The Valens Company (TSX: VLNS) last night released its third quarter financial results. The firm reported net revenues of $21.0 million for the period ended August 31, along with a net loss of $12.8 million and an adjusted EBITDA loss of $6.2 million.
Revenues on a gross basis amounted to $24.6 million, before excise fees netted the company down to $21.0 million. The quarter reported another period of the growth for the company, with the prior quarter seeing $18.8 million in net revenues, while the year ago period had $18.1 million in revenues.
Product sales continue to grow for the company as well, with the firms revenue breakdown seeing $19.5 million in product sales, $0.6 million in toll processing and co-packing, $0.3 million in analytical testing and $0.5 million in other revenue. Product sales grew substantially from $15.1 million in the prior quarter, while toll processing sales fell from $2.6 million as the company refocuses on being a cannabis CPG firm.
Gross profits for the quarter meanwhile amounted to $5.6 million, following cost of sales of $15.2 million. Despite the year over year growth, gross profits were down substantially from the $7.3 million recorded in the year ago period. Furthermore, operating expenses more than doubled from the $10.7 million recorded in Q3 2020 to $19.5 million in the current quarter.
Expenses largely consisted of wages and salaries of $5.4 million (which were nearly equal to gross profits themselves), followed by depreciation and amortization of $3.6 million, advertising commission and selling expenses of $2.3 million, and professional fees of $1.8 million among other expenses. Loss from operations overall amounted to $13.9 million. Following other expenses of $0.8 million, and income tax recoveries of $1.8 million, the company overall posted a loss of $12.8 million for the period.
Looking to the balance sheet, things aren’t much rosier. The company currently has a cash position of $31.0 million, however trade and other receivables are pegged at $41.1 million – nearly two quarters worth of net sales and bringing into question the quality of the firms receivables and the likelihood of collection. As per the MD&A filed, roughly $24.0 million in receivables is over 60 days past due. Total current assets overall are pegged at $138.4 million.
Accounts payable and accrued liabilities are meanwhile sitting at $29.7 million, nearly equal to the firms cash position, while term loans and other debt are pegged at $7.8 million. Lastly, total current liabilities are sitting at $57.2 million overall.
The Valens Company last traded at $2.32 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.