Origin House Announces Sequential Revenue Growth of 89% for the Third Quarter 2018
- Record Q3 revenue of $6.6 million; growth of 89% over Q2 2018 and 790% over Q3 2017.
- On October 18, 2018, closed the acquisition of RVR Distribution (“RVR”), including five licensed distribution and manufacturing facilities across California, and several of the state’s top independent branded products.
- Distribution platform reached 486 licensed California dispensaries as of September 30, 20181.
- Advancing acquisition of 180 Smoke to provide California brand partners with rapid access to the Canadian market.
- Closed the acquisition of premium Sonoma County craft cannabis producer, FloraCal®Farms.
- Continued to generate shareholder value through the monetization of non-core assets; +487%2 return on invested capital.
- Strong cash position of $75.3 million as of September 30, 2018 to continue executing our vision.
OTTAWA, Nov. 28, 2018 /CNW/ – Origin House Corp. d/b/a Origin House (CSE: OH) (OTCQX: ORHOF) (“Origin House” or the “Company”), a leading North American cannabis products and brands company, announced today the Company’s financial results for the three and nine-month periods ended September 30, 2018. All figures are reported in Canadian dollars ($), unless otherwise indicated. Origin House’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).
Last quarter, we stated that after a substantial period of building a foundation, Origin House was at the beginning of a multi-period, sustainable acceleration in revenue growth. Year-to-date, we generated record revenue, completed four transformational acquisitions and are well-capitalized to continue growing. We expect to continue delivering strong revenue growth throughout Q4, 2019 and beyond, as RVR and 180 Smoke are integrated and as we further leverage our brand development and support platform. Our view is that the next 12 months are going to be critical in determining the winners in the cannabis space.
Marc Lustig, CEO of Origin House
Origin House is positioned as a premier operator in the largest and most dynamic cannabis market in the world and we believe we are just at the beginning of our growth curve. We expect this platform to become increasingly difficult to replicate and therefore increasingly valuable for our shareholders as our financial results accelerate, as well as for other operators in the cannabis space that need to be in California.
“One year ago, we unveiled our ambitions to the public. In that period, Origin House has already created a proven track record of identifying break-out brands, partnering with them and selling to customers in a competitive marketplace to drive mutual success,” said Afzal Hasan, President and General Counsel of Origin House. “The financial results we generated in Q2 and Q3 are representative of just the initial framework of a model primed for growth. We have already shown some early success in supporting the growth of some of the largest independent brands in California, like Lowell’s Smokes and King’s Garden. Our growing suite of brand development and support solutions, including financing, allows us to structure innovative, revenue driving deals with other emerging brands, like we have done with Henry’s Original, Pacific Remedy and Utopia. These deals are the first in an extensive pipeline of brand partnerships that we are now executing on. Investing in our partners enables them to scale and realize their aspirations while providing us with sizable upside and limited risk.”
Mr. Hasan added, “We intend to leverage the foundation we have built in California to not just drive revenue growth, but also to grow and hone our employee base for deployment into new markets. The institutional knowledge we are developing from operating in the largest and most culturally significant cannabis market in the world has already taught us valuable lessons that we are carrying over to Canada. We are taking a calculated approach involving the use of a profitable and rapidly growing retail platform, 180 Smoke, for direct to consumer marketing by our brand partners. We are excited about this prospect, and are actively pursuing strategies for expansion of our brand partners into other regulated markets around the globe.”
1) Internal source: based on rolling 6-month data
2) Includes the sale of: Anandia Laboratories Inc.; and Wagner Dimas Inc. (equity interest and license)
Financial Highlights – Q3 – 2018
The following are the major financial highlights of Origin House’s operating results for the three months ended September 30, 2018, compared to the three months ended September 30, 2017:
- revenues were $6.6 million as compared to $744,302, an increase of 790%;
- gross margin was $298,619 as compared $128,010, an increase of 133%;
- operating expenses were $10.1 million as compared to $2.8 million, an increase of 261%;
- net loss of $7.5 million as compared to $3.3 million, an increase of 128%;
- net loss per basic and dilutive shares of $0.12 as compared to $0.08; and
- adjusted EBITDA loss of $4.5 million as compared to a loss of $1.8 million.
The following is a summary of key balance sheet totals as at September 30, 2018, compared to December 31, 2017.
- cash was $75.3 million as compared to $4.5 million an increase of 1,565%;
- total assets of $220.2 million as compared to $46.1 million, an increase of 377%;
- current assets of $90.8 million as compared to $7.9 million, an increase of 1,043%;
- current liabilities of $27.2 million as compared to $2.1 million, an increase of 1,172%; and
- long-term debt of $28.2 million as compared to $2.3 million, an increase of 1,147%.
Recent Developments
For a more comprehensive overview of these recent developments, please refer to Origin House’s Management’s Discussion and Analysis of the Financial Condition and Results of Operations for the Three and Nine Months Ended September 30, 2018.
- On October 3, 2018, Origin House signed a definitive agreement with Australis whereby Australis will purchase 2,200,000 common shares in the capital of Wagner Dimas from Cannroy Delaware Inc. (“Cannroy Delaware”), a wholly-owned subsidiary of Origin House. The sale closed on November 19, 2018.
- On October 3, 2018, Trichome, entered into an agreement with 22 Capital to complete a transaction that will result in a reverse take-over of 22 Capital by the shareholders of Trichome. If completed, the resulting issuer will be listed on the TSX Venture Exchange.
- On October 18, 2018, Origin House closed the previously announced acquisition of RVR Distribution (“RVR”). Upon closing the acquisition, Origin House gained legal control of RVR, however, the Company had control under IFRS 10 from September 1, 2018. Additionally, Ted Simpkins, Co-Founder and CEO of RVR joined the Origin House Board of Directors, effective October 18, 2018.
- On October 22, 2018, CannaRoyalty Corp. registered “Origin House” as a business name and began to conduct business under the Origin House brand.
- On October 23, 2018, the Company’s changed its ticker symbol from “CRZ” to “OH” on the Canadian Securities Exchange and from “CNNRF” to “ORHOF” on the OTCQX market in the United States.
- On November 22, 2018, Origin House began partnering with Mendocino Cannabis Brand, Henry’s Original, to offer strategic investment and innovative brand acceleration.
- On November 23, 2018, the Company accelerated the expiry of all outstanding common share purchase warrants to December 14, 2018. If all warrants are exercised they will generate proceeds of $10.6 million for Origin House.
Results of Operations (Summary)
The following tables set forth consolidated statements of financial information for the three and nine-month periods ending September 30, 2018, and September 30, 2017. For further information regarding the Company’s financial results for these periods, please refer to the Company’s Management’s Discussion and Analysis for the periods ended September 30, 2018 and September 30, 2017 and the Company’s Financial Statements for the periods ended September 30, 2018, published on Origin House’s issuer profile on SEDAR at www.sedar.com and the Company’s website at www.Origin House.com.
1 EBITDA and Adjusted EBITDA are non-GAAP financial measures and accordingly they are not earnings measures recognized by IFRS and do not carry standard prescribed significance. Moreover, our method for calculating Adjusted EBITDA may differ from that used by other companies using the same designation. Accordingly, 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 and investing activities.
Share Capital
The Company’s authorized share capital is an unlimited number of common shares of which 55,202,247 were issued and outstanding as at September 30, 2018 (December 31, 2017 – 43,898,445 common shares). The Company has issued 3,487,832 RSUs that have not been exercised as at September 30, 2018 including 2,357,837 that have vested (December 31, 2017 – 4,153,150 including 1,933,587 that had vested). As of September 30, 2018, there are share purchase warrants and broker warrants outstanding that can potentially be converted to 3,549,765 shares (December 31, 2017 – 4,112,712). The Company has issued 930,500 share options that have not been exercised as at September 30, 2018 including 270,750 that have vested (December 31, 2017 – 850,000 including 212,500 that had vested).
Conference Call
Origin House will host a conference call on, Wednesday, November 28, 2018 at 8:30 a.m. (Eastern Time) to discuss its 2018 third quarter financial results. The call will be chaired by Marc Lustig, Chief Executive Officer, Afzal Hasan, President and General Counsel and François Perrault, Chief Financial Officer.
About Origin House
Origin House is a growing cannabis products and brands company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands. The Company’s foundation is in California, the world’s largest regulated cannabis market where it has delivered over 130 branded cannabis products to the majority of licensed dispensaries. Origin House’s brand development platform is operated out of five licensed facilities located across California, and provides distribution, manufacturing, cultivation and marketing services for its brand partners. The Company is actively developing infrastructure to support the proliferation of its brands internationally, initially in Canada, through its pending acquisition of Canadian retailer 180 Smoke. Origin House’s shares trade on the CSE under the symbol “OH” and on the OTCQX under the symbol “ORHOF”. Origin House is the registered business name of Origin House Corp. For more information, visit www.originhouse.com.
