At a time when many cannabis producers are showing major losses, The Valens Company announced revenue for the first quarter of 2020 increased to $32 million, which is a significant increase from $2.2 million in the first quarter of 2019.
Gross profit also increased to $18.1 million, or 56.6% of revenue, compared to $0.9 million, or 38.3% of revenue, in the first quarter of 2019.
The company’s balance sheet is also strong with $44.3 million in cash and short-term investments and a net working capital position of $80.4 million as of February 29, 2020.
“The first quarter of fiscal 2020 was pivotal for The Valens Company as we hit many milestones, including posting continued quarter-over-quarter revenue growth and having oil-based cannabis 2.0 products hit the shelves in Canada amidst a challenging market backdrop. Throughout the quarter, we leveraged the flexibility of our extraction platform to help our customers navigate increasing market complexity while at the same time accelerating the scale-up of our white label capabilities. These efforts included launching a number of new product formats such as hydrocarbon-based offerings with the intention of bringing these high-demand products to customers at the beginning of the third quarter,” says Tyler Robson, CEO of The Valens Company.
“Looking forward, we are starting to see some encouraging signs with respect to a return to larger extraction volumes into the back half of fiscal 2020. The first quarter also saw an increase in our revenue per gram of input which is directly related to our white label strategy and we expect this number to continue to increase throughout 2020 as this segment makes up a larger part of our revenue and overall business. This was the motivation for our rebrand to The Valens Company which represents much more than just a corporate name change, it signifies the evolution of our business into a leading cannabinoid-based product development and manufacturing company positioned to capitalize on the evolving industry on a global scale.”
The Valens Company has 25 SKUs across 5 different product lines in its development pipeline and expects this to continue to grow throughout 2020 to meet demand from its customers for Cannabis 2.0 products, including vape pens, edibles, concentrates, cannabis-infused beverages, topicals, tinctures, and capsules.
The company also announced receipt of its first international purchase orders of white label products to customers in Australia.
Jeff Fallows, President of The Valens Company, says, “We are seeing challenges in the current market environment with several of our customers experiencing reduced workforces, temporary decreases in cultivation output, and a resulting reduction in demand for extraction services. Although retail demand for cannabis has surged during the COVID-19 pandemic and we are experiencing strong white label sales going into the second half of fiscal 2020, we are unable to predict the full impact these challenges will have on our second quarter financials… With a breadth of new products on the horizon, a white label platform that surpasses even the largest Canadian cannabis companies, and a diversified customer base, we are well-positioned to adapt to ever-changing environments.”