The Valens Company Reports Q4 Revenues Of $16.0 Million, Net Loss Of $16.6 Million

Last night, The Valens Company (TSX: VLNS) reported its fourth quarter financing results for the year ended November 30, 2020. Within, the company reported net revenue of $16.0 million and a net loss of $16.6 million for the quarter, a decline from the figures rteported in Q3.

Net revenues were down 11.5% on a quarter over quarter basis, which the company attributes to “an inventory repositioning” that effectively resulted in lower sales prices on its bulk product. The company noted as well that product sales as a percent of revenue inmproved from 83% to 90% on a quarter over quarter basis. The net loss also improved substantially, growing from $3.1 million to $16.6 million on a quarter over quarter basis.

On a year over year basis, the company reported revenues of $83.8 million for fiscal year 2020, a notable increase from the $58.1 million reported for 2019. However, gross profit was down substantially despite the increase, with gross profits coming in at $25.7 million as compared to the $41.4 million reported in the previous year.

For the fourth quarter, the company managed to post a negative gross profit of $6.0 million, which appears to be the result of substantial cost of sales of $15.3 million, followed by $4.9 million in “inventory valuation allowances.” These poor numbers however were expected following preliminary results released by the company.

Operating expenses were also up year over year, with the company spending $46.4 million in operating expenses as compared to $33.1 million in the prior year. The largest expenses here was wages and salaries at $10.5 million, followed by depreciation and amortization of $10.2 million and share based payments of $9.8 million. Following additional other expenses of $1.9 million, the company reported a loss of $20.7 million for the fiscal year.

Looking to the balance sheet, the firms cash positioned declined from $30.3 million to $20.3 million over the course of the quarter, while trade and other receivables also fell from $34.5 million to $27.5 million. Prepaid expenses were also down, falling from $16.5 million to $12.5 million, while inventory fell from $23.5 million to $14.4 million. Total current assets overall fell from $105.8 million to $78.5 million.

Accounts payable meanwhile increased slightly, growing from $13.8 million to $14.4 million, while the current term loan grew from $1.9 million to $2.0 million. Contractual obligations however fell from $2.6 million to $1.7 million, while income taxes payable declined from $3.2 million to $0.4 million. Overall, total current liabilities fell from $22.3 million to $19.9 million during the quarter.

Looking to 2021, the company has reiterated its prior guidance of revenue for the first quarter of $19 million to $23 million.

The Valens Company last traded at $1.85 on the TSX.

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Information for this briefing was found via Sedar and The Valens Company. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.