Indiva Reports Record Second Quarter Fiscal Year 2020 Results
ONDON, Ontario, Sept. 01, 2020 (GLOBE NEWSWIRE) — Indiva Limited (the “Company” or “Indiva”) (TSXV:NDVA) (OTCQX:NDVAF), a leading Canadian producer of cannabis edibles and other cannabis products, is pleased to announce its financial and operating results for second quarter fiscal 2020 ended June 30, 2020. All figures are reported in Canadian dollars ($), unless otherwise indicated. Indiva’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). For a more comprehensive overview of the corporate and financial highlights presented in this press release, please refer to Indiva’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended June 30, 2020, and the Company’s Condensed Consolidated Interim Financial Statements for the Three and Six Months Ended June 30, 2020 and 2019, which are filed on SEDAR and available on the Company’s website, www.indiva.com.
We are pleased to report robust sequential and year-over-year revenue growth, and improved and positive profit margin in the second quarter of 2020.
Niel Marotta, President and Chief Executive Officer of Indiva
We added provincial agreements with Manitoba, New Brunswick, and Yukon Territory, expanding Indiva’s distribution network to eight provinces and one territory. This quarter also saw the launch of our INDIVA™ CBD Softgels, as well as Bhang® CBD-Dominant Milk Chocolate.
He also added, “Bhang® products continue to be top-selling edibles and high-velocity SKUs across Canada. We also secured more than $1.1 million of initial purchase orders to date for Wana™ Sour Gummies, which are set to be available in stores across the country in September. With multiple top-tier products both in the market and on their way, we are looking forward to capitalizing on our success and earning more consumers’ loyalty by continuing to provide the highest quality cannabis products to Canadians.”
- Gross revenue in Q2 2020 was $2,826,487 representing a 24.8% sequential increase from Q1 2020, and a 1273.7% increase year-over-year from Q2 2019.
- Net revenue in Q2 2020 was $2,559,704 representing a 27.1% sequential increase from Q1 2020, and a 1375.3% increase year-over-year from Q2 2019 driven primarily by sales of Cannabis 2.0 products.
- The Company realized $128,900 in tolling revenue attributable to processing and service arrangements.
Gross margin before fair value adjustments was $21,478 versus a loss of $(342,531) in Q1 2020, due to cost savings and efficiencies from capital investments. Adjusted gross margin would have been $119,873 pro-forma to reflect the new royalty agreement with Bhang®.
- Operating expenses decreased by 30.9% versus Q2 2019 and declined 11% sequentially versus Q1 2020 to $1.6 million, primarily due to improved cost control and capitalization of costs related to production.
- Bhang® Chocolate sales totaled $1,540,720, net of excise taxes in the quarter.
- Bhang® Chocolate remained the top-selling chocolate in most major markets.
- Currently, Indiva has distribution agreements in place with eight provinces and one territory.
Events Subsequent to Quarter End
- More than $1.1 million of initial purchase orders were secured for Wana™ Sour Gummies.
- Commercial production of Wana™ Sour Gummies began, with deliveries of the first three SKUs to provincial wholesalers expected in early September. The initial launch will include Mango Sativa,
- Watermelon Hybrid, and Strawberry Lemonade 1:1 flavours.
- Indiva secured an agreement with CannMart Inc., a wholly owned subsidiary of Namaste Technologies Inc., which will see INDIVA™ CBD Softgels and INDIVA™ Indica Capsules available on CannMart’s B2C distribution channel for their medical customers by the end of August, with Bhang® Chocolate and
- Wana™ Sour Gummies to follow later in the year.
- Indiva entered into an amended license agreement with Bhang®, giving the Company the exclusive right to manufacture and sell Bhang® THC-infused chocolate products in Canada, and the non-exclusive right to export those products internationally.
- Indiva made its first shipments of Artisan Batch premium cannabis to provincial wholesalers.
- The Company identified upwards of $1 million of annual cost savings and efficiencies which will begin to positively impact financial results as early as Q3 2020.
- On July 29, 2020, Indiva announced the extension of the maturity of its senior debt to October 31, 2021.
- On August 10, 2020, Indiva announced completion of its equity financing, closing on a final tranche of $4.17 million for a total of $5.18 million.
- Working capital has substantially improved as a result of the extension of the senior debt and completion of the equity financing.
Company Updates and Outlook
Quality First: Indiva began shipments of craft cannabis under the Artisan Batch brand. The cannabis is sourced through the Company’s partnership with BC Craft Supply Co. Ltd. (“BC Craft”) (CSE: CRFT), finding craft and micro-cultivation gardens which pride themselves on the quality, potency and terpene profile of their strains. Indiva intends to follow up this launch with further high-potency flower SKUs to be sold nationally under the INDIVA™ brand, representing the best of Canadian cannabis.
Sweet, Salty, and Sour: Indiva is set to release Ruby® Cannabis Sugar and Sapphire™ Cannabis Salt as early as Q4 2020, adding to its market-leading portfolio of edibles. Ruby® and Sapphire™ use Crystal Fusion Technology™, which mechanically fuses cannabinoids within the crystal structures of sugar and salt. Indiva also intends to introduce Jewels sweet-and-sour candies. Jewels combine Ruby® Cannabis Sugar with real fruit to create a delightful candy. In addition, Indiva will be delivering further Wana™ Sour Gummies SKUs, which are vegan and gluten-free. Wana™ gummies lead the United States edibles market in dollars sold. These new products will help position Indiva as one of Canada’s most innovative cannabis companies.
Big Bhang: Bhang® Chocolate remains the leader in the edibles category in multiple provinces, and the release of Bhang® Caramel Dark Chocolate THC/CBD 1:1 will help hold this position in the market. Indiva’s strategy to partner with trusted and proven brands is backed up by Bhang®’s market-leading performance.
On a Roll: Indiva completed installation of an automated pre-roll line at its production facility in London. This addition will allow the Company to increase output of Indiva’s pre-rolls and introduce additional SKUs, as well as improve efficiency and profitability.
OPERATING AND FINANCIAL RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2020
Government and private entities are still assessing the present and future effects of the COVID-19 pandemic. Indiva has continued to operate with enhanced health and safety protocols in place to protect its employees. The Company continues to assess the customer, supply chain, and staffing implications of COVID-19 and is committed to making continuous adjustments to minimize disruption and impact. Indiva will remain proactive in its response to the pandemic and compliant with any and all provincial and/or federal policy enacted to protect Canadians.
Indiva sets the standard for quality and innovation in cannabis. As a Canadian licensed producer, Indiva creates premium pre-rolls, flower, capsules, and edible products and provides production and manufacturing services to peer entities. In Canada, Indiva produces and distributes the award-winning Bhang® Chocolate, Wana™ Sour Gummies, Ruby® Cannabis Sugar, Sapphire™ Cannabis Salt, Artisan Batch, and other Powered by INDIVA™ products through license agreements, partnerships and joint ventures. Click here to connect with Indiva on LinkedIn, Instagram, Twitter and Facebook, and here to find more information on the Company and its products.