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Trex Company Reports First Quarter 2019 Results
Reading Time: 7 minutes
– Strong Demand for Trex Decking and Railing Continues –
– Product Mix in Line with Expectations –
– Consolidated and Residential Gross Margins Reflect New Product
Start-up Costs; Progressive Gross Margin Improvement Expected Throughout
2019 –
First Quarter Highlights
- Consolidated net sales increased 5% to $180 million
-
New product start-up costs and related manufacturing inefficiencies of
approximately $10 million in the quarter -
Consolidated gross margin of 38.6%, inclusive of new product start-up
impact of approximately 560 bps - Consolidated earnings per share of $0.54
WINCHESTER, Va.–(BUSINESS WIRE)–Trex Company, Inc. (NYSE: TREX), the world’s number-one brand of decking
and railing and leader in high-performance, low-maintenance outdoor
living products, and a leading national provider of custom-engineered
railing systems, today reported financial results for the first quarter
ended March 31, 2019.
First Quarter 2019 Results
Consolidated net sales for the first quarter of 2019 were $180 million,
reflecting a 5% year-over-year increase. Trex Residential Products net
sales increased 7% to $165 million. Trex Commercial Products contributed
an additional $14 million, compared to $16 million in the year
ago-quarter. Consolidated gross margin was 38.6%, representing gross
margins of 40.2% and 20.5%, respectively, from Trex Residential and Trex
Commercial. SG&A was $30 million, or 16.8% of sales.
Net income for the first quarter of 2019 was $32 million, or $0.54 per
diluted share, compared to $37 million, or $0.63 per diluted share
reported for last year’s first quarter.
“First quarter revenue growth was supported by strong demand for both
our legacy and new residential decking and railing products, resulting
in a product mix that was in line with our expectations. Startup costs
and related manufacturing inefficiencies associated with production of
our new Enhance Naturals and Basics decking unfavorably impacted
residential gross profit by approximately $10 million and significantly
reduced our throughput during the quarter. In March, we made a profile
change to our Trex Enhance decking board to increase throughput and
began to see substantially improved production rates at the end of the
quarter. Our capacity was also constrained by two equipment failures at
our Nevada facility during the first quarter which resulted in the loss
of two production lines for over thirty days each. We will experience
reduced throughput in Nevada during the second quarter as well, but we
expect the reduced throughput and related expenses to be behind us by
the end of June.
“Trex Commercial revenue was consistent with plan, and gross margin
showed year-over-year and sequential expansion of 280 and 210 basis
points, respectively, thanks to operational and organizational changes
that increased efficiencies, and the continued run-off of older
contracts,” noted James E. Cline, President and Chief Executive Officer.
Recent Recognitions
-
For the 12th consecutive year, Trex was named number one in “brand
familiarity,” “brand used most” and “brand used most in the past two
years” for the composite/PVC decking category in the 2019 Builder
magazine’s annual Brand Use Study. -
Trex Company was honored with Green Builder Media’s 2019 Readers’
Choice Award for manufacturing “greenest” decking. -
According to the recent PRODUCTS Brand Use Survey, Trex®
has been named the most preferred decking product among trade
professionals, outranking the traditional pressure-treated lumber.
Summary and Outlook
“Market conditions continue to be favorable, demand for Trex decking and
railing products remains very strong, and early data indicate that
interest in our new Enhance products is robust and broad-based. This
supports our expectation that the re-engineered and expanded line of
Trex Enhance composite decking has significantly increased the size of
our addressable market and will accelerate the conversion from wood. We
are focused on increasing production capabilities as we move through
2019, but as we have said previously, Trex Residential margin
performance for the first half of 2019 will continue to reflect start-up
costs associated with the new product production. We expect gross margin
to progressively increase throughout this year, although due to our
first quarter results and continued startup costs in the second quarter,
we are revising our incremental margin guidance to approximately 40% for
full year 2019. Second quarter consolidated gross margin is expected to
improve sequentially by approximately 300 basis points.
“Trex continued to execute on its long-term capital allocation
priorities in the first quarter and repurchased 125,000 shares for $8.7
million as part of the share buyback program approved by the Board of
Directors in February 2018.
“For the second quarter of 2019, we expect consolidated net sales in the
range of $195 million to $205 million, as we work toward meeting strong
market demand,” Mr. Cline concluded.
First Quarter 2019 Conference Call and Webcast Information
Trex will hold a conference call to discuss its first quarter 2019
results and other corporate matters on Monday, April 29, 2019 at 5:00
p.m. EDT. To participate on the day of the call, dial 1-877-270-2148, or
internationally 1-412-902-6510, approximately ten minutes before the
call and tell the operator you wish to join the Trex Company Conference
Call. A live webcast of the conference call will be available in the
Investor Relations section of the Trex Company website at 1Q19
Earnings Webcast. For those who cannot listen to the live broadcast,
an audio replay of the conference call will be available on the Trex
website for 30 days.
Forward-Looking Statements
The statements in this press release regarding the Company’s expected
future performance and condition constitute “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements are
subject to risks and uncertainties that could cause the Company’s actual
operating results to differ materially. Such risks and uncertainties
include, but are not limited to, the extent of market acceptance of the
Company’s products; the costs associated with the development and launch
of new products and the market acceptance of such new products; the
sensitivity of the Company’s business to general economic conditions;
the impact of seasonal and weather-related demand fluctuations on
inventory levels in the distribution channel and sales of the Company’s
products; the availability and cost of third-party transportation
services for the Company’s products; the Company’s ability to obtain raw
materials at acceptable prices; the Company’s ability to maintain
product quality and product performance at an acceptable cost; the level
of expenses associated with product replacement and consumer relations
expenses related to product quality; the highly competitive markets in
which the Company operates; cyber-attacks, security breaches, or other
security vulnerabilities; and the impact of upcoming data privacy laws
and the EU General Data Protection Regulation and the related actual or
potential costs and consequences. Documents filed with the Securities
and Exchange Commission by the Company, including in particular its
latest annual report on Form 10-K and quarterly reports on Form 10-Q,
discuss some of the important factors that could cause the Company’s
actual results to differ materially from those expressed or implied in
these forward-looking statements. The Company expressly disclaims any
obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
About Trex Company
Trex Company is the world’s largest manufacturer of high performance
wood-alternative decking and railing, with more than 25 years of product
experience. Stocked in more than 6,700 retail locations worldwide, Trex
outdoor living products offer a wide range of style options with fewer
ongoing maintenance requirements than wood, as well as a truly
environmentally responsible choice. Also, Trex is a leading national
provider of custom-engineered railing and staging systems for the
commercial and multi-family market, including performing arts venues and
sports stadiums. For more information, visit trex.com.
| TREX COMPANY, INC. | |||||||||
| Condensed Consolidated Statements of Comprehensive Income | |||||||||
| (In thousands, except share and per share data) | |||||||||
|
Three Months Ended
March 31, |
|||||||||
| 2019 | 2018 | ||||||||
| (Unaudited) | |||||||||
| Net sales | $ | 179,571 | $ | 171,207 | |||||
| Cost of sales | 110,206 | 94,494 | |||||||
| Gross profit | 69,365 | 76,713 | |||||||
| Selling, general and administrative expenses | 30,166 | 28,959 | |||||||
| Income from operations | 39,199 | 47,754 | |||||||
| Interest (income) expense, net | (56 | ) | 229 | ||||||
| Income before income taxes | 39,255 | 47,525 | |||||||
| Provision for income taxes | 7,700 | 10,415 | |||||||
| Net income | $ | 31,555 | $ | 37,110 | |||||
| Basic earnings per common share | $ | 0.54 | $ | 0.63 | |||||
| Basic weighted average common shares outstanding | 58,543,478 | 58,855,156 | |||||||
| Diluted earnings per common share | $ | 0.54 | $ | 0.63 | |||||
| Diluted weighted average common shares outstanding | 58,829,177 | 59,199,622 | |||||||
| Comprehensive income | $ | 31,555 | $ | 37,110 | |||||
| TREX COMPANY, INC. | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (In thousands, except share data) | ||||||||||
|
March 31, |
December 31, | |||||||||
| 2019 | 2018 | |||||||||
| ASSETS | (Unaudited) | |||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 7,907 | $ | 105,699 | ||||||
| Accounts receivable, net | 219,345 | 91,163 | ||||||||
| Inventories | 50,156 | 57,801 | ||||||||
| Prepaid expenses and other assets | 13,877 | 15,562 | ||||||||
| Total current assets | 291,285 | 270,225 | ||||||||
| Property, plant and equipment, net | 122,492 | 117,144 | ||||||||
| Goodwill and other intangibles | 74,399 | 74,503 | ||||||||
| Operating lease assets | 44,251 | — | ||||||||
| Other assets | 3,218 | 3,250 | ||||||||
| Total assets | $ | 535,645 | $ | 465,122 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 23,528 | $ | 31,084 | ||||||
| Accrued expenses and other liabilities | 42,647 | 56,291 | ||||||||
| Accrued warranty | 5,400 | 5,400 | ||||||||
| Line of credit | 35,000 | — | ||||||||
| Total current liabilities | 106,575 | 92,775 | ||||||||
| Operating lease liabilities | 38,764 | — | ||||||||
| Deferred income taxes | 2,125 | 2,125 | ||||||||
| Non-current accrued warranty | 24,934 | 25,354 | ||||||||
| Other long-term liabilities | 90 | 1,905 | ||||||||
| Total liabilities | 172,488 | 122,159 | ||||||||
|
Preferred stock, $0.01 par value, 3,000,000 shares authorized; none issued and outstanding |
— | — | ||||||||
|
Common stock, $0.01 par value, 120,000,000 shares authorized; 70,109,157 and 69,998,336 shares issued and 58,537,485 and 58,551,653 shares outstanding at March 31, 2019 and December 31, 2018, respectively |
701 | 700 | ||||||||
| Additional paid-in capital | 121,592 | 124,224 | ||||||||
| Retained earnings | 448,497 | 416,942 | ||||||||
|
Treasury stock, at cost, 11,571,672 and 11,446,683 shares at March 31, 2019 and December 31, 2018, respectively |
(207,633 | ) | (198,903 | ) | ||||||
| Total stockholders’ equity | 363,157 | 342,963 | ||||||||
| Total liabilities and stockholders’ equity | $ | 535,645 | $ | 465,122 | ||||||
| TREX COMPANY, INC. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (In thousands) | ||||||||||
|
Three Months Ended
March 31, |
||||||||||
| 2019 | 2018 | |||||||||
| (unaudited) | ||||||||||
| Operating Activities | ||||||||||
| Net income | $ | 31,555 | $ | 37,110 | ||||||
|
Adjustments to reconcile net income to net cash used in operating |
||||||||||
| Depreciation and amortization | 3,425 | 4,765 | ||||||||
| Stock-based compensation | 2,793 | 2,295 | ||||||||
| Loss (gain) on disposal of property, plant and equipment | 10 | (22 | ) | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (128,182 | ) | (139,643 | ) | ||||||
| Inventories | 7,645 | (7,928 | ) | |||||||
| Prepaid expenses and other assets | 1,214 | 118 | ||||||||
| Accounts payable | (7,556 | ) | 13,770 | |||||||
| Accrued expenses and other liabilities | (27,332 | ) | (18,972 | ) | ||||||
| Income taxes receivable/payable | 6,438 | 10,399 | ||||||||
| Net cash used in operating activities | (109,990 | ) | (98,108 | ) | ||||||
| Investing Activities | ||||||||||
| Expenditures for property, plant and equipment | (8,647 | ) | (5,435 | ) | ||||||
| Proceeds from sales of property, plant and equipment | – | 24 | ||||||||
| Net cash used in investing activities | (8,647 | ) | (5,411 | ) | ||||||
| Financing Activities | ||||||||||
| Borrowings under line of credit | 35,000 | 92,500 | ||||||||
| Principal payments under line of credit | – | (8,000 | ) | |||||||
| Repurchases of common stock | (14,457 | ) | (8,993 | ) | ||||||
| Proceeds from employee stock purchase and option plans | 302 | 197 | ||||||||
| Net cash provided by financing activities | 20,845 | 75,704 | ||||||||
| Net decrease in cash and cash equivalents | (97,792 | ) | (27,815 | ) | ||||||
| Cash and cash equivalents at beginning of period | 105,699 | 30,514 | ||||||||
| Cash and cash equivalents at end of period | $ | 7,907 | $ | 2,699 | ||||||
Contacts
Bryan Fairbanks
Exec. Vice President and CFO
540-542-6300
Lynn Morgen/Viktoriia Nakhla
ADVISIRY PARTNERS
212-750-5800
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IMC prepares for accelerated growth after legalization in Germany and recovers from the impact of the Israel-Hamas war.
TORONTO and GLIL YAM, Israel, May 8, 2024 /PRNewswire/ — IM Cannabis Corp. (the “Company” or “IMC“) (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, announced its financial results today for the first quarter ended March 31, 2024. All amounts are reported in Canadian dollars and compared to the quarter ended March 31, 2023, unless otherwise stated.
Q1 2024 Financial Highlights
- 13% Revenue increase vs. Q4 2023 of $12.1M vs. $10.7M and 4% decrease vs. Q1 2023 of $12.5M
- 125% Gross profit increase vs. Q4 2023 of $1.8M vs. $0.8 and 39% Gross profit decrease vs. Q1 2023 of $2.9M
- 29% decrease in operating expenses vs. Q1 2023 excluding the one-time Oranim revoke related losses of $4.6M vs. $6.5M and 14% increase including Oranim
- 12% increase of Non-IFRS Adjusted EBITDA loss to $2.1M
Operational Highlights
The Company intends to complete a non-brokered private placement (the “Offering“) of secured convertible debentures of the Company (each, a “Debenture“) for aggregate proceeds of up to C$2,500,000. The Debentures will mature on the date that is 12 months from the date of issuance and will not incur interest except in the event of default. The Debentures are being issued to holders of short term loans and obligations owed by the Company or its wholly owned subsidiaries. The principal of the Debenture may be converted into common shares in the Company (each, a “Share“) at a conversion price of $1.08 per Share.
Management Commentary
“With the April 1st cannabis legalization in Germany, we are augmenting our focus and resources on the German market, where we expect to see the biggest growth potential, and the best return on investment. While it is still too early to make any predictions, our sales in Germany almost doubled during the month of April,” said Oren Shuster, Chief Executive Officer of IMC. “Looking back on the first month post legalization in Germany, I see that we have the infrastructure and the supply agreements in place to continue delivering the accelerated growth we have already seen in April. We will also ensure that we have the necessary resources in place for success.”
“In 2023 we completely restructured, becoming a very lean and agile company, leaning into active cost management. This process is reflected in the numbers, our G&A decreased 27% vs Q1 2023” said Uri Birenberg, Chief Financial Officer of IMC. “While our results have recovered from the impact of the Israel-Hamas war, our revenue was still effected by both an unfavorable exchange rate, as well as price reductions to sell off inventory.”
Q1 2024 Conference Call
The Company will host a Zoom web conference call today at 9:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. Investors are invited to register by clicking here. All relevant information will be sent upon registration.
If you are unable to join us live, a recording of the call will be available on our website at https://investors.imcannabis.com/ within 24 hours after the call.
Q1 2024 Financial Results
- Revenues for the first quarter of 2024 were $12.1 million compared to $12.5 million in the first quarter of 2023, a decrease of 3%. The decrease is mainly due an exchange rate effect of about $0.2 million and decrease in avg. price per sale due to increased competition.
- Gross profit for the first quarter of 2024 was $1.8 million, compared to $2.9 million in Q1 2024, a decrease of 39%. The downside is attributed mainly to the slow-moving stock that was moved out at a lower price and an exchange rate difference totaling $0.4 million and $0.64 million cost of sales loss due to an inventory erase of the slow-moving stock. Company fair value adjustment was $0 and $0.4 million for the Q1 2024 and Q1 2023 respectively.
- Total Dried Flower sold in Q1 2024 was approximately 1,873 kg with an average selling price of $5.68 per gram, compared to approximately 1,842kg in Q1 2023, with an average selling price of $6.59 per gram. This difference is mainly due to increased competition within the retail segment, and mid-range stock discounts to move out slow moving stock.
- Total operating expenses in Q1 2024 were $7.4 million compared to $6.5 million in Q1 2023. The increase is due to the other operating expenses related to Oranim Deal revoke, with an expected losses of $2.8 million. Adjusting for this one-time losses, Q1 2024 operating expenses were $4.6 million compared to $6.5 million in Q1 2023, a decrease of 29%.
- G&A Expenses in Q1 2024 were $2.3 million, compared to $3.2 million in Q1 2023, a decrease of 28%. The decrease in the G&A expense is attributable mainly to salaries and professional services of $0.64 million.
- Selling and Marketing Expenses in Q1 2024 were $2.3 million, compared to $2.8 million in Q1 2023, a decrease of 18% mainly due to a decrease in Salaries and professional services of $0.5 million.
- Net Loss from continuing operations in Q1 2024 was $6.0 million, compared to $0.9 million in Q12023.
- Basic and diluted Loss per Share in Q1 2024 was $0.42, compared to a loss of $0.05 per Share in Q1 2023.
- Non-IFRS Adjusted EBITDA loss in Q1 2024 was $2.1 million, compared to an Adjusted EBITDA loss of $1.9 million in Q1 2023 an increase of 10%.
- Cash and Cash Equivalents as of March 31, 2024, were $1.0 million compared to $1.8 million in December 31, 2023.
- Total assets as of March 31, 2024, were $41.1 million, compared to $48.8 million in December 31, 2023, a decrease of 16%. The decrease is mainly attributed to the goodwill reduction due to Oranim agreement cancelation of about $2.8M, a reduction in Inventory of $2.1 million, reduction of Cash and cash equivalents of $0.8M and reduction in Trade payables of $1.2 million.
- Total Liabilities as of March 31, 2024, were $32.8 million, compared to $35.1 in December 31, 2023, a decrease of about 7%. The decrease was mainly due to the reduction in other accounts payables and accrued expenses of $1.8 million and reduction in the PUT option liability of $0.7 million.
The Company’s financial statements as of March 31, 2024 includes a note regarding the Company’s ability to continue as a going concern. The Company’s Q1 2024 financial results do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. For more information, please refer to the “Liquidity and Capital Resources” and “Risk Factors” sections in the Company’s management’s discussion and analysis for the quarter ended March 31, 2024.
Non-IFRS Measures
This press release makes reference to “Gross Margin” and “Adjusted EBITDA”, which are financial measures that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as complementary information to the Company’s IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should neither be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
For an explanation of how management defines Gross Margin and Adjusted EBITDA, see the Company’s management’s discussion and analysis for the period ended March 31, 2024, available under the Company’s SEDAR+ profile at www.sedarplus.ca on EDGAR at www.sec.gov/edgar.
We reconcile these non-IFRS financial measures to the most comparable IFRS measures as set out below.
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
|
Canadian Dollars in thousands |
||||||
|
March 31, |
December 31, |
|||||
|
Note |
(Unaudited) |
|||||
|
ASSETS |
||||||
|
CURRENT ASSETS: |
||||||
|
Cash and cash equivalents |
$ 1,048 |
$ 1,813 |
||||
|
Trade receivables |
6,506 |
7,651 |
||||
|
Advances to suppliers |
780 |
936 |
||||
|
Other accounts receivable |
3,732 |
3,889 |
||||
|
Inventories |
3 |
7,901 |
9,976 |
|||
|
19,967 |
24,265 |
|||||
|
NON-CURRENT ASSETS: |
||||||
|
Property, plant and equipment, net |
4,939 |
5,058 |
||||
|
Investments in affiliates |
2,078 |
2,285 |
||||
|
Right-of-use assets, net |
1,243 |
1,307 |
||||
|
Intangible assets, net |
5,440 |
5,803 |
||||
|
Goodwill |
7,442 |
10,095 |
||||
|
21,142 |
24,548 |
|||||
|
Total assets |
$ 41,109 |
$ 48,813 |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
|
Canadian Dollars in thousands |
||||||
|
March 31, |
December 31, |
|||||
|
Note |
(Unaudited) |
|||||
|
LIABILITIES AND EQUITY |
||||||
|
CURRENT LIABILITIES:
|
||||||
|
Trade payables |
$ 9,511 |
$ 9,223 |
||||
|
Bank loans and credit facilities |
11,941 |
12,119 |
||||
|
Other accounts payable and accrued expenses |
4,440 |
6,218 |
||||
|
Accrued purchase consideration liabilities |
2,165 |
2,097 |
||||
|
PUT Option liability |
1,967 |
2,697 |
||||
|
Current maturities of operating lease liabilities |
461 |
454 |
||||
|
30,485 |
32,808 |
|||||
|
NON-CURRENT LIABILITIES:
|
||||||
|
Warrants measured at fair value |
4 |
137 |
38 |
|||
|
Operating lease liabilities |
744 |
815 |
||||
|
Long-term loans |
401 |
394 |
||||
|
Employee benefit liabilities, net |
96 |
95 |
||||
|
Deferred tax liability, net |
902 |
963 |
||||
|
2,280 |
2,305 |
|||||
|
Total liabilities |
32,765 |
35,113 |
||||
|
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: |
5 |
|||||
|
Share capital and premium |
253,887 |
253,882 |
||||
|
Translation reserve |
1,399 |
95 |
||||
|
Reserve from share-based payment transactions |
9,664 |
9,637 |
||||
|
Accumulated deficit |
(255,431) |
(249,145) |
||||
|
Total equity attributable to equity holders of the Company |
9,519 |
14,469 |
||||
|
Non-controlling interests |
(1,175) |
(769) |
||||
|
Total equity |
8,344 |
13,700 |
||||
|
Total liabilities and equity |
$ 41,109 |
$ 48,813 |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||
|
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
||||||
|
Canadian Dollars in thousands, except per share data |
||||||
|
Three months ended March 31, |
||||||
|
Note |
2024 |
2023 (*) |
||||
|
Revenues |
$ 12,063 |
$ 12,529 |
||||
|
Cost of revenues |
10,274 |
9,286 |
||||
|
Gross profit before fair value adjustments |
1,789 |
3,243 |
||||
|
Fair value adjustments: |
||||||
|
Realized fair value adjustments on inventory sold in the period |
(10) |
(339) |
||||
|
Total fair value adjustments |
(10) |
(339) |
||||
|
Gross profit |
1,779 |
2,904 |
||||
|
General and administrative expenses |
2,332 |
3,175 |
||||
|
Selling and marketing expenses |
2,292 |
2,805 |
||||
|
Restructuring expenses |
– |
283 |
||||
|
Share-based compensation |
32 |
258 |
||||
|
Other operating expenses |
9 |
2,753 |
– |
|||
|
Total operating expenses |
7,409 |
6,521 |
||||
|
Operating loss |
5,630 |
3,617 |
||||
|
Finance income |
4 |
(14) |
3,530 |
|||
|
Finance expense |
(487) |
(795) |
||||
|
Finance income, net |
(501) |
2,735 |
||||
|
Gain (loss) before income taxes |
(6,131) |
(882) |
||||
|
Income tax benefit |
(111) |
(16) |
||||
|
Net )loss( gain |
(6,020) |
(866) |
||||
|
Other comprehensive income that will not be reclassified to profit or loss in |
||||||
|
Total other comprehensive income that will not be reclassified to profit or loss |
67 |
36 |
||||
|
Exchange differences on translation to presentation currency |
1,330 |
(562) |
||||
|
Total other comprehensive income (loss) that will not be reclassified to profit |
1,397 |
(526) |
||||
|
Other comprehensive income that will be reclassified to profit or loss in |
||||||
|
Adjustments arising from translating financial statements of foreign operation |
(35) |
155 |
||||
|
Total other comprehensive income (loss) that will be reclassified to profit or loss |
(35) |
155 |
||||
|
Total other comprehensive income (loss) |
1,362 |
(371) |
||||
|
Total comprehensive loss |
$ (4,658) |
$ (1,237) |
||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||
|
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
||||||
|
Canadian Dollars in thousands, except per share data |
||||||
|
Three months ended March 31, |
||||||
|
Note |
2024 |
2023 (*) |
||||
|
Net income (loss) attributable to: |
||||||
|
Equity holders of the Company |
(5,623) |
(600) |
||||
|
Non-controlling interests |
(397) |
(266) |
||||
|
$ (6,020) |
$ (866) |
|||||
|
Total comprehensive income (loss) attributable to: |
||||||
|
Equity holders of the Company |
(4,252) |
(959) |
||||
|
Non-controlling interests |
(406) |
(278) |
||||
|
$ (4,658) |
$ (1,237) |
|||||
|
Net income (loss) per share attributable to equity holders of the Company: |
7 |
|||||
|
Basic and diluted (loss) gain per share (in CAD) |
$ (0.42) |
$ (0.05) |
||||
|
Earnings (loss) per share attributable to equity holders of the Company |
||||||
|
Basic and diluted (loss) gain per share (in CAD) |
$ (0.42) |
$ (0.05) |
||||
|
(*) See note 1 regarding figures disclosure. |
||||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||
|
Canadian Dollars in thousands |
||||
|
Three months ended March 31, |
||||
|
2024 |
2023 (*) |
|||
|
Cash provided by operating activities: |
||||
|
Net income (loss) for the period |
$ (6,020) |
$ 43 |
||
|
Adjustments for non-cash items: |
||||
|
Fair value adjustment on sale of inventory |
10 |
339 |
||
|
Fair value adjustment on Warrants, investments and accounts receivable |
100 |
(3,636) |
||
|
Depreciation of property, plant and equipment |
147 |
174 |
||
|
Amortization of intangible assets |
452 |
456 |
||
|
Depreciation of right-of-use assets |
118 |
179 |
||
|
Impairment of goodwill |
2,753 |
– |
||
|
Finance expenses, net |
401 |
635 |
||
|
Deferred tax liability, net |
(69) |
(150) |
||
|
Share-based payment |
32 |
258 |
||
|
Restructuring expense |
– |
283 |
||
|
3,944 |
(1,462) |
|||
|
Changes in working capital: |
||||
|
Decrease (increase) in trade receivables |
1,332 |
1,937 |
||
|
Decrease (increase) in other accounts receivable and advances to suppliers |
159 |
(940) |
||
|
Decrease (increase) in inventories, net of fair value adjustments |
2,159 |
90 |
||
|
Decrease (increase) in trade payables |
663 |
(6,021) |
||
|
Changes in employee benefit liabilities, net |
– |
(22) |
||
|
Increase in other accounts payable and accrued expenses |
(2,745) |
(14) |
||
|
1,568 |
(4,970) |
|||
|
Taxes (paid) received |
(121) |
328 |
||
|
Net cash used in operating activities |
(629) |
(6,061) |
||
|
Cash flows from investing activities: |
||||
|
Purchase of property, plant and equipment |
(2) |
(411) |
||
|
Payment of purchase consideration |
– |
(56) |
||
|
Net cash used in investing activities |
$ (2) |
$ (467) |
||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||
|
Canadian Dollars in thousands |
||||
|
Three months ended March 31, |
||||
|
2024 |
2023 |
|||
|
Cash flow from financing activities: |
||||
|
Proceeds from issuance of share capital, net of issuance costs |
176 |
825 |
||
|
Proceeds from issuance of warrants |
(176) |
7,027 |
||
|
Repayment of lease liability |
(118) |
(175) |
||
|
Interest paid – lease liability |
(15) |
(18) |
||
|
Receipt (repayment) of bank loan and credit facilities |
(2,856) |
(1,046) |
||
|
Cash paid for interest |
(444) |
(56) |
||
|
Proceeds from discounted checks |
2,581 |
|||
|
Net cash (used in) provided by financing activities |
(852) |
6,557 |
||
|
Effect of foreign exchange on cash and cash equivalents |
718 |
(1,059) |
||
|
Decrease in cash and cash equivalents |
(765) |
(1,030) |
||
|
Cash and cash equivalents at beginning of the period |
1,813 |
2,449 |
||
|
Cash and cash equivalents at end of the period |
$ 1,048 |
$ 1,419 |
||
|
Supplemental disclosure of non-cash activities: |
||||
|
Right-of-use asset recognized with corresponding lease liability |
$ 40 |
$ 49 |
||
|
Issuance of shares in payment of debt settlement to a non-independent director of the company |
$ – |
$ 222 |
||
|
(*) See note 1 regarding Figures disclosure. |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||
About IM Cannabis Corp.
IMC (Nasdaq: IMCC) (CSE: IMCC) is an international cannabis company that provides premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets. The Company has exited operations in Canada to pivot its focus and resources to achieve sustainable and profitable growth in its highest value markets, Israel and Germany. The Company leverages a transnational ecosystem powered by a unique data-driven approach and a globally sourced product supply chain. With an unwavering commitment to responsible growth and compliance with the strictest regulatory environments, the Company strives to amplify its commercial and brand power to become a global high-quality cannabis player.
The IMC ecosystem operates in Israel through Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, leveraging years of proprietary data and patient insights. The Company also operates medical cannabis retail pharmacies, online platforms and logistical hubs in Israel that enable the safe delivery and quality control of IMC products throughout the entire value chain. In Germany, the IMC ecosystem operates through Adjupharm GmbH, where it distributes cannabis to pharmacies for medical cannabis patients. The Company also operated in Canada through Trichome Financial Corp and its wholly owned subsidiaries. The Company has exited operations in Canada and considers these operations as discontinued.
Disclaimer for Forward-Looking Statements
This press release contains forward-looking information or forward-looking statements under applicable Canadian and United States securities laws (collectively, “forward-looking statements“). All information that addresses activities or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”, “likely” and “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made. In the press release, such forward-looking statements include, but are not limited to, statements relating to: the impact of the Israel-Hamas war on the Company, including its operations and the medical cannabis industry in Israel; the timing and impact of the legalization of medicinal cannabis in Germany, including, the Company having it “all in house”; the Company being positioned to take advantage of the legalization; the Company’s growth in 2024; the market growth for medicinal cannabis in Germany; the stated benefits of the Company’s EU-GMP processing facility and an EU-GDP logistics center; the Company to host a teleconference meeting as stated; and the Company’s stated goals, scope, and nature of operations in Germany, Israel, and other jurisdictions the Company may operate.
Forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to: the Company’s ability to focus and resources to achieve sustainable and profitable growth in its highest value markets; the Company’s ability to mitigate the impact of the Israel-Hamas war on the Company; the Company’s ability to take advantage of the legalization of medicinal cannabis in Germany; the Company’s ability to host a teleconference meeting as stated; and the Company’s ability to carry out its stated goals, scope, and nature of operations in Germany, Israel, and other jurisdictions the Company may operate.
The above lists of forward-looking statements and assumptions are not exhaustive. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated or implied by such forward-looking statements due to a number of factors and risks. These include: the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry; unexpected changes in governmental policies and regulations in the jurisdictions in which the Company operates; the Company’s ability to continue to meet the listing requirements of the Canadian Securities Exchange and the NASDAQ Capital Market; any unexpected failure to maintain in good standing or renew its licenses; the ability of the Company and its subsidiaries (collectively, the “Group“) to deliver on their sales commitments or growth objectives; the reliance of the Group on third-party supply agreements to provide sufficient quantities of medical cannabis to fulfil the Group’s obligations; the Group’s possible exposure to liability, the perceived level of risk related thereto, and the anticipated results of any litigation or other similar disputes or legal proceedings involving the Group; the impact of increasing competition; any lack of merger and acquisition opportunities; adverse market conditions; the inherent uncertainty of production quantities, qualities and cost estimates and the potential for unexpected costs and expenses; risks of product liability and other safety-related liability from the usage of the Group’s cannabis products; supply chain constraints; reliance on key personnel; the risk of defaulting on existing debt; risks surrounding war, conflict and civil unrest in Eastern Europe and the Middle East, including the impact of the Israel-Hamas war on the Company, its operations and the medical cannabis industry in Israel; risks associated with the Company focusing on the Israel and Germany markets; the inability of the Company to achieve sustainable profitability and/or increase shareholder value; the inability of the Company to actively manage costs and/or improve margins; the inability of the company to grow and/or maintain sales; the inability of the Company to meet its goals and/or strategic plans; the inability of the Company to reduce costs and/or maintain revenues; the Company’s inability to take advantage of the legalization of medicinal cannabis in Germany; and the Company’s inability to host a teleconference meeting as stated.
Please see the other risks, uncertainties and factors set out under the heading “Risk Factors” in the Company’s annual report dated March 28, 2024, which is available on the Company’s issuer profile on SEDAR+ at www.sedarplus.ca and Edgar at www.sec.gov/edgar. Any forward-looking statement included in this press release is made as of the date of this press release and is based on the beliefs, estimates, expectations and opinions of management on the date such forward looking information is made. The Company does not undertake any obligation to update forward-looking statements except as required by applicable securities laws. Investors should not place undue reliance on forward-looking statements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Company Contact:
Anna Taranko, Director Investor & Public Relations
IM Cannabis Corp.
+49 157 80554338
[email protected]
Oren Shuster, CEO
IM Cannabis Corp.
+972-77-3603504
Logo – https://mma.prnewswire.com/media/1742228/IM_Cannabis_Logo.jpg
View original content:https://www.prnewswire.co.uk/news-releases/im-cannabis-reports-first-quarter-financial-results-302139688.html
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Humboldt
Humboldt Seed Company partners with Apollo Green to bring California cannabis genetics to the global marketplace
Apollo Green to distribute Humboldt Seed Company clonal cannabis genetics to Germany, Portugal and Australia
SAN FRANCISCO, April 30, 2024 /PRNewswire/ — Humboldt Seed Company (HSC), California’s leading cannabis seed producer, has announced a partnership with Canadian-based Apollo Green to make eight breeder cuts available to researchers, licensed commercial cultivators and home growers in legal markets worldwide. This first-to-market clonal genetics release is a significant milestone and will expand access to distinctive, high-quality cannabis genetics in both established and emerging global markets including Germany, Portugal and Australia.
The curated, breeder-verified selection includes pioneering triploid genetics, such as OG Triploid and Donutz Triploid alongside the legendary cult classic Blueberry Muffin. Also available are All Gas OG with a THC content of 21% and four high-THC strains in the 30-35% range: Golden Sands, Guzzlerz, Jelly Donutz and Orange Creampop. These selections represent the top .01% from HSC’s extensive California pheno-hunting program.
Exports will begin in May under Apollo Green’s Canadian federal cannabis license. All shipments have Canadian phytosanitary certification, ensuring plants have been inspected, and are clean and free of pests.
“Access for all to quality genetics has been our core focus since the beginning,” said HSC Co-founder and Chief Science Officer, Benjamin Lind. “Our science-based approach to breeding aligns perfectly with Apollo Green’s high standards and we are excited to be able to extend these hand-selected cuts to a wider audience, especially at this pivotal time where we’re seeing positive regulatory changes globally.”
Oisin Tierney, Apollo Green Director of Business Development, said, “California has long been recognized for setting industry standards, and we are proud to play a role in bringing these esteemed genetics to cultivators worldwide. The triploids are especially noteworthy in terms of the unprecedented potential for enhanced plant vigor, higher yields, shorter flowering times and superior returns for solventless extraction.”
About Humboldt Seed Company
Established in 2001, Humboldt Seed Company is a Northern California heritage brand providing quality cannabis genetics to commercial cultivators and home growers in legalized states across the U.S. and international markets including Spain, Canada, Jamaica, South Africa, Colombia, France, Portugal, Greece, the UK, Malta and Thailand. With a focus on environmental and social justice, they combine traditional breeding and modern scientific practices in their strain development program. They have served the cannabis community for over two decades.
For more information visit https://humboldtseedcompany.com/.
About Apollo Green
Licensed since 2019, Apollo Green is Canada’s leader in cannabis genetics. The company’s mission is to provide an ever-growing bank of seeds and clones to medical patients and recreational consumers. Apollo Green provides clean, trusted cannabis seeds and clones, which are backed by the foremost tissue culture technology to reduce risks, costs and time-to-market for licensed producers around the world. Apollo Green is passionate about cannabis genetics.
For more information visit https://apollogreen.com/.
Media contact
Jaana Prall
[email protected]
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View original content:https://www.prnewswire.co.uk/news-releases/humboldt-seed-company-partners-with-apollo-green-to-bring-california-cannabis-genetics-to-the-global-marketplace-302131618.html
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