- The Company achieved a total revenue of
$13.3 million , driven by an 8% increase in adult-use revenue and a significant 45% increase in pre-roll revenue year-over-year - Gross Profit Before Fair Value Changes has surged to
$2.15 million , indicating a substantial margin of 21% and a considerable year-over-year increase of 354% - Adjusted EBITDA showed a 28% improvement as the Company realizes benefits from strategic transformation initiatives
Strathroy sale enables BMO loan repayment, bolstering the Company's financial agility- Management will host a conference call on
August 30, 2023 , at10 a.m. Eastern Time
"Through the transition to a streamlined model and our strategic collaboration with our trusted supply partner, we've achieved strong results that are driving us toward a leaner and more operationally efficient framework. We're optimizing the value of every revenue dollar, magnifying our profit margins, and bolstering our cash performance. These strides enhance our financial resilience and position us to capitalize on the surging demand for our products, charting a promising path for our business growth," confirmed
Summary of Results
For the Quarter-Ended | ||||
($000’s) | ($000’s) | |||
Total revenue | 13,365 | 15,107 | ||
Net revenue (less Excise Tax)* | 10,174 | 11,834 | ||
Gross profit (loss) before changes in fair value | 2,151 | 3,002 | ||
Gross margin % before changes in fair value | 21% | 25% | ||
Loss and comprehensive loss | (9,571) | (9,516) | ||
Adjusted EBITDA* | (1,746) | (3,374) | ||
As at | ||||
($000’s) | ($000’s) | |||
Cash and cash equivalents | 9,442 | 15,551 | ||
Inventory | 15,011 | 15,305 | ||
Biological assets | - | - | ||
Working Capital | (120,288) | (111,036) |
*Net revenue (less Excise Tax) and Adjusted EBITDA are not a recognized measurements under International Financial Reporting Standards (“IFRS”) and this data may not be comparable to data presented by other companies. Net revenue is defined as revenue (i.e., gross revenue less discounts and customer incentives but inclusive of freight) less excise taxes. Management defines Adjusted EBITDA as EBITDA adjusted to exclude interest, tax, and depreciation, stock compensation, fair value changes and other non-cash items, and non-recurring items. This data is furnished to provide additional information and does not have any standardized meaning prescribed by IFRS. The Company uses these non-IFRS measures to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors, and other interested parties, frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate Adjusted EBITDA differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities. See the Company’s management’s discussion and analysis for the three and six months ended
"In Q2, we maintained a strong commitment to enhancing operational efficiency throughout our business," highlighted
Revenue Highlights
Q2 2023 | YoY% | Q2 2022 | Q1 2023 | |
($000’s) | % | ($000’s) | ($000’s) | |
Net Revenue by Channel | ||||
Medical | 4,163 | (4) | 4,339 | 5,973 |
Adult-Use | 5,786 | 8 | 5,352 | 5,861 |
Bulk | 225 | 100 | - | - |
Total Net Revenue | 10,174 | 5 | 9,691 | 11,834 |
Financial Highlights
- For the quarter that ended
June 30, 2023 , Entourage recorded total revenue of$ 13.37 million compared to$13.18 million for the same quarter endedJune 30, 2022 , representing a 1.37% increase year-over-year. - Gross profit before changes in fair value was
$2.15 million for Q2 2023, representing an increase of$1.68 million compared to Q2 2022. This growth can be attributed to a strategic focus on operational efficiencies supported by reduced inventory write-downs in Q2 2023. - Gross margins were 21% in Q2 2023, compared to 5% in Q2 2022. The improvement in Q2 2023, over Q2 2022 arises from increased automation in the production process of finished and semi-finished goods, resulting in lower direct labour costs.
- Total cost of goods sold (COGS) decreased by
$1.19 million for the three months endingJune 30, 2023 , compared to Q2 2022. This reduction was achieved by continued efforts to optimize our operational platform and further automation initiatives. Notably, 19% of COGS accounted for provisions and write-downs. - Selling, general, and administrative (SG&A) expenses declined 13% to
$6.85 million . This change was primarily driven by strategic reductions in headcount, predominantly linked to the exit of cultivation activities inMarch 2023 . Importantly, 19% of SG&A accounts for one-time restructuring charges of$1.32 million . - Adjusted EBITDA improved by
$0.67 million to$(1.75) million in Q2 2023, compared with$(2.41) million in Q1 2023, primarily driven by strategic transformation initiatives to lower costs and partly due to generating higher-margin revenue due to the Company's cost savings initiatives.
Corporate Highlights During and Subsequent to Second Quarter 2023
- In May, a pivotal financial milestone was reached as the Company successfully finalized the sale of its
Strathroy facility. By divesting this asset, the Company strategically strengthened the balance sheet while aligning its production infrastructure to its updated strategy. The net proceeds from the sale of theStrathroy facility paid down a significant portion of the Company’s senior secured credit facility with BMO (the “Credit Facility”). - In June, the remaining balance of the Credit Facility, approximately
$14.6 million , was assumed by the Company’s other secured lender, an affiliate ofLiUNA Pension Fund of Central andEastern Canada , who repaid the remaining balance to BMO. This step simplifies the Company’s debt structure, enhances financial stability, reduces debt exposure, and positions Entourage for future fiscal agility. - Additionally, in June, Entourage held its Annual General Meeting. All director nominees, including
George Scorsis ,Gail Paech ,Bruce Croxon ,Luciano Cacioppo , andJason Alexander , were resoundingly elected, garnering a combined average shareholder approval rating of 98%. Furthermore, the Company's shareholders approved the reappointment ofMNP LLP as auditor. - In June, the Company entered into a two-year agreement with the
University of Guelph to store its genetics in-vitro and research its proprietary genetics. This collaboration allows the Company to ensure that proprietary genetics' safeguard, maintenance, and value remain a priority. - June marked another milestone for the Company with the seamless sale, execution, and fulfillment of its first international order—an impressive 100kg of bulk medicinal cannabis dispatched to
Australia through a partnership withLyphe Australia Pty Ltd. , a fully-owned subsidiary ofLyphe Group Ltd. Four of the Company's premium strains will now be available to medicinal cannabis patients through Lyphe, cementing our global market presence and accelerating our strategic growth agenda. - In the latter part of Q2, the Company issued 1,600,000 deferred share units to its Board of Directors in line with the provisions of its omnibus equity incentive compensation plan and are granted in lieu of specific cash compensation for services provided during the second quarter of 2023.
Commercial and Sales Highlights
- The Company has a record 3.0% national pre-roll market share, with
British Columbia showing the strongest growth at 8.3% in the second quarter. - Color Cannabis ranks among the top five pre-roll brands in
Canada . - The Company launched 18 new SKUs across the Canadian marketplace under both the Color and Saturday portfolio in various new cultivars and formats including; ‘Garlic and Gas Ready-to-Roll,’ ‘Sour Berry 1g Vape,’ and ‘Ghost Fuel Infused Pre-Rolls.’ The Company's ongoing commitment to crafting distinctive products infused with unique flavours and rare cannabinoids is poised to resonate strongly with consumers.
- In conjunction with The Boston Beer Company Inc., Teapot introduced two new flavours, 'Good Day Iced Tea Mango Green Tea' and 'Good Evening Iced Tea Blueberry Chamomile.'
- Introduced new dynamic brands, Dime Bag® and Syndicate. These additions complement beloved offerings within the Color and Saturday Cannabis brands, propelling the Company's expanding product lineup.
- The Company launched an innovative and comprehensive education program tailored to enhance budtender engagement and elevate product knowledge. This program reflects the Company's commitment to customer satisfaction and dedication to creating a well-informed and knowledgeable cannabis community.
- Starseed Medicinal's experienced over 75% renewal rate. These substantial increases highlight the Company's ability to attract and retain a growing customer base.
- Starseed Medicinal has expanded its medical platform, continually adding to its product portfolio. In partnership with Remidose, Starseed will introduce a range of controlled delivery inhaler products available in both a THC and balanced profile exclusively for medical patients.
Conference Call Details
A conference call will be hosted by
Date: | |
Time: | |
Dial-in Number: | Participants, please dial in and ask to join the Entourage call |
Replay Access Code: 0350 Available after | |
About
Follow Entourage and its brands on LinkedIn
Instagram: Color Cannabis, Saturday Cannabis, Starseed, Syndicate, Dime Bag
For Investor & Media Enquiries:
Senior Director, Communications & Corporate Affairs
416-910-0279
Catherine.flaman@entouragecorp.com
Forward Looking Information This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which are based upon Entourage's current internal expectations, estimates, projections, assumptions and beliefs and views of future events. Forward-looking information can be identified using forward-looking terminology such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy.
The forward-looking information in this news release is based upon the expectations, estimates, projections, assumptions, and views of future events which management believes to be reasonable in the circumstances. Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. Forward-looking information necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; loss of markets; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the cannabis industry in
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