Cansortium Reports First Quarter 2023 Results

05/31/2023

- Q1 Revenue up 12% YoY to $22.1 Million -

- Q1 Adjusted EBITDA up 56% YoY to $9.7 Million, with Cash from Operations up 20% YoY to $5.1 Million -

MIAMI, May 31, 2023 /CNW/ - Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated, multi-state cannabis company operating under the FLUENT brand, today announced financial and operating results for the first quarter ended March 31, 2023. Unless otherwise indicated, all monetary results are presented in U.S. dollars.

"We are pleased to once again report double-digit revenue growth and adjusted EBITDA margin expansion, coupled with another period of strong cash flow generation in the face of broader industry challenges," said CEO Robert Beasley. "Our new store openings in Florida, continually improving our cultivation and increasing the mix of high-THC products are all contributing to our growth and profitability improvements in the state."

"In Pennsylvania, we have worked to optimize our inventory management while adding new products to shelves, which has led to increased sales in the state without any new store openings. And in Texas, although we are disappointed with the outcome of the proposed decriminalization and medical program expansion bills, we continue to believe the growth opportunity in Texas is exceptional, similar to the Florida market seven years ago. We are gaining ground in Texas and capturing market share, even without regulatory reform."

"Looking ahead, we plan to continue driving growth and profitability through new store openings, improved cultivation, operating efficiencies and inventory optimization as we execute our strategy and trend toward another year of strong growth and cash flow generation."

Q1 2023 Financial Highlights (vs. Q1 2022)

  • Revenue increased 12% to $22.1 million compared to $19.7 million.
  • Florida revenue increased 9.7% to $18.2 million compared to $16.6 million.
  • Adjusted gross profit1 increased 22% to $14.1 million or 63.9% of revenue, compared to $11.5 million or 58.6% of revenue.
  • Adjusted EBITDA increased 56% to $9.7 million compared to $6.2 million.
  • Cash flow from operations improved 20% to $5.1 million compared to $4.3 million.
  • At March 31, 2023 the Company had approximately $9.5 million of cash and cash equivalents and $57.9 million of total debt, with approximately 296 million shares outstanding.

Recent Operational Highlights

  • In Florida, Cansortium currently operates 31 stores and anticipates opening an additional 3-5 new stores by the end of 2023. Three of these are under contract and in the construction phase.
  • In Florida, Cansortium launched its new Dark Chocolate Bar, made with FLUENT's high quality cannabis extract and Caraïbe 66% chocolate from Valrhona, the legendary French chocolatier.
  • Entered into an agreement, subject to financing, to acquire a Florida property that will become a new 70k square foot cultivation facility and 2.5-acre greenhouse.
  • The Company announced that it plans to move its headquarters from Miami to Tampa, Florida, and will create more than 30 new jobs in administration, finance, human resources, marketing, sales, operations and other key roles.
  • In Pennsylvania, the Company has implemented a more targeted inventory management strategy, which has led to organic sales growth in the state.
  • In Texas, the Company continued to make progress building out its operational footprint and is working to expand its delivery capabilities to support patient populations in Houston and Austin.

______________________

1 Adjusted gross profit 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 gross profit from gross profit plus (minus) the changes in fair value of biological assets, as presented in the consolidated statement of operations.

 

Conference Call

The Company will host a conference call and live audio webcast today at 4:30 p.m. Eastern time to discuss its financial and operational results, followed by a question-and-answer period. Interested parties may submit questions to the Company prior to the call by emailing investors@cansortiuminc.com.

Date: Wednesday, May 31, 2023
Time: 4:30 p.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10021974
Link: Cansortium Conference Call

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Elevate IR at (720) 330-2829.

The conference call will also be available for replay via the News & Events section of the Company's investor relations website at https://investors.getFLUENT.com/.

About Cansortium Inc.

Cansortium is a vertically-integrated cannabis company with licenses and operations in Florida, Pennsylvania and Texas. The Company operates under the FLUENT™ brand and is dedicated to being one of the highest quality cannabis companies for the communities it serves. This is driven by Cansortium's unrelenting commitment to operational excellence in cultivation, production, distribution and retail. The Company is headquartered in Miami, Florida.

Cansortium Inc.'s common shares trade on the CSE under the symbol "TIUM.U" and on the OTCQX Best Market under the symbol "CNTMF". For more information about the Company, please visit www.getFLUENT.com.

Forward-Looking Information

Certain information in this news release may constitute forward-looking information within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. 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 the Company's expectations, estimates, and projections regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company's control.

Forward-looking information is necessarily based on many 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.

For further information: www.getFLUENT.com.

Company Contact
Robert Beasley, CEO
(850) 972-8077
investors.getFLUENT.com

Investor Relations Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
investors@cansortiuminc.com

Media Contact
Patrick Maddox
(501) 680-5220
FLUENT@mattio.com 

CANSORTIUM INC.






CONSOLIDATED STATEMENTS OF FINANCIAL POSITION





As of March 31, 2023 and December 31, 2022






(USD '000)





















March 31,
2023


December 31,
2022

Assets






Current assets






Cash



$           9,468


$             8,359

Trade receivable



33


28

Inventory, net



7,738


8,973

Biological assets



158


996

Investment held for sale



-


-

Prepaid expenses and other current assets



525


883

Total current assets



17,922


19,239







Property and equipment, net



32,145


31,743

Intangible assets, net



93,908


94,291

Right-of-use assets, net



30,075


30,464

Deposit



-


-

Goodwill



1,526


1,526

Other assets



808


768

Total assets



$       176,384


$         178,031







Liabilities






Current liabilities






Trade payable



7,529


6,931

Accrued liabilities



4,572


5,534

Income taxes payable



17,063


13,952

Derivative liabilities



8,954


8,676

Current portion of notes payable



531


741

Current portion of lease obligations



2,486


2,123

Total current liabilities



41,134


37,957







Liabilities held for sale



-


-




-


-

Notes payable



57,912


56,969

Lease obligations



33,587


33,922

Deferred tax liability



19,092


20,290

Other long-term liabilities



1,250


1,333

Total liabilities



$       152,975


$         150,471







Shareholders' equity






Share capital



183,414


180,954

Share-based compensation reserve



6,471


6,395

Equity conversion feature



6,677


6,677

Warrants



29,634


28,939

Accumulated deficit



(202,454)


(195,071)

Foreign currency translation reserve



(334)


(334)

Total shareholders' equity attributable to Cansortium Inc. shareholders

38,313


38,313

Total shareholders' equity 



23,409


27,560







Total liabilities and shareholders' equity



$       176,384


$         178,031







 

CANSORTIUM INC.





STATEMENT OF OPERATIONS





FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022












 For the three months ended
March 31





2023


2022






Revenue, net of discounts


$         22,056


$             19,712

Cost of goods sold


7,966


8,166

Gross profit before fair value adjustments


14,090


11,546






Fair value adjustments on inventory sold


(1,520)


(6,824)

Unrealized (loss) gain on changes in fair value of biological assets


(5,057)


1,198

Gross profit


7,513


5,920






Expenses





General and administrative


2,312


2,841

Share-based compensation


238


100

Sales and marketing


3,998


4,087

Depreciation and amortization


1,848


1,664

Total expenses


8,396


8,692






Income (loss) from operations


(883)


(2,772)






Other expense (income)





Finance costs, net


4,249


3,657

Loss (gain) on change in fair value of derivative liability


278


1,702

Private Placement issuance expense


-


-

Loss on debt settlement


-


-

Loss on disposal of assets


70


-

Loss from termination of a contract


(78)


-

Other expense (income) 


67


(2)

Total other expense


4,586


5,357






Loss before income taxes


(5,469)


(8,129)






Income tax expense


1,914


2,013






Net loss from continuing operations


(7,383)


(10,142)






Net loss from discontinued operations


-


2






Net loss


$          (7,383)


$            (10,144)






Other comprehensive gain (loss) that may be reclassified 





to profit or loss in subsequent years





Exchange differences on translation of foreign operations and reporting currency


-


24






Comprehensive loss


$          (7,383)


$            (10,120)






Net loss per share





Basic and diluted - continuing operations


$            (0.03)


$                (0.04)











Weighted average  number of shares





Basic number of shares


276,556,965


252,276,742

Diluted number of shares


325,942,276


307,365,805






 

CANSORTIUM INC.



STATEMENTS OF CASH FLOWS



(USD '000)







 For the thee months ended March 31


2023

2022

Operating activities



Net loss from continuing operations

$                      (7,383)

$                             (10,142)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:



Unrealized gain (loss) on changes in fair value of biological assets

5,057

(1,198)

Realized (loss) gain on changes in fair value of biological assets

1,520

6,824

Share-based compensation

238

100

Depreciation and amortization

3,717

2,986

Accretion and interest of convertible debentures

132

3,057

Accretion and interest of term loan

3,086

-

Interest income on notes receivable

-

(71)

Interest of equipment loan

8

-

Loss on disposal of assets

70

-

Change in fair market value of derivative

278

1,702

Interest on lease liabilities

1,021

655

Deferred tax expense

(1,198)

(714)

Changes in operating assets and liabilities:



Trade receivable

(5)

1

Inventory

119

(309)

Biological assets

(4,566)

(4,271)

Prepaid expenses and other current assets

358

930

Right of Use Assets/Liabilities

67

-

Other assets

(39)

83

Trade payable

598

415

Accrued liabilities

(963)

1,513

Other long-term liabilities

(83)

-

Income taxes payable

3,111

2,726

Net cash provided by continuing operating activities

5,144

4,287

Net cash used in dicontinuing operating activities

-

2

Net cash provided by operating activities

5,144

4,289




Investing activities



Purchases of property and equipment

(2,949)

(2,353)

Purchase of intangible assets

-

-

Payment of notes receivable

-

92

Advances for notes receivable 

-

(30)

Net cash used in continuing investing activities

(2,949)

(2,291)

Net cash provided by discontinued investing activities



Net cash used in investing activities

(2,949)

(2,291)




Financing activities



Net proceeds from issuance of shares and warrants

2,993

-

Payment of lease obligations

(1,585)

(1,254)

Exercise of Options

-

135

Issuance of shares for note payable extension 


-

Principal repayments of notes payable

(2,494)

(2,224)

Net cash (used in) provided by continuing financing activities

(1,086)

(3,343)

Net cash provided by discountinued financing activities

-

Net cash provided by (used in) financing activities

(1,086)

(3,343)

Effect of foreign exchange on cash and cash equivalents

-

24

Net (decrease) increase in cash

1,109

(1,323)

Cash, beginning of period

8,359

9,024

Cash, end of period

9,468

7,701




 

Cansortium Inc.




Adjusted EBITDA Calculation




(USD '000)





Three months ended


March 31,

March 31,

Variance


2023

2022

Net loss

$                (7,383)

$           (10,144)

$     2,761

Finance costs, net

4,249

3,657

592

Income taxes

1,914

2,013

(99)

Depreciation and amortization

3,774

3,259

515

EBITDA

$                 2,554

$             (1,215)

$     3,769














Three months ended


March 31,
 2023

March 31,
2022

Variance

EBITDA

$                 2,554

$             (1,215)

$     3,769

Change in fair value of biological assets

6,577

5,626

951

Change in fair market value of derivative

278

1,702

(1,424)

Gain on termination of a contract

(78)

-

(78)

Share-based compensation

238

100

138

Discontinued operations

-

2

(2)

Loss on disposal of assets

70

-

70

Other non-recurring expense/(income)

67

-

67

Adjusted EBITDA

$                 9,706

$               6,215

$     3,491





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SOURCE Cansortium Inc