Entourage Health Corp. (
TSX-V:
ENTG) (
OTCQX: ETRGF)
(
FSE:4WE) (“
Entourage” or the
“
Company”), a Canadian producer and distributor of
award-winning cannabis products, today announced its financial
results for the three months ended March 31, 2024. The Company
reported total revenue of $16.4 million (net revenue of $12.7
million, before excise duties and discounts), up 9% year-over-year.
The Company will host a conference call to discuss its financial
and business highlights on Tuesday, May 28, 2024, at 10:00 a.m.
Eastern Time.
“Entourage's first quarter results are a
testament to our robust financial health and strategic approach to
business operations, positioning us for success throughout 2024,”
said George Scorsis, Chair and CEO. “With defined infrastructure
and supply agreements in place, we are well-positioned to continue
delivering the accelerated growth we have already seen develop in
Q1. Our team's relentless focus on efficient execution has led to a
solid performance, reflected in improved profitability and a
significant increase in EBITDA, marking the first positive quarter.
We are also seeing substantial growth in our adult-use business as
we continue to announce and launch a range of innovative products
across Canada set to generate ongoing interest and excitement among
consumers.”
Summary of
Results
For the Quarter-Ended |
|
March 31, 2024 |
March 31, 2023 |
|
|
($000’s) |
($000’s) |
Total revenue |
|
16,418 |
15,107 |
*Net revenue (less
Excise Tax) |
|
12,701 |
11,834 |
Gross profit
before changes in fair value |
|
5,775 |
3,002 |
Gross margin %
before changes in fair value |
|
45% |
25% |
Loss and
comprehensive loss |
|
(6,292) |
(9,516) |
EBITDA** |
|
533 |
(3,884) |
|
|
|
|
As at |
|
March 31, 2024 |
March 31, 2023 |
|
|
($000’s) |
($000’s) |
Cash and cash
equivalents |
|
9,370 |
11,254 |
Inventory |
|
10,925 |
10,010 |
Biological
assets |
|
- |
- |
Working
capital |
|
(152,919) |
(146,909) |
*Net revenue defined as revenue (i.e., gross
revenue less discounts and customer incentives but inclusive of
freight) less excise taxes** EBITDA is not a recognized measurement
under International Financial Reporting Standards (IFRS), and this
data may not be comparable to data presented by other companies.
Management defines EBITDA as adjusted to exclude interest, tax,
depreciation, stock compensation, fair value changes and other
non-cash items, and non-recurring items. This data is furnished to
provide additional information and does not have any standardized
meaning prescribed by IFRS. The Company uses this non-IFRS measure
to provide shareholders and others with supplemental measures of
its operating performance. The Company also believes that
securities analysts, investors, and other interested parties
frequently use this non-IFRS measure in evaluating companies, many
of which present similar metrics when reporting their results. As
other companies may calculate EBITDA differently than the Company,
this metric may not be comparable to similarly titled measures
reported by other companies. We caution readers that EBITDA should
not be substituted for determining net loss as an indicator of
operating results or as a substitute for cash flows from operating
and investing activities. See the Company management's discussion
and analysis for the three months ended March 31, 2024 (the “Q1
2024 MD&A”), for a detailed reconciliation of adjusted EBITDA
to net income/(loss). The Company’s financial statements for the
three months ended March 31, 2024, and the Q1 2024 MD&A are
available on SEDAR+ at www.sedarplus.ca.
“Entourage delivered significant growth in the
first quarter of 2024, driven by increased revenues and robust
operating discipline, resulting in an impressive 92% increase in
gross profit,” said Vaani Maharaj, CFO. “Entourage is now perfectly
positioned to seize a broad spectrum of opportunities, driving
value through significant revenue growth, enhanced operating
efficiencies, and improved margins. We are committed to investing
in our future and accelerating our vision for the Company, setting
a powerful foundation for the rest of the year.”
Revenue Highlights
|
|
Q1 2024 |
Q1 2023 |
ChangeYOY |
|
|
($000’s) |
($000’s) |
% |
Net Revenue by
Channel |
|
|
|
|
Medical |
|
5,752 |
5,973 |
(4%) |
Adult-Use |
|
6,465 |
5,861 |
10% |
Bulk |
|
483 |
- |
100% |
Total Net Revenue |
|
12,701 |
11,834 |
7% |
Financial Highlights
- For the quarter that ended March
31, 2024, Entourage recorded total revenue of $16.4 million
compared to $15.1 million the previous year, a 9% increase, and a
23% increase from Q4 2023.
- Gross profit before changes in fair
value was $5.8 million for Q1 2024, representing a $2.8 million
increase compared to Q1 2023. This significant improvement is
attributed to the cessation of cultivation activities and the
closure of underperforming business units.
- Gross margins were 45% in Q1 2024,
compared to 25% in Q1 2023. This improvement resulted from several
factors, including increased production automation, lower biomass
costs, improved freight management, and packaging
optimizations.
- Cost of Goods Sold (COGS) declined
by $1.9 million or 22% compared to Q1 2023. This reduction reflects
the organization’s commitment to cost management and operational
excellence, as outlined in the Company’s transformation plans.
- EBITDA increased by $4.4 million to
$0.5 million in Q1 2024, a significant turnaround from ($3.9
million) in Q1 2023.** This 114% improvement highlights the success
of the Company’s strategic transformation initiatives to lower
costs and a shift to a higher-margin product mix.
Corporate Highlights During and After the First Quarter
of 2024
- On April 30, 2024, the Company
announced it was in breach of certain financial covenants and other
obligations under each of its Senior Credit Agreement and
Subordinated Credit agreements with an affiliate of the LiUNA
Pension Fund of Central and Eastern Canada (“LPF”) and was working
collaboratively with LPF to reach an agreement on amended debt
terms. Consequently, the Company received a renewed forbearance
letter on May 3, 2024, waiving the Company’s breaches until August
2, 2024, subject to the satisfaction or waiver of certain
conditions.
- In Q1 2024, Entourage increased
production capacity to nearly 2.2 million pre-rolls per month.
Commercial Highlights
- Entourage continues demonstrating
its market strength and consumer appeal with a 10% year-over-year
increase in adult-use revenue. This impressive growth reflects the
Company’s strategic initiatives and ability to adapt to the
evolving market landscape.
- In Q1 2024, the Company’s Dime Bag
brand in Ontario was the 3rd fastest-growing pre-roll brand.
Additionally, Dime Bag launched in Alberta, with plans for a
nationwide rollout throughout 2024.
- In Q1 2024, 80% of stores in
Ontario, Alberta, and British Columbia continued carrying at least
one Entourage SKU, maintaining a strong presence from the previous
year. Furthermore, 50% of these stores featured four or more
Company SKUs.
- In Q1 2024, Entourage’s national
pre-roll market share was 2%. Color Cannabis also ranked 12th
highest pre-roll brand in national dollar sales. It secured the
number 2 spot in the pre-roll category in British Columbia, the
second-largest revenue-generating market in Canada after
Ontario.
- The Company launched 11 new
adult-use SKUs in Q1 2024, enhancing its product lineup across key
markets. These SKUs included Color Cannabis “Pedro’s Sweet Sativa”
and “Blueberry Seagal Live Resin Infused” pre-rolls in Ontario, and
“Phantom Sunset” whole flower in Alberta.
- Additionally, Saturday unveiled
“Passionfruit Lavender” and “Beached Mango” in 1 g 510 vape carts
in Ontario, further diversifying offerings and catering to consumer
demand.
- Starseed consistently broadens its
product portfolio available to medical cannabis patients. This
portfolio includes the introduction of new strains, advanced
delivery methods, and specialized formulations, all designed to
meet the diverse needs of the medical cannabis community.
Conference Call Details A
conference call will be hosted by Mr. Scorsis and Ms. Maharaj, with
management available for questions following opening remarks:
Date: |
Tuesday, May 28, 2024 |
Time: |
10 a.m. Eastern Time |
Dial-in Number: |
Canada/USA: 1-844-763-8274
International Toll: 1-647-484-8814Participants, please dial in and
ask to join the Entourage call. |
Replay Dial-in: |
Canada/USA:
1-855-669-9658 Replay Access Code: 0899 Available after
12:00 p.m. Eastern Time until June 28, 2024 |
Source data: Buddi Retail Data, as of March 31,
2024.
About Entourage Health
Corp.
Entourage Health Corp. is the publicly traded
parent Company of Entourage Brands Corp., a licence holder
producing and distributing cannabis products for the medical and
adult-use markets. The Company owns and operates a fully licensed
26,000 sq. ft. Aylmer, ON processing facility. With its Starseed
Medicinal medical-centric brand, Entourage has expanded its
multi-channelled distribution strategy. Starseed's industry-first,
exclusive partnership with LiUNA, the largest construction union in
Canada, along with employers and union groups, complements
Entourage's direct sales to medical patients. Entourage's elite
adult-use product portfolio includes Color Cannabis, Saturday
Cannabis – and now Dime Bag and Syndicate – sold across eight
provincial distribution agencies. Exclusive Canadian producer and
distributor of award-winning U.S.-based wellness brand Mary's
Medicinals, sold in both medical and adult-use channels. In
addition, Entourage also entered into an exclusive agreement with
Irwin Naturals, a renowned nutraceutical and herbal supplement
formulator of branded wellness products sold across North
America.
Follow Entourage and its brands on:
LinkedIn
Instagram: Color Cannabis, Saturday Cannabis,
Starseed & Syndicate
For additional information or investor or media
inquiries:Catherine FlamanSenior Director, Communications
& Corporate
Affairs416-910-0279catherine.flaman@entouragecorp.com
Forward Looking Information
This press release contains "forward-looking
information" within the meaning of applicable Canadian securities
legislation which are based upon Entourage's current internal
expectations, estimates, projections, assumptions and beliefs and
views of future events. Forward-looking information can be
identified using forward-looking terminology such as "expect",
"likely", "may", "will", "should", "intend", "anticipate",
"potential", "proposed", "estimate" and other similar words,
including negative and grammatical variations thereof, or
statements that certain events or conditions "may", "would" or
"will" happen, or by discussions of strategy.
The forward-looking information in this news
release is based upon the expectations, estimates, projections,
assumptions, and views of future events which management believes
to be reasonable in the circumstances. Forward-looking information
includes estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance, or other statements that are not
statements of fact. Forward-looking information necessarily involve
known and unknown risks, including, without limitation, risks
associated with general economic conditions; adverse industry
events; loss of markets; future legislative and regulatory
developments; inability to access sufficient capital from internal
and external sources, and/or inability to access sufficient capital
on favourable terms; the cannabis industry in Canada generally; the
ability of Entourage to implement its business strategies; the
COVID-19 pandemic; competition; crop failure; and other risks.
Any forward-looking information speaks only as
of the date on which it is made, and, except as required by law,
Entourage does not undertake any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise. New factors emerge from
time to time, and it is not possible for Entourage to predict all
such factors. When considering this forward-looking information,
readers should keep in mind the risk factors and other cautionary
statements in Entourage’s disclosure documents filed with the
applicable Canadian securities' regulatory authorities on SEDAR+ at
www.sedarplus.ca. The risk factors and other factors noted in
the disclosure documents could cause actual events or results to
differ materially from those described in any forward-looking
information.
Third Party Information
This press release includes market and industry
data that has been obtained from third party sources, including
industry publications. The Company believes that the industry data
is accurate and that its estimates and assumptions are reasonable,
but there is no assurance as to the accuracy or completeness of
this data. Third party sources generally state that the information
contained therein has been obtained from sources believed to be
reliable, but there is no assurance as to the accuracy or
completeness of included information. Although the data is believed
to be reliable, the Company has not independently verified any of
the data from third party sources referred to in this press release
or ascertained the underlying economic assumptions relied upon by
such sources.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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