FLWPF - Earnings call transcript Q4 2020

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Operator

Okay. Hello, my name is Philip and I'll be your Conference operator today. At this time, I would like to welcome everyone to the Flowr Q4 2020 Earnings Conference Call. [Operator Instructions] Thank you.

You may begin your conference. on Interim are CFO, CEO, participating President Flowr Irina operator, The And Lance you today's The call Corporation’s, Hossu. Thank Emmanuel and to interchangeably that and note throughout call, will Please the the the with refer Company Flowr Corporation. we Flowr

information results like filed that press I refer additional currently XXXX sections QX QX information, which the amounts growth, factors, this and results risks assumes this release earnings Flowr, from as year forward-looking possible except may risk uncertainties. date hereof please uncertainties statements regarding or which securities denominated information and results made discusses to the public update are SEDAR. management, Once without as statements and obligation participants undue risks now annual on based information, to dollars. Such a Canadian form significant business and that information future business of on our XXXX place indicate or not reliance remind laws, oriented of information include these the of reflect filings, to and future that as disclosures events, results for our are limitation are would number operations, oriented discussed opportunities. during management these applicable today, end involve other and uncertainties statements guarantees cause results financial XXXX on materially are forward-looking such made that could to and circumstances, and to of by business information to Before NDNA Please risks required performance, differ on performance within, including disclosure available and future our or no or given you're are not Flowr call conditions, in of events, results,. of and all revise prospects information discussed management's also financial future it's them note expectations and call regarding or to statements

are these not accordance the not with by are comparable assess these they are other It company. there standardized be In limited company's XXXX, non-IFRS’s IFRS’s. there include approach measures, addition, of this IFRS’s If intended over are used as to may to than -- measures We the methods now refer as substitution be discussion your adjusted measures often by measures to operational defined fourth performance of to of the EBITDA. measures financial considered prepared Lance performance and and to for of And is no non-IFRS’s these and for that they're reconciliations not, those includes are measures. certain turn financial to the in and by should from may include Accordingly, calculating in non-IFRS’s the our pleasure used management non-IFRS’s the Indian industry, may provide my are aid floor Emmanuel. which not result. independently information and a additional quarter differ

Lance Emmanuel

transaction released Thank fiscal results. of in brief begin provide our a accomplishments. sales fourth I'll highlighting and Michael. evening, capital end operational year this also by we recent noteworthy Earlier you, I'll and progress. our XXXX quarter recap

XXXX. Hawthorne last central The subsidiary year, XXXX facilities in in Before the Canada, by April partnership in in transition quarter K-X online completed with its was of the for the and of Portugal draw facilities August R&D facility of financials. ballroom completed the of came with Scotts fourth a were Miracle-Gro XXXX the company commissioned XXXX. September, year-end commissioning facility in the are the I and and of year during worth and at build-out reviews XXXX company read for the the Kelowna QX the company

all to We complete. facilities substantially have our of pleased are

profitability. we execution as on March towards focused and Now,

team senior's leadership vice experience as operations can't finance. executive chief president Flowr that Bonnie the Bonnie a professional hands-on company Donovan of bed an The announce with management, CPG operations, on in that Canada with the as a pleased Bonnie previously extensive logistics in is track with operations. that and has in approach to contract is officer Daryl Brooker growth. management. regulated of effective appointment businesses record So announced building Daryl to be logistics, was may be such joined the brings Mayfair, company of companies culinary and manufacturing, and also

financial $XX.X his the bought additional March than In addition financing more of to company acquisition XXXX. a with global raised deal Subsequently million company changes, to the XXXX $XX the cash Brittany, million these tourist position the to on December, XX, business. an bolstered in into close

to the our retailers. COVID-XX also I've ability are staff our in seen our offset locations major pandemic which results, lockdown licensed its part financial impact THC will helped the to plan. with strengthening quarter to on our impacted revenue site strains company's the several cultivation faced execute In up The the of persistence best be QX cultivation. the rollout hampered and ramp due sales on wintering fully first demands store significant suffered report success in our of constraints, quarter to resources XXXX, for a position of consumer from the We required That new the introduction the and a challenges. financial at pleased resource history and way to the overall company operations and business producers, of our that evolving be perspective. areas urban which the related retail the lack in of ability

will their much Additionally, in consumer still they THC are Canadian largely how the market, for expectations dollars. driven by get and THC

Although I to continuously continue T dried important producers premium produce higher LPs terpene Flowr mean, conversation to an identify need price more T of points. is point, higher cultivate premium to number based justify public of their increasing and becoming content genetics

expect be from I company's expect the produce adapt experienced NumberX, XXXX three XXXX, of quarter major fourth significantly to higher quarter shooting will new our a in to example more that it of you began within January, the bound core While are we of product demand of And perspective. ability evidence, quarter landscape. grow the we areas black there rely to challenge our see while term this very best while in cannabis pleased having We THC and great middle was our this I'm Pecos consumers for and the pandemic to Canadian one short us. to our opportunity ability the the evolving competition quarter call challenge, shareholders a the cultivars success. a cherry bus. bar in products, results the first He called believe called to of I've today. Canada, BC segments on to award-winning think, success our by in revenue of facing

than in out Our in British first border one and Columbia hour. landed sold less

We exclusive to team for peak providers relationships T established potential. a with have in pipeline of bring high also with exotic screens genetic differentiated

the for leveraging rooms Grover facility commercialization. optimize in selecting. be dedicated cultivate, will We and of our got best R&D The to had extremes these

only you facility the cannabis many of facility R&D A the facilities The world. in the at of kind partnership Miracle-Gro fully is will As its XXXX. company. one of Scotts with was to research commissioned recall purpose-built end in dedicated

portfolio as on into us format diversifying help new facility jars. new formats enhancements two, as this three, provinces three date, genetics for product our knock our standing sizes and larger in We first the product well in we XXXX, include format cultivation new to new expect revenue our go we sources. market. pre-rolls commercial orders our further formats producing grand January, to and to practices introduction to brand primarily number Number develop drive We and focused of have shipped heard back

We are in also and Manitoba watches Saskatchewan in Portugal. playing

country While We This Portuguese, in a incredibly in areas EU, the still global, regulatory were getting Portugal impairment of moment XXXX. profit The authorities on shortly? QX sales. Germany. Portugal a putting believe ever warehousing GMP Portugal. medical producing the of domestic agreement these entered announced and we pharmacist. as European the terrace did capital market a us cannabis of sales opportunities. previously in revenue allowed in market now most or to authorization in able take able which in stop second partnership the certified in dry And behind are in the the legalize with an authorized product strategic for sharing Tilray, it in complete to in take Germany are We opportunity Portugal, local first to a we which the Europe position into to is first holiday as represents Flowr a It's a with advantage represented opportunity still watershed bullish projects and through upcoming we major

grown are of to in we approximately addition, sell discussion currently QX kilograms In X,XXX biomass XXXX. in

revenue. additional was challenging testing Number foundation generate our that our operations overall highlight breakout to our year Well, dried underscored we list. Flowr the JCP crush bring produce top certified a our The QX he Canada, We there prestigious central ones art top from was selling it also course own point. XXXX NumberX, in the allow of our achieved pink producers, and XXX local we XXXX can over which agreements built a and Nicky through progress. in will coast could was product price BGP be our was premium that best nowhere, won planted the four on accomplishments, for of which for Portugal several across They revenue and premium facility towing the we the market accomplishments He two, will strength selling a a but QX that science, VC awarded support stability in XX XXXX conduct and campaign, Flowr dried validating are Flowr I'll utilize marketing the GMP Everybody first dry undertake sell number year company. skew BC country. in pulling a the authorizations cannabis a And Cleo while seek XXXX. while on our top own. a our focused our and The to to retail selling pink award. like thing. top X, Flowr dry skew premium skew thesis at bartenders belief

and approximately kilogram capacity. Number X,XXX history. putting kilograms we shutdown the thanks which shot, XX,XXX medical our avoided eight, protect and to largest a our August to position from strong on believe in result at providing in of here outdoor we five, cherry Number European that in all achieve fanfare, help test to COVID be next policies. approximately related employees plants in branding of a XX we harvest harvested COVID K-X we production cannabis confidence We us also X.X, turkeys addition at XX.X% operationalize X% want out for campaign before we new our rooms to camp BP bright and number the six, great found brand have and grade Adkins rolled Number cultivar. total first year in black identity to tat robust our came to seven, legal XX,XXX K-X, our

We stakeholders driven we approximately and cannabis these application shawl XX, Polycoms And bringing operations, complete and strategic our R&D completed structure. the with XX.X XX% THC the sheet our side. tariffs of Hawthorne, from grade placement lastly, dried first in balance we And high successfully and cultivation tiny harvested status things partnership and our able and product GMP number low strengthen with kicked Number diversity a facility bolstering to competitive were advantage additional and T XX. experience cultivate our of from in we enhance our XX, demonstrating strategic which also directors potential medical our eldest tea to saw depth global off totaling, revenue and Portuguese number financing, number operationalized as We formally cannabis global our cost leader at X, the a R&D. our will Flowr million.

I'm in policing While QX a very quarter us. history. best the quarter of the first company's XXXX XXXX was quarter on represents for challenge the

over Now we'll highlights. it run to some through to turn financial Irene

Irina Hossu

objectives significant expansion have our success the to breakout and closing well BC tariffs Flowr’s Thank as made you, early the XXXX. with positioned as stated, acquisition, evening, good Lance in XXXX we've coupled Black provincial well with of Lance of and the everyone progress a as towards Cherry,

sold in product that an therefore we quarter. prices net QX end With of held versus review versus flagship tail total maintain discussed or in a decline X price in Health a the staff price the kills harvested, XX% to primarily of third At to kilogram our XXX the let's was a challenges per BC XXXX, Price Production factor products $X Approximately size string steady, for our of gram, a with XXX call. of was timing We a Now which early the the due versus our had premium. is available of such mix as QX positioning we of Kush impacted is QX, growth pink XX. XXXX. decline sale XXX sold Throughout a kilos was sold the availability continue product, which flagship us results. worked Mother as overall pre-rolls. we brand and package through in of bulk a we of January, product which to for end quarter within start the the fast gave kilograms

That's the cost cash increase X,XXX an the the a cost margin total total approximately breakeven excise compared full quarter $X.X Revenue. gram is basis, sales was revenue and was and due of was kilos sold was collagen XX% for therefore $X.X impairments quarter XX%. our generating net million were the an our adjusted approximately For mentioned year, for below the production an as $XX.X $X.X gross of million million year and gross which sales consecutive full-year on cost The on which was a as in net cost. excluding million, for quarter, XX% Net per Canada showed of we to for basis Canadian million in On million non-revenue product. of second year revenue of the XXXX. the the $X.X cost for excavating company impairments on XXXX basis $X.X and improvement. full operations revenue XXXX, basis to positive misrepresented, Canadian for revenue, QX gross quarter. increase approximately adjusted was sales of throughout from QX timing. significant our The margin million exercise I of expectations before XXXX a Gross $X.X $X.X one-time normalized million adjusted just a of represents

amount we reduction we per a As XXXX. to a costs benefits of larger dilution, we expect our continue of the see fixed from in saw and the product, automation costs spread half gram fixed through to as second cost over

initial due Total expenditures fees inventory administrative approximately the to our general million test basis. was aged not harvest inventory impaired and at well the that fourth normalized the cash of impairment we grant to issues meet $X depreciation, product develop was driven earlier. lower $X.X XXXX. year full million to consisting prosper and compensation did which our X$.X As as professional salaries worth on in standards pertaining and of product legal within indoor and Portugal, QX primarily I one-time time was includes and fees sold $XXX,XXX adjustment which one quarter, hired production. mentioned selling a of The a mother QX excludes production increased quarter our health in described Martin The syndicates, the for product K-X expenses. quarter QX amendments and THC our a third as the result QX milk were of XX, in quarter primarily was share-based the versus facility, long other by increase which $X as as million in the company result grown amortization in of

the to investment in selling we activities Nash, in to distribution, addition, marketing investing our continue quarter, $X.X costs million EBITDA a $X.X into in naturally, penetration of fourth to of XXXX which and compared excludes million. loss non-cash deeper quarter, a the began increased fourth certain was loss and restructuring and drive expenditures the adjusted In

is including $XX constrained $XX increase marketing to in of million the holiday of to SGNA the the operations XXXX, holiday to quarter sector. as The be and decrease market up of the well increase continues for facilities with the in tariffs $X.X initiatives. apologist recorded in $XX an Despite one And still facilities fourth general largest and term GMP both up of greenhouse capacity. in in to of overall footprint one-time acquisition. conservation largely Goodwill with to intangible within During a only to of expenses $XX.X due charge Goodwin, as European revenue the relating revenue valuation our see million third loss selling the low to syndicates, ramp million mentioned the and portion the and the to certified in facility, company and loan of indoor metrics production ramp and the investments EMU the In kitchen anticipated primarily approximately to slower amendment in the the challenges, light is million we assets impairment previously, three these central reflects and million, in which near design a union. Also as impairment and the expect outdoor quarter, policy. the pertain the a than

without terrorist of a the position global completed outside Lance net to acquisition board material acquisition. team and the closing in cash the company increase. liabilities. brings on members with $XX.X company of management of by financial As transaction of in extensive mentioned approximately any of select also The experience the Flowr Karen costs consolidating the December jurisdiction improved million XXnd, Canada. terrace The cannabis

we I approximately As choose we XXX a to year product. December, started And the had harvested strong. off in mentioned

forward We at the are specifics end won she may. giving of to results looking around

Cherry over our retail QX expected and with expect expect of expansion sales the string to of we million XXXX the for approximately end. XXXX sales However, market Plat the of strongest stores by approximately be newest Ontario VC Quebec quarter from date $X.X entry our year to launch into net to XXX and

We Lance turn remarks. now the to about closing are optimistic I'll the call the for year back

Lance Emmanuel

growth. growth which the Well, showcased the revenue, generated queers that Flowr XXXX of approximately QX, no this building be of beginning significant path XXXX XX% by on our another to company The revenue doubt will the foundation was example year. There's there. entire of

line questions you open may have for any the answer questions. to Now, happy please operator

Operator

from, see NTB, question Federico Alliance I Gomez. a [inaudible]

Federico Gomez

R&D to taking for just I wanted question. Hi. touch in my facilities. Irina. Thanks your

a your operations. announced of recently guys you review So

in obviously decent you how, are a to that does your some, demand into how just you know, facility, is So wondering fit expenses. going operating which process? How

Irina Hossu

understood want I you I'm a question. about to sorry. said? I I the background that R&D I sure that noise. Is apologize. heard facility of additional just I bit what I the cost. and believe correctly. you're the make little asking understand

Federico Gomez

exactly. Yeah,

Irina Hossu

Yeah.

Okay, great. out uh, built on we h, are, the absolutely so from an perspective, R&D facility. materially

not we whereby interesting Uh, strategic Scott's cap much is the partnership about that anticipate very provide, they partnership behind any , we with facility uh, have is a investments. the Miracle provide, Grill resources it that further substantial it. really X do that we partnership So a what's the

large the R&D in of of cost portion not a the So or there. operations facility Flowr

incremental So perspective, uh, no, ex significant portion large no uh, and tap op um, that an held by a backs will not from of Flowr. be,

Federico Gomez

still the then Okay, international regarding just operations. thanks. orients And

So for the stuffs, cannabis almost had guys you grand XXXX sale. kilos, medical uh,

of what wondering you next when price of the uh, be can that? kind you from expect, would the harvest size then, there. coming and So And can what Portugal know, expect

Irina Hossu

Sure.

speak just to and ahead the to, for briefly go about proportional, of then uh, a pricing we sell, Lance actually know, in now, right the a product, of so number all I'll in are I'll So we inside pass along have through working terms to it customers strategy you and Rico that of, almost product. of for that process negotiation the potential, uh,

into for wouldn't right So, to obvious pricing want uh, I now the get reasons.

the strategy now? definitive very weeks over Do are something speak more sheet that able we about we'll near be you term, on as we and the want hope to launch. coming in to to sell announce able competent be the to the So to

Lance Emmanuel

respect or for How have just now build tolling with upon you re-imagined us. were entertaining of arrangements partner We parties a coming investment. parties As lot company discussions?, good with to is to do considering future question discussed and share, of with we're, well-prepared ensure had said. with broader aligned harvest that the we've a with that, there the We everybody around wish this with some the investment learnings, about a a but the but to on queue future warnings hopefully to be harvest, not sure your absolutely advantage diligently options what balance make we're X,XXX it did evaluating to too capital achieve not going There's who move And to a produced the that to leadership strategies will the well return forward, we any harvest from is deploy we that new to with into future still again, news take board. opportunities be market kilos how which, year. on actually distant to best both lot European we've the to of positioned some those of

Federico Gomez

more, I could uh, your COVID-XX and mentioning Okay, strategic know, review great. you And process just maybe operations? if you any of more cost the, on elaborate can then if the just, effect saving uh, one if had initiatives, some on that uh, your

Irina Hossu

the doing quite review absolutely. work. Thanks, a is so strategic bit we've been I them Thanks. committee. there, a number Sure, of haven't there quite actually of seen

So believe total I'll within in back the fairly XXXX, uh, start organization. significant you did by we QX a restructuring we if of recall XX% saying, uh, and

So we million optimizing basis uh, uh, that, an did annualized $X spend some on time through anticipate, about doing a SGNA. we in savings strategic committee further incremental,

assets. looking, selling of non-core We are uh, also to,

the you we that's looking I saying, utilized. it's sort um, not such optimize, operated. we're regions uh, we That's you quite is that. time utilized, and also So potential know, to being third don't, a currently which as on in of piece And of bit know, not say the would being land equipment.

us as So sell significant actually yesterday. significant and to we that, find fully of, focus see uh, Australia a to like give uh, are agreement pleased value uh, is Portugal, really well, opportunity, I on, which and to Canada mingle growth the where said, the really our definitive educated to and near are an that in signed fully term. divesting optimize uh, we that operations came uh, we, we of in some uh, of, terrorist We a

Federico Gomez

Great. Thanks.

Operator

of question street? line You the a from Robert have

Unidentified Analyst

a BC only why upcoming you why is just quarter? didn't it didn't the for available And G I the in know wondering upcoming just wondering Tahoe. it mention had about and for you was question I mention just quarter, Alberta? the I I

Lance Emmanuel

respect they're seeing BC that with that the felt consumer trends market of now, and the evolving profile Thank exciting as the BC demand we right we Tahoe, in with you cherry, cost we're some just black have for question, opportunity uh, the evolving strain on didn't make to on bringing to the and genetics that exciting a to DC continue cherries with sense having black that of mine, debt the it continuing other do focus so. to we're

you're because in that's believe only bringing in what limited seeing why it genetics future. areas to we're available higher so And potency on very we much the near be

Unidentified Analyst

Yeah, of course.

part to they're your being cloning. revenue new next clones. also the the be they understanding And mentioned, it you interview what what So you're wondering to into I to stream. going wanted noticed cloning your was thing uh, of facility is the get that. R&D incorporate exactly other the be into quarter about how And CFO, gonna just other us was I strain I um, up. offering I talk the know in and the didn't with, the day

Lance Emmanuel

So Thank question. our primary you business. for the

selling be be understand I your we future? question So are going to is, it the clones would fair.

Irina Hossu

it I, CFO a, it ago in two never answer. on [inaudible]. the being planned Well, have, incorporated confirmed was a your we, I days on on

Unidentified Analyst

you're a Yeah, oil no, spina sold, no, than a dollar? also not was this else, did you again, noticed that other that if going extraction moment, sell little is but you must've roles, structure? anything worries. it or at also the no I into you, once Um, million I

Irina Hossu

not it I believe, we uh, as have yet. sold

previously I non-core as as part at we mentioned, are of So assets. community, this looking

sale. for available as listed currently is extractor the So

Operator

at are no time. questions further And this there

Irina Hossu

And Yes. today's you you you. does so participating. time, the conference. Thank for Thank much conclude Thank Okay. that for everyone.

You may have now great disconnect a day.

The Flowr Corporation (FLWPF) 29 Apr 212020 Q4 Earnings call transcript