The Valens Company Inc. (TSX:VLNS) (OTCQX: VLNCF) reported its second-quarter financial results Wednesday with net revenue jumping 6.5% to $18.8 million, compared to $17.6 million in the same period of 2020. When compared to the net revenue achieved in the previous quarter, figures have dropped by 6.2% from $20.0 million.
Key Q2 Financial Highlights
- Quarterly produced sales improved 70.5% to $16.9 million (comprising around 90% of total net revenue), which compares to $9.9 million in the second quarter of the prior year; the company attributed better product sales to new product launches across various cannabis categories;
- Gross profit was $4.1 million, or 22% of revenue, versus $6.3 million, or 35.8% of revenue in the second quarter of 2020;
- Adjusted EBITDA for the reporting period was a loss of $5 million, which compares to an adjusted EBITDA gain of $2.7 million, or 15.3% of revenue in the comparative quarter of the previous year; the decrease in adjusted EBITDA Valens attributed to the integration of LYF, and higher expenses in connection with the launch of new products;
- The company ended the quarter with around $23.9 million in cash before raising $46 million via a bought deal offering of units.
“We believe that our business model remained resilient despite ongoing challenges presented by the pandemic, and our strategy continued to demonstrate its effectiveness as we gained significant market penetration across the country,” said Tyler Robson, CEO, co-founder and chair of Valens.“We are proud to share that in the second quarter alone, Valens had 132 SKUs listed in Canada – a 76% increase in comparison to 75 SKUs listed in the first quarter of 2021. This material growth in SKU listings stands in stark contrast to many of our competitors in the sector and is a testament to the innovation and quality we are bringing consumers and retailers.”
Recent Operational And Business Milestones
- The British Columbia-based company closed the acquisition of Green Roads and its manufacturing subsidiary for $40 million in a cash-and-stock transaction, entering the U.S. market in June;
- Valens further expanded its Canadian distribution outreach coming to Manitoba, New Brunswick, and Yukon Territory. The company currently distributes its products across six provinces and one territory, including Alberta, British Columbia, Ontario, and Saskatchewan;
- In the previous period, Valens rolled out several new products in four new categories – edibles, flower, pre-rolls, and topicals;
- It has teamed up with two Canadian producers – Rubicon Organics to which it will offer extraction and production service and it will provide pre-roll manufacturing and distribution services to Citizen Stash Cannabis Corp;
- Made changes to its management team and board of directors, appointing Sunil Gandhi as the new CFO, Adam Shea as CCO, while Dr. Guy Beaudin and Drew Wolff were elected to the company’s board of directors.
Strategic Initiatives For Fiscal 2021
- Valens will invest an extra $10 million into Green Roads, to empower its sales and marketing resources; furthermore, the company plans to reach more investors in the U.S. with a trading presence on the Nasdaq Capital Market during the second half of the year.
- It plans to launch more new products across various categories;
- It will use the $28 million of the recently raised net proceeds to support future acquisitions and business expansion opportunities across the U.S. and international markets.
Valens’ shares closed Wednesday’s market session 3.76% lower at $2.05 per share.
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