– Q3 2021 Revenue Increases to a Record $4.0 Million –
– Gross Profit Increases 22% Year-Over-Year, Gross Margin up 1,000 Basis Points to 62.9% –
– Cultivation Facility Expansion in Portugal Completed Ahead of Schedule and On Budget, Providing Additional Capacity to Support Growing Global Partner Base –
BOCA RATON, Fla., Nov. 10, 2021 (GLOBE NEWSWIRE) — Clever Leaves Holdings Inc. (Nasdaq: CLVR, CLVRW) (“Clever Leaves” or the “Company”), a leading multinational operator and licensed producer of pharmaceutical-grade cannabinoids, is reporting financial and operating results for the third quarter ended September 30, 2021. All financial information is provided in US dollars unless otherwise indicated.
Third Quarter 2021 Highlights vs. Same Year-Ago Quarter
- Revenue increased 3% to $4.0 million compared to $3.9 million, driven by continued strength within the non-cannabinoid segment.
- All-in cost per gram of dry flower equivalent remained flat at $0.15, attributed to the sustained ramp of early-stage operations in Portugal.
- Gross profit increased 22% to $2.5 million, reflecting a 62.9% gross margin, a 1,000 basis point increase.
- Net income was $1.0 million compared to a net loss of $(6.1) million.
- Adjusted EBITDA (a non-GAAP financial measure defined and reconciled herein) was $(6.0) million compared to $(3.7) million.
“Our third quarter performance was marked by key operational advancements that have positioned us for continued execution towards our long-term growth strategy,” said Kyle Detwiler, CEO of Clever Leaves. “We maintained year-over-year growth across revenue and gross profit as our U.S. nutraceutical business continues to recover from the lows of the pandemic last year. In our cannabinoid segment, we were pleased with our progress with our early commercial ramp with customers, though we continue to experience variability around the timing and size of our shipments, which can cause our sales activity to fluctuate from quarter to quarter. In Europe, a market of growing global importance, we have continued our progress scaling our Portugal cultivation operations and improving our positioning within several core international markets. As global markets develop, we aim to continue leveraging our production advantages and growing base of international partners to further establish Clever Leaves as a supplier of choice within the global cannabinoid supply chain.
“We have made meaningful progress strengthening our operational foundation and maintaining our production efficiencies. I am proud to announce that we completed construction on our Portugal cultivation facility expansion during the quarter, which provides us with an additional 150,000 square feet of cultivation. This expansion both increases our capacity and offers additional opportunities for enhancing product quality and innovation, including stabilizing and validating new cannabis genetic varietals. The cultivation expansion was completed ahead of the expectations we previously provided, as well as on budget, and we anticipate Portuguese licensing for the cultivation expansion in the next quarter or two. We also believe we remain on track to have our new post-harvest facility in Portugal operational and EU GMP certified by the end of 2022. In Colombia, our EU GMP-certified operations and cost-effective production puts us in a strong position to take advantage of the presidential decree allowing for the commercial production and export of medical cannabis flower, which was signed in late July. We have begun commercial preparations for the export of flower, and we believe the commercial relationships and experience developed in currently selling flower from Portugal will accelerate success with this new opportunity. We remain closely attentive to further legislative and regulatory developments around this approval and look forward to having our Colombian operations complement our already strong Portuguese flower production over time.
“In terms of opening up new avenues for commercialization, we secured a supply partnership with a local healthcare pharmaceutical distributor group in Colombia subsequent to the quarter to provide cannabinoid formulations for the distribution of magistral medications. We are proud to provide locally grown and produced ingredient products to support Colombian patients, and we will work to explore additional opportunities within Colombia’s domestic cannabis market. Following the launch of our Project Change Lives initiative in June, we have already announced U.S. research partnerships with the University of California, Davis and the University of Missouri. Subsequent to the quarter, we also exported a commercial shipment of high-THC cannabis flower from Portugal to the U.S. for use in pharmaceutical development projects, positioning Clever Leaves as one of the first companies ever to commercially ship dried flower from Portugal to the U.S. We are striving to strengthen our legal pathways to the U.S. and use our pharmaceutical grade products to help advance important research, development, and production processes within this market.
“As we look ahead, we remain focused on continuing to expand our distribution footprint across new and emerging markets worldwide and leveraging our strong production efficiencies across Colombia and Portugal. We are grateful for the support of our partners and shareholders as we work to continue delivering on our long-term growth strategy.”
Third Quarter 2021 Financial Results
Revenue in the third quarter of 2021 increased 3% to $4.0 million compared to $3.9 million for the same period in 2020, driven by continued strong performance within the non-cannabinoid segment, which generated strong year-over-year growth as a result of Herbal Brands’ continued recovery from pandemic-related impacts. The increase was partially offset by a decrease in cannabinoid segment revenue compared to the year ago period.
All-in cost per gram of dry flower in the third quarter of 2021 remained flat at $0.15 per gram compared to the same period in 2020. This performance was achieved by continued cost efficiencies in the Company’s Colombian production operations, offset by sustained production costs associated with ramping early-stage operations in Portugal.
Gross profit in the third quarter of 2021 increased 22% to $2.5 million compared to $2.1 million for the same period in 2020. Gross margin in the third quarter of 2021 increased significantly to 62.9% compared to 52.9% for the same period in 2020. The increase was primarily due to Herbal Brands’ aforementioned revenue growth within the non-cannabinoid segment.
Operating expenses in the third quarter of 2021 were $12.2 million compared to $6.8 million for the same period in 2020. The increase was primarily driven by higher share-based compensation expenses, which grew to approximately $3.3 million compared to $0.5 million in the year-ago period, as well as insurance and professional fees related to being a public company.
Net income in the third quarter of 2021 increased significantly to $1.0 million compared to a net loss of $(6.1) million for the same period in 2020. The increase was primarily attributable to gains on re-measurement of warrant liability of $9.1 million, as well as gains on debt extinguishment, in part offset by the aforementioned increase in expenses attributable to higher share-based compensation expenses and the costs associated with operating as a public company.
Adjusted EBITDA in the third quarter of 2021 was $(6.0) million compared to $(3.7) million for the same period in 2020. The decrease was primarily driven by higher public company expenses.
Cash, cash equivalents and restricted cash was $46.2 million at September 30, 2021, compared to $79.5 million at December 31, 2020. The decrease was primarily attributable to continued operating losses and capital investments during the year.
The Company also reduced its total debt by over $7.5 million during the third quarter of 2021.
Revised 2021 Outlook
Due to product, shipment, and supply chain delays, Clever Leaves has revised its revenue outlook and now expects 2021 revenue to be between $14 million and $16 million, compared to its previously stated range of between $17 million and $20 million. As the Company maintains its focus on prudent cost control and continued operational efficiency, Clever Leaves continues to expect full year 2021 gross margin to be approximately 61% and has narrowed its full year adjusted EBITDA forecast from $(24) million to $(26) million to $(24) million to $(25) million. The Company also continues to expect capital expenditures of approximately $10 million for the year.
Conference Call
Clever Leaves will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2021.
Clever Leaves management will host the conference call, followed by a question and answer session.
Conference Call Date: November 10, 2021
Time: 5:00 p.m. Eastern time
Toll-free dial-in number: 1-844-826-3033
International dial-in number: 1-412-317-5185
Conference ID: 10161398
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 November 17, 2021.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10161398
