/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO
UNITED STATES WIRE SERVICES/
First Quarter Fiscal 2022 and Recent
Highlights:
- Appointment of Alimentation Couche-Tard executive,
Stéphane Trudel as Chief Executive
Officer on June 1, 2022
- Consolidated Adjusted EBITDA of negative $2.3 million for the quarter, an improvement of
4% from the previous quarter
- Consolidated revenue for the quarter of $40.9 million, representing a 4% decrease from
the previous quarter and a 7% decrease from the prior year
comparative quarter
- Cash and cash equivalents balance of $28.4 million at the end of the quarter, an
increase of $8.6 million from the
fiscal year end
- Free Cash Flow improved by 24% from the previous quarter
and remains a priority for the Company
- Hifyre™ cannabis consumer technology platform revenue of
$2.9 million, a 3% increase
year-over-year
- Re-classification of revenue from Pineapple Express
Delivery to the newly created Wholesale and Logistics segment with
revenue of $8.5 million for the
quarter
- New Spark Perks Member Pricing on best selling cannabis
products launched May 11, 2022 in key
markets
- Completed the exercise of Series B Warrants by an
indirect wholly-owned subsidiary of Alimentation Couche-Tard Inc.,
in the total aggregate amount of $37.8
million, with net proceeds of $17.3
million
- Elects to postpone NASDAQ listing to focus capital on
business growth in challenging public and capital market
conditions
TORONTO, June 14,
2022 /CNW/ - Fire & Flower Holdings Corp.
("Fire & Flower" or the "Company") (TSX: FAF)
(OTCQX: FFLWD), today announced its financial and operational
results for the fiscal 2022 first quarter ended April 30, 2022.
"Fire & Flower has delivered impressive growth in the early
stages of our business and now we are moving forward to focus on
the next phase of our evolution. As we evolve, our goal is to
deliver positive Adjusted EBITDA and free cash flow. These goals
will be achieved through a focus on operational excellence in all
our business segments, continual growth in our Hifyre cannabis
consumer technology platform, and expansion of our Pineapple
Express Delivery service, now integrated in our Wholesale and
Logistics segment. Deep retail expertise and our close partnership
with Alimentation Couche-Tard, combined with our industry leading
cannabis consumer technology platform and competitive pricing
strategy, are key drivers of value for the Company," said Stéphane
Trudel, Chief Executive Officer of
Fire & Flower.
"Competitive pressures, licence expansion outpacing market
growth, and a growing value-oriented customer base have created
challenging market conditions for the industry as a whole.
With these market conditions, we look to optimize our retail
network and have already seen favourable indications on our
expanded Spark Perks Member Pricing program. As the market
continues to grow, novel offerings such as the Firebird Rapid
Delivery service, which brings cannabis products to consumers'
doors within hours, will become important service differentiators
for our customers. We remain focused on improving near term
financial performance and remain steadfastly focused on our
ultimate goal of financial sustainability through driving towards
positive free cash flow."
Consolidated Financial Highlights
|
Thirteen weeks
ended
|
(In thousands of
Canadian dollars,
|
30-Apr-22
|
1-May-21
|
except per share
amounts)
|
|
|
Total
Revenue
|
40,944
|
44,084
|
Gross Profit
|
12,166
|
16,518
|
Gross Profit
Percentage
|
29.7 %
|
37.5 %
|
Free Cash
Flow
|
(8,724)
|
(5,424)
|
Adjusted
EBITDA
|
(2,311)
|
2,307
|
Net loss
|
(9,906)
|
(61,598)
|
Basic loss per
share
|
(0.27)
|
(2.06)
|
Financial & Operational
Highlights for the First Quarter Fiscal 2022
- Revenue of $40.9 million for Q1
fiscal 2022, representing a decrease of 7% from $44.1 million in the prior year comparative
period, primarily due to increasing competition from new licences
issued and pricing pressures in the cannabis retail market.
- Gross profit of $12.2 million for
Q1 fiscal 2022, representing a decrease of 26% from $16.5 million in the prior year comparative
period.
- Adjusted EBITDA of negative $2.3
million for Q1 fiscal 2022.
- Net loss of $9.9 million for Q1
fiscal 2022, compared to a net loss of $61.6
million in the prior year comparative period.
- Cash and cash equivalents balance of $28.4 million as of April
30, 2022, an increase of $8.6
million from the fiscal year ended January 29, 2022.
- Free Cash Flow for the thirteen weeks ended April 30, 2022 was negative $8.7M, an improvement from negative $11.6M in the previous fiscal quarter ended
January 29, 2022 as a result of lower
SG&A expense and reduction in capital expenditures.
- On April 28, 2022, 2707031
Ontario Inc. exercised 8,298,067 series B common share purchase
warrants for an aggregate exercise price of $37.8 million. Pursuant to the terms of a secured
loan agreement dated December 13,
2021 between the Company and 2707031 Ontario Inc. (the
"Secured Loan Agreement"), a portion of the aggregate
warrant exercise amount of $37.8
million was used to repay the principal of $20.0 million and interest of $0.5 million to 2707031 Ontario Inc. as
prescribed by the Secured Loan Agreement. There are no further
amounts owing under the Secured Loan Agreement.
Segment Revenue
|
Thirteen weeks
ended
|
(In thousands of
Canadian dollars unaudited)
|
30-Apr-22
|
1-May-21
|
Revenue
|
|
|
Retail
|
29,556
|
33,619
|
Wholesale and
Logistics
|
8,459
|
7,628
|
Digital
Platform
|
2,929
|
2,837
|
Total
Revenue
|
40,944
|
44,084
|
Segment Adjusted EBITDA
|
Thirteen weeks
ended
|
(In thousands of
Canadian dollars unaudited)
|
30-Apr-22
|
1-May-21
|
Adjusted
EBITDA
|
|
|
Retail
|
(2,686)
|
932
|
Wholesale and
Logistics
|
(108)
|
1,016
|
Digital
Platform
|
1,714
|
2,466
|
Corporate
|
(1,231)
|
(2,107)
|
Total Adjusted
EBITDA
|
(2,311)
|
2,307
|
Retail
- Retail revenue for Q1 fiscal 2022 decreased 12% to $29.6 million from $33.6
million in the prior year comparative period.
- Gross profit Q1 fiscal 2022 was $8.2
million, a decrease of 33% compared to $12.2 million for the prior year comparative
period.
- Gross profit margin was 27.8% for the quarter ended
April 30, 2022.
- Segment Adjusted EBITDA decreased to negative $2.7 million in Q1 fiscal 2022 from positive
$0.9 million in the same quarter of
the prior year.
- The Company had 101 stores open and in operation at the end of
Q1 fiscal 2022, compared to 79 stores at the end of Q1 fiscal
2021.
Wholesale and Logistics
- Re-classified operating results from the wholly-owned
subsidiary, Pineapple Express Delivery Inc. from the Digital
segment to the newly created Wholesale and Logistics segment.
- Wholesale and Logistics revenue in Q1 fiscal 2022 of
$8.5 million was an increase of
$0.8 million or 11% compared to the
same quarter of the prior year.
- Gross profit in Q1 fiscal 2022 decreased to $1.3 million from $1.5
million in the same quarter of the prior year.
- Segment Adjusted EBITDA decreased to negative $0.1 million Q1 fiscal 2022 from $1.0 million in the same quarter of the prior
year.
Hifyre™ Digital Platform
- Digital revenue of $2.9 million
in Q1 fiscal 2022 compared to $2.8
million in the same quarter of the prior year.
- Gross profit margin was 89.7% for Q1 fiscal 2022 compared to
100% for the prior year comparative period.
- Adjusted EBITDA decreased to $1.7
million in Q1 fiscal 2022 from $2.5
million in the prior year comparative period.
Subsequent Operational Highlights
Post April 30, 2022
- Appointed Stéphane Trudel as
Chief Executive Officer on June 1,
2022. Prior to joining Fire & Flower, Mr. Trudel held the position of Senior Vice
President of Operations for Alimentation Couche-Tard Inc., and
member of its Executive Leadership Team.
- Announced the launch of Firebird Delivery, including a rush
delivery service, in Ontario on
May 19, 2022.
- Launched an expanded Spark Perks Member Pricing program on the
best selling cannabis products on May 11,
2022.
- Announced an exclusive agreement with Zonetail Inc. (TSXV:
ZONE) to offer cannabis delivery to residential high rise buildings
and hotels on May 10, 2022.
- Pineapple Express Delivery expanded its medical delivery base
through an agreement to offer same-day delivery to Entourage Health
Corp. patients (TSXV: ETNG), on May 4,
2022.
Non-IFRS Measures – Adjusted
EBITDA
"Adjusted EBITDA" is a non-IFRS
metric used by management that does not have any standardized
meaning prescribed by IFRS and may not be fully comparable to
similar measures presented by other companies. Management defines
the Adjusted EBITDA as the Income (loss) for the period, as
reported, before income taxes and other expense (income) items such
as finance costs, finance income, gains and losses related to
derivative liability revaluations and debt extinguishments, and
adjusted for share-based compensation, depreciation and
amortization, impairment expense, impairment of right-of-use
("ROU") assets net of lease liabilities remeasurement,
restructuring charges, professional fees associated with
acquisitions, financing and strategic initiatives.
Adjusted EBITDA has been calculated
differently than in periods prior to Q1 2021, where the Company
previously included lease liability cash payments as disclosed in
accordance with IFRS 16 "Leases" accounting standards. The updated
measure reflects the Company's new approach to analyzing the
consolidated operating performance across the business lines. The
Company believes the updated definition is an alternative measure
to assess performance as it provides meaningful operating results
and facilitates period-to-period operating comparisons. As
other companies may calculate this non-IFRS measure
differently than the Company, this metric may not be
comparable to similarly titled measures reported by other
companies. We caution readers that Adjusted EBITDA should not
be substituted for determining net income (loss) as an
indicator of operating results, or as a substitute for cash
flows from operating activities. A reconciliation of net
income (loss) to Adjusted EBITDA is presented
below.
Adjusted EBITDA for the first quarter ended April 30, 2022 was negative $2.3 million compared to positive Adjusted EBITDA
of $2.3 million for the comparable
quarter for 2021 fiscal year.
Adjusted EBITDA
|
Thirteen Weeks
ended
|
(in thousands of
dollars)
|
April 30, 2022
($)
|
May 1, 2021
($)
|
Net loss – as
reported
|
(9,906)
|
(61,598)
|
(Gain) loss on
revaluation of derivative liability
|
(261)
|
54,110
|
Finance costs,
net
|
1,741
|
3,311
|
Income taxes,
net
|
619
|
687
|
Share-based
compensation
|
632
|
532
|
Acquisition and
strategic initiative professional fees
|
100
|
789
|
Depreciation &
amortization
|
4,764
|
4,329
|
Restructuring,
impairment and other costs, net
|
-
|
147
|
Adjusted
EBITDA
|
(2,311)
|
2,307
|
Lease liability cash
payments for the thirteen weeks ended April 30, 2022 was $2.4
million (May 1, 2021: $2.2 million).
|
"Free Cash Flow" is a non-IFRS metric used by management
that does not have any standardized meaning prescribed by IFRS and
may not be fully comparable to similar measures presented by other
companies. Management defines Free Cash Flow as cash provided
by operating activities less cash used to purchase property and
equipment and less lease liability payments. Free Cash
Flow is a key metric that measures the Company's ability to
repay debt, finance strategic business acquisitions and
investments, pay dividends and repurchase shares. As other
companies may calculate this non-IFRS measure differently than the
Company, this metric may not be comparable to similarly titled
measures reported by other companies.
Free Cash Flow
|
Thirteen weeks
ended
|
(In thousands of
Canadian dollars unaudited)
|
30-Apr-22
|
1-May-21
|
Cash from Operating
Activities
|
(5,959)
|
52
|
Less: Lease liability
payments
|
(2,401)
|
(2,413)
|
Less Capital
Expenditures
|
(383)
|
(3,268)
|
Free Cash Flow
(FCF)
|
(8,742)
|
(5,424)
|
Webcast & Conference
Call
Fire & Flower will host a webcast and conference call with
Stéphane Trudel, Chief Executive
Officer, and Judy Adam, Chief
Financial Officer at 8:30 a.m. EDT on
June 14, 2022. The webcast will
discuss Fire & Flower's first quarter financial and
operational.
Dial-In Information
Toll-Free (Canada):
1-833-950-0062
Toll-Free (United States):
1-844-200-6205
Access code: 818860
Webcast
Sign-Up
https://events.q4inc.com/attendee/697092776
Replay Information (Available until June 21, 2022)
Toll-Free (Canada):
1-226-828-7578
Toll-Free (United States):
1-866-813-9403
Replay Code: 553526
Upon completion of the live conference call, a replay of the
conference call will be accessible on Fire & Flower's website
at https://investors.fireandflower.com/.
Fire & Flower's financial statements and management
discussion and analysis for the period are available on Fire &
Flower's SEDAR profile at www.sedar.com and on Fire &
Flower's website at https://investors.fireandflower.com.
About Fire &
Flower
Fire & Flower is a cannabis consumer retail and technology
platform with more than 100 corporate-owned stores in its network.
The Company leverages its wholly-owned technology development
subsidiary, Hifyre Inc., to continually advance its proprietary
retail operations model while also providing additional independent
high-margin revenue streams. Fire & Flower guides consumers
through the complex world of cannabis through best-in-class
retailing while the HifyreTM digital and
analytics platform empowers retailers to optimize their
connections with consumers. The Company's leadership team combines
extensive experience in the technology, cannabis and retail
industries.
Through the strategic investment of Alimentation
Couche-Tard Inc. (owner of Circle K convenience stores), the
Company has set its sights on global expansion as new cannabis
markets emerge and is poised to expand into the United States when permitted through its
strategic licensing agreement with Fire & Flower U.S. Holdings
upon the occurrence of certain changes to the cannabis regulatory
regime.
To learn more about Fire & Flower,
visit www.fireandflower.com.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
This news release contains certain forward-looking
information within the meaning of applicable Canadian securities
laws ("forward-looking statements"). All statements other than
statements of present or historical fact are forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "achieve",
"could", "believe", "plan", "intend", "objective", "continuous",
"ongoing", "estimate", "outlook", "expect", "project" and similar
words, including negatives thereof, suggesting future outcomes or
that certain events or conditions "may" or "will" occur.
These statements are only predictions.
Forward-looking statements are based on the opinions and
estimates of management of Fire & Flower at the
date the statements are made based on information then available
to Fire & Flower. Various factors and
assumptions are applied in drawing conclusions or making the
forecasts or projections set out in forward-looking
statements. Forward-looking statements are subject to and
involve a number of known and unknown, variables, risks and
uncertainties, many of which are beyond the control of Fire
& Flower, which may cause Fire &
Flower's actual performance and results to differ materially
from any projections of future performance or results expressed or
implied by such forward-looking statements. Such factors, among
other things, include: final regulatory
and other approvals or consents;
fluctuations in general macroeconomic conditions;
fluctuations in securities markets; the impact of the COVID-19
pandemic; the ability of the Company
to successfully achieve its business objectives and political
and social uncertainties.
No assurance can be given that the expectations reflected in
forward-looking statements will prove to be correct. Although
the forward-looking statements contained in this news release are
based upon what management of the Company believes, or believed at
the time, to be reasonable assumptions, the Company cannot assure
shareholders that actual results will be consistent with such
forward-looking statements, as there may be other factors that
cause results not to be as anticipated, estimated or intended.
Readers should not place undue reliance on the forward-looking
statements and information contained in this news release.
Additional information regarding risks and uncertainties relating
to the Company's business are contained under the headings "Risk
Factors" in the Company's Annual Information Form dated
April 26, 2022 and "Risks and
Uncertainties" in the management discussion and analysis for the
thirteen weeks ended April 30, 2022
filed on its issuer profile on SEDAR at www.sedar.com. The
forward-looking statements contained in this press release are made
as of the date of this press release, and the Company does not
undertake to update any forward-looking statements that are
contained or referenced herein, except in accordance with
applicable securities laws.
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein.
SOURCE Fire & Flower Holdings Corp.