Cansortium Reports Third Quarter 2021 Financial Results

Published: Nov. 30, 2021 at 1:05 PM PST

Q3 Revenue up 9% YoY to $15.6 Million; Adjusted EBITDA up 34% to $4.9 million

Management to Host Conference Call Today at 5:00 P.M. Eastern Time

MIAMI, Nov. 30, 2021 /PRNewswire/ - Cansortium Inc. (CSE: TIUM.U) (OTCQX: CNTMF) ("Cansortium" or the "Company"), a vertically-integrated cannabis company operating under the Fluent™ brand, today announced financial results for the third quarter ended September 30, 2021. Unless otherwise indicated, all results are presented in U.S. dollars.

"We executed on several key initiatives during the quarter, including the opening of a new dispensary in Pennsylvania and two new dispensaries in Florida, bringing our total retail footprint to 29 stores," said CEO Robert Beasley. "We also received approval from the Florida Department of Health to commence operation in several new bays at our recently expanded Sweetwater facility. In fact, products from Sweetwater hit the shelves in November as planned and early customer feedback has been excellent.

"During the quarter, there was a well-publicized merger between two MSOs in Florida that created a product liquidation event, which disrupted pricing in the market. We nevertheless stood our ground on pricing, which impacted sales but enabled us to hold margins relatively well and still increase adjusted EBTIDA by 34% to $4.9 million. Due to these lower sales, we are revising our 2021 revenue guidance to $63-$66 million, however we are holding our adjusted EBITDA guidance and expect to come in at the low end of our previously disclosed range of $18-$26 million."

Beasley continued: "Pricing volatility in Florida has improved since the peak disruption in September, and as we enter the final month of the year, we continue to expect exiting 2021 at a strong run rate with full production from our increased capacity hitting shelves in February 2022. We have already seen increased yields due to environmental control enhancements across multiple facilities, and we are excited to dramatically improve our competitive positioning with greater inventory and a wider range of products to sell across our Florida retail footprint in 2022."

Q3 2021 Financial Highlights (vs. Q3 2020)

  • Revenue increased 9% to $15.6 million compared to $14.3 million.
  • Florida revenue increased 4.3% to $13.1 million compared to $12.6 million.
  • Adjusted gross profit1 increased to $9.8 million or 62.7% of revenue, compared to $9.5 million or 66.6% of revenue.
  • Adjusted EBITDA increased 34% to $4.9 million or 31.4% of revenue, compared to $3.6 million or 25.5% of revenue.

Recent Operational Highlights

  • In August, the Company opened its 2nd store in Pennsylvania in Mechanicsburg.
  • In September, the Company opened its 27th store in Florida in Fruitland Park, which is the city's first medical marijuana dispensary.
  • Received approval from the Florida Department of Health to commence operations at several new bays at its Sweetwater, FL cultivation facility.
  • Cansortium appointed a new auditor, Baker Tilly US, LLP, in preparation for reporting financial results in accordance with U.S. GAAP in 2022.

2021 Outlook
The Company is revising its 2021 outlook for revenue and now expects it to range between $63-$66 million. The Company continues to expect adjusted EBITDA to range between $18-$26 million and anticipates achieving the lower end of the range. This compares to approximately $52 million of revenue and $10 million of adjusted EBITDA in 2020.

The Company's unaudited consolidated financial statements and accompanying notes, along with the Management Discussion and Analysis (MD&A), will be available under the Company's profile on SEDAR at www.sedar.com and are also accessible through the Investor Relations section of the Company's website at www.getfluent.com.

______________________________

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 5:00 p.m. Eastern time to discuss its financial results and operational highlights.

Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10017358
Link: Cansortium Q3 2021 Earnings 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 (949) 200-4603.

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, Michigan 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. 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 management's expectations, estimates, and projections regarding future events.

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
(305) 900-6266
www.getfluent.com

Investor Relations Contact
Sean Mansouri, CFA
Elevate IR
(949) 200-4603
investors@cansortium.com

Media Contact
Julie Dietel
Grasslands: A Journalism-Minded Agency 
julie@mygrasslands.com
(978) 502-7705

CANSORTIUM INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of September 30, 2021 and December 31, 2020

(USD '000)





September 30,
2021

December 31,
2020

Assets



Current assets



Cash and cash equivalents

$

13,808

$

3,392

Accounts receivable

301

148

Inventory, net

9,975

5,006

Biological assets

3,108

1,914

Prepaid income taxes

628

-

Note receivable

3,986

3,859

Prepaid expenses and other current assets

1,657

1,365

Total current assets

33,463

15,684




Investment held for sale

200

200




Property and equipment, net

30,369

19,517

Intangible assets, net

96,205

97,035

Right-of-use assets

19,290

19,094

Deposit

2,727

1,050

Goodwill

1,526

1,526

Other assets

528

425

Total assets

$

184,308

$

154,531




Liabilities



Current liabilities



Accounts payable

4,685

4,808

Accrued liabilities

7,092

7,614

Income taxes payable

-

8,925

Derivative liabilities

-

7,412

Current portion of notes payable

620

38,583

Lease obligations

2,375

1,894

Total current liabilities

14,772

69,236


-


Notes payable

54,693

13,182

Lease obligations, net of current portion

21,157

20,811

Deferred income taxes

21,547

23,471

Total liabilities

112,169

126,700




Shareholders' equity



Share capital

193,020

137,835

Share-based compensation reserve

6,164

4,675

Equity conversion feature

4,933

11,044

Warrants

29,797

13,265

Accumulated deficit

(161,363)

(138,609)

Accumulated other comprehensive loss

(412)

(379)

Total shareholders' equity 

72,139

27,831




Total liabilities and shareholders' equity

$

184,308

$

154,531

CANSORTIUM INC.

STATEMENT OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(USD '000)








For the three months
ended September 30, 


For the nine months
ended September 30, 


2021

2020


2021

2020







Revenue, net of discounts

$

15,568

$

14,313


$

47,153

$

37,718

Cost of goods sold

5,805

4,784


$

16,956

13,011

Gross profit before fair value adjustments

9,763

9,529


30,197

24,707







Realized fair value of increments on inventory sold

(5,113)

(6,051)


(14,433)

(18,566)

Unrealized change in fair value of biological assets

6,113

4,263



11,768

23,945

Gross profit

10,763

7,741


27,532

30,086







Expenses






General and administrative

2,084

2,861


8,241

9,064

Share-based compensation

731

1,689


4,248

4,938

Sales and marketing

4,033

3,561


11,094

10,162

Depreciation and amortization

1,649

1,561



4,727

4,635

Total expenses

8,497

9,672



28,310

28,799







Income (Loss) from operations

2,266

(1,931)


(778)

1,287







Other expense (income)






Interest expense, net

3,383

3,892


11,233

11,448

Change in fair market value of derivative liability

-

673


(1,551)

1,680

(Gain)/Loss on debt settlement

(10,794)

-


(42)

-

Private placement issuance expense

890

-


7,530

-

Equity loss on investment in associate

-

166


-

381

Loss on debt restructuring

-

-


-

8,065

(Gain)/Loss on disposal of assets

(20)

710


30

656

Other (income) expense 

7

1



(124)

7

Total other expense (income)

(6,534)

5,442



17,076

22,237







Income (Loss) before income taxes

8,800

(7,373)


(17,854)

(20,950)







Income taxes

1,437

1,281


4,868

7,422








Net income (loss)

7,363

(8,654)



(22,722)

(28,372)







(Gain)/Loss from discontinued operations

2

236


33

(106)








Net income (loss) after discontinued operations

$

7,361

$

(8,890)


$


(22,755)

$

(28,266)







Other comprehensive loss:






Foreign exchange translation gain (loss)

(22)

4



(33)

188








Comprehensive income (loss)

$

7,339

$

(8,886)


$

(22,788)

$

(28,078)







Net loss per share






Basic

$

0.03

$

(0.04)


$

(0.10)

$

(0.14)

Diluted

$

0.02

$

(0.04)


$

(0.10)

$

(0.14)

CANSORTIUM INC.

STATEMENT OF CASH FLOWS

(USD '000)





 For the nine months ended September 30, 


2021

2020

Operating activities



Net loss

$

(22,755)

$

(28,266)

Adjustments to reconcile net loss to net cash used in operating activities:



Unrealized gain on changes in fair value of biological assets

(11,768)

(23,945)

Realized gain on changes in fair value of biological assets

14,433

18,566

Share-based compensation

3,883

4,938

Depreciation and amortization

7,529

6,146

Discontinued operations

33

(106)

Accretion of convertible debentures

3,457

5,974

Interest on lease liabilities

1,911

3,324

Change in fair market value of derivative

(1,551)

1,680

Loss on investment in associate

-

381

Loss on debt restructuring

-

8,065

(Gain)/Loss on disposal of assets

30

656

Deferred tax expense

(852)

1,700

Changes in operating assets and liabilities:



Accounts receivable

(153)

79

Inventory

(4,969)

(2,930)

Biological assets

(3,859)

3,096

Prepaid expenses and other current assets

1,632

(492)

Right-of-use assets

(2,395)

(1,439)

Right-of-use liabilties

2,378

-

Other assets

(105)

(99)

Accounts payable

(123)

(309)

Accrued liabilities

(396)

2,205

Income taxes 

(9,553)

4,909

Other liabilities

-

(411)

Net cash provided by (used in) operating activities

(23,193)

3,723




Investing activities



Purchases of property and equipment

(15,210)

(3,136)

Purchase of intangile assets

(318)

-

Payment of notes receivable

1,477

350

Proceeds from sale of property and equipment

29

-

Notes receivable

(1,802)

(1,375)

Proceeds from sale of subsidiary

-

600

Net cash used in investing activities

(15,824)

(3,561)




Financing activities



Proceeds from issuance of shares and warrants

23,730

4,351

Proceeds from issuance of debt, net of loan issuance costs

63,086

62

Payment of lease obligations

(3,342)

(3,207)

Exercise of warrants

1,365

-

Principal repayments of notes payable

(35,373)

-

Net cash provided by financing activities

49,466

1,206

Effect of foreign exchange on cash and cash equivalents

(33)

188

Net increase (decrease) in cash and cash equivalents

10,416

1,556

Cash and cash equivalents, beginning of period

3,392

2,516

Cash and cash equivalents, end of period

$

13,808

$

4,072

CANSORTIUM INC.

ADJUSTED EBITDA RECONCILIATION

(USD '000)






Three months ended


September 30,
2021

September 30,
2020

Variance

Net income (loss)

$

7,361

$

(8,890)

$

16,251

Interest expense

3,383

3,892

(509)

Income taxes

1,437

1,281

156

Depreciation and amortization

2,844

2,100

744

EBITDA

$

15,025

$

(1,617)

$

16,642














Three months ended


September 30,
2021

September 30,
2020

Variance

EBITDA

$

15,025

$

(1,617)

$

16,642

Change in fair value of biological assets

(1,000)

1,788

(2,788)

Change in fair market value of derivative

-

673

(673)

Loss on debt settlement

(10,794)

-

(10,794)

Private placement issuance expense

890

-

890

Share-based compensation

731

1,689

(958)

Discontinued operations

2

236

(234)

(Gain)/Loss on disposal of assets

(20)

$

710

(730)

Other non-recurring expense/(income)

52

166

(114)

Adjusted EBITDA

$

4,886

$

3,645

$

1,241

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SOURCE Cansortium Inc

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