April 29, 2020, 5:00 p.m. EDT

The Flowr Corporation Announces Fourth Quarter and Full Year 2019 Results

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TORONTO, April 29, Apr 29, 2020 (GLOBE NEWSWIRE via COMTEX) -- The Flowr Corporation (tsx.v:FLWR) /zigman2/quotes/205237089/delayed FLWPF +0.14% ("Flowr" or the "Company") herein announces its financial and operational results for the fourth quarter and fiscal year ended December 31, 2019.

Key financial and operating highlights in the fourth quarter and for the full year of 2019

-- The Company generated gross revenue of approximately $1.6 million in the fourth quarter and achieved the highest level of quarterly production to date.

-- Full year gross revenues were approximately $8.2 million based on 993 kilograms sold.

-- Average price per gram in the fourth quarter was $6.10 and for the full year was $6.99, excluding a bulk wholesale transaction, average price per gram in the fourth quarter would have been $6.61 and $7.12 respectively on a normalized basis.

-- The Company sold through all of its BC Pink Kush packaged in the fourth quarter, all of which had minimum THC levels of 20%.

-- Flagship indoor Kelowna 1 Facility capex of $20.2 million was incurred in fiscal 2019 and the Kelowna 1 Facility was substantially completed in the quarter.

Subsequent financial and operational highlights post fiscal 2019

-- The Company strengthened its financial position with the closing of a non-brokered $20 million secured subordinated convertible debenture unit private placement on April 27, 2020, led by Flowr's Chairman and CEO who committed in excess of $10 million.

-- Insiders representing approximately 59% of total sharecount have signed a voluntary 1 year lockup, in addition to any lock-ups they have currently entered into, and have not sold a share since the Company's inception.

-- In February, the Company received Health Canada approval to double capacity at its flagship Kelowna 1 Facility enabling it to become fully operational including automated packaging equipment.

-- In March, the Company restructured 25% of its global workforce, saving in excess of $6 million in annual expenses.

-- With the aforementioned completion of the Kelowna facility, cost restructuring, and focus on the Canadian dried flower market, the Company re-iterated its objective of becoming cash flow positive in H2 2020 even with the uncertainty around COVID-19.

-- All 20 grow rooms at the Kelowna 1 Facility are currently propagated with plants and the Company expects 95% of 2020 production to be premium dried flower in excess of 20% THC.

-- The Company recently commissioned its automated packaging line and expects to see an improvement in efficiency beginning in the second quarter of 2020.

-- Flowr' BC Pink Kush was recently highlighted by the OCS ahead of 4/20 as their bestselling premium pink kush strain.

-- Flowr's BC Pink Kush has not been irradiated since January 2019, a testament to the ability to produce high quality product in a controlled indoor environment.

-- The Company recently launched a new and revitalized Flowr recreational brand initiative which included a full brand redesign, including new logo, new consumer facing website (flowr.ca) and various digital marketing initiatives.

-- In late March, the Company announced that its European subsidiary Holigen received its EU-GMP certification at its facility in Sintra Portugal, putting the Company on a short list of cannabis companies with this license in Europe. Consistent with its strategic focus in Canada, the Company will be focused initially on driving dried flower sales out of Holigen.

-- In January, the Company hired Irina Hossu as Chief Financial Officer to help lead the Company for its next stage of global growth. Irina brings over 15 year of experience in progressively senior finance leadership roles across a variety of global industries including consumer-packaged goods, beverage and alcohol, and financial technology.

-- The Company is forecasting first quarter 2020 gross revenues of approximately $1 million, due to legacy strain mix production headwinds. Notably, all first quarter sales were BC Pink Kush. The Company believes it will see a substantial increase in production and sales in the latter half of 2020 and onwards given the full operation of the Kelowna 1 Facility and production of primarily high THC strains including BC Pink Kush, BC Tahoe OG & BC Louis XII.

MANAGEMENT COMMENTARY

"We believe we are on the doorstep of seeing a step function change in our operating and financial results. Our flagship purpose-built indoor facility in Canada is finally fully operational and licensed. We are producing only high quality and high THC strains out of it, which we know consumers demand and are willing to pay a premium for. Sales trends and demand for our BC Pink Kush strain remain robust and promising. Our foundational thesis that growing high quality cannabis at scale is difficult and only a few companies are both focused and able to do so is playing out in our view. In Europe, we recently joined a short list of companies with EU-GMP certification which will open the medicinal cannabis opportunity for us there soon. We now have certain GMP certifications in Australia as well as Europe. Our conviction in our strategic direction is further validated by management leading yet another round of financing in a very challenging capital markets environment. 2020 will be a big year for Flowr," said Vinay Tolia, Flowr's Chief Executive Officer.

FOURTH QUARTER 2019 RESULTS

The following table summarizes the Company's key financial and operational results:







        In thousands of Canadian dollars,                 Three months ended          Twelve months ended
        (except per share and grams metrics)              December 31                 December 31
                                                          2019           2018         2019           2018
        Grams Harvested - K1*                             660,948        319,174      1,851,895      677,341
        Grams Harvested - Flowr Forest                    3,323,669                   3,323,669
        Grams Sold                                        215, 761       405,584      993,387        405,584
        Average Net Realized Price per Gram               6.10           7.08         6.99           7.08
        Gross Revenue                                     1,589          3,270        8,231          3,270
        Net revenue                                       51             2,870        5,205          2,870
        Gross profit (loss) before fair value adjustments (7,937    )    252          (7,707    )    (390    )
        Selling, General and Administrative expense       6,616          3,905        21,670         8,150
        Share-based compensation                          2,767          3,357        11,803         7,208
        Net income/(loss)**                               (26,996   )    (6,059  )    (36,967   )    (17,907 )
        Basic earnings/(loss) per share                   (0.21     )    (0.10   )    (0.33     )    (0.22   )
        Diluted earnings/(loss) per share                 (0.21     )    (0.10   )    (0.33     )    (0.22   )
        Cash used in investing activities                 (14,584   )    (10,609 )    (61,742   )    (21,670 )
        Cash from financing activities                    16,737         2,267        79,110         51,296
        


-- During the fourth quarter of 2019, out of the Kelowna 1 Facility, the Company produced 661 kilograms of dried cannabis, an increase of 50% over the third quarter. This represented the highest quarterly production figure to date.

-- Approximately 30% of fourth quarter production and 69% of sales were attributed to BC Pink Kush.

-- Kilograms sold of 226 was up 5% over the third quarter.

-- Net revenues were impacted by a total of $1.4 million in one-time events, for full disclosure on this and inventory impairments please refer to Flowr's 2019 Q4 MD&A.

-- Average selling price per gram was $6.10 for the quarter and $6.99 for the year, which included 35kg sold at $3.50 per gram, in a bulk wholesale transaction. On a normalized basis excluding the bulk wholesale transaction, the average selling prices per gram would have been $6.61 and $7.12 respectively reflecting the Company's positioning in the premium segment.

The following table summarizes the Company's financial results for the three and twelve months ended December 31, 2019:







        In thousands of CAD dollars                                              Three months ended       Twelve months ended
                                                                                 December 31              December 31
                                                                                 2019         2018        2019         2018
        (Loss)/Income before taxes                                               (27,752 )    (6,059 )    (37,723 )    (17,907 )
        Depreciation and amortization                                            1,272        620         3,198        640
        Unrealized (gains) losses on fair value adjustments of biological assets 5,688        (165   )    388          420
        Fair value adjustments on inventory sold                                 44           (500   )    482          (500    )
        Inventory Impairment                                                     5,303        --          5,303        --
        Share-based compensation                                                 3,181        3,356       12,217       7,208
        Transaction and listing costs                                            --           381         686          2,184
        Unrealized losses on fair value of investments held in shares            41           --          189          --
        Unrealized loss on valuation of warrant investment                       16           (489   )    450          (153    )
        Loss (gain) on acquisition of investment in Holigen                      3,499        --          (8,153  )    --
        Finance costs                                                            391          --          869          --
        Interest expense                                                         (13     )    (104   )    (85     )    (102    )
        Adjusted EBITDA                                                          (8,330  )    (2,960 )    (22,179 )    (8,210  )
        


/zigman2/quotes/205237089/delayed
US : U.S.: OTC
$ 0.36
+0.0005 +0.14%
Volume: 2,072
Aug. 12, 2020 10:59a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$43.66 million
Rev. per Employee
N/A
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