Mr. John Moynan reports

SLANG WORLDWIDE ANNOUNCES Q4 AND YEAR-END 2023 FINANCIAL RESULTS

Slang Worldwide Inc. has released its financial results for the three and 12 months ended Dec. 31, 2023.

"In 2023, we took a deliberate approach to advancing our strategy of profitable growth, creating a leaner, more nimble Slang. As a result, we ended the year with increased gross profit, higher margins and lower operating expenses, which resulted in significantly lower total comprehensive loss and lower adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] loss," commented John Moynan, chief executive officer of Slang. "With the fourth quarter historically our seasonally lowest revenue quarter, we took the opportunity to further fortify our business and refine our product offering, which will help us make meaningful progress on the path to profitability."

Mr. Moynan continued: "Throughout 2023, we continued to set ourselves apart from other cannabis players by strategically identifying, and advancing opportunities in both our core and emerging markets to build our brand and drive continued financial growth. Initiatives such as our disposable and large-format vaporizers in Colorado, the build-out of our wholesale channel in Vermont, and the expansion of our THC [tetrahydrocannabinol]-free product portfolio have proved successful and will be key contributors to our ongoing growth. Looking to 2024, I believe that we are well positioned to outperform the market as we continue to identify opportunities to increase shareholder value as part of our strategic review."

Full-year 2023 financial and operational summary:

• Revenue from continuing operations for the year ended Dec. 31, 2023 (FY 2023), was $35.68-million, compared with $38.19-million in the year ended Dec. 31, 2022 (FY 2022), representing a 7-per-cent decrease year-over-year. The reduction was primarily driven by a decrease of $2.65-million in the company's distribution sales and a decrease of $1.27-million in emerging market sales, partially offset by an increase of $700,000 in core market sales and an increase of $660,000 in e-commerce sales. Within the core market segment, the company experienced growth in Vermont, with sales increasing by $3.06-million, which is offset by a reduction of $2.36-million in sales in Colorado.
• Gross profit of $18.62-million (52-per-cent gross margin) in FY 2023, compared with $16.45-million (43-per-cent gross margin) in FY 2022, representing a 13-per-cent increase in gross profit and a 9-per-cent increase in gross margin year-over-year. Gross profit before fair value of biological assets was $18.68-million (52-per-cent gross margin) in FY 2023, compared with $17.62-million (46-per-cent gross margin) in FY 2022, representing a 6-per-cent increase in gross profit and a 6-per-cent increase in gross margin year-over-year.
• Operating expenses of $24.61-million in FY 2023, compared with $31.33-million in FY 2022, representing a 21-per-cent decrease year-over-year. The reduction was primarily driven by a decrease in depreciation and amortization, share-based payments, salaries and wages, and consulting and subcontractors.
• Total comprehensive loss of $19.59-million in FY 2023, compared with $29.65-million in FY 2022, representing a 34-per-cent decrease year-over-year. The reduction was primarily driven by a decrease in operating expenses of $6.73-million and an increase in gross profit of $2.17-million.
• EBITDA of negative $3.05-million in FY 2023, compared with negative $8.71-million in FY 2022. The improvement in EBITDA is primarily attributable to a $2.14-million increase in gross profit (excluding depreciation costs), and a reduction of $3.52-million in operating expenses (excluding depreciation) such as share-based payments, insurance, salaries and wages, and consulting and subcontractors.
• Adjusted EBITDA of negative $1.9-million in FY 2023, compared with negative $3.65-million in FY 2022. The improvement in adjusted EBITDA is primarily attributable to an increase of $1.02-million in gross profit before fair value adjustments of biological assets (excluding depreciation costs), and a reduction of $730,000 in operating expenses (excluding depreciation expenses, expected credit losses and share-based payments).
• $9.04-million in cash and restricted cash on Dec. 31, 2023, compared with $11.92-million on Dec. 31, 2022. Additionally, for the 12 months ended Dec. 31, 2023, cash flows used in continuing operating activities was negative $2.62-million, compared with cash flows used in continuing operating activities of negative $3.13-million for the 12 months ended Dec. 31, 2022, an improvement of $510,000.
• Various Slang subsidiaries filed for the employee retention tax credit (ERTC) with the Internal Revenue Service (IRS) in April, 2023. During FY 2023, the company received $1.63-million in ERTCs and $90,000 in interest on ERTCs.
• In June, 2023, the company launched a new two-gram disposable cartridge in Colorado. For the year ended Dec. 31, 2023, the sales of these products totalled approximately $1.62-million.
• The company built a new wholesale revenue stream in Vermont as more Vermont retailers received retail licences. In FY 2023, wholesale sales to Vermont retailers reached $1.04-million.

Recent corporate developments:

• In January, 2024, the company announced that it launched its vape brand, O.pen, in Arizona through a strategic partnership with Trulieve Cannabis Corp.
• The company announced in November, 2023, that it has retained PGP Capital Advisors LLC, to assist in a review of its strategic alternatives.
• In October, 2023, Slang launched sales of its O.pen Sesh, an electric dab rig compatible with 510-thread cartridges and concentrates.
• The company launched its first line of fast-acting cannabis-infused gummies in July, 2023, under its Alchemy Naturals all-natural THC gummy brand at dispensaries across Vermont.
• Slang launched a brand new O.pen product line in July and started selling two-gram delta-8 all-in-one vaporizers in five different strains.

Fourth quarter 2023 financial summary:

• Revenue from continuing operations for the three months ended Dec. 31, 2023 (Q4 2023), was $7.42-million, compared with $11.78-million for the three months ended Dec. 31, 2022 (Q4 2022), representing a 37-per-cent decrease year-over-year. The reduction was primarily driven by a decrease of $4.13-million in core market sales and a decrease of $920,000 in distribution sales, partially offset by an increase of $300,000 in emerging market sales and an increase of $300,000 in e-commerce sales. Within the core market segment, the company experienced sales reductions in Vermont of $2.47-million and in Colorado of $1.66-million.
• Gross profit of $3.8-million (51-per-cent gross margin) in Q4 2023, compared with $4.7-million (40-per-cent gross margin) in Q4 2022, representing a 19-per-cent decrease in gross profit and a 11-per-cent increase in gross margin year-over-year. Gross profit before fair value of biological assets was $3.8-million (51-per-cent gross margin) in Q4 2023, compared with $5.7-million (48-per-cent gross margin) in Q4 2022, representing a 33-per-cent decrease in gross profit and a 3-per-cent increase in gross margin year-over-year.
• Operating expenses of $6.63-million in Q4 2023, compared with $8.17-million in Q4 2022, representing a 19-per-cent decrease year-over-year. The reduction was primarily driven by a decrease in salaries and wages, depreciation and amortization, share-based payments, and consulting and subcontractors.
• Total comprehensive loss of $7.45-million in Q4 2023, compared with $16.96-million in Q4 2022, representing a 56-per-cent decrease year-over-year. The reduction was primarily driven by a decrease of $14.83-million in impairment and $1.54-million in operating expenses, partially offset by higher financing cost and fair value adjustments of $7.26-million, and a decrease in gross profit of $900,000.
• EBITDA of negative $2.09-million in Q4 2023, compared with negative $1.82-million in Q4 2022. The reduction in EBITDA is primarily attributable to a $1.07-million decrease in gross profit (excluding depreciation costs), offset by a reduction of $810,000 in operating expenses (excluding depreciation) such as salaries and wages, consulting and subcontractors, share-based payments, and insurance.
• Adjusted EBITDA of negative $1.48-million in Q4 2023, compared with negative $60,000 in Q4 2022. The reduction in adjusted EBITDA is primarily attributable to a decrease of $2.07-million in gross profit before fair value adjustments of biological assets (excluding depreciation costs), offset by a reduction of $650,000 in operating expenses (excluding depreciation expenses, expected credit losses and share-based payments).

Full-year 2023 financial review

The consolidated financial statements were prepared in accordance with IFRS (international financial reporting standards). The associated tables are a selected presentation of the income statement for the three and 12 months ended Dec. 31, 2023.

See the company's management's discussion and analysis (MD&A) for the three months and full-year ended Dec. 31, 2023, for a detailed reconciliation of EBITDA and adjusted EBITDA to operating income/loss. Slang's financial statements and the Q4 2023 MD&A are available on SEDAR+ and on the company's investor relations website.

Conference call details

Management plans to host an investor conference call on April 12, 2024, at 10 a.m. Eastern Time to discuss the results.

Timing:  Friday, April 12, 2024, at 10 a.m. ET

Dial-in:  1-888-440-5983 (United States toll-free) or 1-646-960-0202 (international)

Conference ID:  6291438

Webcast:  A live webcast can be accessed via the company's website

About Slang Worldwide Inc.

Slang Worldwide is the industry leader in branded cannabis consumer packaged goods, with a diversified portfolio of five distinct brands and products distributed across the United States. Operating in 13 legal cannabis markets nationwide, Slang specializes in acquiring and developing market-proven regional brands, as well as launching innovative new brands to seize global market opportunities and match evolving consumer tastes. The company has over a decade of experience operating in the nascent and highly regulated cannabis sector, and its partners enjoy the benefits of that experience, with access to the Slang playbook for successful operations, sales and marketing. Its strong product pipeline, from uniquely positioned and scalable brands like O.pen, Alchemy Naturals, Ceres and Firefly, and partnerships with brands like Greenhouse Seed Company have a proven record of success, with the brands consistently ranking among the top performers in the states where Slang operates.

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