Fire & Flower Q3 Revenue Declines Slightly YoY, What About Adjusted EBITDA?

Fire & Flower Holdings Corp. FFLWF FAF , released its financial and operational results for the fiscal 2022 third quarter ended October 29, 2022, revealing revenue of CA$43.8 million ($32.2 million) for Q3 2022, representing an increase of 8% from CA$40.7 million in the previous quarter and a decrease of 3% from CA$45.4 million in the prior year comparative period.

Q3 Financial Highlights for the Third Quarter Fiscal 2022

• Gross profit of CA$11.8 million (27% of revenue) for Q3 2022, compared to CA$9.7 million (24% of revenue) in the previous quarter and CA$15.7 million (35% of revenue) in the prior year comparative period.

• Adjusted EBITDA of negative CA$2.8 million for Q3 fiscal 2022 represents a CA$3.2 million improvement from Q2, contributed by higher consolidated gross profit and lower SG&A expenses in the current quarter.

• Net loss of CA$28.1 million for Q3 2022 compared to a net loss of CA$21.6 million in Q2 2022 and CA$2.0 million in the prior year comparative period.

• Cash and cash equivalents balance of CA$17.3 million and positive net working capital of CA$12.5 million as at October 29, 2022.

Subsequent Operational Highlights Post October 29, 2022

• Appointment of John Chou as interim CFO on November 21, 2022.

• Expansion of the Alimentation Couche-Tard ANCTF strategic relationship through the addition of four additional cannabis retail store locations under license on November 7, 2022.

• Entered into an asset purchase agreement on November 7, 2022 to acquire two cannabis retail store locations in Kingston, Ontario from a wholly owned subsidiary of Alimentation Couche-Tard, through the issuance of 804,548 common shares and up to additional 804,548 common shares upon achievement of certain performance metrics. The closing of the transaction is subject to certain closing conditions including the receipt of regulatory approval.

• Expanded the company's footprint in the British Columbia market through the opening of a cannabis retail store in Kelowna, and in Manitoba with the opening of a store in Winnipeg.

"I am excited to see that our team's hard work and focus on operations is demonstrating measurable operational and financial results at the end of the third quarter as well as in the recent weeks. The company continues to be focused on driving the goal of positive adjusted EBITDA and free cash flow. We aim to accomplish our goal through a disciplined approach to driving topline revenue, gross profit dollars and reducing selling, general and administrative expenses," stated Stéphane Trudel, CEO of Fire & Flower.

"Our strategic relationship with Alimentation Couche-Tard has been strengthened through our recent license agreement for five additional co-located cannabis stores adjacent to high-traffic Circle K in the Greater Toronto market, expanding on the existing program in Western Canada. In addition, if approved by shareholders, Fire & Flower will benefit from favorable financing to execute on our plans for growth with a CA$5 million private placement, in addition to the non-dilutive CA$11 million loan that has been secured."

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