The Green Organic Dutchman Holdings Ltd. (OTCQX:TGODF) (CSE:TGOD) released its financial results for the quarter ended March 31, 2022, revealing record quarterly net revenues of CA$10.58 million ($8.25 million), a 96% increase from Q1 2021, and a 12% increase from Q4 2021.
Q1 2022 Financial Highlights
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The quarter-over-quarter increase in revenue is in line with the company's forecast and can be mainly attributed to the launch of premium flowers (Cherry Mints & Maple Kush), launch of pre-rolls, and Highly Dutch Organic flower gaining traction in 2022. With Acosta Canada Corp, providing direct store support as well as budtender and consumer education, in addition to the new listings accepted in key markets for January 2022, the company achieved significant increased revenues in key markets.
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Improved gross margin (before changes in fair value) to 35% from 32% in Q4 2021, reflecting higher net revenues due to sales mix of products moving towards premium flower. The company believes gross margin and net revenue in Canada will continue to increase as it sells proportionately more premium flower, which should result in achieving breakeven adjusted earnings before interest, taxes, depreciation, and amortization.
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General and administrative expenses ("G&A") decreased to CA$3.92 million for the three months ended March 31, 2022, a 14% decrease in comparison to CA$4.57 million for Q4 2021.
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Adjusted EBITDA loss was CA$2.24 million for Q1 2022, representing a 57% improvement of CA$2.93 million compared to Q1 2021 as a result of the company's increase in revenue and continued cost cutting initiatives as well as a sales mix with premium flower accounting for 27% of overall sales versus 19% in the previous quarter.
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As of March 31, 2022, the company had positive working capital of CA$19.01 million (including non-cash contingent consideration liability of CA$4.78 million).
"We continued our momentum from Q4 2021 with strong Q1 2022 results, including another record month in March. These results can be attributed to the launch of new products and our existing products gaining further traction, affirming the strategic approach we have taken," stated Sean Bovingdon, CEO of TGOD.
Key Initiatives:
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The company expanded its production base to meet increasing consumer demand by adding cultivation at the facility in Valleyfield, Quebec.
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The company had agreed with its Canadian lender for the revolver loan to:
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Increase the overall revolver loan limit by CA$5 million to CA$30 million;
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Allow certain eligible inventory to be included as collateral; and
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Relax certain non-financial covenants; subject to the satisfaction of various conditions set out therein. In exchange, the company issued 500,000 common shares of the company to the lender at a price of CA$0.10 per common share. All other terms under the revolver loan remained the same.
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Since October 2021, the company has been engaged with advisors for the sale of company's entity in Poland, HemPoland S.p.a. Z.o.o., which was deemed non-core to future operations and the company strategy. The company received a non-binding competitive offer subsequent to Q1 2022. The company anticipates completing the sale of HemPoland within the coming months.
Photo: Courtesy of Mackenzie Marco on Unsplash
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