Mr. Norton Singhavon reports
AVANT BRANDS REPORTS THIRD QUARTER FISCAL 2021 FINANCIAL RESULTS
Avant Brands Inc. has released its financial results for the third quarter of fiscal 2021 ended Aug. 31, 2021.
"We are excited to have posted two consecutive quarters of record revenues," said Norton Singhavon, founder and chief executive officer of Avant. "The company has achieved positive momentum across three distinct channels: recreational, medical and export. In addition, the recent licensing of our 3PL Ventures [Inc.] facility in Vernon, B.C., enables us to build on this growth trajectory."
Key financial highlights
(for the period ended Aug. 31, 2021) (all figures are compared with the company's most recent fiscal quarter (second quarter 2021)):
Maintained a strong capital position with approximately $16.3-million of cash, $26.7-million of working capital and no debt on its balance sheet;
Achieved record gross revenue of $3.1-million and net revenue of $2.7-million, representing the second consecutive quarter of record revenue;
Sold 525 kilograms of cannabis, compared with 394 kg, an increase of 33 per cent;
Gross margin (A) increased to 40 per cent from 39 per cent;
Recreational cannabis sales in Canada accounted for 71 per cent of total sales, compared with 92 per cent, as the company commenced its initial global export shipment to Israel;
Overall weighted-average selling price decreased by 20 per cent or $1.43 to $5.78 per gram as the company's export shipments received a lower average selling price than its Canadian recreational sales;
Recreational weighted-average selling price decreased 5 per cent to $6.97 per gram as sales for Avant's Tenzo brand increased with the launch of new cultivars and packaging; the Tenzo brand has a lower weighted-average selling price compared with the company's BLK MKT brand;
Operating expenses (B) of $1.5-million increased by $311,000 or 25 per cent as the company had various one-time non-reoccurring expenses related to its Toronto Stock Exchange graduation and other professional fees;
Net loss from operations of $2.97-million, compared with a loss of $124,000, as the company recorded a non-cash loss of $2.3-million on fair value changes of biological assets;
Positive cash flow from operations (before changes in non-cash working capital items) of $831,000, compared with negative $512,000, indicating significant growth within the operations;
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (C) loss of $267,000 compared with a loss of $28,000.
Key corporate highlights:
Completed a full corporate rebrand to Avant Brands to better align with its high-quality cannabis products, emphasize the strength of its capabilities, and raise its profile and visibility with its customers and the investment community;
Graduated to the Toronto Stock Exchange and strengthened the company's board of directors with the appointment of Jurgen Schreiber as chairman of the board, Duane Lo as chair of the audit committee and Ruairi Twomey as independent director;
3PL Ventures, a purpose-built 60,000-square-foot facility, received its standard cultivation, standard processing and medical sales licences, in accordance with Health Canada's Cannabis Act and Regulations;
Filed preliminary base shelf prospectus for up to an aggregate offering of $50-million to provide the company with the flexibility to capitalize on financing opportunities in favourable market conditions during the 25-month period that it remains active;
Added to Nasdaq-listed Global X Cannabis ETF, which currently holds approximately 4.4 million shares of Avant.
Key sales and market highlights:
- Initiated global cannabis exports, with a first shipment of over 200 kg of dried cannabis to Focus Medical Herbs Ltd., a wholly owned subsidiary of IM Cannabis Corp.;
Continued to expand international client portfolio by signing three additional export agreements with customers in Israel and Australia;
BLK MKT continued to be a top-selling premium brand in all Canadian provinces;
BLK MKT one-gram prerolls rapidly emerged as the top seller in British Columbia, and experienced an increase in market share within Ontario;
Achieved a steady increase in business-to-consumer medical clients while expanding the product offering in terms of cultivars (currently 11) and package format sizes (currently five).
Enhanced the company's portfolio of rare and unique cultivars, with the addition of over 80 genetics, most of which are not currently available within Canada's legal supply; the products are expected to launch under Avant's recreational brands BLK MKT, Cognoscente and Tenzo during the first quarter of fiscal 2022;
Executed manufacturing agreements with multiple extraction companies, leveraging the company's cultivation expertise and brand equity, to execute its strategy within the concentrate segment;
Entered into concentrate category with the debut of Tenzo vapes, which have received strong initial feedback from the market;
Divested of its last non-core asset, Zenalytic Laboratories Ltd., for a combination of cash and stock, with an aggregate value of $300,000.
Strategic acquisitions and partnerships
With the recent licensing of 3PL, new roster of cultivars and multiple global export deals signed, the company believes it is well positioned for growth over the coming quarters. Management anticipates the company may require further expansion or production to fulfill the demands of its domestic recreational sales and its global exports in the near to midterm.
The company is actively pursuing opportunities to expand its production output, through the acquisition of existing licensed facilities or contract growing of Avant's cultivars.
For parties with existing purpose-built indoor cultivation facilities which may be interested in discussing a partnership or acquisition, please contact the company at firstname.lastname@example.org.
Coming conference call
Management will host a conference call to discuss the Q3 2021 results on Oct. 14, 2021, at 5 p.m. Eastern Time/2 p.m. Pacific Time.
Canada/United States toll-free: 1-800-319-4610
International toll: 1-604-638-5340
A transcript of the call will be posted on the company's website within 48 hours of the call.
A copy of management's discussion and analysis and the financial statements for Q3 2021 can be downloaded from the company's SEDAR profile or on the company's website.
Note (A): Gross margin before fair value adjustments. Please refer to the company's Q3 2021 financial statements and MD&A for definitions and a reconciliation to international financial reporting standards.
Note (B): Operating expenses exclude non-cash items, such as depreciation and amortization and share-based payments. Please refer to the company's Q3 2021 financial statements and MD&A for definitions and a reconciliation to IFRS.
Note (C): Adjusted EBITDA is a non-IFRS measure, and the company calculates adjusted EBITDA from continuing operations as net income (loss) before interest expense, income taxes, depreciation and amortization, unrealized gain (loss) on changes in fair value of biological assets, equity loss on investment in associate, loss on sale of assets, investment loss, and share-based payments. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. The most directly comparable measure with adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. Please refer to the company's Q3 2021 MD&A for definitions and a reconciliation of adjusted EBITDA to net income (loss) from continuing operations.
About Avant Brands Inc.
Avant is an innovative, market-leading premium cannabis company. Avant has multiple licensed and operational production facilities across Canada, which produce high-quality, handcrafted cannabis products for its highly desired and award-winning consumer brands, sold across both recreational and medical channels.
Avant's recreational consumer brands includes BLK MKT, Tenzo, Cognoscente and Treehugger, all produced from rare and exceptional cultivars and sold in British Columbia, Ontario, Saskatchewan, Manitoba, New Brunswick and Yukon. The company's medical cannabis brand, GreenTec, is distributed nationwide, directly to qualified patients through its GreenTec Medical portal and through various medical cannabis partners.
Avant is a publicly traded corporation listed on the Toronto Stock Exchange (TSX: AVNT), and trades on the OTCQX Best Market (OTCQX: AVTBF) and the Frankfurt Stock Exchange (FRA: 1BUP). The company is headquartered in Kelowna, B.C., and has operations in British Columbia, Alberta and Ontario.
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