TORONTO, Nov. 26, 2019 /CNW/ – SLANG Worldwide Inc. (CNSX: SLNG), (Frankfurt: 84S), (“SLANG” or the “Company“), today announced that it has filed its financial results for the three and nine months ended September 30, 2019. Additionally, the Company is pleased to announce a non-brokered private placement for aggregate gross proceeds of approximately $15 million. The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS“). All figures in this press release are stated in Canadian dollars unless otherwise noted.
“In Q3 2019, we continued to see strong organic revenue growth. Across our portfolio, we saw favourable developments, including a shift in consumer spending toward the premium end of our portfolio, particularly Craft Reserve and Firefly. We continue to diversify our portfolio of products to increase total cannabis market share across both historically strong and blue-sky product segments, for SLANG,” said SLANG CEO Peter Miller.
“Additionally, we are excited to accept additional financing. This significant capital infusion from existing, long-term shareholders further strengthens our balance sheet. The Company’s ongoing efforts toward increased acquisition-centric efficiencies, our goal of positive operating cash flow by mid-2020, today’s enhanced cash position, and our powerful, multi-state platform allow us to be opportunistic around growth opportunities in this dynamic environment. We see huge opportunity in flower, ultra-premium concentrates, and other previously untapped product segments for SLANG.”
Key Financial and Operational Highlights
Brand Key Performance Indicators in Q3 2019:
SLANG will continue to capitalize on growth opportunities within the sector through expanding both its product offerings and distribution channels, ensuring that the Company stays ahead of evolving consumer trends and may reach the broadest consumer base possible. The Company has highlighted a number of key growth initiatives being pursued that will increase consumer demand within its portfolio.
Corporate Development Update:
Announcement of $15M Private Placement
SLANG has announced today a non-brokered private placement financing (the “Financing”) for aggregate gross proceeds of $15,152,063. Investors include existing institutional shareholders of the Company and an additional investment by investor Bruce Linton. The Company intends to use the proceeds of the private placement to support strategic growth opportunities and for general corporate purposes.
Pursuant to the Financing, the Company will issue 30,922,579 units (“Units”) at a price of $0.49 per Unit. Each Unit is comprised of one SLANG common share (a “Common Share”) and one common share purchase warrant (each, a “Warrant”). Each Warrant entitles the holder to purchase one Common Share for five years at an exercise price of $0.52 per Common Share. The Company has the option to accelerate the exercise of the Warrants after one year, in quarterly tranches equal to one-third of the aggregate number of Warrants issued, in the event that the Common Shares trade at a price in excess of $1.50 for a period of 30 consecutive days. Should all of the Warrants be exercised, it would provide the Company with an additional $16 million in cash.
The Financing is expected to close imminently.
Q3 2019 Financial Review
The consolidated financial statements were prepared in accordance with IFRS. All figures are stated in Canadian dollars unless otherwise noted.
The following is selected presentation of the Income Statement for the quarter ended September 30, 2019 and the comparable quarter in 2018:
(In thousands except per share data and
NET OPERATING REVENUE
Cost of goods sold
GROSS PROFIT MARGIN
Other items (Impairment, FV adjustment,
EARNINGS PER SHARE
The Company generated a 49% gross margin in the quarter ended September 30, 2019. The Company has begun to realize a positive gross margin impact from the ongoing integration of certain operations acquired earlier this year. In addition, product mix and market segmentation of sales will impact gross margin in any particular quarter.
Below is the normalized gross profit margin from operations for the three months ended September 30, 2019 as well as the previous quarter:
June 30, 2019
(In thousands except per share data and
Net Operating Revenue
Cost of goods sold
Adjusted Gross Profit
EBITDA, Adjusted EBITDA, Branded Unit volume and Branded Servings volume are non-IFRS financial measures that the Company uses to assess its operating performance. EBITDA is defined as net earnings (loss) before net finance costs, income tax expense (benefit) and depreciation and amortization expense. Management defines Adjusted EBITDA as EBITDA adjusted for other non-cash items such as the impact of unrealized fair values, share based compensation expense, impairments, one-time gains and losses, and one-time revenues and expenses. See the heading “Operations Overview – Branded Volume” in the Company’s Q3 2019 MD&A for a description of how each of Branded Unit volume and Branded Servings volume is calculated. This data is furnished to provide additional information and is a non-IFRS measure and does not have any standardized meaning prescribed by IFRS. The Company uses these non-IFRS measures 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 these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. As other companies may calculate these non-IFRS measures differently than the Company, these metrics may not be comparable to similarly titled measures reported by other companies. We caution readers that Adjusted 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.
(In thousands except per share data and
See the Company’s Q3 2019 MD&A for a detailed reconciliation of EBITDA and Adjusted EBITDA to Total Comprehensive Income / (Loss).
Options and RSU Grants
The Company announces that it has granted common stock purchase options (each, an “Option”) to acquire up to 1,207,500 Common Shares of the Company to certain employees and consultants, 100,000 of which were granted to an employee engaged in investor relations for the Company.
The Company further announces it has granted 3,750,000 restricted share units (“RSUs”) to certain key employees of the Company, 2,500,000 of which were granted to officers and a director of the Company.
The Options and RSUs are subject to certain vesting provisions which are outlined in further detail in the CSE Form 11 filed concurrently with this release.
The Company will hold a conference call at 10:00 a.m. EST on Tuesday, November 26, 2019 to discuss the Company’s Q3 2019 financial results.
888.231.8191 (toll free) or (+1) 647.427.7450 (local or international calls)
An archive of the webcast will be available on the Company’s website for one year.
An investor presentation to accompany management’s remarks will be available on the Company’s website and on the webcast page.
An audio replay of the call will be available for seven days at (+1) 855.859.2056, passcode 9283748.
About SLANG Worldwide Inc.
SLANG Worldwide Inc. is a leading global cannabis consumer packaged goods company with a robust portfolio of renowned brands distributed across 2,600 stores in 12 US states. The Company is focused on acquiring and developing market-proven regional brands as well as creating new brands to meet the needs of cannabis consumers worldwide. SLANG is listed on the Canadian Securities Exchange under the ticker symbol SLNG and on the Frankfurt Stock Exchange under the trading symbol 84S. For more information, please visit www.slangww.com.
This news release contains statements that constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur.
Forward-looking statements are necessarily based upon a number of estimates and assumptions, including those referenced in “Growth Catalysts” in the Company’s management discussion & analysis for the period ending September 30, 2019, that, while considered reasonable by management of SLANG at this time, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual results to differ materially from those expressed or implied in such statements. Investors are cautioned not to put undue reliance on forward-looking statements. Applicable risks and uncertainties include, but are not limited to regulatory risks, changes in laws, resolutions and guidelines, market risks, concentration risks, operating history, competition, the risks associated with international and foreign operations and the other risks identified under the headings “Risk Factors” in SLANG’s final long form prospectus dated January 17, 2019 and “Risks and Uncertainties” in the management discussion and analysis for the year ended December 31, 2018 and nine months ended September 30, 2019, each as filed on SEDAR at www.sedar.com. SLANG is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
This press release contains financial outlooks within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of SLANG to provide an outlook for fiscal 2019 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Updated 2019 Full Year Outlook” herein, and “2019 Growth Catalysts” in the Company’s management discussion & analysis for the period ending September 30, 2019 and assumptions with respect to certain proposed acquisitions. The actual results of the Company’s operations for any period will likely vary from the amounts set forth herein and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading “Forward-Looking Statements”, it should not be relied on as necessarily indicative of future results.
(1) Pro Forma Financial Information
This press release contains references to pro forma financial information, including with respect to pro forma revenues. Pro forma revenues include the revenue for the three-month period ended September 30, 2019 for each of Arbor, LBA, NSH and ACG. Such proposed acquisitions include the previously announced proposed acquisitions of Arbor and LBA, as well as the exercise of options to acquire the remaining Organa Brands businesses, NSH and ACG. These acquisitions cannot be consolidated, in the case of NSH and ACG, because such acquisitions were still under option at quarter-end and, in the case of Arbor and LBA, because such acquisitions have not yet closed. Pro forma revenues do not include anticipated costs and expenses to generate such revenue. Completion of the proposed acquisitions of Arbor and LBA and the exercise of the Company’s option for NSH, and the acquisition of NSH and ACG are subject to, among other things, the negotiation and execution of definitive acquisition agreements and related documents and the satisfaction or waiver of any conditions precedent to the consummation of such acquisitions (including the receipt of any requisite regulatory and third-party approvals).
The Company believes the pro forma results presented provide relevant and useful information for investors because they clarify the Company’s actual operating performance, make it easier to compare the Company’s results with those of other companies and allow investors to review performance in the same way as the Company’s management. Since these measures are not calculated in accordance with IFRS, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of the Company’s performance, and they may not be comparable to similarly named measurements from other companies.
The Canadian Securities Exchange has not reviewed, approved or disapproved the content of this news release.
SOURCE SLANG WORLDWIDE
Original Source: https://www.slangww.com/read-news/?source=122514