Valens Company Posts Q3 Revenues Of $21.0 Million, Net Loss

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.

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