GTEC loses $815,000 in Q1, rebrands as GTEC Cannabis
GTEC Holdings Ltd. has released its results for its first quarter of fiscal 2020. The Company continues its overall strategy of expanding distribution of its premium cannabis products across Canada, driving robust quarterly sales growth, augmented by strong fiscal discipline.
The Company would also like to announce that effective immediately, it has rebranded from GTEC Holdings Ltd. to GTEC Cannabis Co. This rebranding reinforces the Company's strategy, focus and dedication to become a sector-leading, profitable premium cannabis company.
GTEC Cannabis Co is pleased to present the following results for the First Quarter of Fiscal 2020:
Key Financial Highlights of Q1 2020 (all figures are compared to the Company's most recent fiscal quarter (Q4 2019))
Significant revenue growth of 105%, from the sale of 391 kilograms ("KG") of cannabis, resulting in record revenues of $2.4 million
Achieved record revenue for the sixth consecutive Fiscal Quarter
Gross margin increased by 233% to $965,000 (net of excise tax), while gross margin percentage increased from 26% to 41%
Recreational adult-use cannabis sales increased by 430% to $1.2 million which accounted for 50% of all sales, compared to 19%
Average recreational cannabis selling price increased by $0.17 to $9.42 per gram
Overall weighted average selling price increased by $0.35 to $6.24 per gram
Cash cost of production decreased by $0.75 to $2.22 per gram(B)
Production increased by 15% to 502 KG of cannabis
Operating expenses increased 13% to $1 million as the Company invested capital into the launch of its recreational cannabis brand portfolio (excluding non-cash items such as depreciation, amortization and share based payments)
Net loss of $815,000, representing a 70% decrease from $2.6 million
Positive adjusted EBITDA of $5,000(A)
"We are very proud to be achieving rapid sales growth at a time when many in the sector are experiencing revenue contraction," said Norton Singhavon, Founder and CEO of GTEC. "Our success continues to be driven by our unwavering commitment to producing the finest quality cannabis flower in Canada."
Key Corporate Highlights of Q1 2020
Cannabis products continue to sell out quickly within retail channels
Sold all cannabis that was available for sale, while maintaining favourable selling prices
BLK MKTTM continues to be one of the top selling brands in B.C., and continues to be the highest priced single gram product offered on BC Cannabis Stores
Continued to increase yields and THC levels on harvests, with Cherry Punch achieving record THC levels of 28%
Three licensed cultivation facilities, totaling approximately 39,000 square feet, are now fully operational, with Q2 2020 harvests expected to drive increased revenue growth during Q2 and Q3 2020
Completed the successful transition from commercial cultivars to unique premium cultivars, resulting in the Company entering Q2 2020 solely producing its unique premium cultivars
Key Subsequent Events of Q1 2020
During the months of March and April 2020, the Company implemented a series of measures designed to help maintain business continuity during the COVID-19 Coronavirus pandemic
During the months of March and April 2020, the Company hired 12 new employees at its Alberta Craft Cannabis subsidiary in response to demand for its recreational packaged cannabis products
In March 2020, the Company achieved record capacity utilization of 64% (based on: actual dried flower harvested / estimated dry flower capacity), and anticipates reaching full production capacity in the near future
During March 2020, the Company's Tumbleweed Farms subsidiary harvested a lot of Cherry Punch which subsequently tested at 30.7% THC - establishing a new record for the Company
On 4/20 (April 20, 2020) the Company launched its BLK MKTTM brand web-site (www.blk-mkt.ca)
On April 28, 2020 the Company launched its new corporate web-site (www.gtec.co), under its new corporate brand "GTEC Cannabis Co."
A copy of the Management Discussion & Analysis and Financial Statements for the First Quarter of Fiscal 2020 can be downloaded from GTEC's SEDAR profile.
Note (A) Adjusted EBITDA is a non-IFRS measure and the Company calculates adjusted EBITDA from continuing operations as net income (loss) before interest expense, income taxes, depreciation and amortization (per the statement of cash flows), unrealized gain (loss) on changes in fair value of biological assets, equity loss on investment in associate, loss on sale of assets, investment loss and share based payments. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. The most directly comparable measure to adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. See reconciliation of "Adjusted EBITDA (non-IFRS measure)" in the Company's Management's Discussion and Analysis for the period ended February 29, 2020 for additional information.
Note (B) Cash cost of production is a financial performance measure used by the Company, which is not defined by and does not have any standardized meaning under IFRS. Cash costs to produce dried cannabis per gram is equal to production costs of dried cannabis less amortization, packaging costs and distribution costs divided by gram equivalents of cannabis produced in the quarter. Management believes this measure provides useful information as it removes noncash amortization and packaging costs and provides a benchmark of the Company against its competitors.
The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and prospects in a similar manner to the Company's management. As there are no standardized methods of calculating these non-IFRS measures, the Company's approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.