SLANG Worldwide Q3 Revenue Declines 13% YoY To $6.03M

SLANG Worldwide Inc. SLNG SLGWF released Tuesday financial results for the three and nine months ended September 30, 2022, with third-quarter revenue of CA$8.17 million ($6.03 million), down 13% from CA$9.36 million in the same period last year.

"As I was appointed CEO in October, SLANG had been set on a new growth trajectory as we neared the completion of our operational restructuring,” John Moynan, CEO of SLANG, stated. “In the third quarter, SLANG strategically advanced upon a number of key growth opportunities in our Core Markets of Colorado and Vermont which have significantly enhanced our leadership position and are now driving a new level of financial success. Most notably, we completed the integration of our newly acquired Vermont cannabis operations and successfully launched adult-use sales in our Burlington store in October as the first adult-use dispensary in the state. As sales continue to build from the launch of new products, we face a greater opportunity to serve a more expansive consumer base and believe Vermont will serve as a key revenue channel for our business."

Q3 Financial Highlights

• The primary drivers of the revenue decrease were a reduction of CA$0.87 million in sales in our non-core markets sales, a reduction of CA$0.78 million in Firefly 2+ sales and a reduction of CA$0.29 million in Colorado Core Market sales, offset by a CA$0.75 million increase in revenue associated with the acquisition of High Fidelity, Inc. completed on August 11, 2021.

• Gross profit of CA$3.60 million (44% gross margin), compared with CA$3.46 million (37% gross margin) in Q3 2021, representing a 4% increase year-over-year.

• EBITDA was a loss of CA$3.43 million, compared with a loss of CA$5.54 million in Q3 2021. The improvement in EBITDA is primarily attributable to a reduction of $1.86 million in expected credit losses and an increase in gross profit of $0.14 million.

• Adjusted EBITDA was a loss of CA$1.24 million, compared with a loss of CA$1.56 million in Q3 2021. The improvement in Adjusted EBITDA is primarily attributable to a CA$0.45 million increase in gross profit before fair value adjustments on biological assets, offset by an increase in operating expenditures related to HiFi, which is not presented in the comparative period before August 11, 2021.

• CA$12.23 million in cash and restricted cash on September 30, 2022, compared to CA$20.83 million on December 31, 2021, and CA$15.72 million on June 30, 2022.

Recent Milestones

• Vermont regulators issued a retail marijuana license to the company on September 28, 2022, allowing the company to open its Ceres Collaborative dispensary on October 1, 2022, Vermont's first adult-use cannabis store;

• Successfully launched Alchemy Naturals Edibles in Colorado in July and e-commerce in September with an 8% growth in dollar sales from July to September;

• Sustained margin improvement of 44% along with significant reduction in operational expenses;

• Increased Colorado sales as one of the company's key accounts delivered a 229% increase in sales from August to September. SLANG achieved total Colorado sales growth for the month of September of 44.5% year-over-year and 75% from August, significantly beating the company's overall quarterly sales forecast in Colorado by 12%.

Price Action

SLANG shares closed Monday market session 16.88% lower at $0.04 per share.

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