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Grown Rogue Reports First Quarter 2022 Results, aEBITDA of $1.0M
8:16 AM ET, 04/04/2022 - Business Wire
MEDFORD, Ore.--(BUSINESS WIRE)--Apr. 4, 2022-- Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a multi-state cannabis company with operations and assets in Oregon and Michigan, reports fiscal first quarter 2022 results for the three months ended January 31, 2022. All financial information is provided in U.S. dollars unless otherwise indicated.
First Quarter 2022 Financial Summary
Ninth consecutive quarter of positive aEBITDA1, including pro-forma2 results Third consecutive quarter of positive operating cash flow, before changes in working capital Third consecutive quarter of positive net income #1 indoor flower wholesaler in Oregon, according to LeafLink’s MarketSpace data Named fastest growing brand in Oregon during January, according to LeafLink; the third time in five months Net assets (excluding intangibles and goodwill) of $8.23M compared to $1.5M in net liabilities in Q1 2021 Closed a non-brokered private placement for gross proceeds of $1.30M which included an investment from Bengal Capital, a venture capital firm with significant cannabis expertise, and the Company’s CEO Subsequent to quarter end, Grown Rogue launched nitrogen sealed pre-rolls in Michigan
“Grown Rogue had a very strong quarter considering Q1 is typically the weakest quarter of our fiscal year”, said Obie Strickler, CEO of Grown Rogue. “Michigan was particularly strong with revenue up 10% quarter over quarter and Michigan state sales down 3% leading to large market share gains during the quarter. With our recent launch of pre-rolls in Michigan and continued build out of our 80,000 square foot facility, we expect further market share gains in 2022. I could not be more proud of our team as we were north of $1M in aEBITDA for the second consecutive quarter and established Grown Rogue as the clear leader in the Oregon flower market, one of the most competitive states in the US. With our industry leading efficiencies and rapidly expanding craft production, we are excited to kick off 2022, where we are focused on continuing to gain market share, by offering consistent quality and service, and launching into additional product categories in our states. We expect additional economies of scale will lower our breakeven costs in 2022, even as our data suggests Grown Rogue has the lowest indoor production breakeven of any public company in the U.S.”
Highlights by State
Oregon Operations
Revenue of $1.39M compared to $0.87M in Q1 2021, an increase of 59% Gross profit, before fair value adjustments, of $0.70M compared to $0.49M in Q1 2021, an increase of 41% Gross margin, before fair value adjustments, of 50.4% Segmented aEBITDA1 of $0.41M and aEBITDA1 margin of 29.4% compared to segmented aEBITDA1 of $0.05M and aEBITDA1 margin of 4.8% in Q1 2021 Average selling price of indoor whole flower of $781/pound Indoor production run rate expected to increase to 1,000 pounds in Q2 2022 #1 indoor flower wholesaler in Oregon, according to LeafLink’s MarketSpace data Named fastest growing brand in Oregon during January, according to LeafLink, and the third time in five months
Michigan Operations
Revenue of $2.34M compared to pro-forma2 revenue of $1.13M in Q1 2021, an increase of 108% Gross margin, before fair value adjustments, of 57.0% Segmented aEBITDA1 of $1.02M and aEBITDA1 margin of 43.5% compared to pro-forma2 segmented aEBITDA1 of $0.2M and aEBITDA1 margin of 18.8% Average selling price of indoor whole flower of $1,322/pound Indoor production run rate expected to increase to 750 pounds/month in Q2 2022 Top 10 flower wholesaler in Michigan, according to LeafLink’s MarketSpace data Subsequent to quarter end, Grown Rogue launched nitrogen sealed pre-rolls
|
January 31, 2022 |
October 31, 2021 |
|
$ |
$ |
ASSETS |
|
|
Current assets |
||
Cash |
1,607,878 |
1,114,033 |
Accounts receivable |
1,029,971 |
739,248 |
Biological assets |
1,521,500 |
1,188,552 |
Inventory |
3,808,761 |
3,306,312 |
Prepaid expenses and other assets |
299,013 |
357,541 |
Total current assets |
8,267,123 |
6,705,686 |
Marketable securities |
426,823 |
610,092 |
Other investments and purchase deposits |
750,000 |
750,000 |
Property and equipment |
6,392,274 |
5,742,584 |
Intangible assets and goodwill |
399,338 |
399,338 |
TOTAL ASSETS |
16,235,558 |
14,207,700 |
LIABILITIES |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
1,910,861 |
1,766,707 |
Current portion of lease liabilities |
1,117,642 |
624,935 |
Current portion of long-term debt |
1,192,916 |
843,900 |
Business acquisition consideration payable |
360,000 |
358,537 |
Interest payable |
15,000 |
13,750 |
Unearned revenue |
49,007 |
- |
Income tax |
269,133 |
254,631 |
Total current liabilities |
4,914,559 |
3,862,460 |
Accrued liabilities |
60,514 |
123,413 |
Lease liabilities |
1,589,584 |
1,735,503 |
Long-term debt |
1,046,259 |
1,365,761 |
TOTAL LIABILITIES |
7,610,916 |
7,087,137 |
EQUITY |
|
|
Share capital |
21,845,062 |
20,499,031 |
Shares issuable |
35,806 |
74,338 |
Contributed surplus |
6,462,732 |
6,407,935 |
Accumulated other comprehensive income (loss) |
(104,036) |
(90,378) |
Accumulated deficit |
(22,213,515) |
(21,804,349) |
Equity attributable to shareholders |
6,026,049 |
5,086,577 |
Non-controlling interest |
2,598,593 |
2,033,986 |
TOTAL EQUITY |
8,624,642 |
7,120,563 |
TOTAL LIABILITIES AND EQUITY |
16,235,558 |
14,207,700 |
|
Three months ended January 31, |
|
|
2022 |
2021 |
|
$ |
$ |
Revenue |
||
Product sales |
3,732,713 |
874,824 |
Service revenue |
- |
176,361 |
Total revenue |
3,732,713 |
1,051,185 |
Cost of goods sold |
||
Cost of finished cannabis inventory sold |
(1,699,026) |
(470,554) |
Cost of service revenues |
- |
(84,153) |
Gross profit, excluding fair value items |
2,033,687 |
496,478 |
Realized fair value amounts in inventory sold |
(1,010,478) |
(169,328) |
Unrealized fair value gain (loss) on growth of biological assets |
1,289,514 |
(186,806) |
Gross profit |
2,312,723 |
140,344 |
Expenses |
||
Accretion expense |
151,687 |
248,357 |
Amortization of intangible assets |
- |
4,997 |
Amortization of property & equipment |
52,010 |
38,155 |
General and administrative |
1,603,926 |
666,739 |
Share-based compensation |
18,487 |
88,438 |
Total expenses |
1,826,110 |
1,046,686 |
Gain (loss) from operations |
482,593 |
(906,342) |
Other income and (expense) |
||
Interest expense |
(114,660) |
(8,527) |
Other income |
(5,440) |
- |
Gain on debt settlement |
- |
16,623 |
Unrealized gain (loss) on marketable securities |
(167,804) |
302,808 |
Unrealized loss on derivative liability |
- |
(319,627) |
Gain (loss) on disposal of property and equipment |
(6,250) |
- |
Gain from operations before taxes |
192,459 |
(915,065) |
Income tax |
(37,018) |
- |
Net income (loss) |
155,441 |
(915,065) |
Other comprehensive income (items that may be subsequently reclassified to profit & loss) |
||
Currency translation |
(13,658) |
(75,934) |
Total comprehensive income (loss) |
141,783 |
(990,999) |
Gain (loss) per share attributable to owners of the parent – basic & diluted |
- |
(0.01) |
Weighted average shares outstanding – basic & diluted |
164,976,815 |
108,038,431 |
Net income (loss) for the period attributable to: |
||
Non-controlling interest |
564,607 |
4,896 |
Shareholders |
(409,166) |
(919,961) |
Net income (loss) |
155,441 |
(915,065) |
Comprehensive loss for the period attributable to: |
||
Non-controlling interest |
564,607 |
4,896 |
Shareholders |
(422,824) |
(995,895) |
Total comprehensive income (loss) |
141,783 |
(990,999) |
Quarter ended January 31, 2022 |
Oregon |
Michigan |
Corporate |
Consolidated |
Sales revenues |
1,388,945 |
2,343,768 |
- |
3,732,713 |
Costs of goods sold, excluding fair value adjustments |
(691,311) |
(1,007,715) |
- |
(1,699,026) |
Gross profit (loss) before fair value adjustments |
697,634 |
1,336,053 |
- |
2,033,687 |
Net fair value adjustments |
474,511 |
(195,475) |
- |
279,036 |
Gross profit |
1,172,145 |
1,140,578 |
- |
2,312,723 |
Operating expenses: |
- |
|||
General and administration |
341,037 |
739,196 |
523,693 |
1,603,926 |
Depreciation and amortization |
7,041 |
19,166 |
25,803 |
52,010 |
Share based compensation |
- |
- |
18,487 |
18,487 |
Other income and expense: |
- |
- |
- |
|
Gain on sale of assets |
6,250 |
- |
- |
6,250 |
Interest and accretion |
77,387 |
74,494 |
114,466 |
266,347 |
Unrealized loss (gain) on marketable securities |
- |
- |
167,804 |
167,804 |
Other income and expense |
- |
- |
5,440 |
5,440 |
Net income (loss) before tax |
740,430 |
307,722 |
(855,693) |
192,459 |
Tax |
2,951 |
34,067 |
- |
37,018 |
Net income after tax |
737,479 |
273,655 |
(855,693) |
155,441 |
|
Three months ended |
|
|
January 31, |
|
Adjusted EBITDA Reconciliation |
2022 ($) |
2021 ($) |
Net income (loss), as reported |
155,441 |
(915,065) |
Add back realized fair value amounts included in inventory sold |
1,010,478 |
169,328 |
Add back (deduct) unrealized fair value gain (loss) on growth of biological assets |
(1,289,514) |
186,806 |
Add back amortization of property & equipment included in cost of sales |
147,463 |
159,545 |
|
23,868 |
(399,386) |
Add back interest and interest accretion expense, as reported |
266,347 |
256,884 |
Add back amortization of intangible assets, as reported |
- |
4,997 |
Add back amortization of property and equipment, as reported |
52,010 |
38,155 |
Add back share-based compensation |
62,296 |
132,448 |
Add back (deduct) unrealized loss (gain) on marketable securities, as reported |
167,804 |
(302,808) |
Add back (deduct) unrealized loss (gain) on derivative liability |
319,627 |
|
Add back income tax expense |
37,018 |
- |
EBITDA before other adjustments |
609,343 |
49,917 |
Performance incentive bonus payment |
179,685 |
- |
Severance and inactive employee compensation |
61,077 |
- |
Business development incentive bonus |
153,825 |
- |
Adjusted EBITDA |