Valens GroWorks Corp (TSXV: VGW) provided guidance this morning for its recently completed third quarter of 2019. The firm is expecting record revenues in the range of $16 – $17 million for the quarter. The figure is nearly double the $8.8 million in revenue recorded in the second quarter this year.
The guidance is a result of the firm reportedly processing over 26,000 kilograms of cannabis and hemp biomass during the period, as compared to 8,547 kilograms in the prior period.
While the revenue growth is positive for company shareholders, it should be noted that while the company has guided for an 81% increase at minimum on a quarter over quarter basis, its a result of processed mass increasing 204%. The trend suggests price suppression has begun to hit the extraction sector as more operators come online and licensed producers begin to establish their own extraction facilities, such as was recently announced by WeedMD Inc (TSXV: WMD).
According to company President Jeffrey Fallows, the production curve is a result of August seeing a 50% increase in processing due to further equipment coming online. September is reportedly continuing at a similar run rate, with demand only expected to increase further as hemp crops begin to be harvested across the country.
Valens is currently the largest processor in the sector, with 425,000 kilograms of annual capacity currently. That number is expected to more than double to one million tons in the first half of 2020.
Valens GroWorks closed yesterdays session at $3.46 on the TSX Venture Exchange.
Information for this briefing was found via Sedar and Valens GroWorks. 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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