Six months of positive cash flow from operations. Turnaround complete and focused on growth and optimization.
PORTLAND, Ore., April 27, 2021 (GLOBE NEWSWIRE) — Golden Leaf Holdings Ltd. (CSE:GLH) (OTCQB:GLDFF) (“Golden Leaf” or the “Company”), operating as Chalice Brands, a premier, consumer-driven cannabis company specializing in retail, production, processing, wholesale, and distribution, today announces its results for the fourth quarter 2020 and the year ended December 31, 2020.
2020 Financial Highlights:
- Record total revenue of US$21.9 million for FY 2020, a 39% year-over-year increase compared to $15.8 million for FY 2019.
- Record year-over-year revenues for the fourth quarter of 2020 of $5.5 million, a 53% increase compared to the fourth quarter of 2019.
- Fourth quarter of 2020 was the Company’s first ever adjusted EBITDA1 positive quarter of approximately $342,000.
- For the six months ended December 31, 2020 adjusted EBITDA1 was approximately $170,000 and cash flow from operations was approximately $420,000.
- Gross profit for 2020 of $6.8M or 31% gross margin compared to $4.3M at a 27% gross margin in 2019. Gross margin improvements were accomplished as a result of facility consolidations, headcount rationalization, and improved vertical product contribution.
- Galvanized a world-class management team to succeed and grow despite a global pandemic, social unrest and once in a generation Oregon wildfire activity.
- Leveraged the Chalice reputation in the Oregon marketplace and cannabis community to earn exceptional purchasing terms for the Company’s retail stores.
- Restructured and optimized the Bald Peak grow facility and hired a six-time award winning Director of Cultivation. Kicked off in-house breeding program focused on creating unique strains to serve both new and seasoned consumers.
- Created an innovative and non-traditional approach to vendor partnerships and collaborative marketing by building out a true omni-channel advertising plan, collaborative discount programs, participation in the Chalice Farms Magazine and more.
- Restructured the balance sheet with the modification of the Chalice Farms earn-out, resulting in a reduction in forward cash obligations of $2.5M and a manageable payment schedule for the remaining cash obligations over 60 months commencing May 2022.
- On January 21, 2021 the Company announced it received unanimous consent from holders of its convertible debentures due November 16, 2021 to extend the term one year to November 16, 2022 and to reprice the conversion features from C$0.30 to US$0.06.
- During the first quarter the Company closed on total gross proceeds of US$13.7 million in non-brokered private placement transactions to be used to fund the acquisition of its previously announced retail store acquisition.
- On February 26, 2021 the Company announced a letter of intent to acquire a retail store chain in the Northwest. Target close expected by end of April.
- C$3.7M of convertible debentures converted to equity during the first quarter of 2021, reducing balance outstanding to C$4.4M.
- On April 8, 2021 the Company announced its 80% acquisition of CBD skincare brand Fifth & Root.
Jeff Yapp, Chief Executive Officer of Golden Leaf Holdings, commented, “2020 was the culmination of the transition we began in 2019. We set a course for positive cash flow and achieved that goal with support from vendors, commitment of our staff, executives, and directors. We achieved positive cash flow in Q3 and Q4 and positive adjusted EBITDA in Q4 and with the inclusion of its recently announced retail acquisition, management expects that the Company can financially support operations moving forward.”
Fiscal Year 2020 Financial Results:
For the year ended December 31, 2020 (“FY 2020”), total revenue was US$21.9 million as compared to US$15.8 million for the same twelve-month period in 2019 (“FY 2019”). The 39% year-over-year increase largely reflects improvements in Oregon operations.
Gross profit was $6.8 million, or 31% of total revenue for FY 2020, compared with $4.3 million or 27% of total revenue in FY 2019. FY 2020 gross margin increased largely due to cost control measures implemented early in the year, including facility consolidation and headcount reduction in operational areas as well as significantly increased contribution from vertically manufactured products in the Company’s retail revenues.
Operating expenses were $12.3 million for FY 2020, compared with $16.6 million in FY 2019, an improvement of US$4.2 million, or 26%, driven largely by decreases in share-based compensation and general and administrative expenses. The reduction in operating expenses was due primarily to decreased salaries, wages and share-based compensation.
Adjusted EBITDA loss was $1.4 million for FY 2020, compared with a loss of $8.8 million for FY 2019. This measure is primarily driven by the increase in gross profit and the reduction in cash-based operating expenses. The Company considers Adjusted EBITDA an important operational measure for the business. For a reconciliation of Adjusted EBITDA to income (loss) before income taxes, please see the Company’s management discussion and analysis for FY 2020 (the “MD&A”).
Net loss from continuing operations for FY 2020 was $10.0 million compared to $32.6 million for FY 2019. This change of $22.6 million is largely due to no impairments to goodwill and intangible assets in FY2020 (FY2019 – $18.7 million) and improvement in operating income of $6.7 million over the prior year.
“For years, we’ve been providing wellness-inspired cannabis products that feed the market’s growing demand for healthy, vegan, gluten-free, organic and locally-sourced oils, extracts and ingredients,” continued Yapp. “While others play catch-up, we are optimizing and improving our commitment to deliver the highest quality cannabis product and experience.”
The Company’s annual audited financial statements for FY 2020 and related MD&A have been filed on SEDAR and are available for review.
1Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, non-cash compensation expenses, one-time transaction fees and other non-cash charges that include impairments, start-up costs and extraordinary operational curtailment charges and excluding fair value changes related to biological assets.
Investor Conference Call
Golden Leaf management, led by Mr. John Varghese, Executive Chairman and Mr. Jeff Yapp, Chief Executive Officer, will hold a conference call on Tuesday April 27th at 4:30 ET, 2021, to report its financial results for the year ended December 31, 2020.
Dial-in information for the conference call is as follows:
Program Title: Golden Leaf Holdings – 2020 Fourth Quarter Earnings Call
Canada & US: 1-877-407-0784
Participants must request the Golden Leaf Holdings – 2020 Fourth Quarter Earnings Call
A live audio webcast will be available online on the Company’s website at www.goldenleafholdings.com where it will be archived for one year.
An audio replay of the conference call will be available through midnight May 11, 2021 by dialing 1-844-512-2921 from the US or Canada, or 1-412-317-6671 from international locations. The conference ID: 13718945.
About Golden Leaf Holdings
Golden Leaf Holdings is a premier consumer-driven cannabis company specializing in production, processing, wholesale, distribution and retail, with seven dispensaries in Portland, 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. GLH operates nationally through Fifth and Root and has operations in Oregon and California. Visit http://www.glhmonthly.com for regular updates.