Vertically-integrated California cannabis leader showcases positive outcomes as a direct result of executing on strategic initiatives and go-forward mindset
SALINAS, Calif., Aug. 3, 2020 /CNW/ -- Indus Holdings, Inc. ("Indus" or the "Company") (CSE:INDS; OTCQX: INDXF), a leading, vertically-integrated, California-focused cannabis company, announces its financial results for the second quarter 2020 (ended June 30, 2020). All figures stated are in US Dollars.
Second Quarter Financial Highlights:
"Our commitment to increase profitability is reinvigorated by this quarter's results and we remain motivated to deliver beyond expectations," said Mark Ainsworth, Chief Executive Officer for Indus Holdings, Inc. "These financial results reflect the strategic planning we implemented throughout the last few quarters, and while we know there is still a lot of work to do, we are encouraged with the progress."
Subsequent events to the fiscal second quarter June 30, 2020:
On July 17, 2020, Indus Holdings, Inc. announced termination of pending W Vapes acquisition in Nevada and Oregon and sale of associated real estate.
Leadership Changes:
Operational Highlights and Initiatives Underway in 2020:
The Company remains focused on initiatives that will drive sustainable profitable growth, with top priorities of finalizing renovation of its cultivation facilities, improving operational efficiency, and refinement of biological assets.
"It is beyond exciting to see that the team's hard work and the plan they have put in place is working; their continued growth and commitment is driving this company's profitability and success on a daily-basis," said George Allen, Chairman of the Board of Indus Holdings, Inc. "We continue to stay determined to achieve sustainable profitability in 2020 and beyond as every decision has been intentional and calculated for the viability and growth of Indus and its long-term financial health."
Q2 Financial Results Earnings Conference Call Details:
The conference call with management at 8:30 a.m. ET on Tuesday, August 4, can be accessed using the following dial-in information:
U.S. and Canadian Toll-free: | 1-855-327-6837 |
International: | 1-631-891-4304 |
Conference ID: | 10010456 |
Please dial-in at least 10 minutes before the call to register.
The conference call will be webcast live and archived on the investor relations section of the Indus Holdings, Inc. website at https://ir.indusholdingco.com/.
About Indus Holdings, Inc.
Indus Holdings, Inc. (CSE: INDS; OTCQX: INDXF) is a vertically-integrated cannabis company with advanced production capabilities, including cultivation, extraction, manufacturing, brand sales & marketing, and distribution. Founded in 2014 and based in Salinas, California, Indus offers services supporting every step of the supply chain and an extensive portfolio of award-winning brands, including Cypress Cannabis, House Weed, The Original Pot Co., MOON, Flavor, and Kaizen Medicinals. Indus Distribution, a division of Indus Holdings, Inc., is a leading distributor of cannabis products, servicing an extensive portfolio of brands and licensed retailers.
Investor Relations Contact
Bill Mitoulas
Indus Holdings, Inc.
[email protected]
Office: 1.416.479.9547
Media Contact
Renata Follmann
Rossetti Public Relations
[email protected]
Company Contact
Mark Ainsworth
[email protected]
Use of Non-IFRS Financial Information
To supplement the Company's financial results presented in accordance with International Financial Reporting Standards ("IFRS"), Indus uses non-IFRS measures to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate the Company's financial performance. These non-IFRS financial measures are adjusted EBITDA, adjusted gross profit, adjusted gross margin, and non-IFRS net earnings (loss). Management believes that these non-IFRS financial measures reflect the Company's ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. Management also believes that these non-IFRS financial measures enable investors to evaluate the Company's operating results and future prospects in the same manner as management. These non-IFRS financial measures may also exclude expenses and gains that may be unusual in nature, infrequent or not reflective of the Company's ongoing operating results. Since these measures are not calculated in accordance with IFRS, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies.
Forward-Looking Information and Statements
This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Indus' beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Indus' control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved." The forward-looking information and forward-looking statements contained herein may include, but are not limited to, the ability of the Company to successfully achieve business objectives (including completion of renovations and increasing production capacity), and expectations for other economic, business, and/or competitive factors. There can be no assurance that such forward-looking information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such forward-looking information. This forward-looking information reflects Indus' current beliefs and is based on information currently available to Indus and on assumptions Indus believes are reasonable.
Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Indus to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic, competitive, political and social uncertainties; general capital market conditions and market prices for securities; delay or failure to receive board or regulatory approvals; the actual results of future operations; operating and development costs; competition; changes in legislation or regulations affecting Indus; the timing and availability of external financing on acceptable terms; the available funds of Indus and the anticipated use of such funds; delay or inability to complete an acquisition; favorable production levels and outputs; the stability of pricing of cannabis products; the level of demand for cannabis product; the availability of third-party service providers and other inputs for Indus' operations; lack of qualified, skilled labor or loss of key individuals; and risks and delays resulting from the COVID-19 pandemic. A description of additional assumptions used to develop such forward-looking information and a description of additional risk factors that may cause actual results to differ materially from forward-looking information can be found in Indus' disclosure documents, such as Indus' listing statement filed on the SEDAR website at www.sedar.com. Although Indus has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Forward-looking information contained in this news release is expressly qualified by this cautionary statement.
The forward-looking information contained in this news release represents the expectations of Indus as of the date of this news release and, accordingly, is subject to change after such date. However, Indus expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law. Neither the Canadian Securities Exchange nor its Regulation Service Provider has reviewed, or accepts responsibility for the adequacy or accuracy of, the content of this news release.
INDUS HOLDINGS, INC. AND AFFILIATES | ||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||
(Unaudited) | ||||
June 30, | December 31, | |||
(in thousands) | 2020 | 2019 | ||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 6,701 | $ 1,344 | ||
Accounts Receivable?net of allowance for doubtful accounts of $949 at June 30, 2020 and $2,595 at December 31, 2019 | 4,780 | 6,890 | ||
Inventory | 8,420 | 9,376 | ||
Biological assets | 8,588 | 1,716 | ||
Prepaid expenses and other current assets | 6,362 | 2,729 | ||
Total current assets | 34,851 | 22,055 | ||
Long-term investments | 792 | 397 | ||
Property and equipment, net | 41,097 | 42,972 | ||
Goodwill | 357 | 357 | ||
Other intangibles, net | 577 | 1,153 | ||
Other assets | 274 | 2,274 | ||
Total assets | $ 77,947 | $ 69,208 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 3,175 | $ 7,127 | ||
Accrued payroll and benefits | 964 | 531 | ||
Notes payable, current portion | 194 | 135 | ||
Lease obligation, current portion | 2,783 | 2,325 | ||
Other current liabilities | 7,759 | 1,933 | ||
Total current liabilities | 14,875 | 12,051 | ||
Notes payable | 546 | 371 | ||
Lease obligation | 29,969 | 31,480 | ||
Convertible debentures | 13,663 | - | ||
Other long-term liabilities | 51 | 946 | ||
Total liabilities | 59,105 | 44,848 | ||
STOCKHOLDERS' EQUITY | ||||
Share capital | 99,603 | 96,160 | ||
Accumulated deficit | (80,760) | (71,800) | ||
Total stockholders' equity | 18,843 | 24,360 | ||
Total liabilities and stockholders' equity | $ 77,947 | $ 69,208 |
INDUS HOLDING COMPANY AND AFFILIATES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
Periods Ended June 30, | Three Months | Six Months | ||||||
(in thousands except per share amounts) | 2020 | 2019 | 2020 | 2019 | ||||
Net revenue | $ 9,894 | $ 9,689 | $ 19,337 | $ 16,122 | ||||
Cost of goods sold | 10,779 | 8,181 | 21,383 | 13,266 | ||||
Gross profit before biological asset adjustments | (885) | 1,508 | (2,047) | 2,856 | ||||
Net effect of change in fair value of biological assets | (4,313) | 1,217 | (8,009) | 1,862 | ||||
Gross profit | 3,428 | 291 | 5,962 | 994 | ||||
Operating expenses | ||||||||
General and administrative | 2,225 | 5,669 | 6,016 | 7,968 | ||||
Sales and marketing | 1,184 | 1,944 | 2,410 | 3,410 | ||||
Depreciation and amortization | 885 | 764 | 1,762 | 1,459 | ||||
Total operating expenses | 4,294 | 8,376 | 10,188 | 12,837 | ||||
Loss from operations | (866) | (8,085) | (4,226) | (11,843) | ||||
Other income/(expense) | ||||||||
Other income/(expense) | - | 103 | 25 | (292) | ||||
Loss on termination of investment | (3,524) | - | (3,524) | - | ||||
Unrealized gain on change in fair value of investment | 306 | 841 | 391 | 841 | ||||
Gain on foreign currency | - | 182 | - | 182 | ||||
Interest expense | (726) | (378) | (1,576) | (1,161) | ||||
Total other income/(expense) | (3,944) | 747 | (4,684) | (429) | ||||
Loss before provision for income taxes | (4,810) | (7,338) | (8,910) | (12,273) | ||||
Provision for income taxes | 25 | 503 | 50 | 503 | ||||
Net loss | $ (4,835) | $ (7,841) | $ (8,960) | $ (12,776) | ||||
Net loss per share - basic and diluted | $ (0.15) | $ (0.24) | $ (0.27) | $ (0.40) | ||||
Weighted average shares outstanding - basic and diluted | 33,307 | 32,194 | 33,025 | 32,190 |
INDUS HOLDING COMPANY AND AFFILIATES | ||||
STATEMENTS OF CASH FLOWS | ||||
(Unaudited) | ||||
Periods Ended June 30, | Six Months | |||
(in thousands) | 2020 | 2019 | ||
CASH FLOW FROM OPERATING ACTIVITIES | ||||
Net loss | $ (8,960) | $ (12,776) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 1,987 | 1,709 | ||
Share-based compensation expense | 1,825 | 510 | ||
Provision for doubtful accounts | 720 | 230 | ||
Unrealized gain on change in fair value of investments | (395) | (841) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 1,390 | (7,236) | ||
Inventory | 956 | (1,627) | ||
Biological assets | (6,872) | 203 | ||
Prepaid expenses and other current assets | (333) | (1,336) | ||
Accounts payable and accrued expenses | 2,307 | 1,187 | ||
Other long-term liabilities | (98) | (893) | ||
Net cash used in operating activities | (7,473) | (20,870) | ||
CASH FLOW FROM INVESTING ACTIVITIES | ||||
Purchases of property and equipment | (4,110) | (4,012) | ||
Disposition of business interest, net of cash received | 2,743 | - | ||
Investment in corporate interests | - | (1,500) | ||
Net cash used in investing activities | (1,367) | (5,512) | ||
CASH FLOW FROM FINANCING ACTIVITIES | ||||
Principal payments on lease obligations | (1,053) | (760) | ||
Payments on notes payable | (31) | (71) | ||
Proceeds from notes payable | - | 106 | ||
Proceeds from convertible notes, net of financing costs | 13,663 | - | ||
Issuance of warrants associated with convertible notes offering | 1,556 | - | ||
Issuance of subordinate voting shares associated with convertible notes offering | 62 | |||
Proceeds from brokered private placement | - | 40,150 | ||
Fees on public brokered private placement | - | (1,875) | ||
Proceeds from series B offering | - | 3,200 | ||
Proceeds from exercise of options | - | 127 | ||
Issuance of subordinate voting shares | - | 4 | ||
Net cash provided by financing activities | 14,197 | 40,881 | ||
Change in cash and cash equivalents and restricted cash | 5,357 | 14,499 | ||
Cash and cash equivalents?beginning of year | 1,344 | 10,310 | ||
Cash, cash equivalents and restricted cash?end of period | $ 6,701 | $ 24,809 | ||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||
Cash paid during the period for interest | $ 1,403 | $ 748 | ||
Cash paid during the period for income taxes | $ - | $ 2 | ||
OTHER NONCASH INVESTING AND FINANCING ACTIVITIES | ||||
Purchase of property and equipment not yet paid for | $ 578 | $ - | ||
Disposition of business interests | $ 2,743 | $ - | ||
Issuance of warrants | $ 1,556 | $ 2,291 | ||
Shares issued for services in connection with convertible debenture offering | $ 62 | $ - | ||
Shares issued to acquiree in connection with reverse takeover | $ - | $ 1,513 | ||
Issuance of supervoting shares | $ - | $ 40 | ||
Acquisition of private entities | $ - | $ 1,028 | ||
Issuance of subordinate voting shares in exchange for acquisition of private entity | $ - | $ 240 | ||
The table below reconciles Gross Profit (Loss) and Gross Margin to Adjusted Gross Profit (Loss) and Adjusted Gross Margin for the periods indicated.
Period Ended June 30, | Three Months | Six Months | ||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | ||||
Net revenue | $ 9,894 | $ 9,689 | $ 19,337 | $ 16,122 | ||||
Cost of goods sold | $ 10,779 | $ 8,181 | $ 21,383 | $ 13,266 | ||||
Net effect of change in fair value of biological assets | $ (4,313) | $ 1,217 | $ (8,009) | $ 1,862 | ||||
Gross profit | $ 3,428 | $ 291 | $ 5,962 | $ 994 | ||||
Adjusted gross profit (loss)(1) | $ (885) | $ 1,508 | $ (2,047) | $ 2,856 | ||||
Adjusted gross margin(1) | -8.9% | 15.6% | -10.6% | 17.7% | ||||
(1) Non-IFRS measure |
The table below reconciles Net Loss to Adjusted EBITDA for the periods indicated.
INDUS HOLDINGS, INC. AND AFFILIATES | ||||||||
ADJUSTED EBITDA | ||||||||
(Unaudited) | ||||||||
Periods Ended June 30, | Three Months | Six Months | ||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | ||||
Net loss attributable to Indus Holdings, Inc. (IFRS) | $ (4,835) | $ (7,841) | $ (8,960) | $ (12,776) | ||||
Interest expense | 726 | 378 | 1,576 | 1,161 | ||||
Provision for income taxes | 25 | 503 | 50 | 503 | ||||
Depreciation in cost of goods sold | 159 | 105 | 225 | 250 | ||||
Depreciation and amortization in operating expenses | 885 | 764 | 1,762 | 1,459 | ||||
Investment and currency (gains)/losses | 306 | (1,024) | 391 | (1,024) | ||||
Share-based compensation | 213 | 379 | 1,825 | 510 | ||||
Transaction and other special charges | 3,524 | 1,751 | 3,524 | 1,751 | ||||
Net effect of change in fair value of biological assets | (4,313) | 1,217 | (8,009) | 1,862 | ||||
Adjusted EBITDA (non-IFRS) | $ (3,310) | $ (3,769) | $ (7,616) | $ (6,302) | ||||
(1) Non-IFRS measure |
SOURCE Indus Holdings, Inc.
These press releases may also interest you
|