TORONTO, Aug. 18, 2020 (GLOBE NEWSWIRE) — Golden Leaf Holdings Ltd. (CSE:GLH) (OTCQB:GLDFF) (“Golden Leaf” or the “Company”), a premier consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, today announced financial results for the second quarter ended June 30, 2020. All financial results are stated in US dollars, unless otherwise noted.
“Management believes that GLH is substantially undervalued compared to its peers. We have demonstrated the ability to achieve significant growth while navigating the COVID-19 crisis, and its impact on the market as well as our partners in each jurisdiction,” stated Jeff Yapp, Chief Executive Officer of GLH.
The Company focused on growing sales in Oregon, a tactical decision made to offset unexpected shut-down related losses in Nevada, and slower than expected growth in its other markets.
“We brought a laser focus to the areas that we believed provided the greatest opportunity for growth,” continued Yapp. “And we did it everywhere. The team’s disciplined approach to the Company’s front lines helped us drive innovation, maximize results, and further distinguish us from the competition, despite challenges facing the world and the industry. We believe we are turning the corner and can comfortably put past missteps behind us. GLH remains laser-focused on operational excellence.”
Q2 Financial Highlights:
- Record quarterly revenues from continuing operations of $5.5M, an increase of 40% compared to the second quarter of 2019 and 16% greater than the first quarter of 2020. This increase was led by record second quarter Chalice Farms retail revenues of $3.7M.
- Retail growth was driven by an increase in total tickets of 16% and average ticket size of 16% compared to the second quarter of 2019.
- Record year to date revenues from continuing operations of $10.2M, an increase of 40% compared to the first half of 2019, driven by Chalice Farms retail revenues and Oregon wholesale revenues.
- Same store sales growth in the Chalice Farms network of 34% versus the three months ended June 30, 2019 and 25% for the six months ended June 30, 2020.
- Oregon wholesale revenues up 96% year over year driven by improved supply chain and forecasting resulting in stabilization of inventory levels.
- Lowest quarterly cash used in operations in Company history of $137,000.
- Adjusted EBITDA loss (non-IFRS) was $0.7M for the three months ended June 30, 2020, off $0.1M sequentially due primarily to the shortfall in third party toll processing revenues. Adjusted EBITDA is a non-IFRS measure, which the Company considers important in assessing operations. For a reconciliation of Adjusted EBITDA (non-IFRS) to income (loss) before income taxes, please see below.
- Adjusted EBITDA loss (non-IFRS) was $1.4M for the six months ended June 30, 2020, an improvement of $2.5M or 64% compared to the six months ended June 30, 2019 driven by operational efficiencies, increased revenues and reduced G&A expenses and savings related to headcount. Adjusted EBITDA is a non-IFRS measure, which the Company considers important in assessing operations. For a reconciliation of Adjusted EBITDA (non-IFRS) to income (loss) before income taxes, please see below.
- Gross profit before fair value items was $1.5M, flat compared to the same period a year ago and down compared to the first quarter due to the unexpected shutdown and related losses in Nevada as well as the shortfall in third party toll processing revenues in Oregon and the reversal of an audit related adjustment in the first quarter of 2020.
- Gross profit margin excluding fair value items of $(0.2)M and adjusted for extraordinary circumstances in Nevada $(0.2) and the write-off of inventory deposits in California $(0.1) was $1.8M (non-IFRS), equal to a gross margin rate (after these adjustments) of 33% which is favorable versus the average gross profit margin rate during Fiscal 2019 and only slightly off from 37% in the first quarter 2020, due to the shortfall of third-party revenues as mentioned previously.
- Lowered operating expenses to $3.1M, a reduction of $0.7M compared to the same quarter of 2019 and $0.2M compared to the first quarter of 2020. Year to date for the six months ended June 30, 2020 operating expenses are down 22% compared to the same period of 2019.
- In early July, the Company obtained approval from its debenture holders to pay all interest in shares, allowing for continued cash preservation as the Company continues the pursuit of becoming cash flow positive operationally.
- The Company has sufficient cash on hand to meet its short-term obligations and has strong support from all stakeholders to continue to navigate this period of extraordinary growth, while contemplating various non-dilutive capital opportunities to invest further in the Company’s established retail network.
“The Company continues to drive top line growth out of Oregon, while gaining momentum in California and Washington. Discipline, rationalizing head count, optimizing inventory and scrutinizing payables turnover will continue to fuel our growth” further added Yapp.
Preliminary July Financial Results
Record revenues continued in July 2020. The Company produced preliminary unaudited estimated revenues of $2.0M at an estimated gross margin of 33%, led by Chalice Farms retail revenues of $1.4M and Oregon wholesale revenues of $0.5M.
“The Company’s Crawl, Walk, Run strategy helped us build the momentum needed for a great Q1 and Q2,” said Yapp. “Delivery, online ordering and driving innovation in customer experience has led to really solid growth in retail. We are maximizing service to our customers with new products, education and humanity. Our teams have shown up for our customers and continue to perform above our expectations.”
As of June 30, 2020, the Company offers, directly and through its partners, over 145 SKUs across 23 product lines all under Chalice brands, in four jurisdictions: Oregon, California, Nevada and Washington.
Disclaimer Regarding Preliminary Financial Information
The financial information presented in this news release for July 2020 is based on preliminary, unaudited financial statements prepared by management. Accordingly, such financial information may be subject to change. Such financial information is qualified in its entirety with reference to the Company’s unaudited financial statements for the third quarter ended September 30, 2020, which will be filed on SEDAR (www.sedar.com) in November 2020. While the Company does not expect there to be any material changes to the July 2020 financial information presented in this news release, to the extent that it is inconsistent with the information contained in the Company’s unaudited financial statements for the third quarter ended September 30, 2020, the financial information contained in this news release shall be deemed to be modified or superseded by the Company’s unaudited financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws.