Clever Leaves Holdings Inc. (Nasdaq: CLVR) (“Clever Leaves” or the “Company”), a leading multinational operator and licensed producer of pharmaceutical-grade cannabinoids, today reported financial and operating results for the second quarter ended June 30, 2021. All financial information is provided in US dollars unless otherwise indicated.
Second Quarter 2021 Summary vs. Same Year-Ago Quarter
- Revenue increased 89% to $3.7 million compared to $1.9 million, driven by both core segments of the Company.
- All-in cost per gram of dry flower equivalent was $0.22 compared to $0.11, attributed to ramping early-stage operations in Portugal.
- Gross profit increased 157% to $2.3 million, reflecting a 63.6% gross margin.
- Net loss was $(9.0) million compared to $(8.8) million.
- Adjusted EBITDA (a non-GAAP financial measure defined and reconciled herein) improved to $(5.8) million compared to $(6.7) million.
“Our second quarter performance marked sustained progress towards our long-term vision, as we continued to optimize our positioning within the global cannabinoid supply chain,” said Kyle Detwiler, CEO of Clever Leaves. “The nearly 4x year-over-year growth of our cannabinoid segment, as well as continued recovery from COVID-related challenges affecting our non-cannabinoid business, drove our revenue growth during the quarter, while our market-leading cultivation and production efficiencies led to improvements in adjusted EBITDA. We increased the depth and breadth of our global partnership network by sending our first commercial flower shipment to Australia, and we also marked our entrance into the Mexican market through a new commercial partnership. With these advances, all of our operational units, including the U.S., Colombia, Portugal and Germany, are now producing revenue. Through our progress in expanding our international export footprint, and our sustained focus on product quality and operational efficiency, we have built a solid foundation from which to capitalize on further growth opportunities.
“In both Colombia and Portugal, our cultivation operations continued to produce at industry-leading cost levels and supply a growing roster of partners around the world. While our operations in Portugal are still in their early days and continuing to ramp, we have already successfully leveraged our GACP certified production to forge a partnership with IDT Australia Limited (ASX: IDT) to deliver our low-cost, high-quality medicinal flower products to Australian patients. Through our new supply partnership with CBD Life, a distribution and brand-building company for cannabis-derived products in Mexico, we have formed a key relationship in that market and widened the distribution network for our active pharmaceutical ingredient (API) products. Our robust and growing portfolio of pharmaceutical-quality cannabinoid products allows us to create new opportunities to expand our range of supply partners. To this end, we announced our U.S. research initiative, Project Change Lives, pledging up to $25 million of medical cannabis products to any eligible U.S. research organization studying the potential medical benefits of cannabinoids, beginning with our first partnership announced with UC Davis. Across our new and core geographies, we are proud to be addressing both the supply and research knowledge gaps surrounding medical cannabis, as well as positioning Clever Leaves to play a meaningful role in this burgeoning segment of the cannabis industry.
“Subsequent to the quarter, we enhanced our liquidity position through a $25 million financing from Sunstream Bancorp, a joint venture sponsored by Sundial Growers, Inc. (Nasdaq: SNDL), which was used towards the full repayment of our 2022 convertible notes at 90% of par value, generating over $3 million in savings from the repayment at a discount as well as the reduction in interest rates. From a regulatory standpoint, we are pleased by the Colombian government’s new decree allowing the export of medical cannabis flower from the country, a historic milestone that has the potential to double our total addressable market. With our Colombian cultivation already EU GMP certified for dry flower production, and significant greenhouse capacity already constructed, we believe we are well positioned to leverage our experience in flower sales from our Portuguese operation to capitalize on this regulatory development. We look forward to leveraging our operational advantages as we prepare to add this latest offering to our international product portfolio.
“The journey towards realizing the full economic potential of our operating model will be enhanced by new partnerships and new geographies. We will continue to operate with maximum production efficiency while evaluating new opportunities that arise from regulatory developments across the globe. I am extremely proud of our team’s commitment to driving our business development efforts and maintaining our high-quality products and processes, and we will work to continue executing on these fronts in the second half of 2021.”
Second Quarter 2021 Financial Results
Revenue in the second quarter of 2021 increased 89% to $3.7 million compared to $1.9 million for the same period in 2020, driven by strong performance across both the cannabinoid and non-cannabinoid segments, the former of which increased nearly four times compared to the prior year period. The non-cannabinoid segment also generated strong year-over-year growth as a result of Herbal Brands’ continued recovery from pandemic-related impacts.
All-in cost per gram of dry flower in the second quarter of 2021 was $0.22 per gram, compared to $0.11 for the same period in 2020. The increase was driven by continued production costs associated with ramping early-stage operations in Portugal.
Gross profit in the second quarter of 2021 increased significantly to $2.3 million compared to $0.9 million for the same period in 2020. Gross margin in the second quarter of 2021 was 63.6% compared to 46.8% for the same period in 2020. This was largely due to Herbal Brands’ aforementioned revenue growth within the non-cannabinoid segment.
Operating expenses in the second quarter of 2021 were $12.0 million compared to $8.2 million for the same period in 2020. The increase is attributable to higher share-based compensation expenses, which grew by approximately $3.0 million, as well as insurance and professional fees related to being a public company.
Net loss in the second quarter of 2021 was $9.0 million compared to a net loss of $8.8 million for the same period in 2020. This was despite a general increase in expenses that was primarily attributable to the costs associated with operating as a public company.
Adjusted EBITDA in the second quarter of 2021 improved to $(5.8) million compared to $(6.7) million for the same period in 2020. The increase was primarily driven by the aforementioned gross profit growth, as well as continued cost control measures, including cultivation and production efficiencies.
Cash, cash equivalents and restricted cash was $57.1 million at June 30, 2021, compared to $79.5 million at December 31, 2020. This is primarily attributed to operating losses and capital investments during the year.
2021 Outlook
Based on continued momentum achieved through the first half of 2021 on expansion, execution on the revenue pipeline and cost containment measures, the Company continues to believe that it is on track to achieve its 2021 plan. Revenue is expected to be between $17 million to $20 million with gross margin of approximately 61%, and adjusted EBITDA in the range of $(24) million to $(26) million, inclusive of costs associated with being a public company, as well as capital expenditures of approximately $10 million.
Conference Call
Clever Leaves will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2021.
Clever Leaves management will host the conference call, followed by a question and answer session.
Conference Call Date: August 12, 2021
Time: 5:00 p.m. Eastern time
Toll-free dial-in number: 1-800-891-9945
International dial-in number: 1-212-231-2905
Conference ID: 21996432
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.
The conference call will be broadcast live and available for replay here.
A telephonic replay of the conference call will also be available after 8:00 p.m. Eastern time on the same day through August 19, 2021.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 21996432
