Connect with us

Hi, what are you looking for?

Friday, Sep 30, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

The weed wire

Revenues grow while earnings slow for Valens

COVID-19 has cooled the overall demand for extraction services, but executives hold out hope for the rest of 2020

Revenues grow while earnings slow for Valens

Leading processor Valens GroWorks Corp. (TSXV: VLNS) shared positives and negatives in its most recent earnings summary.

On Tuesday, the company released its fiscal results for the first quarter 2020, ending Feb. 29.

While revenues continued to peak — climbing to $32 million, from $30.6 million in the previous quarter — profitability and overall earnings slowed slightly from its strong finish to 2019.

Valens shares rose slightly on the day, to $2.54 on the TSX Venture Exchange.

Read more: Valens shares slip despite posting profitable quarter

In particular, gross profit decreased quarter-over-quarter to $18.1 million, from $22.6 million — a difference of 20 per cent. However, the company noted marked growth over the year from $0.9 million in the first quarter of 2019.

According to Valens’s financial statements, its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was down 19 per cent to $14.3 million, from $17.7 million in the previous quarter.

Valens reported strong liquidity with $44.3 million in cash and short-investments and net working capital of $80.4 million, which is slightly down from $58.7 million and $88.2 million in the previous quarter, respectively.

Valens president Jeff Fallows said his company is seeing challenges in the current market with several of its customers experiencing reduced workforces and decreased cultivation output, which means a reduction in demand for extraction services.

“Although retail demand for cannabis has surged during the COVID-19 pandemic and we are experiencing strong white label sales going into the second half of fiscal 2020, we are unable to predict the full impact these challenges will have on our second quarter financials,” he said in a statement.

The pandemic has undoubtedly had a cooling effect on the rollout of cannabis 2.0 products, and CEO Tyler Robson said that Valens saw a moderation in extraction volumes as customers shifted to smaller processing lots. But he expressed optimism for the rest of the year.

“Looking forward, we are starting to see some encouraging signs with respect to a return to larger extraction volumes into the back half of fiscal 2020,” Robson said.

Read more: Valens GroWorks exports first white label products to Australia

Among its operational highlights, Valens listed a revenue-per-gram of input increase to $1.44 per gram in the first quarter of 2020, compared to $1.25 per gram in the fourth quarter of 2019 and $0.61 per gram in the third quarter.

Valens has shifted some of its production to produce hand sanitizer for donation to front-line health workers and pharmacy staff. It has also donated personal protective equipment from its production facilities.

Read more: If your company is producing hand sanitizer to fight COVID-19, make sure it’s alcohol-based

Top image via Valens GrowWorks Corp.


Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like


Net loss for Q4 was $618.8 million which was due to non-cash impairment charges of $505.1 million


Acquisition will expand Freedom's production capacity and lower its production costs


Study will evaluate psilocybin efficacy in healthcare workers with mental health challenges related to pandemic


Of the 28 stores represented by the Confédération des syndicats nationaux, 22 have been on strike since May 20