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Tuesday, Jan 25, 2022
Mugglehead Magazine
Cannabis & psychedelics industry news based in Vancouver, B.C.
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Greenway makes adjusted EBITDA profit in first reported quarter

Early feedback on the firm’s cannabis products has been strong

Greenway reports adjusted EBITDA profit in first reported quarter
The majority of the Ontario-based company's shares are owned by its directors. Photo via Greenway

The new kid on the block in Canada’s public cannabis markets, Greenway Greenhouse Cannabis Corporation (CSE: GWAY), is reporting some attractive income metrics right out the gate.

On Friday, the company released its earnings results for the three months ended Sept. 30, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $272,000 dollars.

Supporters hailed the metric on social media, pointing out that Greenway has started by doing what many other publicly traded pot firms have failed to do, despite deep pockets and years of trying.

According to the firm’s financial statement, it made $1.2 million in revenue during the quarter, all in business-to-business sales.

But after a fair-value adjustment on inventory sales of $801,000, Greenway reported a gross loss of negative $262,000. A spokesperson tells Mugglehead that the adjustment was higher than expected.

“The accounting standards of the fair-value-model required us to make predictions of sales prices back in March (year-end) before we had sold any cannabis,” the spokesperson explained in an email. “The ongoing decline and compression of wholesale prices in Canada undershot our March predictions.”

“This quarterly adjustment should be reduced in the future because we have historical operating data now.”

Operating expenses totalled $847,000. And net loss was $1.3 million, for a loss per share of negative $0.01.

At the end of the quarter, Greenway had $2.1 million in cash.

Greenway stock fell over 11 per cent Friday to $1.20 on the Canadian Securities Exchange. The firm went public on Sept. 21.

Read more: Greenway announces public listing date, ticker symbol

Read more: Canopy pushes out fiscal 2022 profit predictions, closes Niagara facility

CEO Jamie D’Alimonte said his company is thrilled to report positive adjusted EBITDA in its first quarter of revenue.

“But more importantly we are pleased with the premium product that we are producing,” he said in a statement. “Consumers are noticing the consistent high quality of our cannabis, such as our Sun County Kush pre-rolls. Our entire team is very excited for Greenway’s future.”

Greenway announced its first purchase order in August, supplying 200 kilograms of biomass for pre-rolls via Agro-Greens Natural Products Ltd. and Shelter Market. Agro-Greens is behind brands including True North Cannabis and Wildlife Cannabis Co.

CFO Darren Peddle says attaining positive adjusted EBITDA at this state is a testament to the cultivation expertise of his team.

“We believe that we have the available infrastructure and team in place to scale up aggressively in a responsible and sustainable manner and the ability to meet our business plan of becoming one of the largest and trusted suppliers for high quality cannabis.”

Also on Friday, Greenway said it’s granted company director Dennis Staudt options to buy up to an aggregate of 500,000 common shares in line with its incentive stock plan. Each option is exercisable for one common share at an exercise price of $1.35.

And on Tuesday, the firm said that it intends to sell, on a non-brokered private placement basis, up to around 7.3 million shares at $1.10 for up to $8 million in funds.

“Our EBITDA would increase exponentially if we scaled up our operations. Therefore, we are currently raising funds through a private placement for an expansion,” the company says.

Regarding its licensed nursery, Greenway says it’s currently using the space for self-propagation only, but it will consider using it for other revenue channels in the longer term.

Update (2021-11-26 4:20 p.m. PT): This article has been updated with additional commentary from the company.

 

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