- Recorded record quarterly revenue of $7.7M compared to $6.3M in the three months ended July 31, 2023, an increase of 23%
- Operating Cash Flow (OCF), before changes in working capital (WC), of $1.2M compared to $1.9M in the three months ended July 31, 2023, a decrease of 38%, related largely to an increased ramp of SG&A spending in preparation for the launch of New Jersey in 2H 2024 and one-time royalty and consulting payments to our Michigan partner only incurred in 2024
- Free Cash Flow1 (FCF) of $0.9M, after accounting for $1.0M in cash advances to fund construction in New Jersey cultivation facility
- Received Licensing Approval in New Jersey and closed Option 1 to Acquire 44% of ABCO Garden State, LLC ("ABCO"), the Company's New Jersey operation
- Increased ownership of Michigan operations to 80%
- Reduced outstanding debt by $1.75M through the proactive conversion of outstanding convertible debentures not due until 2027, decreasing the Company's ongoing annual cash interest by $0.2M
MEDFORD, Ore., Aug. 27, 2024 /CNW/ - Grown Rogue International Inc. ("Grown Rogue" or the "Company") (CSE: GRIN) (OTC: GRUSF), a craft cannabis company born from the amazing terroir of Oregon's Rogue Valley, is pleased to report its second quarter 2024 results for the three months ended June 30, 2024. The comparison period for 2023 is the three months ended July 31, 2023, due to the recent fiscal year-end change from October 31 to December 31. All financial information is provided in U.S. dollars unless otherwise indicated.
Second Quarter 2024 Financial Summary ($USD Millions)
|
Second Quarter 2024 Summary
|
2024
|
2023*
|
+/- %
|
|
Revenue
|
$7.7
|
$6.3
|
+23 %
|
|
aEBITDA
|
$2.5
|
$2.1
|
+21 %
|
|
aEBITDA %
|
32.7 %
|
33.2 %
|
-50 bps
|
|
OCF (Before Changes in WC)
|
$1.21
|
$1.9
|
-38 %
|
|
OCF %
|
14.9 %
|
29.5 %
|
-1460 bps
|
|
|
*Comparable 2023 data is May-July due to the fiscal year end change
|
|
|
1)
|
Includes $0.5M in one-time consulting and royalty fees only incurred in 2024
|
Management Commentary
"This was another exciting quarter for Grown Rogue with record revenue and aEBITDA showing the continued execution by our team. We continue to see strong sell-through, record indoor production in both yield and revenue, continued consumer loyalty with our existing products, and strong consumer response to our new, branded pre-rolls – moderated somewhat by market pricing softness in Oregon and Michigan in the quarter. We want to thank our customers who are continuing to find value in our offerings, and we strongly believe that high-quality, low-cost cannabis cultivation, that delights consumers, is a protectable moat when done at the proper scale," said Obie Strickler, CEO of Grown Rogue.
"We had a decline in our operating cash flow before changes in working capital, which was largely attributable to the ramp of SG&A spending in advance of launching New Jersey and some royalty and consulting payments to our Michigan partner that were only incurred this year. We maintain a strong balance sheet with a positive working capital position, minimal debt, and sufficient cash to fund our near-term plan, so we continue to be well positioned to take advantage of new market opportunities.
Our primary growth drivers in 2024 and 2025 continue to be our expansion efforts in New Jersey and Illinois. We expect sales in New Jersey in the fourth quarter of this year and will have an update on the specific timing very soon. Illinois design and engineering is underway, and we are targeting sales starting in the second half of 2025. Our plan for expansion remains one new market every 9 to 12 months, but we are only going to swing at the fat pitches," continued Mr. Strickler.
"I want to personally thank all of our customers, the entire Grown Rogue team, and our supportive shareholders for each doing their part to help Grown Rogue achieve our goal of becoming the first nationally recognized craft cannabis company in the U.S."
Oregon Market Highlights ($USD Millions)
|
Oregon
|
Q2 2024
|
Q2 2023*
|
+/- %
|
|
Revenue
|
3.7
|
3.2
|
+13 %
|
|
aEBITDA
|
1.1
|
1.1
|
+2 %
|
|
aEBITDA Margin %
|
31.3 %
|
34.6 %
|
-330 bps
|
Michigan Market Highlights ($USD Millions)
|
Michigan
|
Q2 2024
|
Q2 2023*
|
+/- %
|
|
Revenue
|
3.5
|
2.8
|
+22 %
|
|
aEBITDA
|
1.6
|
1.3
|
+18 %
|
|
aEBITDA Margin %
|
45.6 %
|
47.1 %
|
-150 bps
|
Michigan operations are through Golden Harvests, LLC.
Financial Statements and aEBITDA reconciliation
|
Consolidated Statements of Financial Position
|
June 30, 2024
|
December 31,
2023
|
|
$
|
$
|
|
ASSETS
|
|
|
|
Current assets
|
|
|
|
Cash and cash equivalents
|
7,521,886
|
6,804,579
|
|
Accounts receivable
|
2,337,007
|
1,642,990
|
|
Biological assets
|
1,700,167
|
1,723,342
|
|
Inventory
|
3,839,952
|
5,021,290
|
|
Prepaid expenses and other assets
|
527,937
|
420,336
|
|
Notes receivable
|
2,016,422
|
-
|
|
Total current assets
|
17,943,371
|
15,612,537
|
|
Property and equipment
|
9,354,186
|
8,820,897
|
|
Notes receivable
|
4,325,033
|
2,449,122
|
|
Warrants asset
|
3,717,688
|
1,761,382
|
|
Intangible assets and goodwill
|
725,668
|
725,668
|
|
Deferred tax asset
|
391,465
|
246,294
|
|
Other investments
|
2,034,782
|
-
|
|
TOTAL ASSETS
|
38,492,193
|
29,615,900
|
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Accounts payable and accrued liabilities
|
1,828,943
|
1,358,962
|
|
Current portion of lease liabilities
|
724,742
|
925,976
|
|
Current portion of long-term debt
|
608,929
|
780,358
|
|
Current portion of business acquisition consideration payable
|
1,904,649
|
360,000
|
|
Derivative liability1
|
13,800,806
|
7,471,519
|
|
Income tax payable
|
1,640,850
|
873,388
|
|
Convertible debentures2
|
1,964,092
|
-
|
|
Total current liabilities
|
22,473,011
|
11,770,203
|
|
Lease liabilities
|
1,657,353
|
1,972,082
|
|
Long-term debt
|
1,615,972
|
82,346
|
|
Convertible debentures
|
-
|
2,459,924
|
|
Business acquisition consideration payable
|
1,277,233
|
-
|
|
TOTAL LIABILITIES
|
27,023,569
|
16,284,555
|
|
EQUITY
|
|
|
|
Share capital
|
37,114,080
|
24,593,422
|
|
Contributed surplus
|
8,142,520
|
8,186,297
|
|
Accumulated other comprehensive loss
|
(115,941)
|
(108,069)
|
|
Accumulated deficit
|
(34,784,564)
|
(20,353,629)
|
|
Equity attributable to shareholders
|
10,356,095
|
12,318,021
|
|
Non-controlling interests
|
1,112,530
|
1,013,324
|
|
TOTAL EQUITY
|
11,468,625
|
13,331,345
|
|
TOTAL LIABILITIES AND EQUITY
|
38,492,193
|
29,615,900
|
|
1)
|
Represents derivative liability associated with the fair valuation of the outstanding convertible debentures and is a non-cash liability, settleable in equity upon conversion
|
|
2)
|
Face value of outstanding convertible debentures as of June 30, 2024 is $4,350,000
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
Three months
ended
|
Three months
ended
|
|
June 30, 2024
|
July 31, 2023
|
|
$
|
$
|
|
Revenue
|
|
|
|
Product sales
|
7,109,563
|
6,076,652
|
|
Service revenue
|
608,566
|
219,065
|
|
Total revenue
|
7,718,129
|
6,295,717
|
|
Cost of goods sold
|
|
|
|
Cost of finished cannabis inventory sold
|
(3,567,522)
|
(3,047,971)
|
|
Costs of service revenue
|
(59,632)
|
(99,212)
|
|
Gross profit, excluding fair value items
|
4,090,975
|
3,148,534
|
|
Realized fair value loss amounts in inventory sold
|
(1,020,633)
|
(585,392)
|
|
Unrealized fair value gain on growth of biological assets
|
305,250
|
583,879
|
|
Gross profit
|
3,375,592
|
3,147,021
|
|
Expenses
|
|
|
|
Amortization of property and equipment
|
211,293
|
196,363
|
|
General and administrative
|
3,008,543
|
1,641,725
|
|
Share option expense
|
28,186
|
97,672
|
|
Total expenses
|
3,248,022
|
1,935,760
|
|
Income from operations
|
127,570
|
1,211,261
|
|
Other income and (expense)
|
|
|
|
Interest expense
|
(79,636)
|
(91,623)
|
|
Accretion expense
|
(378,404)
|
(234,028)
|
|
Other income
|
191,834
|
13,566
|
|
Unrealized loss on derivative liability
|
(7,546,164)
|
(472,970)
|
|
Unrealized gain on warrants asset
|
663,459
|
-
|
|
Loss on disposal of property and equipment
|
-
|
-
|
|
Total expense, net
|
(7,148,911)
|
(785,055)
|
|
Gain (loss) from operations before taxes
|
(7,021,341)
|
426,206
|
|
Income tax
|
(552,481)
|
(80,718)
|
|
Net income (loss)
|
(7,573,822)
|
345,488
|
|
Other comprehensive income (items that may be
subsequently reclassified to profit & loss)
|
|
|
|
Currency translation gain (loss)
|
(5,132)
|
4,227
|
|
Total comprehensive income (loss)
|
(7,578,954)
|
349,715
|
|
Gain (loss) per share attributable to owners of the parent – basic
|
(0.04)
|
0.00
|
|
Weighted average shares outstanding – basic
|
210,438,579
|
170,832,611
|
|
Gain per share attributable to owners of the parent –diluted
|
0.01
|
0.00
|
|
Weighted average shares outstanding – diluted
|
243,741,268
|
170,832,611
|
|
Net income (loss) for the period attributable to:
|
|
|
|
Non-controlling interest
|
109,472
|
75,837
|
|
Shareholders
|
(7,683,294)
|
269,651
|
|
Net income (loss)
|
(7,573,822)
|
345,488
|
|
Comprehensive income (loss) for the period attributable to:
|
|
|
|
Non-controlling interest
|
109,472
|
75,837
|
|
Shareholders
|
(7,688,426)
|
273,878
|
|
Total comprehensive income (loss)
|
(7,578,954)
|
349,715
|
|
Consolidated Statements of Cash Flows
|
Six months ended
|
Six months ended
|
|
June 30, 2024
|
July 31, 2023
|
|
$
|
$
|
|
Operating activities
|
|
|
|
Net income (loss)
|
($11,739,521)
|
$757,467
|
|
Adjustments for non-cash items in net income (loss):
|
|
|
|
Amortization of property and equipment
|
466,345
|
264,183
|
|
Amortization of property and equipment included in costs of inventory sold
|
1,004,759
|
992,366
|
|
Unrealized fair value gain amounts on growth of biological assets
|
(708,664)
|
(1,003,753)
|
|
Realized fair value loss amounts in inventory sold
|
1,948,112
|
1,222,455
|
|
Deferred income taxes
|
(145,171)
|
-
|
|
Share option expense
|
84,371
|
191,715
|
|
Accretion expense
|
760,067
|
433,801
|
|
Loss on disposal of property and equipment
|
2,177
|
-
|
|
Unrealized loss on fair value of derivative liability
|
13,206,204
|
679,322
|
|
Unrealized gain on warrants asset
|
(1,956,306)
|
-
|
|
Currency translation loss
|
(7,872)
|
2,337
|
|
Loss on acquisition of non-controlling interest paid in shares
|
-
|
64,360
|
|
2,914,501
|
3,604,253
|
|
Changes in non-cash working capital
|
425,091
|
(784,047)
|
|
Net cash provided by operating activities
|
3,339,592
|
2,820,206
|
|
|
|
|
Investing activities
|
|
|
|
Purchase of property and equipment and intangibles
|
(527,811)
|
(699,340)
|
|
Cash advances and loans made to other parties
|
(3,814,868)
|
-
|
|
Payments of acquisition payable
|
(362,453)
|
-
|
|
Repayment of NJ Retail promissory note
|
250,000
|
|
|
Equity investment in ABCO Garden State LLC
|
(1,784,782)
|
|
|
Other Investment
|
|
(211,041)
|
|
Net cash used in investing activities
|
(6,239,914)
|
(910,381)
|
|
|
|
|
Financing activities
|
|
|
|
Proceeds from convertible debentures
|
-
|
5,000,000
|
|
Proceeds from warrants exercises
|
4,657,460
|
-
|
|
Proceeds from options exercises
|
195,608
|
-
|
|
Proceeds from sale of membership units of subsidiary
|
600,000
|
-
|
|
Payment of equity and debt issuance costs
|
(126,914)
|
-
|
|
Repayment of long-term debt
|
(714,304)
|
(869,855)
|
|
Repayment of convertible debentures
|
(337,203)
|
(90,000)
|
|
Payments of lease principal
|
(657,018)
|
(955,248)
|
|
Net cash provided by (used in) financing activities
|
3,617,629
|
3,084,897
|
|
|
|
|
Change in cash and cash equivalents
|
717,307
|
4,994,722
|
|
Cash and cash equivalents, beginning
|
6,804,579
|
3,488,046
|
|
Cash and cash equivalents, ending
|
$7,521,886
|
$8,482,768
|
|
SEGMENTED aEBITDA
|
6 months ended June 30, 2024
|
|
Oregon
|
Michigan
|
Services
|
Corporate
|
Consolidated
|
|
Revenue
|
$6,707,566
|
$6,673,302
|
$874,236
|
$117,499
|
$14,372,603
|
|
Costs of revenue, excluding fair value adjustments
|
(3,676,346)
|
(2,663,862)
|
(159,700)
|
-
|
(6,499,908)
|
|
Gross profit (loss) before fair value adjustments
|
3,031,220
|
4,009,440
|
714,536
|
117,499
|
7,872,695
|
|
Net fair value adjustments
|
(856,581)
|
(382,868)
|
-
|
|
(1,239,449)
|
|
Gross profit
|
2,174,639
|
3,626,572
|
714,536
|
117,499
|
6,633,247
|
|
Operating expenses:
|
|
|
|
|
|
|
General and administration
|
1,376,014
|
1,594,733
|
-
|
2,057,120
|
5,027,867
|
|
Depreciation and amortization
|
57,916
|
363,991
|
-
|
44,438
|
466,345
|
|
Share based compensation
|
-
|
-
|
-
|
84,371
|
84,371
|
|
Other income and expense:
|
|
|
|
|
|
|
Interest and accretion
|
(141,160)
|
(45,052)
|
-
|
(743,179)
|
(929,391)
|
|
Loss on disposal or property and equipment
|
(2,177)
|
-
|
-
|
-
|
(2,177)
|
|
Unrealized (loss) gain on derivative liability
|
-
|
-
|
-
|
(13,206,204)
|
(13,206,204)
|
|
Unrealized (loss) gain on warrants asset
|
-
|
-
|
-
|
1,956,307
|
1,956,307
|
|
Other income and expense
|
190
|
-
|
-
|
310,094
|
310,284
|
|
Net income (loss) before tax
|
597,562
|
1,622,796
|
714,536
|
(13,751,412)
|
(10,816,517)
|
|
Tax
|
22
|
808,199
|
-
|
114,785
|
923,006
|
|
Net income after tax
|
597,540
|
814,597
|
714,536
|
(13,866,197)
|
(11,739,523)
|
|
|
|
|
|
|
|
EBITDA
|
Oregon
|
Michigan
|
Services
|
Corporate
|
Consolidated
|
|
Net FV adjs
|
856,581
|
382,868
|
|
|
1,239,449
|
|
Depreciation in COGS
|
654,476
|
350,283
|
|
|
1,004,759
|
|
Depreciation expense
|
57,916
|
363,990
|
|
44,439
|
466,345
|
|
Share comp
|
-
|
-
|
-
|
84,371
|
84,371
|
|
Unrealized derivative
|
-
|
-
|
-
|
13,206,204
|
13,206,204
|
|
Loss on disposal of property plant and equipment
|
2,177
|
-
|
-
|
|
2,177
|
|
Unrealized warrants asset
|
-
|
-
|
-
|
(1,956,307)
|
(1,956,307)
|
|
Interest and accretion
|
141,160
|
45,051
|
-
|
743,180
|
929,391
|
|
Income tax
|
22
|
808,199
|
-
|
114,785
|
923,006
|
|
EBITDA before one-time adj.
|
2,309,872
|
2,764,988
|
714,536
|
(1,629,525)
|
4,159,872
|
|
Add back to EBITDA:
|
|
|
|
|
|
|
Costs associated with acquisition of Golden Harvests
|
|
208,000
|
|
280,000
|
488,000
|
|
New production location startup costs
|
|
|
|
154,628
|
154,628
|
|
Non-recurring legal and transaction costs
|
|
|
|
177,641
|
177,641
|
|
aEBITDA
|
$2,309,872
|
$2,972,988
|
$714,536
|
($1,017,256)
|
$4,980,141
|
|
Adjusted EBITDA margin %
|
34.4 %
|
44.6 %
|
81.7 %
|
|
34.7 %
|
|
NOTES:
|
|
1. The Company's "Free cash flow" metric is defined by cash flow from operations minus capital expenditures and expansion related advances
|
|
2. The Company's "aEBITDA," or "Adjusted EBITDA," is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and that may not be comparable to similar measures presented by other companies. The Company defines "EBITDA" as the Company's net income or loss for a period, as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove transaction costs, stock-based compensation expense, accretion expense, gain (loss) on derecognition of derivative liabilities, the effects of fair-value accounting for biological assets and inventory, as well as other non-cash items and items not representative of operational performance as reported in net income (loss). Adjusted EBITDA is defined as EBITDA adjusted for the impact of various significant or unusual transactions. The Company believes that this is a useful metric to evaluate its operating performance.
|
NON-IFRS FINANCIAL MEASURES
EBITDA and aEBITDA are non-IFRS measures and do not have standardized definitions under IFRS. The Company has also provided unaudited pro-forma financial information, which assumes that closed and pending mergers and acquisitions in 2021 are included in the Company's financial results as of the beginning of the quarterly and annual periods in 2021. The Company has provided the non-IFRS financial measures, which are not calculated or presented in accordance with IFRS, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. These supplemental non-IFRS financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS financial measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the IFRS financial measures presented herein. Accordingly, the following information provides reconciliations of the supplemental non-IFRS financial measures, presented herein to the most directly comparable financial measures calculated and presented in accordance with IFRS.
About Grown Rogue
Grown Rogue International Inc. (CSE: GRIN | OTC: GRUSF) is a craft cannabis company operating in Oregon, Michigan, Minnesota, Maryland, and New Jersey, focused on delighting customers with premium flower and flower-derived products at fair prices. The Company's roots are in Southern Oregon, where it has proven its capabilities in the highly competitive and discerning Oregon market. The Company's passion for quality product and value, combined with a disciplined approach to growth, prioritizes profitability and return on capital without sacrificing quality. The Company's strategy is to pursue capital efficient methods to expand into new markets, bringing craft-quality product at fair prices to more consumers. The Company also continues to make modest investments to improve outdoor craft cultivation capabilities in preparation for eventual interstate commerce. For more information, visit www.grownrogue.com.
FORWARD-LOOKING STATEMENTS
This press release contains statements which constitute "forward‐looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward‐ looking information is often identified by the words "may," "would," "could," "should," "will," "intend," "plan," "anticipate," "believe," "estimate," "expect" or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward‐looking information is not based on historical facts but instead reflect the Company's management's expectations, estimates or projections concerning the business of the Company's future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward‐looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward‐looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company's public disclosure documents filed on Sedar.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward‐looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward‐looking information except as otherwise required by applicable law.
The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company's business are disclosed in the Company's Listing Statement filed on its issuer profile on SEDAR+ atwww.sedarplus.ca. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
SOURCE Grown Rogue International Inc.
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