Flower One Posts EBITDA Loss In Q3 As It Takes 'Necessary Steps' To Achieve Positive Cash Flow

Author: Jelena Martinovic | November 30, 2021 09:43am

Cannabis producer Flower One Holdings Inc. (CSE:FONE) (OTCQX:FLOOF) (FSE: F11) announced its financial and operating results Tuesday for the third quarter ended September 30, 2021.

The company, based in Las Vegas and Toronto, reported revenue of $14.1 million in the third quarter, representing an 18% year-over-year increase.

"While we continued to see the positive impacts of the restructuring and operational advancements, we also experienced seasonal challenges related to our production, highlighting the need for several key improvements required to bring the facility to optimization and ultimately full capacity," said Kellen O'Keefe, Flower One's president and CEO. "We have begun the first phase of significant upgrades to the facility, which will further improve the quality and consistency of our product, and ultimately increase yield and total capacity."

Q3 2021 Financial Highlights

Net income before income taxes totaled $4.3 million, compared to a $17.2 million loss in the same quarter of last year.
Adjusted EBITDA came in negative at $5.73 million, compared to a $1.34 million adjusted EBITDA loss in the prior year's period.
The cost of sales totaled $14.8 million.

Year-To-Date Financial Highlights

For the nine months ending Sept. 2021, gross profit was $15.2 million, versus a gross loss of $14.6 million in the corresponding quarter of last year.
Net loss before income taxes totaled $22.15 million, representing a substantial year-over-year improvement from a net loss of $44.9 million in the same period of last year.
Adjusted EBITDA came in negative at $7.6 million, compared to a $5.64 million loss in the prior year's period.
Cost of sales was $33.5 million, resulting in a gross margin of 27%.
As of September 30, 2021, the company had cash and cash equivalents of $4.9 million, compared with $2.2 million as of June 30, 2021, and $1.1 million as of December 31, 2020.
As of September 30, 2021, total liabilities were $120 million, compared to June 30, 2021, of $131.7 million, and December 31, 2020, of $142.1 million.

Q3 2021 Business Highlights

Announced the full-time appointments of Kellen O'Keefe as CEO and Salpy Boyajian as executive vice president.
Appointed Nikki Brown as the first member of the company's advisory board.
Closed its above-market non-brokered private placement, raising gross proceeds of $5 million.
Announced an exclusive brand partnership with Miss Grass, a brand that serves as an innovative platform focused on cannabis education, culture, and science.
Announced a strategic brand partnership with ALTWELL, a leading California health and wellness cannabinoid-based brand.

"We can assure you that we are taking all of the necessary steps to achieve positive cash flow as quickly as possible," Araxie Grant, the company's CFO, said. "We will continue to explore all options with regards to decreasing the Company's cost of capital and operating expenses."