Cansortium Inc. Reports 2020 Third Quarter Financial Results

Another strong quarter highlighted by $3.6M of Adjusted EBITDA on $14.3M of revenue

MIAMINov. 23, 2020 /PRNewswire/ – Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) (“Cansortium” or the “Company”), a vertically-integrated provider of premium-quality medical cannabis, today announced financial results for its third quarter and nine months ended September 30, 2020. The Company’s unaudited condensed interim consolidated financial statements and accompanying notes, along with the Management Discussion and Analysis (MD&A) are available under the Company’s profile on SEDAR at www.sedar.com and are also accessible through a link on the Investor Relations section of the Company’s website at www.cansortium.com.

The Company will host a conference call and live audio webcast on November 24, 2020 at 5:00 P.M. Eastern time, to discuss its third quarter 2020 financial results. All interested parties can join the conference call by dialing 1-800-319-4610 (Canada/USA) or +1-604-638-5340 (international). Callers should dial in 5 to 10 minutes prior to the scheduled start time and ask to join the call. A live audio webcast of the conference call will also be available at: http://services.choruscall.ca/links/cansortium20201123.html

Selected Third Quarter 2020 Financial Highlights

  • Consolidated revenue of $14.3 million, an increase of 94 percent or $6.9 million compared with consolidated revenue of $7.4 million in the third quarter of 2019.
  • Consolidated loss from operations of $(1.9) million, compared to loss from operations of $(8.1) million in the third quarter of 2019.
  • Consolidated Adjusted EBITDA(1) of  $3.6 million, compared to Adjusted EBITDA(1) loss of  $(2.1) million in the third quarter of 2019.
  • Consolidated net loss of $(8.9) million, or $(0.04) per diluted share, compared to consolidated net loss of $(11.3) million, or $(0.06) per diluted share for the same period last year.
  • During the third quarter of 2020, the Company opened its 21st medical marijuana dispensary in Coral Springs, FL. It operated 16 dispensaries during the comparable period in 2019. In October and November of 2020, the Company opened its 22nd and 23rd Florida dispensary in Coral Gables, FL and Kendall, FL, respectively.
Selected Year-to-Date 2020 Financial Highlights
  • Consolidated revenue of $37.7 million, an increase of 50 percent or $18.7 million compared with consolidated revenue of $19.0 million during the nine months ended September 30, 2019.
  • Consolidated income from operations of $1.3 million, compared to loss from operations of $(28.7) million during the nine months ended September 30, 2019.
  • Consolidated Adjusted EBITDA(1) of  $7.0 million, compared to Adjusted EBITDA(1) loss of $(7.2) million during the nine months ended September 30, 2019.
  • Consolidated net loss of $(28.3) million, or $(0.14) per diluted share, compared to consolidated net loss of $(33.1) million, or $(0.18) per diluted share for the same period last year.

(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. Reconciliations from EBITDA and Adjusted EBITDA to Net Loss are included in the accompanying financial schedules.

Full Year 2020 Outlook

The Company reiterates its full year 2020 outlook for consolidated revenue of $55 million to $60 million with anticipated Adjusted EBITDA of approximately $14 million. The forecast is based on projected revenue of at least $45 million for Cansortium’s Florida operations with additional revenue from the Michigan, Pennsylvania and Texas markets. 

Initial 2021 and 2022 Outlook 

The Company has continued to make progress on its targeted initiatives focused on growth and long-term shareholder value creation. In its home state of Florida, the Company secured an additional cultivation and production facility with operations anticipated to commence in December 2020 and further expansion expected during 2021 and 2022 and will continue to grow its retail footprint with a total of 33 dispensaries anticipated to be operational by the end of 2022. In Pennsylvania, the Company has secured an additional dispensary location that is expected to open in early 2021 in order to augment the strong sales of its existing Hanover dispensary. A third location is expected to come online in the first half of 2021. In Michigan, the Company enhanced the cultivation team on the ground and is pursuing expansion opportunities. Finally, in Texas, the Company has rights to expand the cultivation facility up to 400,000 additional sq. ft. as demand requires. 

The Company is projecting revenue of $95 million to $100 million and $140 to $145 million for 2021 and 2022, respectively, and Adjusted EBITDA of $30 million to $35 million and $60 to $65 million for 2021 and 2022, respectively.

ABOUT CANSORTIUM INC.

Headquartered in Miami, Florida, and operating under the Fluent™ brand, Cansortium is focused on being the highest quality cannabis company in the State of Florida driven by unrelenting commitment to operational excellence from seed to sale. Cansortium has developed strong proficiencies in each of cultivation, processing, retail, and distribution activities, the result of successfully operating in the highly regulated cannabis industry. In addition to Florida, Cansortium is seeking to create significant shareholder value in the attractive markets of TexasMichigan and Pennsylvania.

Cansortium Inc.’s common shares and warrants trade on the CSE under the symbol “TIUM.U” and “TIUM.WT.U”, respectively, and on the OTCQB Venture Market under the symbol (OTCQB: CNTMF). Investors can find current financial disclosure and Real-Time Level 2 quotes for the Company on www.otcmarkets.com.

Forward-Looking Information

All projections related to anticipated future results are forward-looking in nature and are subject to risks and uncertainties that may cause actual results to differ, perhaps materially. Projections are predicated on the Company’s ability to continue successfully implementing the strategic growth and cost-saving initiatives identified by the Special Committee of the Board. In addition, projections are based on the Company’s ability to secure and effectively deploy its capital resources toward those initiatives.

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 a number of 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.

Financial Tables Follow 

     

Cansortium Inc.

    

Consolidated Statements of Financial Position

    

As of September 30, 2020 and December 31, 2019

    

(USD ‘000)

    
     
 

 September 30, 

 December 31, 

 

2020

2019

Assets

    

Current assets

    

Cash and cash equivalents

$

4,072

$

2,516

Accounts receivable

 

65

 

144

Inventory

 

9,574

 

6,709

Biological assets

 

6,128

 

3,845

Note receivable

 

4,895

 

3,870

Prepaid expenses and other current assets

 

1,311

 

556

Total current assets

 

26,045

 

17,640

     

Investment held for sale

 

324

 

Assets held for sale

 

 

6,301

     

Property and equipment, net

 

18,677

 

19,128

Intangible assets, net

 

97,418

 

98,566

Right-of-use assets

 

19,410

 

20,190

Investment in associate

 

3,043

 

3,424

Goodwill

 

1,526

 

1,526

Other assets

 

390

 

291

Total assets

$

166,833

$

167,066

     

Liabilities

    

Current liabilities

    

Accounts payable

 

4,558

 

7,860

Accrued liabilities

 

4,107

 

5,135

Income taxes payable

 

6,401

 

1,492

Derivative liabilities

 

13,436

 

13,198

Current portion of notes payable

 

37,211

 

9,350

Lease obligations

 

1,979

 

1,761

Other current liabilities

 

350

 

Total current liabilities

 

68,042

 

38,796

     

Liabilities held for sale

 

 

3,240

     

Notes payable, net of current portion

 

12,695

 

31,053

Lease obligations, net of current portion

 

20,728

 

21,166

Deferred income taxes

 

26,657

 

24,957

Other long-term liabilities

 

468

 

676

Total liabilities

 

128,590

 

119,888

     

Shareholders’ equity

    

Share capital

 

147,846

 

149,322

Share-based compensation reserve

 

4,148

 

2,977

Equity conversion feature

 

12,250

 

7,613

Warrants

 

13,265

 

11,773

Accumulated deficit

 

(138,891)

 

(123,785)

Accumulated other comprehensive loss

 

(375)

 

(563)

Total shareholders’ equity attributable to Cansortium Inc. shareholders

 

38,243

 

47,337

Non-controlling interests

 

 

(159)

Total shareholders’ equity 

 

38,243

 

47,178

     

Total liabilities and shareholders’ equity

$

166,833

$

167,066

Cansortium Inc.

        

Consolidated Statement of Operations

        

For the three and nine months ended September 30, 2020 and 2019

    

(USD ‘000)

        
 

For the three months
ended September 30,  

 

For the nine months
ended September 30,  

  
  

2020

 

2019

  

2020

2019

         

Revenue, net of discounts

$

14,313

$

7,387

 

$

37,718

$

19,005

Cost of goods sold

 

4,784

 

2,722

  

13,011

6,822

Gross profit before fair value adjustments

 

9,529

 

4,665

  

24,707

12,183

         

Realized fair value of increments on inventory sold

 

6,051

 

3,341

  

18,566

6,692

Unrealized change in fair value of biological assets

 

(4,263)

 

(1,109)

  

(23,945)

(3,182)

Gross profit

 

7,741

 

2,433

  

30,086

8,673

         

Expenses

        

General and administrative

 

2,861

 

4,362

  

9,064

19,384

Share-based compensation

 

1,689

 

258

  

4,938

1,744

Sales and marketing

 

3,561

 

3,348

  

10,162

8,972

Depreciation and amortization

 

1,561

 

2,549

  

4,635

7,250

Total expenses

 

9,672

 

10,517

  

28,799

37,350

         

Income (loss) from operations

 

(1,931)

 

(8,084)

  

1,287

(28,677)

         

Discontinued operations

 

236

 

  

(106)

         

Other expense (income)

        

Interest expense, net

 

3,892

 

2,926

  

11,448

9,786

Change in fair market value of derivative

 

673

 

(2,631)

  

1,680

(6,172)

Loss on investment in associate

 

166

 

  

381

Gain in fair market value of investment in associate

 

 

  

(3,388)

Loss on debt restructuring

 

 

  

8,065

Loss on disposal of assets

 

710

 

2,205

  

656

2,205

Other expense

 

1

 

257

  

7

285

Total other expense (income)

 

5,442

 

2,757

  

22,237

2,716

         

Loss before taxes

 

(7,609)

 

(10,841)

  

(20,844)

(31,393)

         

Income taxes

 

1,281

 

432

  

7,422

1,708

         

Net loss

 

(8,890)

 

(11,273)

  

(28,266)

(33,101)

         

Net income (loss) attributable to non-controlling interest

 

 

83

  

(204)

         

Net loss attributable to controlling interest

$

(8,890)

$

(11,356)

 

$

(28,266)

$

(32,897)

         

Net loss per share

        

Basic

$

(0.04)

$

(0.06)

 

$

(0.14)

$

(0.18)

Diluted

$

(0.04)

$

(0.06)

 

$

(0.14)

$

(0.18)

Cansortium Inc.

  

Consolidated Statement of Cash Flows

  

For the nine months ended September 30, 2020 and 2019

  

(USD ‘000)

  
 

For the nine months
ended September 30,

 

2020

2019

Operating activities

  

Net loss

$

(28,266)

$

(33,101)

Adjustments to reconcile net loss to net cash used in operating activities:

  

Unrealized gain on changes in fair value of biological assets

(23,945)

(3,182)

Share-based compensation

4,938

2,005

Depreciation and amortization

6,146

8,252

Discontinued operations

(106)

Amortization of debt discount

4,497

Accretion of convertible debentures

5,974

Interest on lease liabilities

3,324

Change in fair market value of derivative

1,680

(6,172)

Loss on investment in associate

381

Gain in fair market value of investment in associate

(3,388)

Loss on debt restructuring

8,066

Loss on disposal of assets

656

2,205

Deferred tax expense

1,700

Changes in operating assets and liabilities:

  

Accounts receivable

79

(51)

Inventory

(2,930)

(3,715)

Biological assets

21,662

2,746

Prepaid expenses and other current assets

(492)

(5,561)

Right-of-use assets

(1,439)

Other assets

(99)

(1,116)

Accounts payable

(309)

102

Accrued liabilities

2,205

(3,357)

Income taxes payable

4,909

1,838

Lease obligations

1,772

Other current liabilities

(251)

398

Other liabilities

(160)

Net cash provided by (used in) operating activities

3,723

(35,828)

   

Investing activities

  

Purchases of property and equipment

(3,136)

(12,558)

Purchase of intangible assets

(319)

Payment of notes receivable

350

Notes receivable

(1,375)

Proceeds from sale of subsidiary

600

Net cash used in investing activities

(3,561)

(12,877)

   

Financing activities

  

Proceeds from IPO

56,178

Proceeds from issuance of shares and warrants

4,351

Proceeds from issuance of notes payable

62

41,006

Payment of lease obligations

(3,207)

921

Interest repayments of notes payable

Principal repayments of notes payable

(46,353)

Net cash provided by financing activities

1,206

51,752

Effect of foreign exchange on cash and cash equivalents

188

(59)

Net increase in cash and cash equivalents

1,556

2,988

Cash and cash equivalents, beginning of period

2,516

2,026

Cash and cash equivalents, end of period

$

4,072

$

5,014

   

Cash paid during the period for interest

$

2,457

$

585

   

Non-cash transactions:

  

Issuance of shares to acquire additional interest in consolidated entity

$

$

13,786

Shares returns for sale of interest in subsidiaries

$

(4,374)

$

Founders shares return

$

(10,970)

$

Note payable amendment

$

10,380

$

Issuance of share for convertible debentures amendment

$

2,082

$

Cansortium Inc.

       

Financial Highlights

       

For the three and nine months ended September 30, 2020 and 2019

     

(USD ‘000)

       
 

Three months ended

 

Nine months ended

Financial results

September
30, 2020

September
30, 2019

Variance

 

September
30, 2020

September
30, 2019

Variance

        

Revenue

$

14,313

$

7,387

$

6,926

 

$

37,718

$

19,005

$

18,713

        

Gross profit

$

7,741

$

2,433

$

5,308

 

$

30,086

$

8,673

$

21,413

Gross margin

54.1%

32.9%

21.1%

 

79.8%

45.6%

34.1%

        

Adjusted gross profit (1)

$

9,529

$

4,665

$

4,864

 

$

24,707

$

12,183

$

12,524

Adjusted gross margin (1)

66.6%

63.2%

3.4%

 

65.5%

64.1%

1.4%

        

Selling, general and administrative expenses

$

9,672

$

10,517

$

(845)

 

$

28,799

$

37,350

$

(8,552)

        

EBITDA (1)

$

(1,617)

$

(4,483)

$

2,867

 

$

(3,243)

$

(11,854)

$

8,611

Adjusted EBITDA (1)

$

3,645

$

(2,095)

$

5,740

 

$

6,990

$

(7,224)

$

14,215

        

Net loss

$

(8,890)

$

(11,273)

$

2,383

 

$

(28,266)

$

(33,101)

$

4,835

Net loss per share (basic)

$

(0.04)

$

(0.06)

$

0.01

 

$

(0.14)

$

(0.18)

$

0.04

Net loss per share (diluted)

$

(0.04)

$

(0.06)

$

0.01

 

$

(0.14)

$

(0.18)

$

0.04

  

(1)

Adjusted gross profit, adjusted gross margin, EBITDA and Adjusted EBITDA are non-IFRS financial measures that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Refer to the reconciliation to IFRS and quarterly results of operations sections at the Company’s Management Discussion and Analysis document for reconciliation to IFRS.

Cansortium Inc.
Reconciliation of non-IFRS financial measures
For the three and nine months ended September 30, 2020 and 2019
(USD ‘000)

EBITDA

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 EBITDA from net income (loss), plus (minus) interest expense (income), plus income taxes, plus depreciation and amortization, as follows:

        
 

Three months ended

 

Nine months ended

 

September
30, 2020

September
30, 2019

Variance

 

September
30, 2020

September
30, 2019

Variance

  

Net loss

$

(8,890)

$

(11,273)

$

2,383

 

$

(28,266)

$

(33,101)

$

4,835

Interest expense

3,892

2,926

966

 

11,448

9,786

1,662

Income taxes

1,281

432

849

 

7,422

1,708

5,714

Depreciation and amortization

2,100

3,432

(1,332)

 

6,153

9,753

(3,600)

EBITDA

$

(1,617)

$

(4,483)

$

2,866

 

$

(3,243)

$

(11,854)

$

8,611

Adjusted EBITDA

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. The reconciliation from EBITDA to Adjusted EBITDA is as follows:

        
 

Three months ended

 

Nine months ended

 

September
30, 2020

September
30, 2019

Variance

 

September
30, 2020

September
30, 2019

Variance

EBITDA

$

(1,617)

$

(4,483)

$

2,866

 

$

(3,243)

$

(11,854)

$

8,611

Change in fair value of biological assets

1,788

2,232

(444)

 

(5,379)

3,510

(8,889)

Change in fair market value of derivative

673

(2,631)

3,304

 

1,680

(6,172)

7,852

Gain in fair value of investment in associate

 

(3,388)

3,388

Share-based compensation

1,689

258

1,431

 

4,938

1,744

3,194

Discontinued operations

236

236

 

(106)

(106)

Loss on debt restructuring

 

8,065

8,065

Other non-recurring expense

876

2,530

(1,654)

 

1,035

8,935

(7,900)

Adjusted EBITDA

$

3,645

$

(2,095)

$

5,740

 

$

6,990

$

(7,224)

$

14,215

SOURCE Cansortium Inc

Related Links

https://www.getfluent.com/

 

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