– $58.5 million in Adjusted Sales,1 for first six months of 2021 –
– Q2 revenue increased 13% over Q1 2021 –
– Reduced short term obligations through repayment of approximately US$18 million of debt and restructuring of over US$20 Million into long term debt –
TORONTO, Aug. 30, 2021 (GLOBE NEWSWIRE) — Red White & Bloom Brands Inc. (CSE: RWB and OTCQX: RWBYF) (“RWB” or the “Company”), a multi-state cannabis operator and house of premium brands, is pleased to report select second quarter (Q2, 2021) financial results and subsequent events. The Company will be filing its Q2 2021 financial statements and related Management’s Discussion and Analysis (“MD&A”) today.
Brad Rogers, Chairman & CEO commented, “We continue to make great strides with our branded products and see momentum in Q2, which has teed up Q3 nicely, and will translate into a strong second half. In Florida, after closing the acquisition at the end of April, we have made strategic investments that are allowing us to quickly ramp up capacity as well as complete construction for new store openings before the end of 2021.
“Under IFRS, revenue for the second quarter was up 13% over the first quarter of this year. Even with the growth in recognized revenue, it’s important to note that in the second quarter, there were a number of significant raw material inventory purchases made to support growth for Q3 and in anticipation of new branded product line launches; we want to point out that, under IFRS, these purchases reduced recognized revenue for PV in Michigan. We continue to present the Adjusted Sales to assist investors in understanding the growth and demand for our brands in the US cannabis market.
“The second quarter does not include any operating results from our investee in Michigan. As previously mentioned, we are completing our revised asset purchase of our Michigan investee to bring their revenue as well as adjusted sales into IFRS revenue format before the end of this current quarter. Once those are complete, and the expansion of our Florida operations come on stream, we expect to see strong quarterly results reported for the Company going forward.”
Q2 Highlights
- RWB received Florida Department of Health, Office of Medical Marijuana Use approval and closed on the acquisition of Acreage Florida, which is licensed to operate medical marijuana dispensaries, a processing facility, and a cultivation facility in the state of Florida. The transaction included a 114,000 SF facility for cultivation and a 4,000 SF freestanding administrative office building located on 15 acres in Sanderson Florida.
- Secured 30 double wide fully enclosed cultivation pods that collectively provide approximately 19,000 square feet of turn-key cultivation space, with 14,400 square feet of canopy capable of producing in excess of 7,000lbs of flower annually, as well as thousands of pounds of trim and shipped them to Florida.
- RWB completed the more comprehensive portion of Michigan’s two-step application process, or “prequalification”, for medical marijuana licensing through a wholly owned operating subsidiary, RWB Michigan, LLC.
- Completed US$52 million in financing transactions and retired US$7.7 million of debt.
Q2 Subsequent Event Highlights
- Closed on the acquisition of an operational 45,000 square foot greenhouse situated on 4.7 acres of land in Apopka, Florida. RWB expects a Q4 2021 harvest schedule at this facility.
- Exercised the Company’s option to extend the maturity of its Credit Facility to January 2022, the Company has the option to further extend to July 2022.
- Retired approximately $US10 million of debt.
- Entered into agreements to restructure US$20 million of debt, expected to close over first week of September 2021, which will see the maturity date moved to January 2023.
The Company reports adjusted sales for the first six months of $58.5 million. Revenue for Q2, 2021 was $13.3 million compared to $11.8 million in Q1, 2021, an increase of 13% vs Q1, 2021. Gross Margin (excluding adjustments for biological assets) was $9.5 million in Q2, 2021.
The Company utilizes a 3rd party licensee in Michigan. As per the licensing agreement, the revenue the Company can recognize is product sales less inventory purchases and direct expenses. As a result, the Company’s revenue in Michigan is always understated by inventory purchases made and direct expenses incurred during the period. In the first quarter of 2021, product sales in just Michigan increased by 18% from the prior quarter, and the Company significantly increased inventory purchases to secure sufficient inventory which reduced revenue as per the licensing agreement. This timing difference in revenue will continue until the Company becomes fully licensed in Michigan. Once the Company is licensed in Michigan, the Company will be able to recognize full product sales as revenue under IFRS. As such, Investors are provided adjusted sales1 for additional insight into the results of the Company’s performance.
