Cansortium Reports Third Quarter 2024 Results
- Q3 Revenue improves 3.5% Year-over-Year to $26.1 million
- Delivers $7.5 million in Adjusted EBITDA, representing 29% margin
- Generates $9.6 million in Positive Cash Flow from Operations
TAMPA, fLA., Nov. 29, 2024 /PRNewswire/ - Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated, multi-state cannabis company operating under the FLUENT™ brand, today announced its financial and operating results for the quarter ended September 30, 2024. Unless otherwise indicated, all financial results are presented in U.S. dollars.
"We completed the third quarter by delivering our 12th consecutive quarter of positive cash flow from operations as well as steady year over year revenue growth," said CEO Robert Beasley. "Our focus on continuous improvement and gaining efficiencies has continued to be a positive contributor to our solid performance."
Mr. Beasley added, "In Florida, we have increased our cultivation canopy to remain in balance with strong medical market demand and anticipate adding four new stores in 2025 while expanding our brand and product portfolio. Fortunately, our growth strategy did not depend on the outcome of Amendment 3 passing in Florida and we have made no financial commitments which depended on the adult use measure. FLUENT remains committed to the mission of serving the medical cannabis patients of Florida."
Mr. Beasley concluded, "Looking ahead, with our primary loan refinancing completed and our business combination with RIV Capital set to close by year end, our business is exceptionally well positioned heading into 2025. We have already commenced integration activities and are looking forward to leveraging the combined talent of both teams to scale our market share in the state of New York. Additionally, we also continue to seek out opportunities to drive revenue growth in both Pennsylvania and Texas."
Q3 2024 Financial Highlights (vs. Q3 2023)
- Revenue increased 3.5% to $26.1 million compared to $25.3 million.
- Florida revenue increased 3.6% to $22.0 million compared to $21.3 million.
- Gross profit before fair value adjustments1 was $14.3 million or 54.6% of revenue, compared to $13.7 million or 54.0% of revenue.
- Adjusted EBITDA was $7.5 million compared to $7.7 million, with the decrease primarily driven by higher general and administrative expenses.
- Cash flow from operations for the three months ending September 30, 2024, was $9.6 million compared to $7.1 million in the prior year primarily.
- On September 30, 2024, the Company had approximately $8.9 million of cash and cash equivalents and $74.1 million of total debt outstanding, with approximately 303 million shares outstanding.
Recent Operational Highlights
- In Florida, Cansortium currently operates 35 stores and anticipates opening 4 new stores by the end of 2025.
- The Ruskin, FL Facility is now operational and Cansortium completed its first harvest in June 2024, adding approximately 14,000 sq ft of cultivation canopy.
- The Rosa, FL Facility is under construction, and the Company anticipates it will complete its first harvest by Q2 2025, adding another 7,000 sq ft of canopy to Cansortium's Florida footprint.
- There was no major damage to the Company's facilities or retail locations as a result of the hurricane's which impacted Florida in 2024.
- Subsequent to quarter end, the Company completed a new senior secured credit agreement of up to $96,500,000 with Chicago Atlantic Admin, LLC, refinancing its existing $71,000,000 senior secured term loan that was set to mature May 29, 2025.
RIV Transaction Update and Conference call
The Company has continued its integration activities with RIV Capital Inc. ("RIV Capital") and, with all required regulatory approval obtained, expects to complete the business combination in early December 2024. In connection with the closing, the Company expects to host a conference call to discuss the proforma business as well as its financial and operating results for the third quarter ended September 30, 2024. Details will be announced upon completion of the RIV Capital transaction.
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1 Gross profit before fair value adjustments 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 gross profit before fair value adjustments from gross profit plus (minus) the changes in fair value of biological assets, as presented in the consolidated statement of operations. |
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 Tampa, Florida.
Cansortium Inc.'s Common Shares trade on the CSE under the symbol "TIUM.U" and on the OTCQB Venture 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
[email protected]
Cansortium Inc.
Consolidated Statements of Financial Position (unaudited)
As of September 30, 2024, and December 31, 2023
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
September 30, | December 31, | |||||
2024 | 2023 | |||||
Assets | ||||||
Current assets | ||||||
Cash | $ 8,932 | $ 10,521 | ||||
Trade receivable | 51 | 215 | ||||
Inventory, net | Note 3 | 13,419 | 9,244 | |||
Biological assets | Note 4 | 2,951 | 331 | |||
Prepaid expenses and other current assets | Note 5 | 2,794 | 1,882 | |||
Total current assets | 28,147 | 22,193 | ||||
Property and equipment, net | Note 6 | 31,476 | 27,642 | |||
Intangible assets, net | Note 7 | 94,714 | 93,593 | |||
Right-of-use assets, net | Note 12 | 32,692 | 31,943 | |||
Goodwill | Note 8 | 1,525 | 1,525 | |||
Other assets | 1,373 | 907 | ||||
Total assets | $ 189,927 | $ 177,803 | ||||
Liabilities | ||||||
Current liabilities | ||||||
Trade payable | $ 8,035 | $ 5,525 | ||||
Accrued liabilities | 5,425 | 9,779 | ||||
Income taxes payable | 3,337 | 22,009 | ||||
Derivative liabilities | Note 10 | 817 | 9,109 | |||
Current portion of notes payable, net | Note 11 | 63,989 | 213 | |||
Current portion of lease liabilities | Note 12 | 3,178 | 2,872 | |||
Total current liabilities | 84,781 | 49,507 | ||||
Notes payable, net | Note 11 | 7,414 | 61,189 | |||
Lease liabilities | Note 12 | 38,924 | 37,242 | |||
Deferred tax liability | 22,303 | 17,398 | ||||
Uncertain tax position | 38,816 | - | ||||
Other long-term liabilities | Note 21 | 3,447 | 3,882 | |||
Total liabilities | 195,685 | 169,218 | ||||
Shareholders' equity | ||||||
Share capital | Note 13 | 183,690 | 183,690 | |||
Share-based compensation reserve | 7,158 | 6,739 | ||||
Equity conversion feature | 6,914 | 6,677 | ||||
Warrants | Notes 13 | 29,634 | 29,634 | |||
Accumulated deficit | (232,820) | (217,821) | ||||
Foreign currency translation reserve | (334) | (334) | ||||
Total shareholders' equity | (5,758) | 8,585 | ||||
Total liabilities and shareholders' equity | $ 189,927 | $ 177,803 |
Cansortium Inc.
Statement of Operations (unaudited)
For the three- and nine-months ending September 30, 2024 and 2023
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
For the three months ended | For the nine months ended | |||||||||
September 30, | September 30, | September 30, | September 30, | |||||||
Revenue, net of discounts | $ 26,147 | $ 25,260 | $ 78,643 | $ 71,746 | ||||||
Cost of goods sold | 11,859 | 11,607 | 38,315 | 34,882 | ||||||
Gross profit before fair value adjustments | 14,288 | 13,653 | 40,328 | 36,864 | ||||||
Fair value adjustments on inventory sold | (2,099) | 4,492 | (2,259) | 9,044 | ||||||
Unrealized gain (loss) on changes | Note 4 | (611) | (3,627) | 8,704 | (11,719) | |||||
Gross profit | 11,578 | 14,518 | 46,773 | 34,189 | ||||||
Expenses | ||||||||||
General and administrative | Note 14 | 3,913 | 2,705 | 12,483 | 7,588 | |||||
Sales and marketing | Note 14 | 5,846 | 5,354 | 17,298 | 14,928 | |||||
Depreciation and amortization | 1,737 | 2,003 | 5,247 | 5,780 | ||||||
Share-based compensation | 228 | 228 | 419 | 643 | ||||||
Total expenses | 11,724 | 10,290 | 35,447 | 28,939 | ||||||
Income from operations | (146) | 4,228 | 11,326 | 5,250 | ||||||
Other expense (income) | ||||||||||
Finance costs, net | Note 19 | 5,154 | 4,562 | 14,700 | 13,135 | |||||
Loss (gain) on change in fair value of ccccderivative liability | Notes 10 | (898) | 426 | (8,292) | 262 | |||||
Gain on debt settlement | - | (116) | - | (116) | ||||||
Loss on disposal of assets | - | - | 212 | 70 | ||||||
Loss from termination of a contract | - | 2 | 5 | 6 | ||||||
Other miscellaneous income | - | - | - | 67 | ||||||
Total other (income) expense | 4,256 | 4,874 | 6,625 | 13,424 | ||||||
Income (loss) before income taxes | (4,402) | (646) | 4,701 | (8,174) | ||||||
Income tax expense | Note 9 | 7,379 | 4,662 | 19,700 | 9,867 | |||||
Net comprehensive loss | $ (11,781) | $ (5,308) | $ (14,999) | $ (18,041) | ||||||
Net loss per share | ||||||||||
Basic and diluted - continuing operations | $ (0.04) | $ (0.02) | $ (0.05) | $ (0.06) | ||||||
Weighted average number of shares | ||||||||||
Basic number of shares | 300,522,916 | 298,963,366 | 299,617,665 | 290,693,488 | ||||||
Diluted number of shares | 341,807,051 | 358,650,277 | 341,616,139 | 345,906,048 | ||||||
Cansortium Inc.
Consolidated Statements of Cash Flow (unaudited)
For the nine months ended September 30, 2024 and 2023
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
For the nine months ended | ||
September 30, | September 30, | |
Operating activities | ||
Net loss from continuing operations | $ (14,999) | $ (18,041) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Unrealized loss (gain) on changes in fair value of biological assets | (8,704) | 11,719 |
Realized loss (gain) on changes in fair value of biological assets | 2,259 | (9,044) |
Share-based compensation | 419 | 644 |
Depreciation and amortization | 11,366 | 10,961 |
Accretion and interest of convertible debentures | 426 | 400 |
Accretion and interest of term loan | 10,372 | 9,534 |
Interest of equipment loan | - | 37 |
Interest on cultivation facility loan | 61 | - |
Interest on insurance financing | 9 | - |
Interest on convertible promissory note | 224 | - |
Loss on disposal of assets | 212 | 70 |
Change in fair market value of derivative | (8,292) | 262 |
Interest on lease liabilities | 3,588 | 3,041 |
Deferred tax expense | 4,835 | (1,003) |
Uncertain tax position | 38,816 | - |
Changes in operating assets and liabilities: | ||
Trade receivable | 164 | (20) |
Inventory | 10,944 | 11,339 |
Biological assets | (11,294) | (12,609) |
Prepaid expenses and other current assets | 960 | (497) |
Right of Use Assets/Liabilities | (3,520) | 455 |
Other assets | (466) | (66) |
Trade payable | 2,510 | (3,275) |
Accrued liabilities | (4,354) | (205) |
Other long-term liabilities | (435) | 2,531 |
Income taxes payable | (18,672) | 10,872 |
Net cash provided by operating activities | 16,429 | 17,105 |
Investing activities | ||
Purchases of property and equipment | (10,543) | (4,500) |
Purchase of intangible assets | (1,332) | - |
Net cash used in investing activities | (11,875) | (4,500) |
Financing activities | ||
Net proceeds from issuance of shares and warrants | - | 2,993 |
Net proceeds from insurance financing | - | 800 |
Net proceeds from convertible note | 3,983 | - |
Payment of lease obligations | (2,126) | (4,800) |
Net proceeds from auto and equipment loan | 48 | - |
Principal repayments of notes payable | (8,048) | (7,852) |
Net cash used in financing activities | (6,143) | (8,859) |
Net increase (decrease) in cash | (1,589) | 3,746 |
Cash, beginning of period | 10,521 | 8,359 |
Cash, end of period | $ 8,932 | $ 12,105 |
Cansortium Inc.
Adjusted EBITDA Calculation (unaudited)
(Amounts expressed in thousands of United States Dollars unless otherwise stated)
Three months ended | |||
September 30, | September 30, | Variance | |
Net loss | $ (11,781) | $ (5,308) | $ (6,473) |
Finance costs, net | 5,154 | 4,562 | 592 |
Income taxes | 7,379 | 4,662 | 2,717 |
Depreciation and amortization | 3,801 | 3,829 | (28) |
EBITDA | $ 4,553 | $ 7,745 | $ (3,192) |
Three months ended | |||
September 30, | September 30, | Variance | |
EBITDA | $ 4,553 | $ 7,745 | $ (3,192) |
Change in fair value of biological assets | 2,710 | (865) | 3,575 |
Change in fair market value of derivative | (898) | 426 | (1,324) |
Professional fees(1) | 529 | - | 529 |
One-time employee costs(2) | 162 | - | 162 |
Loss on debt settlement | - | (116) | 116 |
Share-based compensation | 228 | 228 | - |
Other non-recurring expense(3) | 243 | 263 | (20) |
Adjusted EBITDA | $ 7,527 | $ 7,681 | $ (154) |
Nine months ended | |||
September 30, | September 30, | Variance | |
Net loss | $ (14,999) | $ (18,041) | $ 3,042 |
Finance costs, net | 14,700 | 13,135 | 1,565 |
Income taxes | 19,700 | 9,867 | 9,833 |
Depreciation and amortization | 11,274 | 11,490 | (216) |
EBITDA | $ 30,675 | $ 16,451 | $ 14,224 |
Nine months ended | |||
September 30, | September 30, | Variance | |
EBITDA | $ 30,675 | $ 16,451 | $ 14,224 |
Change in fair value of biological assets | (6,445) | 2,675 | (9,120) |
Change in fair market value of derivative | (8,292) | 262 | (8,554) |
Loss on termination of contract | - | 6 | (6) |
Loss on debt settlement | - | (116) | 116 |
Professional fees(1) | 4,170 | - | 4,170 |
One-time employee costs(2) | 776 | - | 776 |
Share-based compensation | 419 | 643 | (224) |
Loss on disposal of assets | 212 | 70 | 142 |
Other non-recurring expense(3) | 486 | 327 | 159 |
Adjusted EBITDA | $ 22,001 | $ 20,318 | $ 1,683 |
(1) Legal and professional fees associated with potential transactions and professional fees associated with prior periods. |
(2) Severance and relocation costs. |
(3) One-time costs incurred during the period related. |
SOURCE Cansortium Inc.
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