Zenabis Global (TSX: ZENA) released a corporate update after the bell this evening, identifying that a number of cuts have occurred at the company as it strives for profitability amid a downturn within the Canadian cannabis sector. The firm has now decided that all of the firms construction projects are substantially completed, and any previously planned expansion has now been stopped.
First and foremost however, Zenabis has identified that it has made a number of staffing cuts, which are expected to reduced quarterly operating expenses by approximately $2.0 million. Cuts include 33% of its corporate staff at its Vancouver, BC head office, and 22% of employees across the board, which is expected to translate to roughly 175 positions at the company. Deemed a restructuring, the action is stated to have no impact to the firms customer service, production, product development, 2.0 initiatives, or overall operations – which is questionable at best. Zenabis claims this is due to increasing efficiencies.
With respect to facilities, all construction is stated to now be substantially complete. Any previous expansions that were announced – such as part 2C of the Langley facility expansion – appear to have either been completed or halted. The text surrounding the Langley facility in particular was muddied, with the firm saying they’re satisfied with the current production capabilities for the facility, and that substantially complete areas will be sufficient going forward. An update provided last month identified that further work was required to be completed for this expansion.
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Additionally, the firm is looking to dispose of its Delta, BC facility which has an annual growing capacity of only 100 kilograms of cannabis. The facility is going up for sale as a result of it being a “non-core asset” for the firm, and has not had cultivation activities occur on the property since May 2019.
In terms of products, Zenabis has focused its second generation product lines on that of vaporizers and beverages. While the former continues to be available to consumers, the latter is anticipated to hit store shelves in the second quarter of 2020. The company is also in the process of developing its export markets, with the first test batch of product being sent to its European partner in March, followed by bulk orders in the second quarter of 2020. A bulk order of product to Israel is also anticipated to occur within the second quarter.
Zenabis Global last traded at $0.07 on the TSX.
Information for this briefing was found via Sedar and Zenabis Global Inc. 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.
