Cannara Biotech Q1 Revenue Grows 57% YoY To $7.7M, What About Adjusted EBITDA?

Cannara Biotech Inc. LOVFF LOVE 8CB released its fiscal first quarter 2023 financial results for the three-month period ended November 30, 2022, revealing revenue of CA$10.3 million ($7.7 million), an 57% increase compared to Q1 2022.

Q1 2023 Financial Highlights

• Gross profit before fair value adjustments of CA$4 million, an increase of 34% compared to Q1 2022.

• Delivered the company's seventh straight quarter of positive adjusted EBITDA of CA$1.7 million, a 72% increase compared to Q1 2022.

• Net income of CA$2,951, compared to net loss of CA$530,499 in Q1 2022.

• The company has CA$27.1 million in working capital as of November 30, 2022, which includes CA$6.8 million of cash on hand.

Other Highlights

• Increased employee's headcount from approximately 190 employees in Q1 2022 to 280 employees in Q1 2023; a 47% increase, to support the growth of the operations.

• Cannara entered the British Columbia market with 7 of its dried flower, pre-roll, and hash products.

• The company was deemed eligible to hold a cannabis representative registration by the province of Alberta in November 2022, paving the way for it to sell cannabis into the Alberta retail market.

• In December 2022, the company's Farnham Facility received its CUMCS Equivalency IMC-G.A.P. certification. Obtaining the certification provides documented evidence that Cannara has met strict standards for quality and consistency in the cultivation, harvest and primary processing of cannabis needed for export of cannabis inputs to certain international jurisdictions, including Israel, Europe, and Australia.

• In December 2022, the company signed a lease agreement with a new tenant for a building that is under construction at its Valleyfield site. The start of the lease term is set for January 2024 with a term of 11 years. This transaction will generate income and positive cash flow on an area of the Valleyfield Facility that would otherwise been unused as it is not licensed for cannabis production.

Nicholas Sosiak, CFO of Cannara stated, "When compared to the previous year's Q1 results, the financials improved significantly across all metrics. However, we did experience some temporary pre-roll manufacturing capacity challenges that impacted sales during the quarter. We are working diligently on increasing internal pre-roll manufacturing capacity, and we expect to resume our significant growth trend during Q2. We expect to achieve 9 active growing zones at Valleyfield this year, having just activated our 7th, allowing us to greater volumes of premium-grade cannabis. As the company continues to scale, we expect revenues, margins, and profits to continue to improve, and shareholders to be rewarded for their investment in Cannara. I am proud to be able to report our seventh consecutive quarter of adjusted EBITDA in addition to currently being on track to achieving record monthly sales in January 2023."

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