Indiva Reports Record Third Quarter Fiscal Year 2020 Results
11/26/2020
LONDON, Ontario, Nov. 26, 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 the third quarter fiscal 2020 ended September 30, 2020. All figures are reported in Canadian dollars ($), unless otherwise indicated.
“We are pleased to report record revenue and significantly improved gross margins in the third quarter of 2020, driven by the introduction of Wana™ Sour Gummies across Canada” said Niel Marotta, President and Chief Executive Officer of Indiva. “Our business has gained considerable momentum and we expect revenue growth to accelerate significantly in fiscal Q4 2020, driven by sales and purchase orders in hand, and continued strong sell through of Indiva products at the retail level.
Data from Hifyre indicates that, within the edibles category, Indiva holds leading market share in BC, Alberta, Saskatchewan and Ontario. Fiscal Q4 2020 has already shown significant sequential growth, with October 2020 net revenue exceeding September’s record monthly net revenue of $2.0 million, and gross margin before fair value adjustments approaching 30% in the month.
November net revenue is on track to exceed October, based on purchase orders in hand. Gross margin before fair value adjustments is expected to continue to rise, and approach 30% for fiscal Q4 2020. Further significant additional gross margin improvement is expected in Q1 2021, as the Company begins to benefit from sharply lower distillate costs.
Indiva’s focus on quality, and specifically on licensing and producing award-winning products is bearing fruit, and we look forward to continuing to provide of-age Canadians with exceptional cannabis products.”
HIGHLIGHTS Quarterly Performance
Gross revenue in Q3 2020 was $3.42 million representing a 22% sequential increase from Q2 2020, and a 1,600% increase year-over-year from Q3 2019. Net revenue in Q3 2020 was $3.03 million representing a 19% sequential increase from Q2 2020, and a 1,500% increase year-over year from Q3 2019, driven primarily by sales of Cannabis 2.0 products.
Net revenue from edible products grew to $2.18 million representing 72% of net revenue in Q3 2020, up 42% from $1.54 million in Q2 2020.
Gross margin before fair value adjustments and impairments improved to $0.67 million or 22.2% of net revenue versus nil in Q2 2020 and 14.5% in Q3 2019, due to a shift in product mix to higher margin products and improved operational utilization.
Operating expenses decreased by 21% versus Q3 2019 and decreased by 30% versus the nine months ended September 30, 2020, primarily due to improved cost control and capitalization of costs related to production. Comprehensive net loss included one-time expenses and non-cash charges including losses on non-refundable deposits and disposal of equipment totaling $1.27 million. Excluding these charges, comprehensive loss declined to $2.3 million versus $2.6 million in Q3 2019.
The Company closed the final tranche of its $5.18 million equity private placement on August 10, 2020.
Indiva also announced the extension of the maturity of its senior debt to October 31, 2021. As a result, working capital has substantially improved as compared to June 30, 2020.
Operational Highlights
Indiva began commercial production of Wana™ Sour Gummies in August of 2020 and began shipments to provincial wholesalers in September 2020. Wana™ Sour Gummie Sales in fiscal Q3 2020, all of which occurred in the month of September, accounted for $1.23 million or 41% of net revenue in the quarter.
Indiva signed a Supply Agreement with the Yukon and began shipment of products.
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, as well as Bhang® Chocolate and Wana™ Sour Gummies.
Indiva entered into an amended license agreement with Bhang®, replacing the previous JV, giving the Company the exclusive right to manufacture and sell Bhang® THC-infused chocolate products in Canada. Indiva made its first shipments of Artisan Batch premium cannabis to provincial wholesalers.
Events Subsequent to Quarter End
Indiva secured an agreement with Medical Cannabis by Shoppers™, a subsidiary of Shoppers Drug Mart Inc. making Bhang® Chocolate and Wana™ Sour Gummies available through the Medical Cannabis by Shoppers™ platform.
October monthly net revenue came in at a record $2.3 million, with gross margin before fair value adjustments exceeding 29%.
Sell through data from Hifyre for the month of October 2020 shows strong sell-through of Indiva products. With a 32% share of sales, Indiva now leads with the #1 market share position in the edibles category: • Ontario #1 with 36% market share. • Alberta #1 with 30% market share. • British Columbia #1 with 27% market share. • Saskatchewan #1 with 37% market share. • Wana Sour Gummies led the Gummies category with $1.94M in retail sales or 18% share. • Bhang led the chocolate category with $1.22M in retail sales. • Product Ranking in October showed the top 3 SKUs are Wana™ Sour Gummies (led by Strawberry-Lemonade) and 5 of the Top 10 SKUs are from Indiva.
Indiva began shipments of ICC under the INDIVA™ brand to Saskatchewan, Ontario, Alberta and British Columbia. ICC is a high-potency THC strain with a strong terpene profile.
