| Valens ("The Company") (TSX:VGW) (OTC:VGWCF) is pleased to provide the following summary of operations to investors:
Operational Developments
The Company continued to receive increasing size and frequency of cannabis and hemp shipments throughout the third quarter of 2019 as expected based on agreements and relationships with our industry partners.
On October 15th, Valens reported its third quarter 2019 earnings highlighting a record revenue increase to $16.5 million, a 87.1% increase over the second quarter of 2019. This profitability was due to the Company's increase in extraction operations, leading technical capabilities and quality of products. In addition, the increase in operations volume resulted in strengthening gross margins to 77.8% of revenue in the third quarter of 2019, up from the 57.9% realized in the second quarter of 2019.
Net income in the quarter was $5.9 million, making us the most profitable public cannabis company in the Canadian cannabis sector with the highest net income margin, excluding biological asset fair value adjustments. Some highlights in the quarter include: - The Company expanded its agreement with Tilray Inc. by substantially increasing the service offering of extraction services by 300% to 60,000 kilograms per annum and added white label manufacturing services.
- 26,625,000 grams of dried cannabis and hemp biomass was processed in Q3, a 212% increase over the second quarter of 2019.
- Gross profit for the quarter was $12.8 million or 77.8% of revenue compared to $5.1 million or 57.9% of revenue in the second quarter.
- As mentioned in our previous newsletter, annual extraction capacity significantly increased to 425,000 KG of dried cannabis and hemp biomass to meet increasing customer demand.
- Valens opened its corporate offices located in downtown Toronto, Ontario to serve as a hub to retain top talent, coordinate global operations, manage international customer relationships and expand access to the institutional investment community.
- Commenced trading on the TSX exchange under ticker symbol "VGW" and the OTCQX Best Market in the US under the ticker symbol “VGWCF”.
- Valens was also added to The Cannabis ETF (NYSE: THCX) (“THCX”), which trades on the New York Stock Exchange.
In addition, subsequent to the end of the period: - The Company received an amended license from Health Canada to permit sales directly to Provinces and Territories.
- Retail Agreement - the Company signed an agreement to become the first third party processor to supply Shoppers Drug Mart with cannabis oil products for their online medical cannabis site.
- Beverage Agreement - the Company signed its first beverage agreement with Iconic Brewing to manufacture 2.5 million cannabis beverages over the term of the 5-year agreement.
- The Company has already processed 13,423 kilograms of biomass in the first 45 days of the fourth quarter.
- Signed a two year white label deal with BRNT Ltd., a Canadian cannabis design house known for its highly creative and authentic brands which have attracted a steadfast and loyal following around the world with a gross revenue potential of more than $50 Million in the first two years.
Looking ahead, goals for the remainder of the fiscal year:
We also anticipate higher revenue per gram of input in Q4 compared to previous quarters due to the launch of edibles and concentrates later this year.
In addition, we have more than 240,000 kilos of dried cannabis or hemp input already contracted for 2020 with expected revenue growth over the next several quarters and years. |