Canadian Edibles Producer Indiva Reports Modest Q1 Results, Eyes Strong 2024 After Strategic Realignments

Indiva Limited NDVAF NDVA, a Canadian cannabis edibles producer, announced Thursday its financial and operating results for the first fiscal quarter ended March 31, 2024. Despite facing sector-wide challenges, revenue saw a marginal decrease of 0.9% to CA$9.3 million ($6.8 million) from the same quarter last year, influenced by seasonal declines and regulatory changes affecting certain product lines.

Q1 2024 Financial Highlights

• Revenue was CA$9.3 million, representing a 14.1% sequential decrease from Q4 2023 and a 0.9% decrease year-over-year from Q1 2023.
• Net loss was CA$1.8 million, an improvement from a loss of $2.3 million in the same quarter last year.
• Adjusted EBITDA was a profit of CA$0.1 million, decreasing from CA$1.5 million in Q4 2023  and CA$0.4 million in Q1 2023.
• Gross profit was CA$2.8 million, compared to CA$2.3 million in the same quarter of 2023.

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Core Brands Fuel Indiva’s Growth

Despite these numbers, Indiva’s core brands, such as Pearls by Grön, excelled with a 160% growth in net revenue year-over-year, bolstering its market stance. Notably, the transition of Wana Sour Gummies to contract manufacturing significantly impacted revenue, contributing to an CA$4.9 million drop, which was offset by a CA$5.2 million increase from newer products like Pearls by Grön gummies and No Future vapes.

Operational Resilience

Gross profit rose by 18.4% to CA$2.8 million, representing 29.7% of net revenue, driven by a more favorable product mix and reduced inventory impairments. Conversely, operating expenses remained steady at CA$3.2 million, nearly unchanged from the prior year.

Despite facing a net loss of $1.8 million due to one-time expenses and a decrease in EBITDA to CA$0.1 million, Indiva’s market share story remains strong. The company dominates the edibles category in key regions of Canada like British Columbia, Alberta, and Ontario, propelled by their leading products.

Company Outlook

Indiva projects a promising Q2 2024, expecting higher net revenue both sequentially and year-over-year, potentially surpassing $10 million. This optimism is fueled by strong purchase orders, ongoing robust sales from core brands, and new product launches. Furthermore, enhanced margins are anticipated due to an improved product mix and better overhead absorption, setting the stage for a record-breaking fiscal year in revenue and EBITDA.

“We are very pleased with our performance in the first quarter of 2024, our seasonally weakest quarter. Indiva's business has transformed in the last year, as greater than 50% of our net revenue, specifically the revenue from Wana which has declined due to the transition to contract manufacturing, and the elimination of revenue from lozenges, has been replaced in the last 12 months,” said Niel Marotta, president and CEO of Indiva. “Now that these difficult cross currents have subsided, Indiva is positioned to demonstrate sustainable organic growth in its core brands without fighting against the loss of revenue from Wana and lozenges.”

Marotta also highlighted the significant role of product innovation in driving the industry and edible category growth, underscoring Indiva’s commitment to introducing new products and maintaining market leadership.

NDVAF Price Action
NDVAF's shares were trading 5.63% lower at $0.0464 per share at the time of this writing around noon ET Friday.

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