Flora Growth Corp. [FLGC] Conference call transcript for 2023 q2
2023-08-15 11:59:10
Fiscal: 2023 q2
Operator: Thank you for standing by. This is the conference operator. Welcome to the Flora Growth Corp. Q2 2023 Results and Corporate Update Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Dany Vaiman, Chief Financial Officer. Please, go ahead.
Dany Vaiman: Thank you, operator. And good morning, everyone. On behalf of the Flora team, welcome to our Q2 2023 and corporate update conference call. Before we begin, I wish to inform listeners that certain statements to be made today by the management team may contain forward-looking information. Today’s call will include estimates and other forward-looking information and statements concerning future events, revenues, results from operations, financial position, markets, economic conditions, partnerships and any other statements that may be constructed as a prediction of future performance. The information may involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by such statements. Factors that could cause or contribute to such differences are described in details in the company’s most recent filings available on EDGAR at sec.gov and SEDAR at sedar.com. Any estimates or forward-looking information or statements provided are accurate only as of the date of this call, and the company undertakes no obligation to publicly update any forward-looking information or supply any new information regarding the circumstances after the date of this call. On the call today, we have Clifford Starke, CEO; and myself, Dany Vaiman, CFO. Following the presentation, Clifford and I will be available for the question-and-answer period. The Q3 2023 results press release and accompanying 10-Q have been filed on EDGAR and SEDAR. Also note that all amounts mentioned in this call are in United States dollars unless otherwise stated. I’ll now turn the call over to Clifford.
Clifford Starke: Thank you, Dany and good morning everyone on the line. Welcome to the Flora Growth Q2 2023 results call. I welcome by saying that we were appointed in late June for the needs in stability and direction in this challenging environment. The company’s Colombian operations were not performing and corporate overhead was larger than what gross margins could sustain. We knew we had to make changes and make them quickly. We decided to divest for its Colombian operations and we implemented $6.1 million of cost savings, which includes a significant reduction in corporate overhead. While we believe favorable regulatory outcomes around adult use cannabis are likely in both United States and Europe, and we deliver significant upside in time. We do not intend to structure Flora as a company dependent on legalization. As we continue to rebuild Flora, we believe the upside lies with the cash flow diversity and runway for growth of our core businesses, which are expected to remain cash flow positive. Just Brands operates in all 50 states, 21 countries or 50 over 20,000 distribution points globally and a wide range of products from gummies, to Delta 8, HHC and so on and so forth. It is responsible for introducing the world’s most popular CBD gummy with more CBD gummy sold than any other brand. In July, Just Brands formed an exclusive worldwide partnership with Hulk Hogan to produce and sell Hulk Hogan branded products. The deal is expected to be accretive to Flora and includes a partnership with Carma HoldCo. Carma HoldCo is the host brand behind TYSON 2.0., Ric Flair Drip and evolved by future. We expect to form additional similar partnerships with entertainers and celebrities in the near future. Vessel is the leading brand of consumer technology including vape pens, batteries, and accessories. The Vessel product base are all premium and have an extremely high loyalty factor. We anticipate saving growth for Vessel in the coming quarters. Phatebo is a German based distributor of patented brand pharmaceuticals with an outreach for 28 countries. We believe in Phatebo’s potential to become an important player in therapeutics, marketing new cannabis products to the European market to start. The downturn in the global financial markets, particularly within the cannabis space continues to be a challenge facing the industry. We remain optimistic about the sector’s long-term prospects, now it’s the time for the industry to consolidate, reduce costs and build efficient models that can withstand the impact of broader economic weaknesses. Companies who will view the current conditions as a clear indication of evolution, we’ll emerge stronger and generate higher than average returns. With that, I’m going to pass along to Dany, who will go over the financial results for the quarter. Please go ahead.
Dany Vaiman: Thank you, Clifford. Let me start by commenting that our results for the quarter both on a quarterly and year-to-date basis do not reflect the benefits of our reduced cost profile, which are expected to be filled in the quarters to come. We have reorganized our team to be lean, agile, and fit for purpose, enabling Flora to improve the expected operating cash flows. Our cost cutting and resource optimization is expected to continue and form a key part of our strategy, but without sacrificing performance. Revenues for the second quarter of 2023 were $21.5 million, an increase of 140% compared to the second quarter of 2022. In the first half of 2023, revenues were $40.8 million, an increase of 210% year-over-year. Gross profit for the second quarter of 2023 was $4.0 million, an increase of 19% compared to the second quarter of 2022. In the first half of 2023, gross profit was $9.3 million, an increase of 68% year-over-year. The growth in revenues and gross profit is driven by the inclusion of full period results for Phatebo and Just Brands, which were acquired in December 2022 and February 2022, respectively. On a consolidated basis, net loss for the quarter was $44.6 million, primarily due to the impact of impairment expenses of $34.9 million, loss from discontinued operations of $7.6 million and non-cash expenses of $1.2 million. Net loss for the first half of 2023 was $48.5 million, consisting substantially of impairment expenses of $34.9 million, loss from discontinued operations of $8.3 million and non-cash expenses of $2.7 million. As we look ahead, we will continue to prioritize Flora’s liquidity position. Considering recent market shifts and economic conditions, we intend to take proactive steps to improve our liquidity by obtaining additional financing. We believe the current market offers a generational opportunity for investment in the sector. We are confident in the trajectory we've set, and we are committed to delivering value to our shareholders. I will now hand the call back to the operator for the question-and-answer session.
Operator: Thank you. [Operator Instructions] As there are no questioners in the queue, this concludes the question-and-answer session. I would like to turn the conference back over to Clifford Starke for any closing remarks.
Clifford Starke: Thank you, operator, and thank you all for joining the call today. We look forward to continue updating you on the progress in the quarters ahead. Thank you and have a great day.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Q - : :
