Flora Growth (FLGC) 28 Nov 222022 Q3 Earnings call transcript

Hello, everyone, and welcome to the Flora Growth Third Quarter 2022 Earnings Results Webcast. I'm Jessie Casner, Chief Marketing Officer at Florida Growth. Please note this webcast is recorded and will be published for viewing shortly after the end of the webcast.

On the call with me today are Luis Merchan, Chief Executive Officer and Chairman of the Board; Jason Warnock, Chief Commercial Officer; and Elshad Garayev, Chief Financial Officer. Today, we will discuss the results of the third quarter of 2022. Form financial XX, the the XXXX the of unaudited months and SEC our disseminated cover September we ended were a morning statements release. three for nine under our This earnings and X-K, filed with be Copies EDGAR. Investor Relations and in section of found the Flora's of both website can on forward-looking you subject to are remind to webcast, like which during this management’s and statements, uncertainties. prepared I’d that remarks may contain risks

future guarantee be performance and reliance undue not them. don’t therefore placed should upon statements Forward-looking

or factors could to statements SEC cause the no filed made maybe required results circumstances XXXX. undertakes obligation of differ materially The statements publicly forward-looking under X, actual the applicable description any to made, the during securities detailed For correct that company to on or law. May presentation with forward-looking events Form our from except update the refer as to future please XX-F reflect

company's will measures adjusted Finally, in its today, on certain certain expenses Such the management are and call IFRS Flora and EBITDA to of Chief Officer financial release. And my adjusted from measures to financial financial please explained Growth's Executive in that, the introduce EBITDA Flora as excludes Luis Board, non-IFRS refer Merchan. the non-IFRS Chairman pleasure with which note results. it's earnings margin, such

markets world leader be to quality a you to be us create here want and introduction, safe, the Flora, in across accessible the welcome, to seek the to Jessie, providing high have cannabis for are to taken with We the time today. Thank everyone. benefits the globe. We cannabis you everyone. appreciate we of At where

the a was quarter company. third record period for The

across and revenue execute meaningful strategic we're metrics. than million the which XXXX. first-time led very the in third to reported entirety quarter of million during milestone. quarter, approximately improvements the initiatives for continue this during over in key we XXXX. our $XX deliver This of more alone the we Today, financial generated quarter represents This one to number $XX.X on we revenue of all We is proud

quarter our integration XX.X% increased amongst This gross to optimize XX.X% our including others M&A was inventory to third third from last (ph). Additionally, management the margin year. due operations, to and efficiencies quarter improved across compared

to expect Wholesale revenue, sales and Life of selling realize and top No JustCBD Cap. we included us of revenue types line our Sciences. and sales. cost of the representing meaningful momentum. build to that volatile head geopolitical across as our clear upward an Commercial three we these of We were this year. Flora of we savings Vessel integration accomplished has and of integration the and JustCBD, improvements we while more environment pillars the capital and uncertain This meaningful despite continue our accomplished House continues challenging This quarter our It's delivered balance House a into the improvements finalized total brands This new strategic pillar, Brands growth that and regulatory fourth market, helped from climate. than Momentum a XX% Brands, synergies. of top In Vessel

Commercial our is facility acre the On Colombia cultivation Wholesale XXX in front, fully operational.

harvesting lowest now the the cost and of structures are under operating We one globe. cannabis weekly we on a are high-THC in basis,

States, in operational throughout that XXXX. and remainder of upcoming intend on countries for These awarded high-THC XXXX path we Germany regulatory more of already quota to to were of announcements list a through we This We Colombia. add to regulatory this for by and tons to have the months. cleared Colombian the of government, leverage changes significant the and cannabis industry come XX milestones the countries export, expect year, heels the positive the United we the five in

added Controls key Board Financial and our and enhancing of Garayev, also key milestones former Corporate executive these our roster, JPMorgan achieve to Brandon Amazon Konigsberg, appointed we Elshad As executives our our further a and former Governance as our our Officer, units, capabilities. to we Directors Financial across Boeing business executive core Chief

has XXXX and in with in active with been operations today. into agreement the Cap. the and definitive on legal, pharmaceutical medical announced import to a Franchise month, important the JustBrands the to and in world M&A we acquisitions cannabis medicinal most this Flora Health, cannabis market acquire Finally, Global a front No of distribute primary Earlier Germany distributor licenses

at in to to with expect both based close XXXX. and transformative of a $XXX we this on company's in have for acquisition million revenues We XXXX, mid-December expect our least company for guidance

Our outstanding third results of Elshad of hard and the With our everyone. over directors and talents Garayev, to hand you, CFO, and Thank around our dedication the quarter work, momentum staff I'll board the are the our for world. product review that, XXXX. it financial of performance to management, of

last well primarily driven profit margin XX.X% operating by margins Gross and increased improved as Vessel. Thank significantly on in were a period XXXX XX.X% third same to to of last inventory acquired third sales expenses Operating in JustCBD period XXXX, in improved expanding marketing first from approximately from to quarter businesses, the was significantly our of of path year-to-date Increase margin our million to in all primarily signal by was CapEx new the first million. you, for XXX.X% gross year-over-year profitability. to growth cost Luis. ability $X.X to driven $X.X to optimize increase in investments objectives. from $X.X in year. to also period's from QX Flora compared Revenue of loss sales million to are mix Net in compared and lab quarter The increased year. half same compared driven million in period $X.X and pricing. our the year the expenditures ago. this EBITDA in for million our negative QX compared expanded primarily million improved quarter by result XXX% our enabling deliver negative was reflecting million $XX.X The which organically to as our our year-over-year period EBITDA a the third Adjusted XXXX decrease The completion $X.X XXXX, Adjusted from business. last and XX.X% XX.X% million was year infrastructure, QX approximately operations, channels us product the was a in million operations. and XXX% to the the million $X in were $XX in to negative prior same administrative OpEx in in year. $X.X of negative $X.X the

balance our to Turning sheet.

company as acquired as transactional million operating and decrease The and and $XX.X the to activities. JustCBD for expansion Officer, equivalents Today, to XX, million cash cash time With primarily XXXX. compared expenses paid higher As the M&A will to Chief lab debt of of to of sales December September XX, marketing as $X.X over that, expenses one- cash for and was our attributed related businesses of million Flora were acquisition well it Casner. I now related Jessie cost free. operations, our channels remains Marketing of hand $XX

target to distribution opening streams of the that Flora's Brands allow to markets the and Since chains, cannabis, new our building regardless been up of has inception, of Elshad. status meaningful revenue of legal drive bases. supply House networks, value consistent you, entry Thank customer

bear this strategy We continue fruit. see to

XX% direct-to-consumer wholesale and year-over-year saw Flora's margins driven and attributed Brands performance and in than margin Both of revenues quarter strong House the by growth sales, experienced record third improvement. of JustCBD and more division, majority The with Vessel. improvement with being being the to brands

in and closures factory to synergies and been preparation see cost we smooth our for realize season. factory supplier between housed our consolidation first and overseas in supply one business for to chain under reflect continue and from better demand and brands have have XXXX, are to our of QX. inventory also the consolidated, general logistics over holiday and We out teams revenue primary leveraged given the in expansion. and been roof the increase last of units fulfillment half where scale. quarter position XXXX demand channel Sales economies expect In through the the in relationships increase all XX% revenue of inconsistencies get to administrative reductions, We now QX ending heightened early position an driving

cultivation acquired third Co. based No creating cash product pass now Cap and expanded Cap and existing No operations acquisition our product retailers wholesale offering. has offering it during we with commercial the Hemp novel royalty over in Commercial brand. Officer, I'll bolstered been opportunities Chief quarter, is for JustCBD the new business. This penetration to no access our on Additionally, elaborate clientele. our Jason the Warnock, to into to integrated

Republic. Luis Switzerland CBD U.S. the and on, and Czech exported we into As successfully isolate dried into flower touched the

of we as of to ability cultivation and activation realize global Our team testament goals growing quickly our is Flora to distribution our export full and list partners. as a the the did

and strategic M&A Our our activity regulatory strong connections.

all three to government for growers meet Although cultivate of Colombian the specifically our by the April cannabis the of cannabis was of into this able and flower we strain cannabis high-THC one to passage export of are export four We dried regulations one the delayed were year. for ability international cannabis for fall Today, goal psychoactive actively and to cultivars of exporting XXXX. balanced harvesting the in flower markets. cultivating strains of a including

network expect distributors have supply of is THC EU in fully pathway these us the and their bulk the Global have Life specifically will in existing in the fully acquisition and flower European other and to XXXX THC foothold to the seeking program. engaged we now hand being products, commercial towards it Kingdom, isolate, of activation beginning through producing for as countries export where to of To XXXX. of our CBD are Health. are certification produce flourish. European certification commercial wholesale activate realize fit the we Colombia actively The as of the Germany, partners dry long pathways and for EU discuss our building into to to of any purposes in market, I QX beyond. cannabis in actively this will and flower, into term of approved for Sciences pharmacies, United continue redirected medical domestic Luis Franchise CBD channel a going Additionally, engaged pending strategically QX Union. we export within Switzerland to well derivatives U.S. the distillates efforts the dry strategy Leveraging Flora Flora markets our the GMP provide back our potential progress our chain

you, Thank Jason.

is Life of the mentioned, industry. development of part the we've Sciences, critical our of and cannabis research As medication future a

this quarter. achieved milestones have key We two

Colombia. cannabis First, was facility derivatives completed we traditional custom with square capabilities products just medicinal foot grade serve have and INVIMA our prescription including of cannabis ago. Alongside construction Flora treat medications anxiety we our lab in cannabis X, commercial. Bogota, market the science launch then a have in Flora number greater master of formulations formulated new and to weeks acne. completed of expanding a are These to X, the medications awaiting the as and lab Located ailments, formulated to to X,XXX formulas now lab eight backed manufacture social are few certification

Life research our our our revenues core completes early this With our fourth begin prescription that operational again completed, these business unit. year. call of the Sciences this expect successful and all I thank division as for could want from And steps as operational we attending formulations realizing quarter you today. to via updates

the am our formative the execute track to the engaging has strategic headwinds, company on I to M&A quarter meet our goals XXXX across third activity Our last meaningful our say months. been XX We're on to are that revenue we million. XX and XX to continuing macro for time of and million a guidance despite remain proud

full of brands consumer we supply world's revenues acquisition for base. XXXX, Colombian throughout We was as these cannabis our our to of a on household high-THC our on In will expansion of quality grown hyper integration of have opportunity quarter. and each the see targets, demand products. focused realizing the meet course our last been year full accelerate this and of the year and The we high and the of focused of activation the CBD

where bets of are for Franchise pending Health signal the we of future. acquisition placing is Our Global our a

across in but boundaries, is geographic Our the advantageous cannabis hemmed globe. the in not cannabis locations future and demand growing to by most move the of is where where areas

like, set supply company international standard and to of to the thank from want this sincere to bodies, day we apart benefits setting entire other and to you course, an our are Board cannabis to Flora working promoting shareholders, looks and of players where I continuously world international our research, reality. our customers, our of Flora continue team. create working practices a to growth make the accessible that scientific the our everyone are exists streamline industry, best what the a Directors every We ourselves cannabis with appending supporting in offer chain.

Thank Luis. This remarks. prepared you, completes our

within Investor recording reminder, webcast for Flora hours of again XX a Center. Growth’s call. the As attending XXXX be you Thank quarter available third on this will all Flora earnings Growth results