- Significant revenue growth of 105%, resulting in record revenues of $2.4 million
- Record revenue for sixth consecutive quarter
- Gross margin percentage increased to 41%
- Positive adjusted EBITDA of $5,000 (A)
Kelowna, BC – April 28, 2020 – GTEC Holdings Ltd. (TSX-V:GTEC) (OTCQB: GGTTF) (FRA: 1BUP) (“GTEC”, the “Company” or “GTEC Cannabis Co”) announces it has reported its First Quarter of Fiscal 2020 results. The Company continues its overall strategy of expanding distribution of its premium cannabis products across Canada, driving robust quarterly sales growth, augmented by strong fiscal discipline.
The Company would also like to announce that effective immediately, it has rebranded from GTEC Holdings Ltd. to GTEC Cannabis Co. This rebranding reinforces the Company’s strategy, focus and dedication to become a sector-leading, profitable premium cannabis company.
GTEC Cannabis Co is pleased to present the following results for the First Quarter of Fiscal 2020:
Key Financial Highlights of Q1 2020
All figures are compared to the Company’s most recent fiscal quarter (Q4 2019)
- Significant revenue growth of 105%, from the sale of 391 kilograms (“KG”) of cannabis, resulting in record revenues of $2.4 million
- Achieved record revenue for the sixth consecutive Fiscal Quarter
- Gross margin increased by 233% to $965,000 (net of excise tax), while gross margin percentage increased from 26% to 41%
- Recreational adult-use cannabis sales increased by 430% to $1.2 million which accounted for 50% of all sales, compared to 19%
- Average recreational cannabis selling price increased by $0.17 to $9.42 per gram
- Overall weighted average selling price increased by $0.35 to $6.24 per gram
- Cash cost of production decreased by $0.75 to $2.22 per gram(B)
- Production increased by 15% to 502 KG of cannabis
- Operating expenses increased 13% to $1 million as the Company invested capital into the launch of its recreational cannabis brand portfolio (excluding non-cash items such as depreciation, amortization and share based payments)
- Net loss of $815,000, representing a 70% decrease from $2.6 million
- Positive adjusted EBITDA of $5,000(A)
“We are very proud to be achieving rapid sales growth at a time when many in the sector are experiencing revenue contraction” said Norton Singhavon, Founder and CEO of GTEC. “Our success continues to be driven by our unwavering commitment to producing the finest quality cannabis flower in Canada.”
Key Corporate Highlights of Q1 2020
- Cannabis products continue to sell out quickly within retail channels
- Sold all cannabis that was available for sale, while maintaining favourable selling prices
- BLK MKT continues to be one of the top selling brands in B.C., and continues to be the highest priced single gram product offered on BC Cannabis Stores
- Continued to increase yields and THC levels on harvests, with Cherry Punch achieving record THC levels of 28%
- Three licensed cultivation facilities, totaling approximately 39,000 square feet, are now fully operational, with Q2 2020 harvests expected to drive increased revenue growth during Q2 and Q3 2020
- Completed the successful transition from commercial cultivars to unique premium cultivars, resulting in the Company entering Q2 2020 solely producing its unique premium cultivars
Key Subsequent Events of Q1 2020
- During the months of March and April 2020, the Company implemented a series of measures designed to help maintain business continuity during the COVID-19 Coronavirus pandemic
- During the months of March and April 2020, the Company hired 12 new employees at its Alberta Craft Cannabis subsidiary in response to demand for its recreational packaged cannabis products
- In March 2020, the Company achieved record capacity utilization of 64% (based on: actual dried flower harvested / estimated dry flower capacity), and anticipates reaching full production capacity in the near future
- During March 2020, the Company’s Tumbleweed Farms subsidiary harvested a lot of Cherry Punch which subsequently tested at 30.7% THC – establishing a new record for the Company
- On 4/20 (April 20, 2020) the Company launched its BLK MKT™ brand web-site (www.blk-mkt.ca)
- On April 28, 2020 the Company launched its new corporate web-site (www.gtec.co), under its new corporate brand “GTEC Cannabis Co.”
A copy of the Management Discussion & Analysis and Financial Statements for the First Quarter of Fiscal 2020 can be downloaded from GTEC’s SEDAR profile.
Note (A) Adjusted EBITDA is a non-IFRS measure and the Company calculates adjusted EBITDA from continuing operations as net income (loss) before interest expense, income taxes, depreciation and amortization (per the statement of cash flows), unrealized gain (loss) on changes in fair value of biological assets, equity loss on investment in associate, loss on sale of assets, investment loss and share based payments. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. The most directly comparable measure to adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. See reconciliation of “Adjusted EBITDA (non-IFRS measure)” in the Company’s Management’s Discussion and Analysis for the period ended February 29, 2020 for additional information.
Note (B) Cash cost of production is a financial performance measure used by the Company, which is not defined by and does not have any standardized meaning under IFRS. Cash costs to produce dried cannabis per gram is equal to production costs of dried cannabis less amortization, packaging costs and distribution costs divided by gram equivalents of cannabis produced in the quarter. Management believes this measure provides useful information as it removes noncash amortization and packaging costs and provides a benchmark of the Company against its competitors.
The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and prospects in a similar manner to the Company’s management. As there are no standardized methods of calculating these non-IFRS measures, the Company’s approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
About GTEC Cannabis Co
GTEC Cannabis Co is a specialized cannabis company which produces and distributes ultra-premium cannabis products in Canada. The Company has four licensed and operational assets and is currently distributing cannabis through medical and recreational sales channels.
GTEC’s exclusive cultivar collection includes rare and unique phenotypes, which are not currently available from other Licenced Producers. GTEC’s premium and ultra-premium product portfolio includes; BLK MKT, TM Tenzo TM, GreenTec TM, Cognōscente TM and Treehugger TM.
The Company wholly owns operations in BC, Alberta and Ontario, and is licensed by Health Canada for the following: sales into recreational supply chains, direct sales to medical patients, bulk sales to other Licenced Producers, extraction, and analytical testing.
GTEC is a publicly traded corporation, listed on the TSX Venture Exchange (GTEC), OTCQB Venture Market (GGTTF) and Frankfurt Stock Exchange (1BUP). The Company’s headquarters is located in Kelowna, British Columbia.
To learn more about the Company or to access the most recent Corporate Presentation, please visit our website at www.gtec.co
For additional information, please contact:
GTEC Cannabis Co.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:
This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals, where applicable and the state of the capital markets. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. For instance and among other things, there can be no assurance that: the Company will achieve full production capacity which is expected to drive increased revenue growth in the second and third quarter 2020; the Company will increase average selling prices and gross margins by transitioning from bulk B2B cannabis sales to CPG cannabis sales (via Provincial sales channels); the Company will continue to have demand for BLK MKT branded products; the Company will achieve profitability or significant growth each quarter; the Company will be able to settle its outstanding liabilities and debt obligations in the 2020 fiscal year; production and sales will increase quarter-over-quarter; Grey Bruce and Tumbleweed will enter into full production; management will be successful in further reducing expenditures; the Company will be able to reduce expenditures in the 2020 fiscal year and strengthen its balance sheet; the Company will become cash flow positive; production, capacity or efficiency estimates or sales projections will be met; the Company’s selling price and gross margin will increase; unforeseen construction, harvest or delivery delays will not occur; the Company’s combined annual output will meet expectations; the Company’s genetic portfolio will deliver a sustainable competitive advantage and provide favourable gross margins or that the Company will be able to establish long-term brand equity and consumer loyalty; and there will be continued demand for the Company’s flower. Accordingly, readers should not place undue reliance on forward-looking statements, which speak only as of the date of this news release. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
This news release refers to certain financial performance measures that are not defined by and do not have a standardized meaning under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. These non-IFRS financial performance measures are defined in the MD&A. Non-IFRS financial measures are used by management to assess the financial and operational performance of the Company. The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and prospects in a similar manner to the Company’s management. As there are no standardized methods of calculating these non-IFRS measures, the Company’s approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.