Indiva Remains the National Market Share Leader
in the Edibles Category
Indiva Limited (the "Company" or "Indiva")
(TSXV:NDVA), the leading Canadian producer of cannabis edibles, is
pleased to announce its financial and operating results for the
first fiscal quarter ended March 31, 2024. 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 news release, please refer to Indiva's
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Three Months Ended March 31, 2024,
and the Company's Condensed Consolidated Interim Financial
Statements for the Three Months Ended March 31, 2024 and 2023,
which are filed on SEDAR+ and available on the Company's website,
www.indiva.com.
"We are very pleased with our performance in the first quarter
of 2024, our seasonally weakest quarter. Indiva’s business has
transformed in the last year, as greater than 50% of our net
revenue, specifically the revenue from Wana which has declined due
to the transition to contract manufacturing, and the elimination of
revenue from lozenges, has been replaced in the last 12 months. Now
that these difficult cross currents have subsided, Indiva is
positioned to demonstrate sustainable organic growth in its core
brands without fighting against the loss of revenue from Wana and
lozenges," said Niel Marotta, President and Chief Executive Officer
of Indiva. "Growth in our core brands, namely Pearls gummies, where
depletions in the big three provinces have more than doubled
year-over-year, and the continued growth of the No Future and Blips
brands, more than offset the loss of net revenue caused by the
movement to contract manufacturing of Wana and the discontinuation
of lozenges caused by regulatory requirements. Greater than 30% of
our net revenue in Q1 2024 was derived from brands created and
owned by Indiva, including Indiva 1432 Chocolate, Indiva Blips
tablets, Indiva Doppio Sandwich Cookies, and No Future Gummies and
Vapes, up from 20% of net revenue in Q1 2023. Indiva remains
committed to product innovation that will support both industry and
edible category growth and we have a robust pipeline of new
products across No Future, Pearls and Indiva Blips brands which
will hit market between June and September of 2024."
HIGHLIGHTS
Quarterly Performance
- Gross revenue in Q1 2024 was $10.6 million, representing a
15.2% sequential decrease from Q4 2023, and a 2.6% increase
year-over-year from Q1 2023.
- Net revenue in Q1 2024 was $9.3 million, representing a 14.1%
sequential decrease from Q4 2023 due to seasonal factors, and a
0.9% decrease year-over-year from Q1 2023, driven primarily by
strength in core brands, including Pearls by Gr�n, where net
revenue grew by greater than 160% year-over-year, as well as strong
contribution from No Future gummies, which was offset by weaker
revenue from Wana Sour Gummies, which reported 85% lower net
revenue year-over-year, due to the transition to contract
manufacturing in June of 2023. The loss of revenue from lozenges,
due to Health Canada's removal from market, following a
determination that these are edible products, reduced net revenue
in the quarter by greater than $1.3 million versus Q1 2023. In
aggregate, the decline in Wana and loss of lozenge revenue totalled
$4.9 million of net revenue. This reduction in net revenue from
Wana and lozenges was more than offset by growth in Pearls by Gr�n
and the introduction of No Future gummies and vapes, which in total
accounted for greater than $5.2 million of incremental net revenue
in the quarter.
- Net revenue from edible products was $8.4 million in Q1 2024,
or 89.7% of net revenue, up 14.5% from $7.3 million in the prior
year period, driven by strength in core brands offset by weakness
in Wana.
- Gross profit increased 18.4% to $2.8 million or 29.7% of net
revenue compared to $2.3 million or 24.8% of net revenue in Q1 2023
due to lower impairments of inventory and positive mix impact.
Gross profit before inventory write-down was $2.8 million or 29.8%
of net revenue, a decrease versus Q4 2023 and a 11.9% decrease
versus Q1 2023, driven by one-time adjustments in property taxes
and an increase in overhead costs.
- In Q1 2024, Indiva sold products containing 186 million
milligrams of cannabinoids, the active ingredient in its products,
which represents a 14.7% decrease when compared to the 218 million
milligrams in product sold in Q4 2023, and a 66.3% increase
compared to 112 million milligrams sold in Q1 2023.
- Impairment charges in the quarter totaled $17,450, a record
low, driven by process improvement and an impairment recovery on
certain raw materials. This impairment includes a write off of
products that did not meet the Company's quality standards and aged
finished goods.
- Operating expenses in the quarter decreased 0.7% year over year
to $3.2 million, or 34.4% of net revenue versus 28.9% in Q4 2023
and 34.3% in Q1 2023.
- EBITDA was a loss of $0.2 million in the quarter. Adjusted
EBITDA decreased sequentially in Q1 2024 to a profit of $0.1
million, versus a profit of $1.5 million in Q4 2023, and a profit
of $0.4 million in Q1 2023. See "Non-IFRS Measures", below.
- Comprehensive net loss was $1.8 million in Q1 2024 and included
one-time expenses and non-cash charges including inventory
impairments. This is an improvement from a loss of $2.3 million in
Q1 2023. Excluding these charges, comprehensive loss declined to
$1.6 million in Q1 2024 or EPS of ($0.01) versus a loss of $1.3
million in Q1 2023 or EPS of ($0.01).
Market Share
- Data from provincial wholesalers for the first quarter of 2024
shows Indiva’s leadership in the edibles category continues. Indiva
holds the #1 ranking in market share by sales and units sold in the
edibles category across British Columbia (31.5% share), Alberta and
Ontario (27.6% share) driven by continued growth of Pearls by Gr�n
gummies, No Future gummies, Bhang Chocolate, 1432 Chocolate and
Doppio Sandwich Cookies. Indiva also holds the #1 SKU ranking by
sales and units sold in the edibles category with Pearls Blue
Razzleberry 3:1 CBG/THC gummies followed by the #2 SKU with
Blackberry Lemonade 1:1:1 CBN/CBD/THC gummies.
Operational Highlights for the First Quarter 2024
- No Future gummy performance: Since their introduction in August
2023, Indiva has sold greater than 4 million No Future gummies.
Aggregate weekly depletions for No Future gummies continue to rise,
as the brand and its value proposition continue to gain awareness
with consumers and budtenders.
- LIFE financing: On March 4, 2024, Indiva announced the closing
of its previously announced private placement offering pursuant to
the listed issuer financing exemption pursuant to Part 5A of
National Instrument 45-106 – Prospectus Exemptions, first announced
on January 22, 2024, and then amended and restated on February 28,
2024, pursuant to which the Company issued 9,060,000 units of the
Company for aggregate gross proceeds of $906,000.
- New Product Introductions:
- No Future: Indiva launched four additional No Future 1.2g 510
vapes including Grape Ape Indica, Peach Punch Sativa, Tropical
Island Haze Sativa, and Pink Grapefruit Kush Indica, bringing total
No Future vape SKUs in market to nine. Additionally, the Company
launched three new No Future gummy flavours, including the Red One
and the Pink One. Additionally, the Company launched No Future
Fatty Patty, an innovative chocolate covered cookie dough edible
with 10mg THC.
- Blips: Indiva has launched a 55-pack to complement the existing
25-pack of these innovative tablets. The 55-pack is available in
Alberta and British Columbia, with the Ontario launch slated for
June 2024.
- Pearls: Indiva launched Pearls Lemon Dream CBN 25-pack, which
follows on the success of Marionberry CBG 25-pack, and Peach Mango
CBD 25-pack. Lemon Dream is now available in licensed stores in
British Columbia, Alberta and Ontario.
Events Subsequent to Quarter End
- New product introductions:
- No Future: Indiva shipped a new gummy called No Future Stupidly
Sour Gummies to Alberta and British Columbia, with Ontario set to
launch in August and September. Stupidly Sour Gummies come in three
flavours including Arctic Meltdown Blues, Key Lime Cherry Revolt
and Citrus Chaos. These additions bring total No Future gummy SKUs
in market to ten.
- Indiva Blips: Indiva broadened its offering of Indiva Blips
Tablets, with two additional new 20-count SKUs, one with a
cannabinoid ratio of 1:2 THC:CBG, which will ship to British
Columbia and Alberta in May, and the other with 1:1 THC:CBD, which
will also ship to Alberta in May.
- Pearls gummies: Indiva shipped a new 5-pack Pearls SKU called
Red Razzleberry. With a cannabinoid ratio of 1:1:1 THC:CBD:CBG,
this new product piggybacks on the success of the bestselling
cannabis product in Canada, Pearls Blue Razzleberry
- Loan Amendment with SNDL: As announced on April 2, 2024, Indiva
repaid $2,000,000 of the principal amount outstanding pursuant to
the amendment to the second amended and restated promissory note
between Indiva and SNDL Inc. (the "Amended Term Loan") and
shall work to reduce other current liabilities in the near term. In
consideration for the repayment of $2,000,000, the amendment
removed the Company's covenant under the Amended Term Loan to
ensure a $2,000,000 minimum unrestricted cash balance at all times.
The maturity date of the Amended Term Loan continues to be February
24, 2026.
- Engagement of Advisor: The Company has retained SSC Advisors
(the "Advisor"), as its financial advisor, to assist the
Company in the evaluation of potential strategic alternatives
intended to maximize shareholder value, including but not limited
to, financing alternatives, a merger, amalgamation, plan of
arrangement, consolidation, reorganization or other similar
transactions. SNDL and Indiva continue to act as commercial
partners and SNDL remains supportive of Indiva and this process.
SSC Advisors can be reached through Aaron Salz at
aaron@sscadvisors.com. There is no set timetable to complete the
strategic review process nor have any decisions been made relating
to strategic alternatives at this time. There can be no assurance
that the strategic review will result in any binding offer or
transaction.
Outlook
- The Company expects that Q2 2024 net revenue will be higher on
a sequential basis and year-over-year, expected to exceed $10
million, based on the strength of purchase orders from provincial
wholesalers and deliveries to date in the quarter. April 2024 was a
record month for net revenue, with growth driven by continued
strength in Pearls gummies, and the contribution to revenue from No
Future gummies and Indiva Blips tablets. Margins are also expected
to improve sequentially in Q2 2024 due to higher sales, improved
product mix and improved overhead absorption. For the fiscal year
2024, the Company expects to generate record net revenue and record
EBITDA, driven by continued strength in its core brands, bolstered
by new product introductions and continued efficiency gains at the
production facility from automation and process improvements.
OPERATING AND FINANCIAL RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 2024
Three months ended
March 31
(in thousands of $, except gross margin %
and per share figures)
2024
2023
Gross revenue
10,642.1
10,369.3
Net revenue
9,328.5
9,412.1
Gross margin before inventory
write-down
2,784.3
3,161.4
Gross margin before inventory write-down
(%)
29.8%
33.6%
Loss and comprehensive loss
1,770.1
2,252.4
Adjusted EBITDA1
119.6
414.8
EBITDA1
(191.4)
(613.1)
Earnings per share – basic and diluted
(0.01)
(0.01)
Comprehensive earnings per share – basic
and diluted
(0.01)
(0.01)
1 See "Non-IFRS Measures", below.
Operating Expenses
Three months ended
March 31
(in thousands of $)
2024
2023
General and administrative
1,573.3
1,584.7
Marketing and sales
1,270.6
1,212.0
Research and development
151.1
266.7
Share-based compensation
117.8
66.1
Depreciation of property, plant and
equipment
40.0
50.2
Amortization of intangible assets
51.9
51.9
Expected credit loss
4.9
0.5
Total operating expenses
3,209.6
3,232.0
CONFERENCE CALL - Thursday, May 23, 2024 at 10:30 a.m.
(EDT):
The Company will host a conference call to discuss its results
on Thursday, May 23, 2024 at 10:30 a.m. (EDT). Interested
participants can join by dialing 289-514-5100 or 1-800-717-1738.
The conference ID is 83291.
A recording of the conference call will be available for replay
following the call. To access the recording please dial
289-819-1325 or 1-888-660-6264. The replay ID is 83291#. The
recording will remain available until Thursday, June 20, 2024.
ABOUT INDIVA
Indiva is proud to be Canada's #1 producer of cannabis edibles.
Indiva sets the gold standard for quality and innovation with
award-winning products across a wide range of brands including
Pearls by Gr�n, No Future Gummies and Vapes, Bhang Chocolate,
Indiva Blips Tablets, Indiva Doppio Sandwich Cookies, and Indiva
1432 Chocolate. Indiva manufactures its top-quality products in its
state-of-the-art facility in London, Ontario, and has a corporate
workforce remotely distributed across Canada. Connect with Indiva
on LinkedIn or Instagram, or visit Indiva's website to find more
information on the Company and its products.
DISCLAIMER AND READER ADVISORY
General
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) has in any way passed upon the merits of the
contents of this news release and neither of the foregoing entities
accepts responsibility for the adequacy or accuracy of this news
release or has in any way approved or disapproved of the contents
of this news release.
Certain statements contained in this news release constitute
forward-looking information. These statements relate to future
events or future performance. The use of any of the words "could",
"intend", "expect", "believe", "will", "projected", "estimated" and
similar expressions and statements relating to matters that are not
historical facts are intended to identify forward-looking
information and are based on the parties' current belief or
assumptions as to the outcome and timing of such future events.
Actual future results may differ materially. In particular, this
news release contains forward-looking information relating to,
among other things, (i) the Company's outlook for and expected
operating margins and future financial results, including the
Company's ability to achieve record net revenue and EBITDA,
sequential and year-over-year growth of net revenue and to achieve
higher gross margins over time due to higher sales, improved
product mix and improved overhead absorption, (ii) the projected
growth of its business and operations (including existing and new
segments thereof), and the future business activities of, and
developments related to, the Company within such segments after the
date of this news release, (iii) additional jurisdictions within
which the Company may establish its operations or business
footprint, (iv) the Company's ability to capture and/or maintain
its market share in any jurisdiction, (v) the Company's ability to
deliver on its commitments for existing or new listings of
products, (vi) the Company's ability to benefit from its licensing
deals, (vii) the Company's ability to continue to innovate and
introduce new products, (viii) the Company's ability to monetize
any impaired inventory which remains saleable, (ix) the Company's
ability to conduct sensory evaluation trials of medicated samples
on site, (x) the Company's ability to deliver new products to the
market within a set timeframe, if at all, (xi) the proposed
telephone conference call being held by the Company on May 23,
2024, and (xii) the ability of the Company and the Advisor to
identify and evaluate strategic alternatives. Various assumptions
or factors are typically applied in drawing conclusions or making
the forecasts or projections set out in forward-looking
information. Those assumptions and factors are based on information
currently available to the Company, and include, without
limitation, assumptions about the Company's future business
objectives, goals, and capabilities, the cannabis market, the
regulatory framework applicable to the Company and its operations,
and the Company's financial resources. Although the Company
believes that the assumptions underlying, and the expectations
reflected in, forward-looking statements in this news release are
reasonable, it can give no assurance that such expectations will
prove to have been correct. A number of factors could cause actual
events, performance or results to differ materially from what is
projected in the forward-looking statements. Specifically, readers
are cautioned that forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company, as
applicable, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements, including, but not limited to, risks
and uncertainties related to: (i) the available funds of the
Company and the anticipated use of such funds, (ii) the
availability of financing opportunities, (iii) legal and regulatory
risks inherent in the cannabis industry, (iv) risks associated with
economic conditions, (v) dependence on management, (vi) public
opinion and perception of the cannabis industry, (vii) risks
related to contracts with third-party service providers, (vii)
risks related to the enforceability of contracts, (viii) reliance
on the expertise and judgment of senior management of the Company,
and ability to retain such senior management, (ix) risks related to
proprietary intellectual property and potential infringement by
third-parties, (x) risks relating to the management of growth
and/or increasing competition in the industry, (xi) risks
associated to cannabis products manufactured for human consumption,
including potential product recalls, (xii) risks related to the
economy generally, and (xiii) risk of litigation.
The forward-looking information contained in this news release
is made as of the date hereof and the Company is not obligated to,
and does not undertake to, update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, except as required by applicable securities laws.
Because of the risks, uncertainties and assumptions inherent in
forward-looking information, investors should not place undue
reliance on forward-looking information. The foregoing statements
expressly qualify any forward-looking information contained
herein.
This news release contains future-oriented financial information
and financial outlook information (collectively, "FOFI")
about the Company's prospective results of operations, which are
subject to the same assumptions, risk factors, limitations, and
qualifications as set out in the above paragraph. FOFI contained in
this news release was approved by management as of the date of this
news release and was provided for the purpose of providing further
information about the Company's future business operations. The
Company disclaims any intention or obligation to update or revise
any FOFI contained in this news release, whether as a result of new
information, future events or otherwise, unless required pursuant
to applicable law. Readers are cautioned that the FOFI contained in
this document should not be used for purposes other than for which
it is disclosed herein.
Non-IFRS Measures
This news release makes reference to certain non-IFRS measures.
These measures are not recognized measures under IFRS, do not have
a standardized meaning prescribed by IFRS, and are therefore
unlikely to be comparable to similar measures presented by other
companies. Rather, these measures are provided as additional
information to complement those IFRS measures by providing further
understanding of our results of operations from management's
perspective. Accordingly, these measures should not be considered
in isolation nor as a substitute for analysis of our financial
information reported under IFRS.
The non-IFRS measure used in this news release includes
"Adjusted EBITDA". The Company calculates Adjusted EBITDA as a sum
of net revenue, other income, cost of inventory sold, production
salaries and wages, production supplies and expense, general and
administrative expense, and sales and marketing expense, as
determined by management. Adjusted license fee eliminates 50% of
the fee which is equivalent to the Company's share of the joint
venture company to which the license fee is paid. Adjusted EBITDA
is provided to assist readers in determining the ability of the
Company to generate cash from operations and to cover financial
charges. Management believes that Adjusted EBITDA provides useful
information to investors as it is an important indicator of an
issuer's ability to generate liquidity through cash flow from
operating activities and equity accounted investees. Adjusted
EBITDA is also used by investors and analysts for assessing
financial performance and for the purpose of valuing an issuer,
including calculating financial and leverage ratios. The most
directly comparable financial measure that is disclosed in the
financial statements of the Company to which the non-IFRS measure
relates is income (loss) from operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240523428246/en/
INVESTOR CONTACT Anthony Simone Phone: 416-881-5154 Email:
ir@indiva.com
Niel Marotta, Chief Executive Officer Phone: 613-883-8541 Email:
contact@indiva.ca
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