SLANG Worldwide Announces First Quarter 2023 Financial Results

Positive EBITDA of $0.68 million in Q1 FY2023, compared with ($2.36 million) in Q1 FY2022¹

Achieved positive operational cash flow in Q1 FY2023 for the second consecutive quarter, and on track to generate positive operational cash flow in Q2 FY2023^1,2

Adjusted gross profit of $5.68 million (52% adjusted gross margin) in Q1 2023, compared with $3.64 million (43% adjusted gross margin) in Q1 2022, a 56% increase year-over-year¹

Toronto, Ontario–(Newsfile Corp. – May 24, 2023) – SLANG Worldwide Inc. (CSE: SLNG) (OTCQB: SLGWF) (“SLANG” or the “Company“), a leading global cannabis consumer packaged goods (CPG) company with a diversified portfolio of popular brands, today released financial results for the three months ended March 31, 2023. All figures in this press release are stated in Canadian dollars unless otherwise noted. 

“SLANG’s results from Q1 FY2023 again demonstrated the strength of the SLANG business model and our ability to thrive in the country’s most competitive cannabis markets, and create a differentiated financial profile. By operating in a flexible and scalable manner to effectively compete in each specific cannabis market where we operate, we have now produced positive Adjusted EBITDA, our first quarter of positive EBITDA, our second consecutive quarter of positive operational cash flow, and our highest quarterly adjusted margins to date, of 52%. We anticipate this positive momentum to continue through fiscal 2023 as we further elevate our market position and continue to drive top and bottom-line results,” commented John Moynan, Chief Executive Officer of SLANG.

“Our core markets of Vermont and Colorado continue to outperform expectations, with our portfolio of leading brands fueling solid sales growth. In fact, we achieved our strongest sales growth in Colorado in the first quarter with sales increasing 12% year-over-year. Our ability to continue driving high-margin revenue from our Core Markets positions these operations as the financial backbone of our Company, allowing us to be aggressive in driving brand performance nationally through our Emerging Markets,” Mr. Moynan concluded.

First Quarter 2023 Operational Highlights and Growth Drivers: 

• Generated positive operational cash flow in Q4 FY2022 and Q1 FY2023, achieving two consecutive quarters of positive operational cash flow¹.
• In the first two O.pen promotions of Q1 2023, the Company saw its top 5 highest volume accounts deliver a 30-66% year-over-year sales lift. This was driven by a new strategic marketing approach in 2023, concentrated on structured, brand-driven promotions during key sales periods throughout the year.
• Launched O.pen and Alchemy Naturals into the Vermont wholesale market, a significant near-term growth opportunity.
• In April 2023, expanded into the new market of West Virginia, launching operations through strategic partnerships with leading, high-quality premium cannabis brands and operators.

First Quarter 2023 Financial Highlights

• Revenue from continuing operations for the three months ended March 31, 2023, was $10.82 million, compared with $8.37 million in the three months ended March 31, 2022, representing a 29% increase year-over-year. The primary drivers of the increase were due to an increase in our Core Market sales of $2.05 million in Vermont and $0.78 million in Colorado, offset by a reduction in Emerging Market sales. The increase in Vermont was driven by the opening of the Company’s CERES Collaborative dispensary on October 1, 2022, Vermont’s first recreational cannabis store. 
• Gross profit of $5.72 million (53% gross margin) in Q1 2023, compared with $3.66 million (44% gross margin) in Q1 2022, representing a 56% increase year-over-year. Adjusted gross profit¹ was $5.68 million (52% adjusted gross margin) in Q1 2023, compared with $3.64 million (43% adjusted gross margin) in Q1 2022, representing a 56% increase year-over-year.
• EBITDA¹ of $0.68 million in Q1 2023, compared with ($2.36 million) in Q1 2022. The improvement in EBITDA is primarily attributable to a $2.06 million increase in gross profit and a $0.55 million decrease in share-based payments. Further reductions in operating expenditures such as consulting and subcontractors also contributed to the improvement in EBITDA.
• Adjusted EBITDA¹ of $0.74 million in Q1 2023, compared with ($1.64 million) in Q1 2022. The improvement in Adjusted EBITDA is primarily attributable to a $2.04 million increase in gross profit before fair value adjustments of biological assets. Further reductions in operating expenditures such as consulting and subcontractors also contributed to the improvement in Adjusted EBITDA.
• $11.67 million in cash and restricted cash on March 31, 2023, compared to $11.92 million on December 31, 2022. Excluding deferred cash consideration of $0.33 million paid in connection with the Company’s acquisition of High Fidelity Inc. (“HiFi”), the Company was operational cash flow positive in the three months ending March 31, 2023¹.

First Quarter 2023 Financial Review

The consolidated financial statements were prepared in accordance with IFRS. The following is a selected presentation of the Income Statement for the three months ended March 31, 2023. 

See the Company’s management’s discussion and analysis for the three months ended March 31, 2023 (the “Q1 2023 MD&A“) for a detailed reconciliation of EBITDA and Adjusted EBITDA to Operating Income / (Loss). SLANG’s financial statements and the Q1 2023 MD&A are available on SEDAR at www.sedar.com, and on the Company’s Investor Relations website at www.slangww.com.