Chalice Brands Ltd. Reports over 300% improvement in Adjusted EBITDA(1) as part of Record Third Quarter 2021 Financial Results

Third Quarter 2021 Revenues of $8.0 Million Marks another Record and Fourth Consecutive Quarter of Positive Adjusted EBITDA(1)

Portland, OR – November 23, 2021 -- Chalice Brands Ltd. (CSE: CHAL) (OTCQB: CHALF) (“Chalice” or the “Company”), a premier consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, today announces its financial and operating results for the third quarter 2021. All amounts stated are in US Dollars unless otherwise noted.

Third Quarter Highlights:

  • Record quarterly revenues from continuing operations of $8.0 million, a 29% year-over-year increase compared to $6.2 million for the same period in 2020, in part driven by a full quarter of revenues from the Company’s Homegrown Oregon stores.
  • 63.7% growth in gross profit for third quarter 2021 of $3.6 million, or 45% gross margin, compared to $2.2 million or 36% gross margin for the same period in 2020. Gross margin improvements are due to an increased share of our vertical product growth and retail sales of our own Bald Peak flower.
  • Chalice branded products in the Homegrown stores have risen in the quarter from 3% pre-acquisition to 24%. In the Chalice branded retail stores, Chalice products reached a high of over 43% for the quarter compared to 20% for the same period in 2020, demonstrating a 115% year-over-year growth.
  • Record positive Adjusted EBITDA1 of approximately $600,000 represents the fourth consecutive quarter of achieving positive Adjusted EBITDA1 and is over a 300% improvement compared to a loss of $260,0001 for the same period in 2020.
  • Record year-to-date revenue of $20.4 million for the nine months ended September 30, 2021, an increase of 25% compared to $16.4 million for the same period in 2020 and almost matching total revenue for fiscal 2020 of $21.9 million.
  • For the nine months ended September 30, 2021, Adjusted EBITDA1 was approximately $1.6 million, compared with a loss of approximately $1.9 million for the same period in 2020.
  • On September 16, the Company announced its Cannabliss & Co. retail acquisition from Acreage Holdings Inc. of four retail dispensaries located in Portland, Eugene, and Springfield, Oregon for total consideration of US$6.5 million. The Company continues to operate these stores under a management services agreement pending OLCC approval.
  • Subsequent to third quarter, on October 7, the Company announced the promotion of Meghan Miller to Chief Operating Officer (COO).

“The third quarter was another outstanding performance for Chalice as we accomplished record revenues and our most profitable quarter to date. During the quarter, we closed a transformative acquisition in Oregon of four retail dispensaries from Acreage, bolstering our retail footprint by 130% in the fiscal year. By maintaining our focus on profitable operations and accretive acquisitions, Chalice has immediately impacted the vertical contribution within the new stores ahead of schedule. The Chalice team is motivated by our strategic mission to capitalize on untapped opportunities in Oregon and other markets with significant room for consolidation, synergies, and vertical leverage,” commented Jeff Yapp, President and Chief Executive Officer of Chalice Brands.

Fiscal Third Quarter Ended September 30, 2021 Financial Results

For the three months ended September 30, 2021 (“Q3 2021”), total revenue from continuing operations was $8.0 million as compared to $6.2 million for the same period in 2020 (“Q3 2020”). The 29% year-over-year increase is strongly attributed a full quarter realizing Homegrown Oregon sales. Gross profit was up 63.7% compared to Q3 2020 at $3.6 million, or 45% of total revenue for Q3 2021, compared with $2.2 million, or 36% of total revenue, in Q3 2020.

Adjusted EBITDA1 was approximately $600,000 for Q3 2021, compared with a loss of approximately $260,000 for Q3 2020, continuing the positive trend since fourth quarter 2020. This move to profitability was primarily driven by continued cost controls, increased contribution from Homegrown, and increased vertical product contribution in both Chalice and Homegrown. The Company considers Adjusted EBITDA an important operational measure for the business and looks to continue to grow this important metric as the business scales.

For the nine months ended September 30, 2021, total revenue from continuing operations was $20.4 million, as compared to $16.4 million for the same period in 2020.

For the nine months ended September 30, 2021, gross profit was $9.2 million, or 45% gross profit margin compared to $5.1 million or 31% for the same period in 2020.

For the nine months ended September 30, 2021, Adjusted EBITDA1 was approximately $1.6 million, compared with a loss of approximately $1.9 million for the same period in 2020.

The Company’s interim financial statements for the third quarter 2021 and related MD&A have been filed on SEDAR and are available for review.

“Chalice is proud to have accomplished record revenue growth and profitable operations for four consecutive quarters. We remain diligent in executing our conservative capital allocation strategy which will ensure the Company is well positioned and prepared for both short and long-term growth and expansion. Despite the ongoing challenges facing the cannabis industry, our financial performance has never been stronger. For the remainder of the year and beyond, we will continue to focus on strengthening Chalice in a sustainable and profitable manner,” noted John Varghese, Executive Chairman.

1Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, non-cash compensation expenses, non-recurring promotional and investor relations expenses, one-time transaction fees and other non-cash charges that include impairments, start-up costs and extraordinary operational curtailment charges. Prior period amounts have been adjusted for the inclusion of fair value changes related to biological assets effective for Q3 2021 and forward.

 

Q3 2021 Conference Call Details

Chalice Brands management, led by Mr. John Varghese, Executive Chairman, and Mr. Jeff Yapp, Chief Executive Officer, will hold a conference call for investors to discuss the results on Tuesday, November 23, 2021, at 5:00 p.m. ET followed by a webinar for shareholders providing a corporate update and a summary of the second quarter.

REGISTRATION: Please visit click here to register and stream the conference call.

Once registered, registrants will receive an email for this event inclusive of a calendar invite and details on how to connect. A replay of the webcast will be available online immediately following the call on the Company's website at investors.chalicebrandsltd.com where it will be archived for one year.

 

About Chalice Brands Ltd.

Chalice Brands is a premier consumer-driven cannabis company specializing in production, processing, wholesale, distribution and retail, with twelve dispensaries owned and four dispensaries under management in Oregon. The Company is committed to developing a dynamic portfolio built around the recognized brands of Chalice Farms, with a focus on health and wellness. Chalice operates nationally through Fifth & Root and has operations in Oregon and California.

Visit investors.chalicebrandsltd.com for regular updates. 

 

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