Christina Lake Cannabis Corp. (the “Company” or “CLC” or
“Christina Lake Cannabis”) (CSE: CLC) (OTCQB: CLCFF)
(FRANKFURT: CLB) is pleased to report its financial
results for the first quarter ended February 28, 2023 (“Q1’23”).
All amounts are expressed in Canadian dollars unless otherwise
noted.
Q1’23 Highlights
- Revenue up 16% to $1.9M over
Q1’22
- Distillate shipments increased by
80% compared to Q1’22
- Gross margin of $616k or 32.2%
before fair value adjustments
- Decreased G&A expenses by $173k
or 14%
“Q1 has continued on the growth trajectory we
established in fiscal 2022, while demonstrating the typical
seasonality we expect in the first quarter” said Mark Aiken, Chief
Executive Officer of Christina Lake Cannabis. “As the industry
continues to face headwinds, our organization remains focused on
delivering strong results, optimizing our operations and growth.
Actual Q1 distillate shipments increased by 80% compared to Q1
2022, creating revenue growth of 16% despite the market price
compression.
The Management team has been focused on
strategic initiatives including:
- Expanded production capacity of
industry leading distillate;
- New product introductions
(Pre-rolls and Infused Pre-Rolls, Kief, Hash, and Infused
Hash);
- Expanded customer base; and
- Turnkey formulations.
Going forward, all signs point to continuing
strong quarterly demand, sales growth, and strong performance as we
continue to march towards our FY2023 goals.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
|
February 28, 2023 |
February 28, 2022 |
$ Change |
% Change |
Revenue from the sale of goods |
$ |
1,917,165 |
|
$ |
1,652,801 |
|
$ |
264,364 |
|
16 |
% |
Costs of sales |
|
(1,300,701 |
) |
|
(744,931 |
) |
|
555,770 |
|
75 |
% |
Gross profit before fair value adjustment |
|
616,464 |
|
|
907,870 |
|
|
(291,406 |
) |
(32 |
%) |
Changes in fair value of inventory sold |
|
(489,263 |
) |
|
(227,341 |
) |
|
261,922 |
|
115 |
% |
Gross profit |
|
127,201 |
|
|
680,529 |
|
|
-553,328 |
|
(81 |
%) |
General and administrative expenses |
|
(1,097,406 |
) |
|
(1,270,687 |
) |
|
(173,281 |
) |
(14 |
%) |
Other items |
|
(239,174 |
) |
|
(179,407 |
) |
|
59,767 |
|
33 |
% |
Income (loss) |
|
(1,209,379 |
) |
|
(769,565 |
) |
|
(439,814 |
) |
(57 |
%) |
|
|
|
|
|
Income (loss) per share |
|
(0.01 |
) |
|
(0.00 |
) |
|
|
|
|
|
|
|
Gross margin % |
|
32.2 |
% |
|
54.9 |
% |
|
|
|
|
|
|
|
Financial Position |
|
|
|
|
Working capital |
|
2,175,609 |
|
|
1,612,449 |
|
|
|
Inventory |
|
5,064,765 |
|
|
6,777,491 |
|
|
|
Total assets |
|
17,209,168 |
|
|
18,422,014 |
|
|
|
Total liabilities |
|
7,236,239 |
|
|
9,293,889 |
|
|
|
Q1 distillate shipments increased by 80%
compared to Q1 2022. Revenue grew 16% to $1.9M from $1.7M in the
comparative quarter despite the market price compression. Revenue
growth was driven by the growing demand in our premium distillate
and expanding customer base.
Gross Margin Before Fair Value Adjustments was
32% of revenue from sale of goods for Q1’23, compared with 55% in
Q1’22. Cost of goods sold included a slight increase in the input
biomass cost as well as capitalized depreciation expense. The
Company continued to realize production efficiencies to combat
price compression in the wholesale distillate market as production
and sales continued to ramp up. This was offset by an expanded
product mix, which includes various grades of premium
distillate.
Total general & administrative (“G&A”)
expenses declined by $173k or 14% in Q1’23 compared to Q1’22,
driven by year-over-year reductions in consulting fees, marketing,
salaries and share based compensation expenses. G&A decreased
to 57% of revenue during the quarter, compared with 77% in
Q1’22.
Loss and comprehensive loss in Q1’23 was $(1.2M)
which is a $440k increase from Q1’22 loss of $(770k). The
year-over-year increase is primarily driven by an increase in cost
of goods sold and changes in fair value of inventory sold, which
was offset by an increase in revenue and reduction in general and
administrative expenses.
Cash and Working Capital
As at February 28, 2023, the Company had working
capital of $2,175,609 (November 30, 2022 – $3,683,558) which
consisted of cash of $1,500,047 (November 30, 2022 - $1,810,639),
receivables of $1,146,313 (November 30, 2022 - $1,906,820), prepaid
expenses of $45,570 (November 30, 2022 - $3,885), inventory of
$5,064,765 (November 30, 2022 - $5,766,418). Current liabilities,
being accounts payable and accrued liabilities, current portion of
loan and current portion of convertible debentures, $5,609,837
(November 30, 2022 – $5,832,954).
About Christina Lake Cannabis
Corp.
Christina Lake Cannabis is a licensed producer
of cannabis under the Cannabis Act. It has secured a standard
cultivation license and corresponding processing amendment from
Health Canada (March 2020 and August 2020, respectively) as well as
a research and development license (early 2020). Christina Lake
Cannabis’ facility consists of a 32-acre property, which includes
over 950,000 square feet of outdoor grow space, offices,
propagation and drying rooms, research facilities, and a facility
dedicated to processing and extraction. Christina Lake Cannabis
also owns a 99-acre plot of land adjoining its principal site. CLC
focuses its production on creating high quality extracts and
distillate for its B2B client base with proprietary strains
specifically developed for outdoor cultivation to enhance
extraction quality.
On behalf of Christina Lake
Cannabis:
“Mark Aiken”Mark Aiken, CEO
For more information about CLC, please
visit: www.christinalakecannabis.comJennifer SmithInvestor
Relations and Media
Inquiriesinvestors@clcannabis.com902-229-7265
THE CANADIAN SECURITIES EXCHANGE (“CSE”) HAS NOT
REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ACCURACY OR
ADEQUACY OF THIS RELEASE, NOR HAS OR DOES THE CSE’S REGULATION
SERVICES PROVIDER.
Non-IFRS Financial Measures
In this news release, the Company reports "
Gross Margin Before Fair Value Adjustments", a financial measure
that is not determined or defined in accordance with the
International Financial Reporting Standards, as issued by the
International Accounting Standards Board ("IFRS").
Gross Margin Before Fair Value Adjustments does not have a
standardized meaning prescribed by IFRS and the Company's methods
of calculating this financial measure may differ from methods used
by other companies. Accordingly, such non-IFRS financial measure
may not be comparable to similarly titled measures presented by
other companies. This measure is provided as additional information
to complement IFRS by providing a further understanding of
operations from management's perspective and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS.
This data is furnished to provide additional
information and are non-IFRS measures and do not have any
standardized meaning prescribed by IFRS. The Company uses these
non-IFRS measures to provide shareholders and others with
supplemental measures of its operating performance. The Company
also believes that securities analysts, investors and other
interested parties, frequently use these non-IFRS measures in the
evaluation of companies, many of which present similar metrics when
reporting their results. As other companies may calculate these
non-IFRS measures differently than the Company, these metrics may
not be comparable to similarly titled measures reported by other
companies.
Forward Looking Statements
This news release contains statements that
constitute "forward-looking statements." Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements,
or developments in the industry to differ materially from the
anticipated results, performance or achievements expressed or
implied by such forward-looking statements. Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the words "expects",
"plans", "anticipates", "believes", "intends", "estimates",
"projects", "potential" and similar expressions, or that events or
conditions "will", "would", "may", "could" or "should" occur.
Although the Company believes that the expectations and assumptions
on which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking
statements because the Company can give no assurance that they will
prove to be correct. Since forward-looking statements address
future events and conditions, by their very nature they involve
inherent risks and uncertainties. These statements speak only as of
the date of this News Release. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks including various risk factors discussed in the
Company’s disclosure documents which can be found under the
Company’s profile on http://www.sedar.com. Should one or more
of these risks or uncertainties materialize, or should assumptions
underlying the forward-looking statements prove incorrect, actual
results may vary materially from those described herein as
intended, planned, anticipated, believed, estimated or expected.
The Company does not intend, and does not assume any obligation, to
update these forward-looking statements except as otherwise
required by applicable law.
Financial Outlook
This news release contains a financial outlook
within the meaning of applicable Canadian securities laws. The
financial outlook has been prepared by management of the Company to
provide an outlook for the Company's operational cash flow for the
month ended February 28, 2023 and may not be appropriate for any
other purpose. The financial outlook has been prepared based on a
number of assumptions including the assumptions discussed under the
heading "Forward-Looking Statements". The actual results of the
Company's operations for any period will likely vary from the
amounts set forth in these projections and such variations may be
material. The Company and its management believe that the financial
outlook has been prepared on a reasonable basis. However, because
this information is highly subjective and subject to numerous
risks, including the risks discussed under the heading
"Forward-Looking Statements", it should not be relied on as
necessarily indicative of future results.
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