Christina Lake Cannabis Corp. (the “Company” or “CLC” or
“Christina Lake Cannabis”) (CSE: CLC) (OTCQB: CLCFF)
(FRANKFURT: CLB) is pleased to report its financial
results for the second quarter ended May 31, 2023 (“Q2’23”). All
amounts are expressed in Canadian dollars unless otherwise noted.
Q2’23 Highlights
- Revenue up 36% to $1.4M over prior
year period; increase of 81% over Q1’23
- Distillate volumes sold increased
by 118% compared to the six-month period ending Q2’22
- Gross margin of $2.3M or 42.8%
before fair value adjustments for the six-month period
- Decreased G&A expenses by $188k
or 8% from prior year period
“In Q2, our dedication to executing strategic
initiatives has been validated through an impressive surge in sales
growth of 36%,” said Mark Aiken, Chief Executive Officer of
Christina Lake Cannabis. “As we advance into the second
half of Fiscal 2023, we maintain our unwavering commitment to
meeting the escalating sales demand for our premium distillate
products while driving operating efficiencies throughout our
processes, and to expand our product lines available to our valued
customers.”
OPERATIONAL AND FINANCIAL
HIGHLIGHTS
|
May 31, 2023 |
May 31, 2022 |
$ Change |
% Change |
Revenue from the sale of goods |
$ |
5,393,905 |
|
$ |
3,973,811 |
|
$ |
1,420,094 |
|
36 |
% |
Costs of sales |
|
(3,085,255 |
) |
|
(1,772,279 |
) |
|
1,312,976 |
|
74 |
% |
Gross profit before fair value adjustment |
|
2,308,650 |
|
|
2,201,532 |
|
|
107,118 |
|
5 |
% |
Changes in fair value of inventory sold |
|
(1,681,269 |
) |
|
(669,282 |
) |
|
1,011,987 |
|
151 |
% |
Gross profit |
|
627,381 |
|
|
1,532,250 |
|
|
(904,869 |
) |
(59 |
%) |
General and administrative expenses |
|
(2,097,451 |
) |
|
(2,286,208 |
) |
|
(188,757 |
) |
(8 |
%) |
Other items |
|
(514,060 |
) |
|
(40,184 |
) |
|
473,876 |
|
1179 |
% |
Income (loss) |
|
(1,984,130 |
) |
|
(794,142 |
) |
|
(1,189,988 |
) |
150 |
% |
|
|
|
|
|
Income (loss) per share |
|
(0.02 |
) |
|
(0.01 |
) |
|
|
|
|
|
|
|
Gross margin % |
|
42.8 |
% |
|
55.4 |
% |
|
|
|
|
|
|
|
Financial Position |
|
|
|
|
Working capital |
|
1,715,664 |
|
|
7,576,188 |
|
|
|
Inventory |
|
4,144,802 |
|
|
6,273,722 |
|
|
|
Total assets |
|
16,991,415 |
|
|
17,986,504 |
|
|
|
Total liabilities |
|
7,765,284 |
|
|
6,126,917 |
|
|
|
|
|
|
|
|
|
|
|
|
Distillate volumes sold increased by 118% from
the comparative period ending Q2’22 resulting in revenue growth of
36% to $5.4M from $4.0M despite market price compression in the
price of distillate. Revenue growth was driven by an expanding
customer base with increased demand in distillate inputs for both
vape and infused pre-rolls.
Gross Margin Before Fair Value Adjustments was
42.8% compared to 55.4% in the prior year period. The decline in
gross margin is primarily attributed to a significant drop in the
price of wholesale distillate. Cost of goods sold increased by 74%
from the comparative period due to the significant increase in
distillate volume produced and sold as noted above. The Company
continues to work towards production efficiencies to combat price
compression in the wholesale distillate market as production and
sales continued to ramp up.
Total general & administrative (“G&A”)
expenses declined by $189k or 8% from prior comparative period,
driven by year-over-year reductions in management fees, marketing,
share based compensation and repairs and maintenance expenses.
G&A decreased to 39% of revenue during the period, compared
with 58% in the prior year.
Loss and comprehensive loss in Q2’23 was $(2.0M)
which is a $1.2M increase from the prior year period loss of
$(794k). The year-over-year increase in loss is primarily driven by
an increase in changes in fair value of inventory sold, and
reduction in income from other items relating to a one time
settlement of $258k in the comparative period.
Cash and Working Capital
As at May 31, 2023, the Company had working
capital of $1,715,664 (November 30, 2022 – $3,683,558) which
consisted of cash of $1,531,378 (November 30, 2022 - $1,810,639),
receivables of $2,183,575 (November 30, 2022 - $1,906,820), prepaid
expenses of $19,432 (November 30, 2022 - $3,885), inventory of
$4,144,802 (November 30, 2022 - $5,766,418). Current liabilities,
being accounts payable and accrued liabilities, current portion of
loan and current portion of convertible debentures, $6,163,533
(November 30, 2022 – $5,832,954).
About Christina Lake Cannabis
Corp.
Christina Lake Cannabis is a licensed producer
of cannabis under the Cannabis Act. It has secured a standard
cultivation license and corresponding processing amendment from
Health Canada (March 2020 and August 2020, respectively) as well as
a research and development license (early 2020). Christina Lake
Cannabis’ facility consists of a 32-acre property, which includes
over 950,000 square feet of outdoor grow space, offices,
propagation and drying rooms, research facilities, and a facility
dedicated to processing and extraction. Christina Lake Cannabis
also owns a 99-acre plot of land adjoining its principal
site. CLC focuses its production on creating high quality
extracts and distillate for its B2B client base with proprietary
strains specifically developed for outdoor cultivation to enhance
extraction quality.
On behalf of Christina Lake
Cannabis:
“Mark Aiken”Mark Aiken, CEO
For more information about CLC, please
visit: www.christinalakecannabis.com
Jennifer SmithInvestor Relations and Media
Inquiriesinvestors@clcannabis.com902-229-7265
THE CANADIAN SECURITIES EXCHANGE (“CSE”) HAS NOT
REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ACCURACY OR
ADEQUACY OF THIS RELEASE, NOR HAS OR DOES THE CSE’S REGULATION
SERVICES PROVIDER.
Non-IFRS Financial Measures
In this news release, the Company reports "Gross
Margin Before Fair Value Adjustments", a financial measure that is
not determined or defined in accordance with the International
Financial Reporting Standards, as issued by the International
Accounting Standards Board ("IFRS"). Gross Margin
Before Fair Value Adjustments does not have a standardized meaning
prescribed by IFRS and the Company's methods of calculating this
financial measure may differ from methods used by other companies.
Accordingly, such non-IFRS financial measure may not be comparable
to similarly titled measures presented by other companies. This
measure is provided as additional information to complement IFRS by
providing a further understanding of operations from management's
perspective and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS.
This data is furnished to provide additional
information and are non-IFRS measures and do not have any
standardized meaning prescribed by IFRS. The Company uses these
non-IFRS measures to provide shareholders and others with
supplemental measures of its operating performance. The Company
also believes that securities analysts, investors and other
interested parties, frequently use these non-IFRS measures in the
evaluation of companies, many of which present similar metrics when
reporting their results. As other companies may calculate these
non-IFRS measures differently than the Company, these metrics may
not be comparable to similarly titled measures reported by other
companies.
Forward Looking Statements
This news release contains statements that
constitute "forward-looking statements." Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements,
or developments in the industry to differ materially from the
anticipated results, performance or achievements expressed or
implied by such forward-looking statements. Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the words "expects",
"plans", "anticipates", "believes", "intends", "estimates",
"projects", "potential" and similar expressions, or that events or
conditions "will", "would", "may", "could" or "should" occur.
Although the Company believes that the expectations and assumptions
on which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking
statements because the Company can give no assurance that they will
prove to be correct. Since forward-looking statements address
future events and conditions, by their very nature they involve
inherent risks and uncertainties. These statements speak only as of
the date of this News Release. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks including various risk factors discussed in the
Company’s disclosure documents which can be found under the
Company’s profile on http://www.sedar.com. Should one or more
of these risks or uncertainties materialize, or should assumptions
underlying the forward-looking statements prove incorrect, actual
results may vary materially from those described herein as
intended, planned, anticipated, believed, estimated or expected.
The Company does not intend, and does not assume any obligation, to
update these forward-looking statements except as otherwise
required by applicable law.
Financial Outlook
This news release contains a financial outlook
within the meaning of applicable Canadian securities laws. The
financial outlook has been prepared by management of the Company to
provide an outlook for the Company's operational cash flow for the
month ended May 31, 2023 and may not be appropriate for any other
purpose. The financial outlook has been prepared based on a number
of assumptions including the assumptions discussed under the
heading "Forward-Looking Statements". The actual results of the
Company's operations for any period will likely vary from the
amounts set forth in these projections and such variations may be
material. The Company and its management believe that the financial
outlook has been prepared on a reasonable basis. However, because
this information is highly subjective and subject to numerous
risks, including the risks discussed under the heading
"Forward-Looking Statements", it should not be relied on as
necessarily indicative of future results.
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