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    FAF   CA3181081074

FIRE & FLOWER HOLDINGS CORP.

(FAF)
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Fire & Flower Holdings Corp :. (FFLWF) Announces Record 2020 Fiscal and Fourth Quarter Financial and Operational Results

04/28/2021 | 10:05am EDT

TORONTO - Fire & Flower Holdings Corp. ('Fire & Flower' or the 'Company') (TSX: FAF) (OTCQX: FFLWF), announced its financial and operational results for the fiscal year and quarter ended January 30, 2021.

Financial and Operational Highlights for the 2020 Fiscal Year Ended January 30, 2021

Total revenue of $128.1 million at a gross profit of 35.5%, compared to revenue of $51.1 million at a gross profit of 36.4% for the 2019 fiscal year - representing a 150% increase in revenue; Achieved positive Adjusted EBITDA of $0.02 million for the fiscal year 2020; Cash balance of $30.6 million as compared to $22.9 million for fiscal year 2019; Significant 110.4% sequential quarter over quarter growth of high margin revenue sources in the Hifyre Digital Retail and Analytics Platform ('Hifyre'), with $6.3 million for the fiscal year 2020; Open Fields distribution business achieved 36.5% sequential quarter over quarter growth and produced $20.3 million in revenue for the fiscal year 2020;

Same store sales for the quarter increased 36.8% compared to the fourth quarter of 2019; Closed the acquisition of Friendly Stranger Holdings Corp., a multi-store and multi-banner cannabis retail operator in Ontario. At the Company's fiscal year end, it had 73 stores open and operating. In Q4 2020, thirteen stores commenced operations under Fire & Flower banners compared to three stores in Q3 2020; Opened two co-located cannabis retail stores with Circle K as part of a pilot program; Completed financings for aggregate gross proceeds of $28 million. Additionally, Alimentation Couche-Tard Inc., through an indirectly wholly-owned subsidiary, exercised its participation rights in respect of the financings; Entered into a commitment letter for an aggregate amount of up to $10 million with an option for an additional $5 million for non-dilutive credit facilities with ATB Financial, a Canadian Schedule One bank; Amended the provisions of certain debentures and forced conversion of all remaining principal amounts and accrued unpaid interest through the issuance of 12,223,638 common shares of the Company; Maintained business continuity during the COVID-19 public health crisis through rapid innovation of the Hifyre Digital Retail and Analytics Platform including the Spark Fastlane click-and-collect service, curbside pickup and same-day home delivery in select provinces such as the 14 million person Ontario market

Fiscal Year 2020 and Fourth Quarter Financial Results

For the fiscal year ended January 30, 2021, the Company generated revenue of $128.1 million including sales of $101.5 million in the Retail Platform, $20.3 million in the Distribution Platform and sales of $6.3 million in the Digital Retail and Analytics Platform.

During the thirteen weeks ended January 30, 2021, the Company generated revenue of $43.2 million including sales of $33.2 million in the Retail Platform, $7.0 million in the Distribution Platform and sales of $3.1 million in the Digital Retail and Analytics Platform.

Total gross profit for the fiscal year 2020 ended January 30, 2021 was $45.4 million or 35.5% of revenue with retail and wholesale operations delivering $39.2 million, or 86.2% of total gross profit, compared to the prior year's $18.6 million with retail and distribution operations delivering $16.0 million, or 86.2% of total gross profit for the 52 weeks ended February 1, 2020.

Total gross profit for the fourth quarter ended January 30, 2021 was $16.4 million or 38% of revenue with the Retail Platform delivering $11.9 million, or 72.6% of total gross profit, compared to $4.7 million with retail and wholesale operations delivering $5.1 million, or 83.5% of total gross profit for the fourth quarter ended February 1, 2020.

For the 2020 fiscal year, the Company recorded net comprehensive loss of $79.0 million, or net loss per share, and on a fully diluted basis of $0.45. The net comprehensive loss incurred during the year largely due to non-operating charges including debt extinguishment and finance costs, offset by a gain on revaluation of derivative liabilities, as well as operating losses as the Company continues to invest in the expansion of its business lines including the acquisition of Friendly Stranger Holdings Corp.

Retail Update

Fire & Flower's focus on four-wall retail economics, the optimization and expansion of its retail network was a contributing factor in achieving positive Adjusted EBITDA. In addition, the Company continues to monitor the COVID-19 public health crisis and adapt its business model to optimally serve customers.

Currently, the Company operates 80 cannabis retail stores with 40 located in Alberta, 29 stores in Ontario, 9 stores in Saskatchewan and 1 store in each of Manitoba and Yukon territory.

Retail revenue for the quarter ended January 30, 2021 was $33.2 million, an increase of $19.5 million from the prior year and $6.6 million from the previous quarter. The increase in revenue was driven by a larger number of operating retail stores during the quarter and stronger sequential same store sales.

Gross profit for the quarter ended January 30, 2021 was $11.9 million, an increase of $7.2 million from the prior year and $2.9 million from the previous quarter. Gross profit dollars increased due to the expanded store network and the ability to run data-driven and technology enabled consumer initiatives. The gross margin percentage improved over the prior year with the addition of higher margin cannabis 2.0 products into the sale mix, better product costing and reduced discounting activity on slower moving product. Gross margin percentage was lower over the second quarter as a result of initiatives that were intended to bring more customers into the Fire & Flower digital ecosystem.

At the initial outset of the COVID-19 pandemic lockdown in mid-March 2020, the Company experienced higher than normal sales, but sales have since normalized and there was no material adverse impact to financial results despite temporarily closing certain stores to ensure the Company was sufficiently staffed and equipped to operate in the best interests of customers, employees and the community.

Open Fields Distribution Update

During the quarter ended January 30, 2021, Open Fields revenue increased to $7.0 million from $5.1 million in Q3 2020, representing a 36.5% increase between Q3 2020 and Q4 2020.

Wholesale distribution revenue increased as the Saskatchewan market continued to open up with more retailers sourcing inventory from Open Fields. Improved supply from key distribution partners and the continued growth of cannabis 2.0 products and legacy categories are key drivers of this improvement.

In addition to creating an increased margin opportunity in the province, the distribution channel demonstrates how this supply chain model can be adapted by the Company for use in other jurisdictions where direct wholesale relationships with licensed producers and accessory suppliers are permitted.

About Fire & Flower

Fire & Flower is a leading, technology-powered, adult-use cannabis retailer with more than 80 corporate-owned stores in its network. The Company leverages its wholly-owned technology development subsidiary, Hifyre Inc., to continually advance its proprietary retail operations model while also providing additional independent high-margin revenue streams. Fire & Flower guides consumers through the complex world of cannabis through education-focused, best-in-class retailing while the HifyreTM digital retail and analytics platform empowers retailers to optimize their connections with consumers. The Company's leadership team combines extensive experience in the technology, cannabis and retail industries.

Through the strategic investment of Alimentation Couche-Tard Inc. (owner of Circle K convenience stores), the Company has set its sights on global expansion as new cannabis markets emerge and is poised to expand into the United States when permitted through its strategic licensing agreement with American Acres Managers upon the occurrence of certain changes to the cannabis regulatory regime.

Fire & Flower is a multi-banner cannabis retail operator that owns and operates the Fire & Flower, Friendly Stranger, Happy Dayz and Hotbox brands. Fire & Flower Holdings Corp. owns all issued and outstanding shares in Fire & Flower Inc. and Friendly Stranger Holdings Corp., licensed cannabis retailers that own and operate cannabis retail stores in the provinces of Alberta, Saskatchewan, Manitoba and Ontario, and the Yukon territory.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This news release contains certain forward-looking information within the meaning of applicable Canadian securities laws ('forward-looking statements'). All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as 'anticipate', 'achieve', 'could', 'believe', 'plan', 'intend', 'objective', 'continuous', 'ongoing', 'estimate', 'outlook', 'expect', 'project' and similar words, including negatives thereof, suggesting future outcomes or that certain events or conditions 'may' or 'will' occur. These statements are only predictions.

Forward-looking statements are based on the opinions and estimates of management of Fire & Flower at the date the statements are made based on information then available to Fire & Flower. Various factors and assumptions are applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Forward-looking statements are subject to and involve a number of known and unknown, variables, risks and uncertainties, many of which are beyond the control of Fire & Flower, which may cause Fire & Flower's actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Such factors, among other things, include: final regulatory and other approvals or consents; fluctuations in general macroeconomic conditions; fluctuations in securities markets; the impact of the COVID-19 pandemic; the ability of the Company to successfully achieve its business objectives and political and social uncertainties.

No assurance can be given that the expectations reflected in forward-looking statements will prove to be correct. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. Additional information regarding risks and uncertainties relating to the Company's business are contained under the heading 'Risks and Uncertainties' in the management discussion and analysis for the thirteen and fifty-two weeks ended January 30, 2021 filed on its issuer profile on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

Contact:

Investor

E: investorrelations@fireandflower.com

T: 1-833-680-4948

Media

E: media@fireandflower.com

T: 780-784-8859

(C) 2021 Electronic News Publishing, source ENP Newswire

Stocks mentioned in the article
ChangeLast1st jan.
ALIMENTATION COUCHE-TARD INC. -0.60% 49.46 Delayed Quote.14.02%
FIRE & FLOWER HOLDINGS CORP. -3.16% 0.92 Delayed Quote.5.75%
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Financials
Sales 2022 208 M 165 M 165 M
Net income 2022 - - -
Net cash 2022 3,00 M 2,39 M 2,39 M
P/E ratio 2022 -
Yield 2022 -
Capitalization 316 M 251 M 251 M
EV / Sales 2022 1,51x
EV / Sales 2023 1,06x
Nbr of Employees -
Free-Float 62,4%
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Number of Analysts 3
Last Close Price 0,92 CAD
Average target price 1,93 CAD
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Managers and Directors
Trevor Fencott President, Chief Executive Officer & Director
Nadia Vattovaz Chief Financial Officer & Executive VP-Operations
Donald Arthur Wright Chairman
Suzanne Langier VP-Information technology, People & Culture
Sharon M. Ranson Independent Director
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