Experion Holdings Reports Financial Results for Q4 and FYE Nov 30, 2020
VANCOUVER, British Columbia/ ACCESSWIRE March 29, 2021 – Experion Holdings Ltd. (the “Company” or “Experion”) (TSXV: EXP) (OTCQB: EXPFF) (FRANKFURT: MB31), Canada’s solution to craft cannabis supply and builder of premium cannabis brands including its sought after and popular brand Citizen Stash is pleased to report its fourth quarter and fiscal year end financial results for the period ended November 30, 2020.
“The fiscal year ended November 30, 2020 was a pivotal and productive year for Experion as we fully transitioned into a recognized premium supplier of cannabis products led by our brand “Citizen Stash”. We strategically focused our assets on building an innovative supply channel and related infrastructure for national distribution to create one of the most cost effective and efficient cannabis businesses in the sector today”, commented Jarrett Malnarich, Chief Executive Officer of Experion. “Our unique supply chain model coupled with our diligent marketing efforts allowed us to quickly build a nationally recognized in-demand premium brand, known as “Citizen Stash”. These accomplishments are reflected in a 25% increase of our revenue for the quarter ended November 30, 2020 over the previous quarter, and also represented our fifth consecutive quarter of sales growth. Additionally, we achieved an increase in revenue of 366% for the fiscal year ended November 30, 2020 over the fiscal year ended November 30, 2019 while simultaneously reducing our operating costs by 43% compared to the same period.”
Mr. Malnarich continued, “moving into 2021, Experion is focused on several key strategies: expand out the aggregation and distribution model through key partnerships, expand sales to all provincial jurisdictions, increase our share of the premium market on the retail shelf, launch new innovative products, and profitability.”
Key Financial Highlights:
- Gross revenue increased 366% to $7.3 million for the fiscal year ended November 30, 2020 compared to $1.6 million for the fiscal year ended November 30, 2019.
- Gross revenue was $2.7 million for the quarter ended November 30, 2020 representing a 25% increase over the previous quarter revenue of $2.1 million.
- The quarter ended November 30, 2020 represented the fifth consecutive quarter of revenue growth for the Company.
- Operating expenses for the fiscal year ended November 30, 2020 decreased by $2.6 million or 43% compared to the prior fiscal year.
- The Company processed and sold 848,008 grams of premium dried flower through retail distribution in the fiscal year ended November 30, 2020 compared to 290,293 grams in the previous fiscal year, an increase of 192%.
- The average price per gram realized was $8.44 (net of excise tax, $7.07) for the fiscal year ended November 30, 2020, as compared to $5.36 (net of excise tax, $4.83) for the fiscal year ended November 30, 2019, an increase of 57%.
- Increased product stock keeping units (“SKUs”) from 7 to 24 during the fiscal year ended November 30, 2020 representing an increase of 243% from the previous fiscal year.
- Adjusted EBITDA increased $4.1 million in the fiscal year ended November 30, 2020 to a $(1.4) million loss, versus a $(5.5) million loss in the fiscal year ended November 30, 2019, an increase of 74%.
- Well positioned balance sheet with total assets of $12.1 million and a net working capital balance (current assets less with current liabilities) of $3.9 million.
Corporate and Operational Summary for the Quarter and Year Ended November 30, 2020:
Transitioned to an industry-leading producer, processer and distributor of premium cannabis products increasing sales by 366% for the fiscal year ended November 30, 2020 as compared to the fiscal year ended November 30, 2019 through:
- Completed facility and license improvements.
- Increased licensed cultivation space by 20% within our licensed facility in March.
- Increased our licensed processing space by 100% within our licensed facility in March.
- Experion was granted a sales license for Extractions, Topicals and Edibles in April.
- Increased national distribution from just two provinces to a total of five provinces and two territories.
- The Company’s premium brand, “Citizen Stash” entered Ontario, Canada’s largest cannabis market in September.
- Ranked #22 in supplied volume to the Ontario Cannabis Store within the first three months of entering the Ontario market.
- The Company’s premium brand, “Citizen Stash” is now available in British Columbia, Alberta, Manitoba, Saskatchewan, Yukon, North West Territories, and Ontario, representing a 400% market expansion during the fiscal year ended November 30, 2020.
- Partnered with leading sales and distribution agency, Velvet Management, to maximize visibility and awareness of the Company’s premium brand “Citizen Stash” at the retail level in September.
- Secured the best-in-industry farmers to grow and cultivate Experion’s premium genetics across Canada.
- Contracted supply now over 500 kilograms per month of premium cannabis products.
- Experion has options in place to increase supply allowing the Company to grow inventory in step with market demand, with no upfront capital requirements.
- Increased and diversified the product line up.
- Continued to build product excellence around genetic portfolio with 24 listed SKUs including several new first to market in demand strains.
- Launched premium “Citizen Stash” pre-rolls in April.
- Launched “Citizen Stash” edible gummies in October.
- Decreased operating expenses, with a 43% reduction of costs in the fiscal year ended November 30, 2020 compared to the prior fiscal year by streamlining and terminating redundant roles, reducing expenses, and optimizing business processes, functions, and services.
- Strengthened corporate governance with the addition of an independent board member with significant industry, financial and business knowledge, and experience.
Experion Holdings Ltd. Quarter and Year Ended November 30, 2020 Financial Summary:
|Three Months Ended||Fiscal Year Ended|
|(000’s of Cad dollars, except per gram metrics)||Nov 30,
|Average Realized Price (Revenue) per Gram||8.09||8.74||6.48||8.44||5.36|
|Net Revenue *1||2,228||1,781||531||6,130||1,415|
|Gross Profit before Fair Value Adjustments||295||448||(114)||1,065||(237)|
|Selling, General and Administration Expense||926||598||1,669||3,398||5,966|
|Net Income / (Loss)||(4,175)||(188)||(10,512)||(5,942)||(16,153)|
|Adjusted EBITDA *2||(305)||(149)||(2,064)||(1,416)||(5,523)|
|Number of Shares Outstanding (000’s)||100,762||100,762||100,475||100,762||100,475|
*1 Net of excise tax.
*2 Adjusted EBITDA is a non-GAAP measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management defines adjusted EBITDA as comprehensive loss for the period, as reported, before interest, taxes, depreciation and amortization, and adjusted by removing share-based payments, and other one-time and non-cash items, including impairment losses. See reconciliation of “Adjusted EBITDA” in the Company’s Management’s Discussion & Analysis for the period ended November 30, 2020.
- Gross revenue increased 366% to $7.3 million in the fiscal year ended November 30, 2020 compared to $1.6 million in the fiscal year ended November 30, 2019.
- Gross revenue was $2.7 million for the quarter ended November 30, 2020, representing an increase of 25% over the previous quarter revenue of $2.1 million.
- Product sales from the final two quarters of fiscal 2020, the quarters ended August 31, 2020 and November 30, 2020 made up 65% of the total $7.3 million gross revenue from the fiscal year ended November 30, 2020, as compared to the first two quarters of the fiscal year ended November 30, 2020, as sales and expenses in the first two quarters reflected the transitional period of the Company as it began its ‘aggregation & distribution’ model and its expense rationalization program.
- Gross profit before fair value adjustments was $1.06 million or 17% of net revenue for the fiscal year ended November 30, 2020, compared to $(0.237) million or (17)% of net revenue for the fiscal year ended November 30, 2019.
- Gross profit for the financial year ended November 30, 2020 was impacted by both the transition to the ‘aggregation and distribution’ model in the first half of the year, and an inventory write down of $(0.376) million in the quarter ended November 30, 2020.
- Excluding the inventory write-down, ‘adjusted gross profit’ before fair value adjustments would have been $1.44 million, or 24% of net revenue for the financial year ended November 30, 2020.
- Gross profit before fair value adjustments was $0.295 million for the quarter ended November 30, 2020, compared to $0.447 million for the quarter ended August 31, 2020. The lower gross profit was the result of the inventory write down in the amount of $(0.376) million for the quarter ended November 30, 2020.
- Excluding this inventory write-down, ‘adjusted gross profit’ before fair value adjustments would have been $0.671 million, or 30% of net revenue for the quarter ended November 30, 2020.
- The Company expects it will continue to improve on its gross margin levels. The ‘aggregation & distribution’ business model is a mix of externally purchased flower and internally grown flower which results in a gross margin not entirely comparable to the Company’s Canadian licenced producer (“LP”) peers as the costs of purchased flower from strategic grow partners is generally higher than the costs of growing internally.
- While the Company’s absolute gross margin may be lower compared to the traditional Canadian LP peers that grow only, unlike these peers, Experion does not have the significant upfront capital costs and the higher on-going operating expenditures to support the large growing As a result, the Company can drive significant revenues from a lower invested capital base, driving higher returns on invested capital and a quicker pathway to profitability than traditional growing peers.
- The Company’s goal is to continue to drive improvements in gross margin with additional automation, economies of scale and operational efficiencies of all its processing systems.
- As a result of the shift in strategy and the refined business model of the Company in early 2020 to focus on the core sales and distribution of premium cannabis flower for the recreational market, a $2.9 million impairment expense was taken on certain goodwill, intangible and other equipment assets in the quarter ended November 30, 2020 related to the Company’s EFX Laboratories Inc. (“EFX”) subsidiary:
- The Company hibernated EFX’s intellectual property (“IP”) and assets that focused on the medical and therapeutics cannabis markets.
- The Company still owns these assets and IP which include a Phase III clinical trial for post-operative pain relief, topical formulations, and various proprietary standard operating procedures.
- While Experion has no specific plans currently to utilize these assets, there may be an opportunity in the future as new Health Canada ‘Cannabis Health Products’ regulations are enacted for over-the-counter products.
- Adjusted EBITDA was a $(1.4) million loss for the fiscal year end November 30, 2020, an increase of $4.1 million compared to the $(5.5) million loss in the prior fiscal year.
- In the quarter ended November 30, 2020, adjusted EBITDA was $(0.305) million, compared to $(0.149) million in the quarter ended August 31, 2020. Adjusted EBITDA in the quarter ended November 30, 2020 was impacted by larger than normal quarterly accruals.
Fiscal 2021 Strategic Initiatives
Experion expects to realize significant growth and continue to capture market share in 2021 by leveraging what has been built throughout 2020 by:
- Expanding into all provincial markets within Canada.
- Maximizing the visibility of the Company’s “Citizen Stash” brand within our current markets.
- Expanding the premium product offerings with further innovation, namely, new-in-demand strains, concentrates and edibles.
- Accelerating our scalable and capital efficient ‘aggregation and distribution’ model nationally.
- Partnering with a central Canadian cannabis processor to replicate our British Columbia based Mission facility to keep pace with our demand and sales growth.
Experion will continue to deploy its capital into product inventory and marketing to rapidly drive sales and brand visibility nationally.
Q1 2021 Revenue Guidance
Gross revenue guidance for the first quarter of fiscal 2021, the quarter ending February 28, 2021, is projected to be between $3.7 million to $4.0 million, or a 40% to 51% growth versus the quarter ended November 30, 2020 which had gross revenue of $2.7 million. This growth is driven by the Company’s ability to fulfill its demand and expand its brand throughout Canada.
About Experion Holdings Ltd.
Experion Holdings Ltd. is the parent company of Experion Biotechnologies Inc., a Health Canada licensed cultivator and processor of cannabis, based in Mission, British Columbia.
Experion Holdings Ltd. is invested in a portfolio of products to address a wide spectrum of consumer needs’ including adult-use, wellness, and therapeutic, and medical products.
Experion trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol “EXP” on the OTCQB Venture under the symbol “EXPFF” and on the Frankfurt Stock Exchange under the symbol “MB31”.
Certain financial measures in this news release, including adjusted EBITDA from continuing operations, ‘adjusted gross profit’ and ‘adjusted gross margin’ before fair value adjustments are non-IFRS measures. These terms are not defined by IFRS and, therefore, may not be comparable to similar measures provided by other companies. These non-IFRS financial measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS.
Notice Regarding Forward Looking Statements
This news release contains “forward-looking statements” and “forward-looking information” (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations, and objectives for future operations that are subject to a number of material factors, assumptions, risks and uncertainties, many of which are beyond the control of the Company.
Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expect”, “goal”, “plan”, “continue”, “future”, “projects”, “outlook” and similar expressions, or are events or conditions that “will”, “would”, “may”, “likely”, “could”, “should”, “can”, “typically”, “traditionally” or “tends to” occur or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: the Company’s capital spending forecast and expectations of how it will be funded; the Company’s capital management strategy and financial position; the Company’s outlook, projected increases to gross margin, activity levels, supply chains, product inventory and sales channels; the Company’s planned expansion; key strategic initiatives, growth and capture of market share; further legislative and regulatory developments involving cannabis or otherwise affecting the Company’s business or its consumers generally, including new over-the-counter products; competition; currency and interest rate fluctuations; and marketing costs.
Although the Company believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements are made, undue reliance should not be placed on the forward-looking statements because the Company can give no assurances that such statements and information will prove to be correct and such statements are not guarantees of future performance. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.
Actual performance and results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: known and unknown risks, including those set forth in the Filing Statement dated September 25, 2017 and/or the most recent annual and interim Management’s Discussion and Analysis (“MD&A”) (a copy of which can be found under Experion’s profile on SEDAR at www.sedar.com); the Company’s ability to raise the necessary capital or to be fully able to implement its business strategy; integration of acquisitions, competition, and uncertainties resulting from potential delays or changes in plans with respect to acquisitions, development projects or capital expenditures and changes in legislation; stock market volatility and the inability to access sufficient capital from external and internal sources; general economic, market or business conditions including those in the event of an epidemic, natural disaster or other events, including the ongoing COVID-19 pandemic; global economic events; changes to the Company’s financial position and cash flow; the availability of qualified personnel, management or other key inputs; currency exchange and interest rate fluctuations; changes in political and security stability; potential industry developments; and other unforeseen conditions which could impact the Company. Accordingly, readers should not place undue importance or reliance on the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive and should refer to “Risk Factors” set out in the MD&A.
Statements, including forward-looking statements, contained in this news release are made as of the date they are given and the Company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Experion Holdings Ltd.