Valens Company Q1 Revenue Increases 26% Sequentially To $18.5M

Author: Nicolás Jose Rodriguez | April 13, 2022 08:02pm

The Valens Company Inc. (TSX:VLNS) (NASDAQ:VLNS), a leading manufacturer of cannabis products, reported its first-quarter fiscal year 2022 financial results late on Wednesday.

Highlights

Net revenue grew 26.1% sequentially to $23.2 million from $18.4 million in Q4 2021. Net revenue was primarily driven by provincial sales which increased by 36.7% in Q1 2022 as compared to Q4 2021.
B2C revenue lines of provincial sales and Green Roads accounted for 68.5% of net revenue in Q1 2022.
Valens reiterates its objective of achieving positive adjusted EBITDA by Q4 2022.

“The results from the first quarter demonstrate that Valens’ underlying business has passed an inflection point. This performance reinforces the importance of Valens' now diversified business lines across provincial sales, B2B LP sales, and Green Roads sales (...) allowing us to deliver more sustainable growth. We delivered another quarter of strong provincial sales as we continue to grow our recreational market share, with the launch of Versus and Contraband,” said Tyler Robson, CEO, co-founder, and chair of The Valens Company. “Our Green Roads US CBD business saw a modest decline in revenue primarily due to normal seasonal trends, with December being historically its slowest month.”

“We took the opportunity to exit some higher-priced inventory through the B2B channel. These factors resulted in lower gross margins in the quarter. It was also encouraging to see gross margin improvements in provincial sales despite significant retail price compression and increases in supply chain costs in the quarter,” concluded the CEO.

“We implemented a series of Integration Initiatives aimed at driving efficiencies throughout the organization and right-sizing our cost structure to ensure we remain nimble and aggressive in a competitive market. With these initiatives now firmly underway and following our recent CDN$32.3 million financing we believe we have the branded product portfolio, manufacturing capabilities, and balance sheet strength to pursue our key strategic objectives in 2022,” added Jeff Fallows, Valens Company president in a press release.

Key Objectives for 2022

Grow adult recreational market share in Canada by seeking to become a top 5 Player in vapes, edibles, and beverages and a top 10 player in flower products.
Unlock the firm’s potential in the U.S. and international markets through the Green Roads platform acquired in April 2021.
Seek to achieve positive adjusted EBITDA by Q4 by improving the gross margin and SG&A profile of the business through Integration Initiatives that are based on a combination of cost efficiencies, the realization of M&A synergies, and greater levels of automation and process standardization.
Reduce cash burn through improvements in adjusted EBITDA, working capital management, and monetization of non-core assets.
Development of the Company’s U.S. THC strategy "as permissible under federal regulations."

Revenue & EBITDA Guidance for 2023