E Valens Company Q4 Financials Negative Across The Board

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The Valens Company Inc. (VLNCF), formerly known as Valens Groworks Corp., is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products and a constituent in the munKNEE.com Pure-Play Pot Stock Index and it reported its Q4, 2020, financials yesterday, as follows:

Q4 Financial Highlights (All figures are in Canadian dollars and compared to the previous quarter)

  • Net Revenue: decreased 11.5% to $16.0M
  • Gross Profit ($): declined to $(6.0)M from $7.3M
  • Adj. EBITDA*declined to $(4.3)M from $1.4M
  • Net Income (Loss)increased by 81.6% to $(16.6)M
  • Income Loss/Share: declined to $(0.13) from $(0.02)
  • Cash on Handdeclined by 29.4% to $21.4M 

*Valens' management defines adjusted EBITDA as:

  • income (loss) and comprehensive income (loss) from operations, as reported, before interest, tax, depreciation, and amortization,
  • and adjusted for removing share-based payments, realized gains and losses from short-term investments and liabilities, and other one-time and non-cash items including impairment losses.
  • and believes adjusted EBITDA is a useful financial metric to assess its operating performance on an adjusted basis as described above. 

Q4 Operational Highlights

  • Increased market share to ~4.9% of the Cannabis 2.0 market in Alberta, British Columbia, and Ontario 
  • Grew cannabis-infused beverage market share in Canada to approximately 5.2%
  • Manufactured 62 SKUs in Q4 2020, an increase of 11%
  • Cemented position as the largest third-party vape manufacturer in Canada
  • Transitioned from shipping bulk distillate in Q1 2020 to shipping hundreds of thousands of finished product units per month in Q4 2020, resulting in revenue which is expected to be recurring in nature

Management Commentary

Jeff Fallows, the President, said:

  • "Over the course of 2020, Valens has created a platform that is not only highly adaptable to changing market conditions, but also easily transportable into new markets.
  • Moving into the fiscal year 2021, we have already executed step one of our strategic plan for the year with the announcement of our agreement to acquire LYF Food Technologies Inc. (which is expected to close on or around March 1, 2021) and are focused on quickly integrating and realizing on the incredible opportunity we see in adding their edibles platform to our capabilities.
  • With our recent bought deal financing, we are also well-positioned to aggressively pursue available and future growth opportunities, including potential acquisitions.
  • We are now more excited than ever about the future of Valens and the potential for us to create shareholder value in 2021 and beyond."
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