The next phases of its 'Launch, Grow,
Optimize' strategy are well underway after a highly successful
'Launch' phase that positioned Valens as a leading cannabis
consumer products company
Optimization strategies are underway and
$10 million in annual cost
efficiencies have been identified through operational process
efficiency gains, reductions in manufacturing and sourcing costs,
organizational realignment and realization of M&A
synergies
The company anticipates identifying an
additional $10 million in annual cost
efficiencies and implementing them by the end of 2022
KELOWNA, BC, Feb. 2, 2022 /PRNewswire/ - The Valens Company
Inc. (TSX: VLNS) (Nasdaq: VLNS) (the "Company" "The Valens
Company" or "Valens"), a leading manufacturer of cannabis products,
is pleased to announce integration initiatives aimed at driving
revenue growth and market share gains for each of its portfolio
brands in their target markets, as well as margin improvement
through more efficient operations, reduced operational and
organizational costs and realization of M&A-related synergies
following an acquisitive 2021.
As Valens now enters the 'Grow & Optimize' phases of
its 'Launch, Grow, Optimize' strategy, the Company will be
focusing on four key pillars:
- Driving revenue growth with a focus on Canadian recreational
and U.S. health and wellness markets
- Capturing market share across its brand portfolio in product
categories of focus that include flower, vape, pre-roll, edible,
and beverage offerings in the premium, accessible premium, and
value segments
- Seeking to generate increased gross margins and positive EBITDA
margins through revenue growth and cost reduction and efficiency
initiatives aimed at keeping operations flexible and
innovative
- Creating shareholder value through operational performance,
financial transparency, and increased trading liquidity
"It's a pivotal time for Valens after a very acquisitive 2021
that saw us accelerate our business plan from three years to one
and create a leading cannabis consumer products company with an
exciting portfolio of brands," said Tyler
Robson, Chief Executive Officer and Chairman of The Valens
Company. "As we redirect our focus to realizing the full package of
targeted benefits from these acquisitions, we are now capturing the
first wave of synergies through operational and organizational
changes that we believe will not only improve our efficiencies but
also drive the business towards becoming EBITDA positive in fiscal
Q4 2022, which will be discussed in greater detail on our upcoming
investor day. I'm proud to say that we have identified $10 million in annual cost efficiencies and
expect to identify an additional $10
million in the coming quarters through additional planned
initiatives. Investors can expect to start to see some of the
benefits of the first wave of efficiencies in fiscal Q2 2022, with
the majority of the impact being realized in the second half of the
fiscal year."
Valens' first $10 million in
annual cost efficiencies are expected to come from the following
areas:
- Operational Efficiencies: Valens has eliminated
overlapping functions and centralized some shared services across
different business segments.
- Portfolio Rationalization: Elimination of both
underperforming product SKUs and those that were not aligned with
our go-forward strategy, as well as the realignment of certain
brand offerings to better address consumer demand
opportunities.
- Automation: Initiatives in this category include the
commissioning of Pommies and the implementation of automated edible
equipment, packaging lines and pre-roll machines. Additional
automation is expected to come on-line over the next few
months.
- Contract Grow: Valens has made significant advances in
its biomass sourcing strategy by leveraging its existing
relationships and buying power as the largest purchaser of biomass
in the country.
"Although we have only just begun to experience the targeted
revenue growth from our 'Launch, Grow, and Optimize'
strategy, we are already pursuing optimization initiatives to
ensure we remain operationally agile, competitively positioned in
the market, and best able to deal with ongoing logistical and
inflationary challenges that are being amplified by an ongoing and
drastic industry recalibration," said Jeff
Fallows, President of The Valens Company. "By the end of
2022, we expect to realize additional annual cost efficiencies of
$10 million through the continued
optimization of internal processes, right-sizing of our cost
structure and the realization of further synergies from our recent
acquisitions. Incremental to the $20
million of cost efficiencies, efforts to monetize surplus or
unnecessary assets and tighter working capital management is
anticipated to generate an additional $5 to $10 million
in cash over the coming quarters."
Robson concluded, "We remain focused on our strategic vision for
Valens – to bring the benefits of cannabis to the world. I want to
thank our entire organization for the dedication and tireless work
directed at creating a platform that is second to none in the
market. We would like to invite our investors and interested
potential investors to our virtual investor day, which is scheduled
for February 7, 2022, where we will
provide many more details and insights into our 2022 operational
plan. Through the implementation of our strategic initiatives, we
are developing a roadmap for Valens in its next phase of growth,
while always remaining focused on the needs of consumers. The
actions we are announcing today will better align our
organizational structure with our evolving business and best
position The Valens Company to drive shareholder value in 2022 and
beyond."
At Valens, it's Personal.
About The Valens Company
The Valens Company is a leading manufacturer of cannabis
products with a mission to bring the benefits of cannabis to the
world. The Company provides proprietary cannabis processing
services in addition to best-in-class product development,
manufacturing, and commercialization of cannabis consumer packaged
goods. The Valens Company's high-quality products are formulated
for the medical, health and wellness, and recreational consumer
segments, and are offered across all cannabis product categories
with a focus on quality and innovation. The Company also
manufactures, distributes, and sells a wide range of CBD products
in the United States through its
subsidiary Green Roads, and distributes medicinal cannabis products
to Australia through its
subsidiary Valens Australia. In partnership with brand houses,
consumer packaged goods companies and licensed cannabis producers
around the globe, the Company continues to grow its diverse product
portfolio in alignment with evolving cannabis consumer preferences
in key markets. Through Valens Labs,
the Company is setting the standard in cannabis testing and
research and development with Canada's only ISO17025 accredited analytical
services lab, named The Centre of Excellence in Plant-Based Science
by partner and scientific world leader Thermo Fisher Scientific.
Discover more on The Valens Company at
http://www.thevalenscompany.com.
Notice regarding Forward Looking Statements
All information included in this press release, including any
information as to the future financial or operating performance and
other statements of The Valens Company that express management's
expectations or estimates of future performance, other than
statements of historical fact, constitute forward-looking
information or forward-looking statements within the meaning of
applicable securities laws and are based on expectations, estimates
and projections as of the date hereof. Forward-looking statements
are included for the purpose of providing information about
management's current expectations and plans relating to the future.
Wherever possible, words such as "plans", "expects", "scheduled",
"trends", "forecasts", "future", "indications", "potential",
"estimates", "predicts", "anticipate", "to establish", "believe",
"intend", "ability to", or statements that certain actions, events
or results "may", "should", "could", "would", "might", "will", or
are "likely" to be taken, occur or be achieved, or the negative of
these words or other variations thereof, have been used to identify
such forward-looking information. Specific forward-looking
statements include, without limitation, all disclosure regarding
future results of operations, future outcomes of transactions,
economic conditions, and anticipated courses of action. Investors
and other parties are advised that there is not necessarily any
correlation between the number of SKUs manufactured and shipped and
revenue and profit, and undue reliance should not be placed on such
information.
The risks and uncertainties that may affect forward-looking
statements include, among others, Canadian regulatory risk,
Australian regulatory risk, U.S. regulatory risk, U.S. border
crossing and travel bans, the uncertainties, effects of and
responses to the COVID-19 pandemic, reliance on licenses, expansion
of facilities, competition, dependence on supply of cannabis and
reliance on other key inputs, dependence on senior management and
key personnel, general business risk and liability, regulation of
the cannabis industry, change in laws, regulations and guidelines,
compliance with laws, limited operating history, vulnerability to
rising energy costs, unfavourable publicity or consumer perception,
product liability, risks related to intellectual property, product
recalls, difficulties with forecasts, management of growth and
litigation, many of which are beyond the control of The Valens
Company. For a more comprehensive discussion of the risks faced by
The Valens Company, and which may cause the actual financial
results, performance or achievements of The Valens Company to be
materially different from estimated future results, performance or
achievements expressed or implied by forward-looking information or
forward-looking statements, please refer to The Valens Company's
latest Annual Information Form filed with Canadian securities
regulatory authorities at www.sedar.com or on The Valens Company's
website at www.thevalenscompany.com. The risks described in such
Annual Information Form are hereby incorporated by reference
herein. Although the forward-looking statements contained herein
reflect management's current beliefs and reasonable assumptions
based upon information available to management as of the date
hereof, The Valens Company cannot be certain that actual results
will be consistent with such forward-looking information. The
Valens Company cautions you not to place undue reliance upon any
such forward-looking statements. The Valens Company disclaims any
intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by applicable law. Nothing herein
should be construed as either an offer to sell or a solicitation to
buy or sell securities of The Valens Company.
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SOURCE The Valens Company Inc.