Le Lézard
Classified in: Health, Business, Covid-19 virus
Subjects: ERN, CCA, FVT

Indus Holdings, Inc. Reports Second Quarter 2020 Results And Improves Guidance For The Third Quarter


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.


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