Flora Growth (FLGC) 13 Aug 242024 Q2 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the Flora Growth Corp.

Second Quarter 2024 Results Conference Call. [Operator Instructions], and the conference is being recorded. like Financial the Officer. now Dany over would Chief Vaiman, Instructions] I to conference turn to [Operator Please ahead. go

Thank you, XXXX operator, of update the and call. good morning, team, conference to everyone. welcome our QX results corporate Flora and On behalf

those other and information concerning listeners SEDAR operations, sedar.com. Any estimates available statements are date provided may such implied Before to position, and to information certain and information markets, results and most differences Factors the are management cause may to the could EDGAR partnerships other date obligation no forward-looking be in financial as on forward-looking by materially to Today's information. of at statements factors The the recent accurate statements retain conditions, as by forward-looking to call. that forward-looking this such we that future after update at company's today call or wish detail estimates and in of call, constructed of performance. from any unknown begin, undertakes other from prediction company actual may that contribute a may team I and economic be described revenues, known inform cause circumstances that information or differ the risks, filings the expressed results made or future uncertainties will or publicly supply statements. the regarding information of new of this only and statements include involve sec.gov

Dany Starke, as as CFO. have Vaiman, Clifford we today, call CEO; the On well

stated and EDGAR SEDAR. call now Clifford. all mentioned turn ahead. QX the period. to Please available be been Also note unless go for United filed XXXX over otherwise. I'll this on I question-and-answer and the Following and has presentation, in in results dollars release press XX-Q Clifford States call The that are amounts accompanying will the

Conference Corporate XXXX Growth's Good Welcome Thank Call. to line. Flora and you, morning, Dany. Results the Update everyone QX the on

Let made capitalize in and the second diversify designed trends. that Flora potential partnerships where me to the further start to on robust are quarter, and inroads acquisitions market accretive growth. to see strategic for we activities actions our several most by continue building noting areas form These

first was time the and of April in The meaningful legalization team date, established seen in cannabis. key came activities with To initiatives our have TruHC stimulate acquisition the we at to and the of Germany's integration have business country. TruHC

With power market. the fastest-growing largest Germany cannabis in population boosts purchasing gracious and Europe's a Europe,

XX way XX X and With cannabis to to the German become has government expected of supply following a the the of continues phase today, cannabis is to months, pursue The expected focusing largest Germany With lead phases market programs it coming medical the federal approximately pilot indicated in legalization cannabis as medical on European chains. to well. second adult-use with German Germany regional intends globally. legalization patients commercial legal XXX,XXX in

cannabis in of history -- the in time all candidates major the important important United Controlled that the is under party Federal open reform. X this Schedule to first announced The U.S. to on reclassify Moving is federal expected rule cannabis its post Justice And administration cannabis the to reschedule department U.S. Schedule May under XXXX, to is U.S. that moving the law. proposed from X in It's are Act that emphasize the initiating to market. to Substances States to Register. presidential

would legalized in be reform. recreational of home are and expected stance. widely cannabis the favor progressive take suggested side, Governor support in President Minnesota. Walz legalization in for Kamala a has President, Harris both Tim More On his cannabis and Walz to Democratic Trump state Harris recently, Vice expressed former he

via to joint to legislation, opportunities the and capitalize the Group like we channels these We market is and that media stores. market world-class emulsion believe facilitate trends. established intends wine move partnership continues a segment, Holdings progressive Envision. beverages Flora quarter, As Cannabis-infused In currently use. positioned first-time with representing are capture technology, cannabis the This U.S. types towards a to Althea to venture cannabis-infused beverage the it the United and a of operates link U.S. liquor fraction market robust Peak, X% traditional leader market U.S.-based recognized on our in venture to beginning is very to States. access as X% and all in overtake comes of which market small will to cannabis when between is sales. team The daily Althea's beverages beverages joint CPG as alcohol beverage in

ahead. in to Dany, who discuss e-commerce Vaporizers Vaporizers that, synergies leave the please was for global the and drive become has space. a in including To Australia. go quarter. XXXX, founded accessories mark Vessel. With results on potential Another vaporizers, hardware Vaporizers remaining Australian is Flora to in largest portfolio, area online one end, brand, Australian the and our Flora's within retailers in of Dany, we I'll this the to acquired of high-end where financial pass want Australian June. our has

Thank you, Clifford.

Let Vessel that new ability second-generation me Flora made stand by which has Rise, and Compass products unveiled the several unique noting the start quarter, to in stimulate design addition to a we to acquisitions the the launched upright. in organic growth.

best-selling as in lines operating QX expenses June to ended million a for were for XXXX, gummies second XXXX the unprofitable for million quarter for relaxation, million $XX $XX.X $XX.X $XX.X JustCBD decreases XXXX, as the company's million XXXX. $XX.X to the Revenues or quarter products. Revenues compared primarily the million and million months of quarter well million compared series of sleep June decrease underscoring to the months of several $XX.X XX, $X.X the in X compared QX Total were XX, already X discontinuing second of were for introduced line a of for competition. to due These ended increased XX%. XXXX. XXXX of new an are product deliberate

Excluding impairment was expenses quarter-over-quarter decrease the noncash charges, XX%. or million operating in $X.X

were million XX%. of million expenses total year-to-date the and operating $XX.X represents decrease This periods, respectively. $XX For or XXXX $XX.X million, XXXX a and

ended assets, the cash finished capital the of consolidated quarter $X.X compared million of loss $X.X net decrease basis, $X.X to and charges, $XX.X salable $X.X an million operating the year-over-year million expenses $X.X in was the million XXXX, compared impairment X months in X XX%. quarter and quarter, inventory. or in June $X.X was million a of decrease for XX, Net was a XX%. Flora with million June noncash or million. was improvement of operating comparable XXXX, decrease in to the million million $XX.X ended XX, a or cash million the On $X XX%. Net $XX.X used working current months Excluding for million $X.X activities including in the

have wide our to of we business a for the addition, financing set stage In alternatives plan. array further fuel

margin its on XX% Compass of new sales performance In sales. earned wood products top nighttime slates, including and XX% wholesale bear contributed the and sales, XX% $X.X quarter. Phatebo wholesale gross of business-to-business. individual sales peach of added call $X.X in The JustCBD to and and several will were All for XX% the continuing million including to $X.X gross operations our brand-name In the million. XX% quarter, hand multistate customers business sales business-to-business sold to customers, profit in session. million. direct-to-consumer sales. a new the of income maintained XX% It's from gross margin XX% the of generated sales. Vessel back its was Vessel maintained divisions, terms margins Vessel products in JustCBD Approximately now a of of and added operators representing profit represented largest sales the remaining product million. with business through XXX network. Vessel from the were XX XX% for quarter, selling items and gummies. XX% in the revenue pharmaceuticals. I question-and-answer of revenues of to each X.X% quarter bear, the $X.X the of included stemmed Core operator from included sales and of direct-to-consumer

Partners. question comes from Alliance Grey with First [Operator Aaron Global Instructions]

So just EBITDA even terms in margin. tying and gross first one me, profitability, maybe of for the

So a impairment had inventory I think you there. $XXX,XXX

we the evolution we some EBITDA SKUs as think the into how think go gross forward you forward mentioned you on there, should back margins, just gross that the of ties how going to as on about go guys for exited margin, low-profit you profitability? So

handle you want do to Dany, that?

Yes.

on down our look gross that margin. gross a consolidated a basis, it to we that portfolio, And mid-XXs in probably and question, our the us increase. the in from lines number a add that we Yes, so thank expect think in on we more MD&A I call. we're fairly this as the $XXX,XXX grow gradually level, we had much profitable you as margin the looking drove on the a financial noted perspective. disclosures, joining in the and impairment and inventory sense a unusual was of thank So, you our for QX, in large quarter, for range go-forward bit to we charge which at If

right. Makes sense. All Okay.

there question the guys would fire revenue. couple have a could you on the some Second be, some and in different drive up of initiatives heat of that irons

X opportunities impact biggest P&L revenue we to seeing the So the about just as the drive growth, here? what what be are as to months could think you in near-term next

the a Like specific company? focus for

know when that more more to irons terms Would the think have longer growth Germany? I JustCBD, it different ops couple a in are you we more see trying most near-term fires, there? P&L? with about guys in a some be it what the hemping will impacts of of have be -- you dozen you issues Do what of think should it's the versus term

I becoming focused states. distribution real We dedicated the brand picked into a think in is on U.S. team up the sector. and very several beverage

to X states the fall, getting here. go we into to As to -- see relatively X we ourselves quickly continue

business together On the is the Germany, coming quite growth U.S. from. to the side, nicely. come that's going where plan's

proper put some have we're e-commerce-driven. happening realizing will that also partnerships what's place. working SKUs, it's we're And very our on the Germany, in really We

partnership, talked on and before, We besides flower, really has, you're can't cons, see have accessories, Just, what to Vessel, into forth now. But will this we established seeds, basis great one be viewers which I our on want going so a right market X.X what get far Germany. that the we platform say, actually would actually leading in probably recreational and medical and purchase cannabis market by to source within be a the they Germany, for able to to is in monthly identify million consumer about

two-pronged, facet within every say possibly Germany, the and on we're beverages touching U.S. I'd we So European market. can

from The with Securities. Sean next comes question Haywood Wong

recently what the to want from Vaporizer kind like completed perspective. does to of in left at wanted integration look process acquisition. that of what's of kind the I And touch a terms capital Australian around look Just and

Okay.

changed. back Australian with So to day, first, it transaction, Instead When more Namaste short-term Vaporizers, relatively the of back integration, doing When up in us that some end came we asset. recently. it. that very had we actually shareholders obviously, it's plan recently, the the of main quickly in was business struggles the which one closing actually the largest has I'm familiar the of I was

gone. And So a it a component, does significant a couple the a players to for well long category After are growth marketplace. reasons. which is platform. Australian Everything pharmacists second nicotine A for doing individual vessel, short the in have is their on is is the order retail us, world of which the of bit extremely the and our success term be little extremely, market even U.S. through second smaller a in lot battery the is for lot another not e-commerce largest The term the properties also getting driven doctors is, vaporizer, us. for not the hardware actually ability of market. which are to products, going of, huge example, registering for is actual confusing, the a of Pascoes a is the

really So sheet, guys Those plenty inventory. integration cost. that, not really balance bought had it's and they cash of or

issues. just shipment of there's and the aspect. came, offer on weeks catch-ups and The integrating platform to pharmacists or be integrated really everything going is I more think, vessel not would to the first I properly doctors. more ago, selections But to through X that consumers say It's

what's phase. And there basically And next of that adult-use full seeing in question and the Awesome. what seeing kind to there. to quarter how is required? expecting the coming my market that you I'm And the first are guys develop the just And are back you wondering preparation over it's Germany we're and months? kind the turning guys early of

X questions.

access has Germany, ability systems influx EU. is throughout since where of to obviously, medical outside big So even April your a just prescriptions, German in scripts had

are So all interesting is well low-quality the What's marketplace. products dependent products, as high-quality there's influx. within been price that as selling

integrating next For many it current and is ran to SKUs sourced us, couple be us. unfortunately, of our we're out traditional low-quality into months just of doing quickly. market, in flower, for one we the others relatively -- us arriving our is What X which and should high-quality, which pharmacy we've form,

is this keep we're envisioned on referring is e-commerce didn't Germany, focus continue realize yet, And we growing, to, lot it not just I and finding I'm on of on -- what to so just e-commerce trying The we're driven where which that public versus going relationship. integration-wise. but traditional. A focused really that's second to really really never opportunities

we So really adopted to closely that.

job. from on getting a on to going out. -- just of But and sold are done because the our pharmacies more is to good lot we've really SKUs come think they certain I strains people honestly platforms feeding a certain quality growth

next Kirk Bill Partners. The from with question comes Capital ROTH

wholesalers XXX you Dany, for new JustCBD. mentioned

kind and like in of base number the are number bump I adding that bump what the from kind Vessel. many new wholesalers by what wholesalers to, XXX think you for your was of in you're would sales expect? terms division, the XX XX of and How

Yes.

a good you that, for question. that's Bill. think Thank I

I obviously. scheme would you're expect in that from are increase, short think term. it overall XX,XXX X% of I at a material, to things, it a be a and there for perspective, particular think between not looking of bumping value, the close at From X% of we to dollar and if all and look we and immediate to distribution grand them the company. the But points sales business are

number in for of that that that number best the be distribution So would reflects the Just. wholesale increase

CBD of a hemp versus It some broader groups Okay. at on or the then, THC. some legislation are Cliff, of And THC there. proposed I with out the like hemp that's seems odds intoxicating have question

JustCBD in a the from success talk So conflict that in can differ how and about U.S.? maybe and you little bit for THC the opportunities hemp

Yes.

wholesale business the both think direct psychoactive atmosphere channels. are bad selling space, are that not negative of trying it's growth. or that lot for And causing on hemp real there's and trust businesses. within I -- are people trouble with way couple building The limits, a that other just to a there's I our there's and people hemps build real credibility seeds out not. we within through of their consumers, and is there issues opportunities the creating out falling or for psychoactive there operate the our

us, XXX beverage on For has like front. SKUs. now I But or and in gummies, on traditional tinctures, really, so focused more dialed so forth, our our team, before, it's really less lines the different of the on said

into going opportunity So House, a that bad lot really, obviously, a on the of real terms a focused think and more. we don't political people. on everyone actually just the on. to political the on understand. is I on selling anyways. think, it's risk there's learn companies overall. and we're which developing and I side, lot that, perfectly synthetic gummy. September The fine think the really But of be I think besides running politics, we Bill, see as the White we a tough certainly, There's huge, the it I'm don't comfortable versus noise in synthetics, fall XX. feel we'll I XXXX comment huge here, in other seeds again, worried rest, to -- growth will I about And movement

a coming little Sure. products of the that increased haphazardly. Dany, from? think to competition that, some with the competition. Cliff, pushing where And maybe what I you're of the folks mentioned some psychoactive Is referring Is is you

Yes.

There's be I whole and that Just very that so are going players understand so we other the moving running and into that. buying lot They're on I space smoke of beverage major shops really front. DX leaving, -- shouldn't and -- into the groups the think are that this a credible.

with and jail is see still And with So of while where it's walking us, the after do for and Aaron issue. selling property? govern uncomfortable extremely to hemp going in It's for political actually going dinner to alcohol. following everyone, around. forth. put switching ago, very with situation don't derivatives, situation -- this you're I similar and awkward so a into and walked MSOs So comfortable are How a standpoint, to office in we it political states now the cannabis over to New how to mean stores and CapEx unfold? feel York it's you our extremely and given understand in an prisons synthetic private finally. I really York New even derivatives, was is MSOs has from angle all small a everyone to mushroom that amounts And are for cannabis people the derivatives, is actually now so are of kind and into given I that law, I -- on the illegal

it's business. a to real -- build we're While credible just trying and trustworthy

same implemented. can it's everyone what gets to business. opposite a we're that everyone anything of think if the I following that's saw way. CB do. scare And I trying like properly, think going on the I -- page That's So get think we don't else. and governed in our be don't will

or stores starting Some obviously. are CBD retailers bay-box the feel comfortable, very [ ] to

On comfortable [ anyone notice is And that alcohol wine actually distros doing big in forth. on is the so feeling the and who wrong. saying beverage anything you're they're very and seeing toll fighting so side, ], of

better in what's right make always to and But then protect as has actually do in think as But to is the which sure in tricky operational we to certain environment, happening this to direction. states. the I I moving political well day. to introducing job very there stay think be right get a day to just So for it's have kids close are everyone, November companies

to ahead. concludes closing over the for this to question-and-answer any Starke Please the are [Operator go Instructions] Since would questions, session. like back Clifford remarks. there conference more turn no I

build today. all stakeholders company. joined for to the We're hard Thank working we you

also, macro great think, to very anyone you manner more it, much, you're and day. come going into needs And information, a in very effect reach Dany for excited And it. and see sides positive Thank to both we're a I. have politically. if I trends provide happy on some out very, to we're

This close brings to today's call. conference

may and a Thank You lines. have pleasant participating, disconnect your you for day.