Mr. Riaz Bandali reports
EMERALD HEALTH THERAPEUTICS REPORTS PURE SUNFARMS SECOND QUARTER 2020 FINANCIAL RESULTS
Emerald Health Therapeutics Inc. has provided preliminary, unaudited financial results for the second quarter of 2020 for its 41.3-per-cent-owned joint venture, Pure Sunfarms.
"Pure Sunfarms' leadership in low-cost production enables it to offer consumers high-quality cannabis products that are well priced. This strong competitive positioning against both licensed and unlicensed producers has enabled it to achieve leading market share in Ontario and strong growth in other provinces," said Riaz Bandali, president and chief executive officer of Emerald. "With its broadening product mix, including forthcoming oils and cannabis 2.0 products, we anticipate that Pure Sunfarms will continue to build on its competitiveness and accomplishments."
PURE SUNFARMS FINANCIAL RESULTS
(in thousands of dollars, except for per-gram figures)
Three months ended
Sales, gross $19,307 $32,356
Sales, net $12,902 $32,356
Cost of sales $8,594 $5,293
Selling, general and administrative expenses $2,574 $2,384
EBITDA $2,509 $25,200
Cultivation $/gram (incl. depreciation) 0.84 0.65
Six months ended
Sales, gross $40,826 $46,715
Sales, net $30,906 $46,715
Cost of sales $17,201 $10,369
Selling, general and administrative expenses $5,829 $3,712
EBITDA $9,235 $33,776
Cultivation $/gram (incl. depreciation) 0.83 0.82
- Retail branded sales volume for the second quarter of 2020 increased 89 per cent compared with the first quarter of 2020;
- Remained the top-selling brand of dried flower products with the Ontario Cannabis Store (OCS) (by kilograms sold) for the year to date ended July 31, 2020, with a market share of 13.8 per cent, and had two of the top four selling dried cannabis products (by kilograms sold) (1);
- Achieved record sales (by kilograms, defined as sales of Pure Sunfarms products by the provincial boards to retailers, as well as sales by the provincial boards directly to consumers via their websites) in Ontario, Alberta and British Columbia in aggregate for the month of July;
- Launched its dried cannabis products in its fourth and fifth provincial markets (Saskatchewan and Manitoba). Pure Sunfarms' products are now available in five provinces;
- Launched multiple new dried cannabis products, including additional large-format (28-gram) packages, which have consistently ranked among the best-selling dried cannabis products with the OCS since launch, as well as two new strains, additional prerolls and seeds;
- Prepared for the imminent launch of cannabis oil products and new product forms under cannabis 2.0;
- Received from Health Canada its cannabis cultivation sales licence based on an initial production area within its second 1.1-million-square-foot greenhouse facility in Delta, B.C., allowing it to expand capacity as needed through successive licence amendments;
- Expanded its credit facility with the lending syndicate led by Bank of Montreal and including Farm Credit Canada (FCC) and the addition of CIBC to its full $59-million capacity with the completion of the credit facility's accordion feature.
(1) Data cited have been calculated by Pure Sunfarms from sales information provided by OCS.
Financial comments (quarterly figures)
The 40-per-cent quarter-over-quarter decrease in gross sales was primarily a result of a lower average selling price per gram of dried flower for the three months ended June 30, 2020, compared with the same period in the previous year. The net average selling price per gram of dried flower was 29 per cent lower in the three months ended June 30, 2020, compared with the three months ended March 31, 2020.
In the three months ended June 30, 2020, total sales in kilograms were attributed 57 per cent to provincial boards (flower) and 43 per cent to the wholesale channel (flower and trim). This included non-monetary transactions with extraction licensed producers in which Pure Sunfarms sold extraction grade dried flower and trim and purchased various forms of distillate from the same counterparties, which will be used in Pure Sunfarms' future cannabis 2.0 products.
Sales momentum early in the third quarter, the addition of new provincial markets and additional retail stores across the country, and the imminent launch of Pure Sunfarms' first cannabis 2.0 products and bottled oils are expected to positively contribute to Pure Sunfarms' results in the second half of the year.
Pure Sunfarms' facilities in Canada remain open and operational, and has not experienced any COVID-19 illnesses. Pure Sunfarms adheres to the highest health and safety standards in its operations and has put in place heightened hygiene practices and safety protocols, including more stringent cleaning and sanitization, and is taking appropriate precautions throughout all operations as per the recommendations of health authorities. It will continue to enhance and evolve such practices and protocols as the situation warrants.
About Emerald Health Therapeutics Inc.
Emerald Health Therapeutics is committed to cutting-edge cannabis science to create new consumer experiences with distinct recreational, medical and wellness-oriented cannabis, and non-cannabis products. With an emphasis on innovation and production excellence, Emerald's three distinct operating assets are designed to uniquely serve the Canadian marketplace and international opportunities. These assets, all in full production, include: its Metro Vancouver-based greenhouse operation (78,000 square feet) capable of producing organic-certified product; Verdelite, its premium craft cannabis production indoor facility in St. Eustache, Que. (88,000 square feet); and Pure Sunfarms, its 41.3-per-cent-owned joint venture in Delta, B.C., producing high-quality, affordably priced products (1.1 million square feet). Its Emerald Naturals subsidiary has launched a new natural wellness product category with its non-cannabis endocannabinoid-supporting product line and is expanding distribution across Canada.
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