The Valens Company Inc. (TSX: VLNS) announced on Wednesday its financial results for fiscal Q1 2022 ended February 28, 2022. The firm notched in net revenue of $23.2 million, an increase from both Q4 2021’s $18.4 million and Q1 2021’s $20.0 million.
However, the quarterly gross margin declined to 8.5% from last quarter’s 14.7% and last year’s 23.8%.
“The results from the first quarter demonstrate that Valens’ underlying business has passed an inflection point,” explained CEO Tyler Robson. “Diversified business lines are now allowing us to deliver more sustainable growth.”
Breaking down the topline revenue figure, the company saw the highest quarter-on-quarter increase in B2B revenue at $6.3 million from $4.1 million. The highest revenue contributor, provincial sales, jumped to $10.8 million from $7.9 million while revenue from green roads declined to $5.1 million from $5.7 million.
Further down, the company incurred $28.0 million in operating expenses, higher than its net revenue. This led to notching a quarterly operating loss of $26.1 million.
The firm also said that it is on track with its $20 million annualized cost savings, having reduced around $9.5 million so far. Around $6.4 million of the actioned reduction came from SG&A.
Corollary, the company ended with a net loss of $25.7 million, compared to the net losses of last quarter at $21.4 million and last year at $6.2 million.
Calibrating for financial items, adjusted EBITDA loss also grew to $25.7 million for the quarter compared to $21.4 million last quarter. “As expected, adjusted EBITDA declined quarter over quarter due to an inefficient cost structure that had not yet benefited from our Integration Initiatives announced in late February and a change in sales mix that saw a lower percentage of sales,” Robson added.
The firm ended with a cash balance of $17.4 million, bringing current assets to $135.1 million. Meanwhile, current liabilities ended at $60.0 million.
In 2023, the company is targeting to generate a minimum of $225 million in revenue and improve adjusted EBITDA margin to greater than 10%.
The Valens Company Inc. last traded at $1.65 on the TSX.
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