Strong execution by Canada's largest cannabis retailer leads to
$128.1 million in annual revenue, an
increase of 150%
Quarterly revenue increased 157% to
$43.2 million
year-over-year
Second consecutive quarter of positive
Adjusted EBITDA was $1.5 million for
fourth quarter of 2020; positive Adjusted EBITDA for the
year
Hifyre Digital Retail and Analytics
Platform delivered 110.4% sequential growth producing $6.3 million of revenue for the year
TORONTO, April 27, 2021 /CNW/ - Fire & Flower
Holdings Corp. ("Fire & Flower" or the "Company") (TSX: FAF)
(OTCQX: FFLWF), today announced its financial and operational
results for the fiscal year and quarter ended January 30, 2021.
Financial and Operational Highlights for the 2020 Fiscal Year
Ended January 30, 2021
- Total revenue of $128.1 million
at a gross profit of 35.5%, compared to revenue of
$51.1 million at a gross profit of
36.4% for the 2019 fiscal year – representing a 150% increase in
revenue;
- Achieved positive Adjusted EBITDA of $0.02 million for the fiscal year 2020;
- Cash balance of $30.6 million as
compared to $22.9 million for fiscal
year 2019;
- Significant 110.4% sequential quarter over quarter growth of
high margin revenue sources in the Hifyre™ Digital Retail and
Analytics Platform ("Hifyre"), with $6.3
million for the fiscal year 2020;
- Open Fields distribution business achieved 36.5% sequential
quarter over quarter growth and produced $20.3 million in revenue for the fiscal year
2020;
- Same store sales for the quarter increased 36.8% compared to
the fourth quarter of 2019;
- Closed the acquisition of Friendly Stranger Holdings Corp., a
multi-store and multi-banner cannabis retail operator in
Ontario. At the Company's fiscal
year end, it had 73 stores open and operating. In Q4 2020, thirteen
stores commenced operations under Fire & Flower banners
compared to three stores in Q3 2020;
- Opened two co-located cannabis retail stores with Circle K as
part of a pilot program;
- Completed financings for aggregate gross proceeds of
$28 million. Additionally,
Alimentation Couche-Tard Inc., through an indirectly wholly-owned
subsidiary, exercised its participation rights in respect of the
financings;
- Entered into a commitment letter for an aggregate amount of up
to $10 million with an option for an
additional $5 million for
non-dilutive credit facilities with ATB Financial, a Canadian
Schedule One bank;
- Amended the provisions of certain debentures and forced
conversion of all remaining principal amounts and accrued
unpaid interest through the issuance of 12,223,638 common shares of
the Company;
- Maintained business continuity during the COVID-19 public
health crisis through rapid innovation of the
Hifyre Digital Retail and Analytics Platform including
the Spark Fastlane™ click-and-collect service, curbside pickup and
same-day home delivery in select provinces such as the 14 million
person Ontario market;
Subsequent Financial and Operational Highlights post
January 31, 2021
- Entered into strategic licensing partnership and acquisition
option with American Acres, which intends to operate
dispensaries in California,
Arizona and Nevada with the first Fire & Flower
branded store expected in Palm Springs,
California this year;
- Submitted an initial application to list its common shares on
the Nasdaq exchange;
- The Company announced the milestone achievement
of 250,000 Spark PerksTM members across
the Fire & Flower retail network;
- More than 80 retail stores under four banners across the
provinces of Alberta, Saskatchewan, Manitoba and Ontario and the Yukon territory;
- Completed a $15 million, low
cost, at-the-market equity distribution offering which
further strengthened the Company's balance sheet and positions Fire
& Flower for future growth;
- Announced planned $53 million
debt-to-equity conversion which significantly improved the
Company's balance sheet and further reduced interest costs.
Circle K owner, Alimentation Couche-Tard's debenture conversion was
$23.6 million, which will bring their
equity stake to 19.9%;
- Hifyre entered into strategic agreement with leading U.S.
analytics company BDSA.
Financial Results for the Fourth Quarter period ended
January 30, 2021
- Total revenue of $43.2 million at
a gross profit of 38.0%, compared to revenue of $16.8 million at a gross profit of 36.6% for the
fourth quarter of 2019;
- An increase in revenue of 30.5% and an increase of 42.8% in
total gross profit dollars compared to the third quarter of
2020;
- Second consecutive quarter of positive Adjusted EBITDA of
$1.5 million as compared to
$1.2 million of positive Adjusted
EBITDA in the third quarter of 2020 and negative Adjusted EBITDA
loss of $5.26 million for the fourth
quarter of 2019.
Selected Summary of Financial Results
|
|
|
(in thousands of
dollars, except per share amounts)
|
Thirteen Weeks
Ended
|
Fiscal Year
Ended
|
Statement of Loss
and Comprehensive Loss
|
January 30,
2021 ($)
|
February 1,
2020 ($)
|
$
Change
|
January 30,
2021 ($)
|
February 1,
2020 ($)
|
$
Change
|
%
Change
|
%
Change
|
Revenue
|
43,219
|
16,788
|
|
128,053
|
51,106
|
|
26,431
|
76,947
|
157%
|
151%
|
Cost of goods
sold
|
(26,790)
|
(10,640)
|
|
(82,634)
|
(32,499)
|
|
(16,150)
|
(50,135)
|
152%
|
154%
|
Gross
profit
|
16,429
|
6,148
|
10,281
|
45,419
|
18,607
|
26,812
|
167%
|
144%
|
Expenses
|
|
|
|
|
|
|
General and
administrative
|
12,417
|
10,023
|
2,394
|
39,403
|
30,259
|
9,144
|
24%
|
30%
|
Share-based
payments
|
522
|
728
|
(206)
|
2,512
|
3,101
|
(589)
|
-28%
|
-19%
|
Marketing and
promotion
|
1,032
|
387
|
645
|
1,709
|
1,679
|
30
|
167%
|
2%
|
Acquisition and
business development costs
|
1,187
|
291
|
896
|
2,153
|
492
|
1,661
|
308%
|
338%
|
Depreciation &
Amortization
|
3,419
|
2,145
|
1,274
|
12,345
|
7,653
|
4,692
|
59%
|
61%
|
Impairment expense,
net
|
565
|
4,613
|
(3,462)
|
1,448
|
4,613
|
(1,302)
|
-75%
|
-28%
|
Impairment of ROU
assets, net of lease liabilities remeasurement
|
586
|
-
|
586
|
1,863
|
-
|
1,863
|
100%
|
100%
|
Restructuring
charges
|
1,548
|
6,469
|
(4,921)
|
1,548
|
6,469
|
(4,921)
|
-76%
|
-76%
|
Total
Expenses
|
21,276
|
24,656
|
(3,380)
|
62,981
|
54,266
|
8,715
|
-14%
|
16%
|
Loss from
operations
|
(4,847)
|
(18,508)
|
13,661
|
(17,562)
|
(35,659)
|
18,097
|
-74%
|
-51%
|
Listing
expense
|
-
|
-
|
-
|
-
|
(1,835)
|
1,835
|
NM
|
-100%
|
(Loss) gain on
revaluation of derivative liability
|
(2,444)
|
1,710
|
(4,154)
|
18,638
|
31,193
|
(12,555)
|
-243%
|
-40%
|
Gain (loss) on debt
extinguishment
|
710
|
-
|
710
|
(53,152)
|
(9,028)
|
(44,124)
|
100%
|
489%
|
Interest
income
|
22
|
161
|
(139)
|
220
|
384
|
(164)
|
-86%
|
-43%
|
Finance
costs
|
(4,077)
|
(5,651)
|
1,574
|
(25,104)
|
(17,650)
|
(7,454)
|
-28%
|
42%
|
Other (expenses)
income
|
(5,789)
|
(3,780)
|
(2,009)
|
(59,398)
|
3,064
|
(62,462)
|
53%
|
-2039%
|
Total (loss)
income before tax
|
(10,636)
|
(22,288)
|
11,652
|
(76,960)
|
(32,595)
|
(44,365)
|
-52%
|
136%
|
Income tax
expense
|
(831)
|
-
|
(831)
|
(2,049)
|
-
|
(2,049)
|
100%
|
100%
|
Deferred tax
recovery
|
50
|
-
|
50
|
50
|
-
|
50
|
100%
|
100%
|
Net (loss) income
and comprehensive (loss) income
|
(11,417)
|
(22,288)
|
10,871
|
(78,959)
|
(32,595)
|
(46,364)
|
-49%
|
142%
|
Net (loss) income
per share, basic
|
($0.05)
|
($0.16)
|
$0.11
|
($0.45)
|
($0.28)
|
($0.17)
|
-69%
|
61%
|
Net (loss) income
per share, diluted
|
($0.05)
|
($0.15)
|
$0.10
|
($0.45)
|
($0.28)
|
($0.17)
|
-67%
|
61%
|
"While 2020 was a challenging year due to the pandemic, it was
also a transformative year for Fire & Flower as our strong
fiscal 2020 financial and operational results demonstrate our
ability to successfully execute on our aggressive growth strategy,"
commented Trevor Fencott, Chief
Executive Officer of Fire & Flower. "From an operating
standpoint, we continued to make significant progress as we grew
from 21 stores at the beginning of 2019 to 80 stores today, which
includes the recent acquisition of Friendly Stranger. Building on
top of our record growth is our recently signed strategic licensing
partnership and acquisition option with American Acres, which
provides us with an opportunity for considerably greater expansion
as it serves as an entry point into the sizable U.S. cannabis
market. Financially, fiscal 2020 was a banner year of growth for
the Company as we increased revenues over 150% year-over-year and
ended with positive Adjusted EBITDA. We also strengthened our
balance sheet through the reduction of debt which provides us with
greater financial flexibility to execute on our overall
strategy."
Fencott continued, "Our investment in technology and innovation
has led our proprietary Hifyre digital platform to become the
market-leading analytics and data-driven system, assisting our
multi-banner retail stores understand consumer habits and
behaviours which further positions us for growth and the challenges
of competition. Our cutting-edge retail platform is now being
recognized as a key tool for growth in the cannabis retail
industry. Recently, leading U.S. analytics company, BDSA, partnered
with our Company to build their operations with our proprietary
platform. In addition, the owners of Circle K, Alimentation
Couche-Tard continued to support our strategy by bringing their
ownership stake in us to 19.9% and deepening our operational
relationship with initiatives like our Circle K co-located store
pilot program which utilizes their existing real estate footprint
or selling Fire & Flower gift cards in hundreds of Circle K
stores across the country."
"With the strong momentum we have entering 2021 and our path to
US market entry, we felt that now is the right time to apply to
list on the Nasdaq, which will give us increased exposure to the
global investment community while we execute on our growth plan to
cement our status as the leading data-driven international cannabis
retailer," concluded Fencott.
Fiscal Year 2020 and Fourth Quarter Financial Results
For the fiscal year ended January 30,
2021, the Company generated revenue of $128.1 million including sales of $101.5 million in the Retail Platform,
$20.3 million in the Distribution
Platform and sales of $6.3 million in
the Digital Retail and Analytics Platform.
During the thirteen weeks ended January
30, 2021, the Company generated revenue of $43.2 million including sales of $33.2 million in the Retail Platform,
$7.0 million in the Distribution
Platform and sales of $3.1 million in
the Digital Retail and Analytics Platform.
Total gross profit for the fiscal year 2020 ended January 30, 2021 was $45.4
million or 35.5% of revenue with retail and wholesale
operations delivering $39.2 million,
or 86.2% of total gross profit, compared to the prior year's
$18.6 million with retail and
distribution operations delivering $16.0
million, or 86.2% of total gross profit for the 52 weeks
ended February 1, 2020.
Total gross profit for the fourth quarter ended January 30, 2021 was $16.4
million or 38% of revenue with the Retail Platform
delivering $11.9 million, or 72.6% of
total gross profit, compared to $4.7
million with retail and wholesale operations delivering
$5.1 million, or 83.5% of total gross
profit for the fourth quarter ended February
1, 2020.
For the 2020 fiscal year, the Company recorded net comprehensive
loss of $79.0 million, or net loss
per share, and on a fully diluted basis of $0.45. The net comprehensive loss incurred during
the year largely due to non-operating charges including debt
extinguishment and finance costs, offset by a gain on revaluation
of derivative liabilities, as well as operating losses as the
Company continues to invest in the expansion of its business lines
including the acquisition of Friendly Stranger Holdings Corp.
Retail Update
Fire & Flower's focus on four-wall retail economics, the
optimization and expansion of its retail network was a contributing
factor in achieving positive Adjusted EBITDA. In addition, the
Company continues to monitor the COVID-19 public health crisis and
adapt its business model to optimally serve customers.
Currently, the Company operates 80 cannabis retail stores with
40 located in Alberta, 29 stores
in Ontario, 9 stores in
Saskatchewan and 1 store in each
of Manitoba and Yukon territory.
Retail revenue for the quarter ended January 30, 2021 was $33.2
million, an increase of $19.5
million from the prior year and $6.6
million from the previous quarter. The increase in revenue
was driven by a larger number of operating retail stores during the
quarter and stronger sequential same store sales.
Gross profit for the quarter ended January 30, 2021 was $11.9
million, an increase of $7.2
million from the prior year and $2.9
million from the previous quarter. Gross profit dollars
increased due to the expanded store network and the ability to run
data-driven and technology enabled consumer initiatives. The gross
margin percentage improved over the prior year with the addition of
higher margin cannabis 2.0 products into the sale mix, better
product costing and reduced discounting activity on slower moving
product. Gross margin percentage was lower over the second quarter
as a result of initiatives that were intended to bring more
customers into the Fire & Flower digital ecosystem.
At the initial outset of the COVID-19 pandemic lockdown in
mid-March 2020, the Company
experienced higher than normal sales, but sales have since
normalized and there was no material adverse impact to financial
results despite temporarily closing certain stores to ensure the
Company was sufficiently staffed and equipped to operate in the
best interests of customers, employees and the community.
Open Fields Distribution Update
During the quarter ended January 30,
2021, Open Fields revenue increased to $7.0 million from $5.1
million in Q3 2020, representing a 36.5% increase between Q3
2020 and Q4 2020.
Wholesale distribution revenue increased as the Saskatchewan market continued to open up with
more retailers sourcing inventory from Open Fields. Improved supply
from key distribution partners and the continued growth of cannabis
2.0 products and legacy categories are key drivers of this
improvement.
In addition to creating an increased margin opportunity in the
province, the distribution channel demonstrates how this supply
chain model can be adapted by the Company for use in other
jurisdictions where direct wholesale relationships with licensed
producers and accessory suppliers are permitted.
Hifyre™ Digital Retail and Analytics Update
During the quarter ended January 30,
2021, Hifyre continued to develop and commercialize products
within the Digital Retail and Analytics Platform. Digital product
subscription revenue increased 110.4% sequentially from
$1.5 million at Q3 2020 to
$3.1 million at Q4 2020, as the
Company increased commercial digital platform subscription and
recurring monthly services to external clients, which had slowed in
Q1 2020 during the onset of COVID-19. The platform also played a
key role in adapting the Company's retail business model to meet
the regulatory and operational changes in response to the
pandemic.
Currently, the Spark Perks program has surpassed more than
250,000 members. Program members typically transact more frequently
and spend more per transaction than non-member customers. During
the fourth quarter, the platform has provided the Company with an
enhanced understanding of its customers which allowed the Company
to create a tailored customer experience resulting in anticipated
higher customer lifetime value.
Customers using the Hifyre™ IQ platform now include many
cannabis licensed producers, equity research analysts, consulting
firms and investment banks. The platform provides clients with a
comprehensive understanding of consumer purchase behaviours in the
North American adult-use cannabis market.
Non-IFRS Measures – Adjusted EBITDA
"Adjusted EBITDA" is a Non-IFRS metric used by management that
does not have any standardized meaning prescribed by IFRS and may
not be comparable to similar measures presented by other companies.
Management defines the Adjusted EBITDA as the Income (loss) for the
period, as reported, before accretion and interest, tax, and
adjusted for removing the share-based compensation expense,
depreciation and amortization, gains and losses related to
derivative liability revaluations and debt extinguishments,
professional fees associated with financing and acquisition and
business development activities, impairment charges, restructuring
costs, and includes lease liability cash payments that would have
been excluded from profit and loss due to the application of IFRS
16 accounting standards. Management believes "Adjusted EBITDA" is a
useful financial metric to assess its operating performance on a
cash basis before the impact of non-cash items. As other companies
may calculate this non-IFRS measure differently than the Company,
this metric may not be comparable to similarly titled measures
reported by other companies. We caution readers that Adjusted
EBITDA should not be substituted for determining net loss as an
indicator of operating results, or as a substitute for cash flows
from operating activities. A reconciliation of net income to
Adjusted EBITDA is presented below.
Adjusted EBITDA for the fiscal year ended January 30, 2021 was a gain of $0.02 million compared to a loss of $16.3 million for the fiscal year ended
February 1, 2020. Adjusted
EBITDA for the quarter ended January
30, 2021 was $1.5 million
compared to a $5.3 million loss for
the thirteen weeks ended February 1,
2020.
|
Thirteen weeks
ended
|
Fiscal Year
ended
|
(in thousands of
dollars)
|
January 30, 2021
($)
|
February 1, 2020
($)
|
January 30, 2021
($)
|
February 1, 2020
($)
|
Net loss and
comprehensive loss – as reported
|
(11,417)
|
(22,288)
|
(78,959)
|
(32,595)
|
Other (income)
expense
|
5,789
|
3,780
|
59,398
|
(3,064)
|
Income tax
expense
|
831
|
-
|
2,049
|
-
|
Deferred tax
recovery
|
(50)
|
|
(50)
|
|
Share-based
payments
|
522
|
728
|
2,512
|
3,101
|
Acquisition and
business development costs
|
1,187
|
291
|
2,153
|
492
|
Depreciation &
Amortization
|
3,419
|
2,145
|
12,345
|
7,653
|
Professional fees
related to financing activities
|
475
|
201
|
847
|
630
|
Impairment
|
565
|
4,613
|
1,448
|
4,613
|
Impairment of ROU
assets, net of lease liabilities remeasurement
|
586
|
-
|
1,863
|
-
|
Restructuring
charges
|
1,548
|
6,469
|
1,548
|
6,469
|
Lease liability
payments (1)
|
(1,938)
|
(1,198)
|
(5,132)
|
(3,613)
|
Adjusted
EBITDA
|
1,517
|
(5,259)
|
22
|
(16,314)
|
(1)
|
Lease payments are
made on the first of the calendar month.
|
Conference Call
Fire & Flower will host a
conference call with Trevor Fencott,
President and Chief Executive Officer, and Nadia Vattovaz, Executive Vice President,
Operations and Chief Financial Officer at 8:30 a.m. EDT on April 27,
2021. The conference call will discuss Fire & Flower's
fourth quarter and fiscal year 2020 financial and operational
results and updates on the Company's plans for 2021.
Dial-In Information
Toll-Free Dial-In Number:
1-888-390-0546
Replay Information (Available until May 18, 2021)
Toll-Free Dial-In Number:
1-888-390-0541; Replay Code: 27606#
Upon completion of the live conference call, a replay of the
conference call will be accessible on Fire & Flower's website
at https://fireandflower.com/investor-relations.
Fire & Flower's financial statements and management
discussion and analysis for the period are available on Fire &
Flower's SEDAR profile at www.sedar.com and on Fire &
Flower's website at www.fireandflower.com/investor-relations/.
About Fire & Flower
Fire & Flower is a leading, technology-powered,
adult-use cannabis retailer with more than 80 corporate-owned
stores in its network. The Company leverages its wholly-owned
technology development subsidiary, Hifyre Inc., to continually
advance its proprietary retail operations model while also
providing additional independent high-margin revenue streams. Fire
& Flower guides consumers through the complex world of cannabis
through education-focused, best-in-class retailing while
the HifyreTM digital retail and analytics
platform empowers retailers to optimize their connections with
consumers. The Company's leadership team combines extensive
experience in the technology, cannabis and retail
industries.
Through the strategic investment of Alimentation
Couche-Tard Inc. (owner of Circle K convenience stores), the
Company has set its sights on global expansion as new cannabis
markets emerge and is poised to expand into the United States when permitted through its
strategic licensing agreement with American Acres Managers upon the
occurrence of certain changes to the cannabis regulatory
regime.
Fire & Flower is a multi-banner cannabis retail operator
that owns and operates the Fire & Flower, Friendly Stranger,
Happy Dayz and Hotbox brands. Fire & Flower Holdings Corp.
owns all issued and outstanding shares in Fire & Flower Inc.
and Friendly Stranger Holdings Corp., licensed cannabis
retailers that own and operate cannabis retail stores in the
provinces of Alberta, Saskatchewan, Manitoba and Ontario, and the Yukon territory.
To learn more about Fire & Flower, visit
www.fireandflower.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This news release contains certain forward-looking
information within the meaning of applicable Canadian securities
laws ("forward-looking statements"). All statements other than
statements of present or historical fact are forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "achieve",
"could", "believe", "plan", "intend", "objective", "continuous",
"ongoing", "estimate", "outlook", "expect", "project" and similar
words, including negatives thereof, suggesting future outcomes or
that certain events or conditions "may" or "will" occur. These
statements are only predictions.
Forward-looking statements are based on the opinions and
estimates of management of Fire & Flower at the
date the statements are made based on information then available
to Fire & Flower. Various factors and
assumptions are applied in drawing conclusions or making the
forecasts or projections set out in forward-looking
statements. Forward-looking statements are subject to and
involve a number of known and unknown, variables, risks and
uncertainties, many of which are beyond the control of Fire
& Flower, which may cause Fire &
Flower's actual performance and results to differ materially
from any projections of future performance or results expressed or
implied by such forward-looking statements. Such factors, among
other things, include: final regulatory
and other approvals or consents;
fluctuations in general macroeconomic conditions;
fluctuations in securities markets; the impact of the COVID-19
pandemic; the ability of the Company
to successfully achieve its business objectives and political
and social uncertainties.
No assurance can be given that the expectations reflected in
forward-looking statements will prove to be correct. Although
the forward-looking statements contained in this news release are
based upon what management of the Company believes, or believed at
the time, to be reasonable assumptions, the Company cannot assure
shareholders that actual results will be consistent with such
forward-looking statements, as there may be other factors that
cause results not to be as anticipated, estimated or intended.
Readers should not place undue reliance on the forward-looking
statements and information contained in this news release.
Additional information regarding risks and uncertainties relating
to the Company's business are contained under the heading "Risks
and Uncertainties" in the management discussion and analysis for
the thirteen and fifty-two weeks ended January 30, 2021 filed on its issuer profile on
SEDAR at www.sedar.com. The forward-looking statements
contained in this press release are made as of the date of this
press release, and the Company does not undertake to update any
forward-looking statements that are contained or referenced herein,
except in accordance with applicable securities laws.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein.
SOURCE Fire & Flower Holdings Corp.