Fire & Flower Announces 2021 Fiscal and Fourth Quarter Financial and Operational Results
Fiscal 2021 Highlights:
- Consolidated revenue for fiscal year 2021 increased 37% to a record $175.5 million
- Consolidated Adjusted EBITDA for fiscal 2021 was $5.1 million, consistent with the prior year
- Hifyre™ cannabis consumer technology platform generated a record $14.3 million for the fiscal year, an increase of 129% year-over-year
- Retail revenue increased 29% to a record $130.8 million for fiscal 2021, with more than 100 retail stores opened and operating at January 29, 2022
- Acquired Pineapple Express Delivery, PotGuide and Wikileaf to expand logistics capabilities and web traffic as part of the asset light e-commerce strategy
Fourth Quarter 2021 and Recent Highlights:
- Consolidated revenue and Adjusted EBITDA for the fourth quarter of fiscal 2021 was $42.7 million and negative $2.4 million, respectively
- Hifyre™ revenue for the fourth quarter generated a record of $4.1 million representing a 7% sequential increase quarter-over-quarter
- Completed one of the final steps in preparation for listing on the NASDAQ including filing of the 40-F registration statement and DTC eligibility for common shares
- Announced intent to exercise Series B warrants by strategic partner Alimentation Couche-Tard, owner of Circle K convenience stores
- Announced an expansion of the industry-first Spark Select program, a new highly competitive product and pricing strategy to drive an expanded customer base, in a proactive response to the fast growing value-oriented cannabis consumer segment
TORONTO, April 26, 2022 /CNW/ – Fire & Flower Holdings Corp. (“Fire & Flower” or the “Company”) (TSX: FAF) (OTCQX: FFLWD), today announced its financial and operational results for the fiscal year and fourth quarter ended January 29, 2022.
Fiscal 2021 has been a year of significant advancement and growth for Fire & Flower and we have delivered meaningful year-over-year revenue growth. The Hifyre Digital Platform has exhibited impressive 129% annual and 7% quarterly sequential growth and is the core value proposition of our business.
Trevor Fencott, Chief Executive Officer of Fire & Flower
This year, we have refined our vision to, ‘Deliver Cannabis to the World’ positioning our business as a consumer e-commerce platform, supported by a distributed retail network enhanced by our Circle K store co-location program. This position is enabled through the acquisition of Pineapple Express Delivery, one of the largest cannabis delivery platforms in the world.
“In the fourth quarter of fiscal 2021, while we have continued to see growth in our Hifyre digital business segment, we saw a decline in our retail revenue due to increased competitive pressures within the Canadian cannabis retail landscape. We announced a further competitive price and product strategy aimed at continuing to build an expanded consumer base. As we look out to fiscal 2022, we anticipate continued growth in our digital business and driving further revenue opportunities in the U.S. We look forward to greater continued alignment with our partners at Alimentation Couche-Tard through the retail store co-location program which will be important in delivering a clear, convenience-oriented value proposition to our customers in brick-and-mortar retail and e-commerce.”
Financial and Operational Highlights for the 2021 Fiscal Year and for the Fourth Quarter Period Ended January 29, 2022
- Revenue of $42.7 million and $175.5 million for the fourth quarter and fiscal year ended January 29, 2022, representing a modest decrease of 1% for the comparable quarter (from $43.2 million) and a 37% increase year-over-year (from $128.1 million).
- While all business segments contributed to the year-over-year revenue increase, the quarter-over-quarter revenue decrease was primarily due to increasing competition from new licences issued and pricing pressures in the retail market.
- Gross profit of $13.7 million and $62.1 million for the fourth quarter and fiscal year ended January 29, 2022 represented a decrease of 17% for the comparable quarter (from $16.4 million) and a 37% increase year-over-year (from $45.4 million).
- Adjusted EBITDA of negative $2.4 million for the fourth quarter and positive $5.1 million for the fiscal year ended January 29, 2022.
- Net loss of $19.5 million for the quarter and $63.6 million for the fiscal year ended January 29, 2022, compared to a net loss of $11.4 million for the comparable quarter and $79.0 million for the fiscal year ended January 30, 2021.
- An increase of 32 stores during the fiscal year, with 105 stores open and operating at the fiscal year end.
- Alimentation Couche-Tard increased its equity ownership to 20.8% with $20 million outstanding on the ACT Loan and $2.4 million in convertible debentures outstanding.
- As part of the Company’s continued digital strategy, completed the acquisitions of Pineapple Express Delivery, PotGuide and Wikileaf.
- Amended the strategic licensing agreement with Fire & Flower U.S. Holdings (formerly American Acres Managers) to derive additional U.S. based digital revenue.
Retail
- Retail revenue for the 2021 fiscal year increased 29% to $130.8 million from $101.5 million in fiscal year 2020.
- Retail revenue for the fourth quarter, decreased 5% to $31.7 million from $33.2 million in the prior year comparative period. Revenue decreased $2.0 million or 6% sequentially from Q3 fiscal 2021.
- Gross profit for the 2021 fiscal year was $41.5 million compared to $35.1 million in 2020 fiscal year.
- Gross profit for the fourth quarter was $8.2 million, a decrease of 31% compared to $11.9 million for the prior year comparative period.
- Gross profit margin was 25.8% for the fourth quarter ended January 29, 2022 and 31.7% for the 2021 fiscal year.
- Segment Adjusted EBITDA for the 2021 fiscal year was $1.2 million compared to $7.5 million in fiscal year 2020. Segment Adjusted EBITDA decreased to negative $2.1 million in the fourth quarter 2021 from positive $1.9 million in the same quarter the prior year.
- The Company had 105 stores open and in operation at the end of January 29, 2022, compared to 73 stores at the end of January 30, 2021.
Wholesale
- Wholesale distribution revenue for the 2021 fiscal year increased 49% to $30.3 million compared to $20.3 million in 2020 fiscal year.
- Wholesale distribution revenue in Q4 fiscal 2021 of $7.0 million was approximately flat compared to the same quarter of the prior year.
- Gross profit was $6.4 million for the 2021 fiscal year compared to $4.1 million in 2020 fiscal year.
- Gross profit in Q4 fiscal 2021 increased to $1.6 million year-over-year from $1.4 million in the same quarter of the prior year.
- Segment Adjusted EBITDA for the 2021 fiscal year was $4.7 million compared to $2.9 million in 2020 fiscal year. Segment Adjusted EBITDA decreased to $1.0 million in Q4 2021 from $1.1 million in the same quarter of the prior year.
Hifyre™ Digital Platform
- Hifyre Digital Platform revenue for the 2021 fiscal year increased 129% to $14.3 million compared to $6.3 million in 2020 fiscal year.
- Q4 2021 Hifyre revenue was $4.1 million compared to $3.1 million in the same quarter of the prior year.
- Gross profit margin was 97.3% for the fourth quarter ended January 29, 2022 and 99.2% for the 2021 fiscal year.
- Adjusted EBITDA for the 2021 fiscal year was $7.7 million compared to $1.8 million in 2020 fiscal year. Adjusted EBITDA increased to $1.9 million in Q4 2021 from $1.6 million in the same quarter the prior year.
Subsequent Operational Highlights Post January 29, 2022
- Amended the Strategic Licensing Partnership and Option to Acquire Fire & Flower U.S. Holdings (formerly American Acres Managers) and the creation of an additional high margin U.S. digital revenue stream on January 31, 2022.
- Pineapple Express Delivery launched next-day delivery services with BC Cannabis Stores in the Vancouver region on February 24, 2022.
- Completed one of the last remaining steps in the Company’s NASDAQ listing through obtaining DTC Eligibility for the Company’s common shares on April 13, 2022.
- Expanded logistics and delivery services through a cross-docking Distribution Agreement with Manitoba Liquor & Lotteries on April 14, 2022.
- Announced a highly competitive product and pricing strategy to drive an expanded customer base on April 21, 2022.
- On April 20, 2022, announced intent to exercise Series B warrants by strategic partner Alimentation Couche-Tard, owner of Circle K convenience stores, resulting in a post exercise ownership stake of approximately 35%.
Non-IFRS Measures – Adjusted EBITDA “Adjusted EBITDA” is a Non-IFRS metric used by management that does not have any standardized meaning prescribed by IFRS and may not be fully comparable to similar measures presented by other companies. Management defines the Adjusted EBITDA as the Income (loss) for the period, as reported, before income taxes and other expense (income) items such as finance costs, finance income, gains and losses related to derivative liability revaluations and debt extinguishments, and adjusted for share-based compensation, depreciation and amortization, impairment expense, impairment of right-of-use (“ROU”) assets net of lease liabilities remeasurement, restructuring charges, professional fees associated with acquisitions, financing and strategic initiatives.
Adjusted EBITDA has been calculated differently than in periods prior to Q1 2021, where the Company previously included lease liability cash payments as disclosed in accordance with IFRS 16 “Leases” accounting standards. The updated measure reflects the Company’s new approach to analyzing the consolidated operating performance across the business lines. The Company believes the updated definition is an alternative measure to assess performance as it provides meaningful operating results and facilitates period-to-period operating comparisons. As other companies may calculate this non-IFRS measure differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted EBITDA should not be substituted for determining net income (loss) as an indicator of operating results, or as a substitute for cash flows from operating activities. A reconciliation of net income (loss) to Adjusted EBITDA is presented below.
Adjusted EBITDA for the fourth quarter ended January 29, 2022 and 2021 fiscal year was negative $2.4 million and a positive $5.1 million compared to positive Adjusted EBITDA of $3.5 million for the comparable quarter and $5.2 million for the 2020 fiscal year respectively.
Lease liability cash payments for the thirteen weeks and fiscal year ended January 29, 2022 were $2.4 million and $9 million, respectively (January 30, 2021: $0.8 million and $3.2 million, respectively).
Webcast & Conference Call
Fire & Flower will host a webcast and conference call with Trevor Fencott, Chief Executive Officer, and Judy Adam, Chief Financial Officer at 8:30 a.m. EDT on April 26, 2022. The webcast will discuss Fire & Flower’s fiscal year 2021 and fourth quarter financial and operational results.
Dial-In Information
Toll-Free (Canada): 1-833-950-0062
Toll-Free (United States): 1-844-200-6205
All other locations: +1-929-526-1599
Access code: 013467
Webcast Sign-Up
https://event.on24.com/wcc/r/ 3755300/ 8C01528CC241A5D03166AC3EAE5D8F 7D
Replay Information (Available until May 17, 2022)
Toll-Free (Canada): 1-226-828-7578
Toll-Free (United States): 1-866-813-9403
All other locations: +44-204-525-0658
Replay Code: 348644
Upon completion of the live conference call, a replay of the conference call will be accessible on Fire & Flower’s website at https://investors. fireandflower.com/.
Fire & Flower’s financial statements and management discussion and analysis for the period are available on Fire & Flower’s SEDAR profile at www.sedar.com and on Fire & Flower’s website at https://investors. fireandflower.com.
About Fire & Flower
Fire & Flower is a cannabis consumer retail and technology platform with more than 100 corporate-owned stores in its network. The Company leverages its wholly-owned technology development subsidiary, Hifyre Inc., to continually advance its proprietary retail operations model while also providing additional independent high-margin revenue streams. Fire & Flower guides consumers through the complex world of cannabis through best-in-class retailing while the HifyreTM digital and analytics platform empowers retailers to optimize their connections with consumers. The Company’s leadership team combines extensive experience in the technology, cannabis and retail industries.
Through the strategic investment of Alimentation Couche-Tard Inc. (owner of Circle K convenience stores), the Company has set its sights on global expansion as new cannabis markets emerge and is poised to expand into the United States when permitted through its strategic licensing agreement with Fire & Flower U.S. Holdings upon the occurrence of certain changes to the cannabis regulatory regime.
To learn more about Fire & Flower, visit www.fireandflower.com.
