Achieves Record Revenue, Record Gross Margin
and Positive Adjusted EBITDA
LONDON, ON, Aug. 24, 2021 /CNW/ - Indiva Limited (the
"Company" or "Indiva") (TSXV: NDVA) (OTCQX: NDVAF),
the leading Canadian producer of cannabis edibles, is pleased to
announce its financial and operating results for the second quarter
of fiscal 2021 ended June 30, 2021.
All figures are reported in Canadian dollars ($), unless otherwise
indicated. Indiva's financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS").
For a more comprehensive overview of the corporate and financial
highlights presented in this press release, please refer to
Indiva's Management's Discussion and Analysis of Financial
Condition and Results of Operations for the Three and Six Months
Ended June 30, 2021, and the
Company's Condensed Consolidated Interim Financial
Statements for the Three and Six Months Ended June 30, 2021 and 2020, which are filed on
SEDAR and available on the Company's website, www.indiva.com.
"We are delighted to report record net revenue, record gross
profit and positive adjusted EBITDA for the second quarter of
2021. Indiva continued to grow its market share organically
in the second quarter, and this strength has continued through
July, driven by new SKU introduction, including Wana Quick fast-acting gummies and Bhang Cookies
and Cream chocolate," said Niel
Marotta, President and Chief Executive Officer of Indiva.
"Becoming a top 10 ranked LP nationally by dollar share and top
three measured by units, and doing so by driving organic growth
rather than through acquisition, is a testament to the talent,
dedication and hard work of the entire Indiva team. Looking
forward to the second half of 2021, we expect to see continued
revenue growth driven by new product introductions, including
multi-pack Wana gummies and cookies from Slow Ride Bakery, marking
Indiva's first introduction of baked goods into the market.
We also expect to see continued margin expansion throughout 2021,
driven by lower distillate costs and continued improvement in
operating efficiencies. Indiva is hitting its stride, and we intend
to continue to drive profitable organic growth by delivering
best-in-class cannabis products to of-age Canadians."
HIGHLIGHTS
Quarterly Performance
- Gross revenue in Q2 2021 was a record $9.87 million representing a 249% increase
year-over-year from Q2 2020, and a 44% sequential increase from Q1
2021. Year-to-date, gross revenue increased 229% year over year to
$16.74 million.
- Net revenue in Q1 2021 was a record $9.08 million representing a 255% increase
year-over-year from Q2 2020, and a 46% sequential increase from Q1
2021, driven primarily by increased sales of category leading
edibles, including Wana Sour Gummies and Bhang Chocolate.
Year-to-date, net revenue increased 235% year over year to
$15.3 million, surpassing total net
revenue for the entire fiscal year of 2020.
- Net revenue from edible products grew to $8.43 million, up 445% from $1.54 million in the prior year period and up 52%
from $5.53 million in Q1 2021. Edible
product sales represent 93% of net revenue in Q2 2021.
- Gross profit before fair value adjustments and impairments,
improved by 160% sequentially to a record $3.08 million, and increased to a record 34.0% of
net revenue, versus 19% in Q1 2021 and 0.8% in Q2 2020. The
improvement in gross margin resulted from the Company benefitting
significantly from lower distillate costs. Year-to-date, gross
profit increased to $4.27 million, or
28% of net revenue, versus nil in the corresponding period last
year.
- In Q2 2021, Indiva sold products containing 52 million
milligrams of distillate, the active ingredient in edible products,
which represents a 73% increase when compared to the 30 million
milligrams in product sold in Q1 2021. Average distillate cost was
$0.02 per mg in Q2 2021 versus
$0.038 per mg in the previous
quarter, representing a 47% sequential decline in the cost of this
key input. The Company expects gross margins to continue to improve
in the second half of 2021, due to significant declines in realized
distillate costs, in addition to improved operating efficiencies
from increased output.
- Impairment charges in the quarter totaled $0.29 million, including the disposal of product
that did not meet the Company's quality standards, disposal of aged
inventory and obsolete packaging.
- Operating expenses in the quarter increased by 40% to
$3.09 million sequentially versus Q1
2021, and increased by 106% year-over-year versus Q2 2020,
primarily due to higher marketing and sales commissions driven by
higher sales volumes, and higher public company costs.
Year-to-date, operating expenses increased by 76% to $5.3 million.
- Operating expenses as a percentage of net revenue in Q2 2021
declined to 34% in Q2 2021 versus 36% in Q1 2021 and 59% in Q2 2020
respectively. The Company expects operating expenses to continue to
decline as a percentage of net revenue as the year
progresses.
- Indiva achieved positive adjusted EBITDA in Q2 2021 of
$0.54 million versus a loss of
$0.52 million in Q1 2021 and a loss
of $1.0 million in Q2 2020, driven by
higher revenue and higher gross profit, offset by higher operating
expenses. Year-to-date, adjusted EBITDA was nil, versus a loss of
$2.17 million in the corresponding
period last year.
- Comprehensive net loss was $1.42
million for the quarter and included one-time expenses and
non-cash charges totaling $1.0
million. Net loss per share was $0.01 versus $0.03
in Q2 2020. Excluding these charges, comprehensive loss in the
quarter declined to $0.42 million
versus a loss of $1.92 million in Q2
2020.
- Cash balance stood at $3.4
million, and working capital stood at $5.21 million at June 30,
2021.
Q2 2021 Market Share Hits New Record
- Sell through data from Hifyre for the second quarter of 2021
continues to show strong sales of Indiva edible products. With 50%
share of sales in the second quarter, up from 46% in the first
quarter of 2021, Indiva continues to expand its lead in the #1
market share position in the edibles category. Market share
increased in the second quarter across all provinces versus Q1
2021:
-
- Ontario #1 with 48% market
share.
- Alberta #1 with 59% market
share.
- British Columbia #1 with 50%
market share.
- Saskatchewan #1 with 32%
market share.
- Manitoba #1 with 53% market
share.
- Wana Sour Gummies led the edibles category with 38% total
category share.
- Bhang® led the chocolate category, with
Bhang® Milk Chocolate remaining the top selling
chocolate edible SKU nationally.
- Product ranking in Q2 2021 showed the top seven SKUs are Wana™
Sour Gummies (led by Strawberry-Lemonade) and eight of the Top 10
SKUs are from Indiva.
- Based on Hifyre data from British
Columbia, Alberta,
Ontario, Manitoba and Saskatchewan, the edibles category improved in
Q2 2021 to a record $35.64 million in
retail sales versus $29.6 million in
Q1 2021.
- Headset data for June 2021 showed
seven of the top nine edible products in Ontario were Indiva products.
Operational Highlights for the Second Quarter Fiscal
2021
- Bhang Milk Chocolate was the highest velocity product in
Ontario, according to OCS data
published for their fiscal year ended March
31, 2021, selling more units than any other SKU. Bhang Dark
Chocolate was the 6th highest velocity SKU.
- Bhang Cookies and Cream and Bhang Caramel Mocha Milk Chocolate
became available nationally. Bhang Cookies and Cream quickly became
a top seller amongst all Bhang chocolate SKUs.
- Indiva expanded its distribution of Wana Quick fast-acting gummies to six provinces
and one territory. In addition, Wana
Quick became available in the medical channel through the
Medical Cannabis by Shoppers platform.
- Indiva introduced additional premium strains under the Artisan
Batch brand, most of which are limited time offers as per the brand
ethos.
- Indiva introduced a bubble hash concentrate product into the
Province of Quebec.
- Indiva made its first deliveries of Bhang Chocolate, Wana Sour
Gummies and Artisan Batch flower to the province of Newfoundland.
Events Subsequent to Quarter End
- In August 2021, Indiva introduced
three new Cookie SKUs from Slow Ride Bakery to the Ontario market, marking Indiva's first baked
goods introduced in the edibles category. Initial sell-in has been
very strong. In the coming months, Indiva expects to broaden its
baked goods product offering from Slow Ride and widen its
distribution of Slow Ride Cookies coast-to-coast.
- Indiva introduced new high-potency, craft grown cultivars to
the Canadian market under its Artisan Batch brand, including
Unicorn Sherbert by KRFT, Cereal Milk by KRFT and Sticky Larry by
Stinky Greens. The Company expects to introduce more exciting and
unique cultivars from Canada's
best craft cultivators in the coming months.
Outlook
- The Company expects sequential and year-over-year revenue
growth and margin improvement to continue in the second half of
2021, as a result of new product introduction, lower distillate
costs and improved operating efficiencies.
- Indiva expects to introduce over 20 new SKUs, including
seasonal baked good SKUs, in the second half of 2021.
- Indiva also expects to continue to introduce additional craft
cannabis flower SKUs under the Artisan Batch brand. Artisan Batch
puts special focus on bringing Canadians the best dry flower from
craft growers. Special attention is paid to high THC potency,
robust terpene content, premium buds and fresh harvest dates.
OPERATING AND FINANCIAL RESULTS FOR THE THREE AND SIX MONTHS
ENDED JUNE 30, 2021 AND 2020
|
Three months
ended
June
30
|
Six months
ended
June
30
|
(in thousands of
$, except gross margin %
and per share figures)
|
2021
|
2020
|
2021
|
2020
|
Gross
revenue
|
9,870.3
|
2,826.5
|
16,740.6
|
5,091.3
|
Net
revenue
|
9,076.9
|
2,559.7
|
15,298.0
|
4,573.0
|
Gross margin before
fair value adjustments
and impairments
|
3,082.5
|
300.6
|
4,265.7
|
6.0
|
Gross margin before
fair value adjustments
and impairments (%)
|
34.0%
|
11.7%
|
27.9%
|
0.1%
|
Loss and
comprehensive loss
|
(1,416.0)
|
(2,528.7)
|
(4,444.8)
|
(4,966.8)
|
Adjusted
EBITDA[1]
|
544.2
|
(524.4)
|
0.02
|
(2,166.8)
|
Net loss per share –
basic and diluted
|
(0.01)
|
(0.03)
|
(0.03)
|
(0.06)
|
Comprehensive loss
per share – basic and
diluted
|
(0.01)
|
(0.03)
|
(0.03)
|
(0.06)
|
1
|
Adjusted EBITDA is a
Non-IFRS Measure. The Company calculates Adjusted EBITDA as a sum
of net revenue, other income, cost of inventory sold, production
salaries and wages, production supplies and expense excluding
capitalized amortization in cost of sales, general and
administrative expense, and sales and marketing expense, as
determined by management. Adjusted license fee eliminates 50% of
the fee which is equivalent to the Company's share of the joint
venture company to which the license fee is paid. Adjusted EBITDA
is provided to assist readers in determining the ability of the
Company to generate cash from operations and to cover financial
charges.
|
Operating Expenses
|
Three months
ended
June
30
|
Six months
ended
June
30
|
(in thousands of
$)
|
2021
|
2020
|
2021
|
2020
|
General and
administrative
|
1,675.0
|
1,091.6
|
2,800.5
|
2,303.1
|
Marketing and
sales
|
1,093.2
|
229.9
|
1,965.7
|
510.1
|
Research and
development
|
41.0
|
1.1
|
41.0
|
2.9
|
Share-based
compensation
|
162.1
|
115.5
|
273.3
|
111.6
|
Depreciation of
property, plant, and equipment
|
71.4
|
61.4
|
127.6
|
88.8
|
Amortization of
intangible assets
|
52.0
|
0.1
|
104.0
|
0.2
|
Total operating
expenses
|
3,094.8
|
1,499.6
|
5,312.0
|
3,016.8
|
Quarterly Results
(in thousands of
$,
except per share
figures)
|
Q2
2021
|
Q1
2021
|
Q4
2020
|
Q3
2020
|
Q2
2020
|
Q1
2020
|
Net
revenue
|
9,076.9
|
6,221.1
|
7,050.6
|
3,027.2
|
2,559.7
|
2,013.3
|
Comprehensive net
loss
|
(1,416.0)
|
(3,028.8)
|
(6,884.0)
|
(3,571.8)
|
(2,528.7)
|
(2,438.1)
|
Basic and diluted
loss per share
|
(0.01)
|
(0.03)
|
(0.06)
|
(0.04)
|
(0.03)
|
(0.03)
|
COVID-19
Government and private entities are still assessing the present
and future effects of the COVID-19 pandemic. Indiva has continued
to operate with enhanced health and safety protocols in place to
protect its employees. The Company continues to assess the
customer, supply chain, and staffing implications of COVID-19 and
is committed to making continuous adjustments to minimize
disruption and impact. Indiva will remain proactive in its response
to the pandemic and compliant with any and all provincial and/or
federal policy enacted to protect Canadians.
CONFERENCE CALL
The Company will host a conference call to discuss its results
on Tuesday, August 24, 2021 at
8:30am EST. Interested participants
can join by dialing 416-764-8658 or 1-888-886-7786. The conference
ID is 09955484.
A recording of the conference call will be available for replay
following the call. To access the recording please dial
416-764-8691 or 1-877-674-6060. The replay ID is 955484#. The
recording will remain available until Thursday September 30, 2021.
ABOUT INDIVA
Indiva sets the standard for quality and innovation in cannabis.
As a Canadian licensed producer, Indiva produces and distributes
award-winning cannabis products nationally, including
Bhang® Chocolate, Wana™ Sour Gummies, Slow Ride
Bakery Cookies, Jewels Chewable Tablets, Ruby® Cannabis
Sugar, Sapphire™ Cannabis Salt, as well as capsules, pre-rolls and
premium flower under the INDIVA and Artisan Batch brands. Click
here to connect with Indiva on LinkedIn, Instagram, Twitter
and Facebook, and here to find more information on the Company and
its products.
DISCLAIMER AND READER ADVISORY
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) has in any way passed upon the merits of the
contents of this press release and neither of the foregoing
entities accepts responsibility for the adequacy or accuracy of
this release or has in any way approved or disapproved of the
contents of this press release.
Certain statements contained in this press release constitute
forward-looking information. These statements relate to future
events or future performance. The use of any of the words "could",
"intend", "expect", "believe", "will", "projected", "estimated" and
similar expressions and statements relating to matters that are not
historical facts are intended to identify forward-looking
information and are based on the parties' current belief or
assumptions as to the outcome and timing of such future events.
Actual future results may differ materially. In particular, this
release contains forward-looking information relating to the
Company's future operations, future product offerings and
compliance with applicable regulations. Various assumptions or
factors are typically applied in drawing conclusions or making the
forecasts or projections set out in forward-looking information.
Those assumptions and factors are based on information currently
available to the parties. The material factors and assumptions
include the parties being able to maintain the necessary regulatory
and other third parties' approvals and licensing and other risks
associated with regulated entities in the cannabis industry. The
forward-looking information contained in this release is made as of
the date hereof and the parties are not obligated to update or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
applicable securities laws. Because of the risks, uncertainties and
assumptions contained herein, investors should not place undue
reliance on forward looking information. The foregoing statements
expressly qualify any forward-looking information contained
herein.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in
the United States. The securities
have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act") or
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SOURCE Indiva Limited