VANCOUVER, Nov. 14, 2019 /CNW/ - Zenabis Global Inc. (TSX:ZENA) ("Zenabis" or the "Company") today announced its financial results for the third quarter ended September 30, 2019. All amounts, unless specified otherwise, are expressed in Canadian dollars.
Key Highlights
During the three months ended September 30, 2019, Zenabis:
- Cultivated 5,239 kg of dried cannabis, outperforming revised design capacity by 25.7%, and representing a kilogram yield increase of 112% over the previous quarter;
- Increased licensed annual production capacity by 147% from 23,100 kg to 57,000 kg as a result of receiving several key license amendments at Zenabis Atholville and the cultivation license at Zenabis Langley Site A Part 1;
- Submitted a license amendment application for Zenabis Langley for additional growing areas totaling 101,300 sq. ft. Once approved, this is expected to increase Zenabis' licensed annual production capacity by 39,400 kg to 96,400 kg - representing a 69% further increase in annual production capacity;
- Increased net revenue per gram of cannabis sold by 13% to $4.75 from $4.22 in Q2 2019. This increase is related to the sales mix discussed below.
- Achieved an internal production cost of dried cannabis sold of $1.14 per gram compared to $0.78 per gram in Q2 2019. Cost per gram is impacted by the sales mix between dried flower and dried trim where a gram of dried flower is assigned a higher cost than a gram of dried trim. Lower sales of bulk trim in the quarter resulted in a higher internal production cost per gram of dried cannabis sold.
Andrew Grieve, Chief Executive Officer of Zenabis, stated, "In this quarter, Zenabis substantially expanded its licensed capacity and cultivation yields, raised $65 million in new financing, and submitted further license amendments that, once approved, will increase annual cultivation capacity by over 300% compared to the second quarter of 2019. These license amendments at Zenabis Altholville and Zenabis Langley, expansion into the Ontario market, and the launch of a new value brand Re-Up meaningfully improved our competitive position for the fourth quarter and beyond."
Mr. Grieve added, "We continue to make substantial progress toward achieving our planned licensed annual production capacity of 143,200 kg. By the end of 2019, we expect to have 111,200 kg of capacity licensed or submitted for licensing. In addition, we resolved our packaging challenges in September of 2019. As a result, October provincial recreational shipments increased by 93% to 830 kg versus 430 kg in September of 2019, and primary dried flower packaging output per day increased by 101% to an average of 10,636 units per day in October 2019 versus 5,282 units per day in September 2019. Over the first 10 days of November, this figure increased to an average of 18,099 units per day."
"I am pleased to say that Zenabis shipped more product in the first half of the fourth quarter of 2019 than was shipped during the entirety of the third quarter. We believe this reflects consumer appreciation for our high-quality, high-value products, and market appreciation for our ability to compete with the illicit market on price with our value brand, Re-up."
"We continue to focus on construction and licensing of Zenabis Langley and have modified the construction plan for Part 2C to be substantially complete in the first quarter of 2020. We believe this is a prudent, responsible approach to reaching our target total annual cultivation capacity of 143,200 kg of dried cannabis upon completion of licensing at Zenabis Langley, which is anticipated for the second quarter of 2020."