales and marketing		Note 14		6,018		5,576		11,452		9,574
Depreciation and amortization		Notes 6,7		1,780		1,929		3,510		3,777
Share-based compensation				142		177		191		415
Total expenses				12,547		10,253		23,723		18,649
Income from operations				7,712		1,905		11,472		1,022
Other expense (income)
Finance costs, net		Note 19		4,835		4,324		9,546		8,573
Gain on change in fair value of derivative liability		Notes 10		(5,707)		(442)		(7,394)		(164)
Loss on disposal of assets				-		-		212		70
Loss from termination of a contract				3		82		3		3
Other miscellaneous income				(2)		-		-		67
Total other (income) expense				(871)		3,964		2,367		8,549
Income (loss) before income taxes				8,583		(2,059)		9,105		(7,527)
Income tax expense		Note 9		7,636		3,291		12,321		5,205
Net comprehensive income (loss)				$                       947		$                  (5,350)		$               (3,216)		$               (12,732)
Net loss per share
Basic and diluted - continuing operations				$                     0.00		$                     (0.02)		$                  (0.01)		$                      (0.05)
Weighted average  number of shares
Basic number of shares				299,573,039		296,938,910		299,551,203		286,804,241
Diluted number of shares				341,443,706		352,230,174		341,763,315		339,972,379

Cansortium Inc.
Consolidated Statements of Cash Flow
For the six months ended June 30, 2024 and 2023 
 (Amounts expressed in thousands of United States Dollars unless otherwise stated)

		For the six months ended
		June 30, 2024	June 30, 2023
	Operating activities
	Net loss from continuing operations	$                              (3,216)	$                          (12,732)
	Adjustments to reconcile net loss to net cash provided by operating activities:
	Unrealized loss (gain)  on changes in fair value of biological assets	(9,315)	8,092
	Realized loss (gain) on changes in fair value of biological assets	160	(4,552)
	Share-based compensation	191	415
	Depreciation and amortization	7,473	8,042
	Accretion and interest of convertible debentures	284	266
	Accretion and interest of term loan	6,802	6,262
	Interest of equipment loan	-	13
	Interest on insurance financing	30	-
	Interest on convertible promissory note	49	-
	Loss on disposal of assets	212	70
	Change in fair market value of derivative	(7,394)	(164)
	Interest on lease liabilities	2,405	2,037
	Deferred tax expense	2,898	(1,517)
	Changes in operating assets and liabilities:
	Trade receivable	132	1
	Inventory	8,132	7,402
	Biological assets	(7,081)	(8,886)
	Prepaid expenses and other current assets	687	11
	Right of Use Assets/Liabilities	(2,525)	67
	Other assets	(90)	(40)
	Trade payable	152	(135)
	Accrued liabilities	666	(623)
	Other long-term liabilities	(435)	(791)
	Income taxes payable	6,657	6,722
	Net cash provided by operating activities	6,874	9,960
	Investing activities
	Purchases of property and equipment	(3,902)	(4,339)
	Purchase of intangible assets	(1,332)	-
	Net cash used in investing activities	(5,234)	(4,339)
	Financing activities
	Net proceeds from issuance of shares and warrants	-	2,993
	Net proceeds from convertible note	3,000	-
	Payment of lease obligations	(1,412)	(3,188)
	Net proceeds from auto and equipment loan	48	-
	Principal repayments of notes payable	(5,314)	(4,988)
	Net cash used in financing activities	(3,678)	(5,183)
	Net increase (decrease) in cash	(2,038)	438
	Cash, beginning of period	10,521	8,359
	Cash, end of period	$                                 8,483	$                                 8,797

Cansortium Inc.
Adjusted EBITDA Calculation
(Amounts expressed in thousands of United States Dollars unless otherwise stated)

	Three months ended
	June 30,	June 30,
	2024	2023	Variance
Net loss	$                                947	$                        (5,350)	$                  6,297
Finance costs, net	4,835	4,324	511
Income taxes	7,636	3,291	4,345
Depreciation and amortization	3,771	3,887	(116)
EBITDA	$                        17,189	$                           6,152	$              11,037
	Three months ended
	June 30,	June 30,
	2024	2023	Variance
EBITDA	$                        17,189	$                           6,152	$              11,037
Change in fair value of biological assets	(6,480)	824	(7,304)
Change in fair market value of derivative	(5,707)	(442)	(5,265)
Professional Fees	1,852	-	1,852
One-time employee costs	454	-	454
Loss on termination of contract	-	82	(82)
Share-based compensation	142	177	(35)
Other non-recurring expense/(income)	240	-	240
Adjusted EBITDA	$                           7,690	$                           6,793	$                       897
	Six months ended
	June 30,	June 30,
	2024	2023	Variance
Net loss	$                        (3,216)	$                     (12,732)	$                  9,516
Finance costs, net	9,546	8,573	973
Income taxes	12,321	5,205	7,116
Depreciation and amortization	7,473	7,662	(189)
EBITDA	$                        26,124	$                           8,708	$              17,416
	Six months ended
	June 30,	June 30,
	2024	2023	Variance
EBITDA	$                        26,124	$                           8,708	$              17,416
Change in fair value of biological assets	(9,155)	3,540	(12,695)
Change in fair market value of derivative	(7,394)	(164)	(7,230)
Professional Fees	3,641	-	3,641
One-time employee costs	614	-	614
Loss on termination of contract	-	3	(3)
Share-based compensation	191	415	(224)
Loss on diposal of assets	212	-	212
Other non-recurring expense/(income)	241	137	104
Adjusted EBITDA	$                        14,474	$                        12,639	$                  1,835

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SOURCE Cansortium Inc.

FAQ

What was Cansortium's (CNTMF) revenue in Q2 2024?

Cansortium reported record Q2 2024 revenue of $27.3 million, up 12% year-over-year from $24.4 million in Q2 2023.

How much did Cansortium's (CNTMF) Florida revenue grow in Q2 2024?

Cansortium's Florida revenue increased 15% to $23.1 million in Q2 2024, compared to $20.1 million in Q2 2023.

What was Cansortium's (CNTMF) adjusted EBITDA in Q2 2024?

Cansortium reported adjusted EBITDA of $7.7 million in Q2 2024, compared to $6.8 million in Q2 2023.

How many stores does Cansortium (CNTMF) operate in Florida as of Q2 2024?

As of Q2 2024, Cansortium operates 35 stores in Florida and plans to open 4 new stores by Q2 2025.

When is Cansortium's (CNTMF) business combination with RIV Capital expected to close?

Cansortium's business combination with RIV Capital is expected to close in the fourth quarter of 2024.