Continues Sequential Revenue Growth Reports Second Quarter 2021 Revenues of $6.9 Million and Third Consecutive Quarter of Positive Adjusted EBITDA(1)
PORTLAND, Ore., Aug. 26, 2021 (GLOBE NEWSWIRE) -- Chalice Brands Ltd. (CSE:CHAL) (OTCQB:CHALF) (“Chalice” or the “Company”), a premier consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, today announces its financial and operating results for the second quarter 2021. All amounts stated are in US dollars unless otherwise noted.
Second Quarter Highlights:
- Record quarterly revenues from continuing operations of $6.9 million, a 26% year-over-year increase compared to $5.5 million for the same period in 2020.
- Gross profit for second quarter 2021 of $3.1M, or 45% gross margin, compared to $1.3M or 23% gross margin in 2020. Gross margin improvements are due to an increased share of our vertical product growth and retail sales of our own Bald Peak flower.
- Continued the positive Adjusted EBITDA1 trend of approximately $250,000.
- On April 8, 2021, the Company announced its 80% acquisition of CBD skincare brand Fifth & Root with a national presence in over 400 retail outlets across the United States.
- A record 412 million shares were voted at the Company’s annual general meeting held on May 10, 2021, with over 95% approving the Company’s name change to Chalice Brands Ltd. along with the share consolidation effective as of May 25, 2021.
- On May 19, 2021, the Company closed the purchase of 100% ownership in Homegrown Oregon, a chain of five retail dispensaries located in Portland, Salem and Albany, Oregon, for total consideration of approximately US$9.75 million.
- Retail store count in Oregon increased from 7 to 12. Chalice branded products in Homegrown have risen from 3% pre-acquisition to a high of 28% in August. In Chalice retail stores, Chalice branded products reached a high of over 50%.
- Enacted the consolidation of its common shares on the basis of one (1) post-consolidation common share for every twenty-three (23) pre-consolidation common shares effective as of May 25, 2021.
- Appointed Ginger Mollo as Chief Integration Officer of Chalice Brands, and General Manager of Fifth & Root; a nationally recognized CBD skincare brand based in California.
Jeff Yapp, President and Chief Executive Officer of Chalice Brands, commented, “Chalice is creating a strong foundation through our decision to prioritize the crawl-walk-run operating philosophy in our approach to investments for growth. We continue to make excellent progress in terms of executing our west coast U.S. strategy to achieve accelerated growth, and our record second quarter results reflect this. Chalice continues to generate strong organic growth due to brand recognition, disciplined capital allocation, and strategic acquisitions.”
Fiscal Second Quarter Ended June 30, 2021 Financial Results
For the three months ended June 30, 2021 (“Q2 2021”), total revenue from continuing operations was $6.9 million, as compared to $5.5 million for the same period in 2020 (“Q2 2020”). Gross profit grew 131% year-over-year to $3.1 million. Gross margin almost doubled from 23% in Q2 2020 to 45% in Q2 2021.
Adjusted EBITDA1 was approximately $250,000 for Q2 2021, compared with a loss of $750,000 for Q2 2020, continuing the positive trend since fourth quarter 2020. This move to profitability was primarily driven by continued cost controls, increased contribution from Homegrown and increased vertical product contribution in both Chalice and Homegrown. The Company considers Adjusted EBITDA an important operational measure for the business and looks to grow this important metric as the business scales.
For the six months ended June 30, 2021, total revenue from continuing operations was $12.4 million, as compared to $10.2 million for the same period in 2020. The 22% year-over-year increase is strongly attributed to the accretive acquisition of Homegrown coupled with continued strength in retail tickets and traffic.
For the six months ended June 30, 2021, gross profit was $5.1 million, or 45% compared to $3.0 million or 30% for the same period in 2020 with the increase driven by contribution from Homegrown, increased vertical sales and increased third party revenues.
While revenue grew 22% during the period, operating expenses decreased 5% from $6.3 million for the six months ended June 30, 2020 to $6.0 million for the six months ended June 30, 2021.
The Company’s interim financial statements for the second quarter 2021 and related MD&A have been filed on SEDAR and are available for review.
“Management has executed on our targeted high-level business objectives and are confident Chalice Brands will continue to position itself as a market leader in Oregon. In doing so, the Company is proud to have accomplished sequential revenue growth and profitable operations, as highlighted in this record second quarter performance. We look forward to executing on our conservative capital allocation to drive growth organically and through any opportunistic and accretive transactions for the remainder of the year,” added John Varghese, Executive Chairman.
1Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, non-cash compensation expenses, non-recurring promotional and investor relations expenses, one-time transaction fees and other non-cash charges that include impairments, start-up costs and extraordinary operational curtailment charges and excluding fair value changes related to biological assets.
https://www.globenewswire.com/news-release/2021/08/26/2287462/0/en/Chalice-Brands-Ltd-Continues-Sequential-Revenue-Growth.html