Strongest adjusted margins¹ to date of 54%, demonstrating an increase from adjusted gross margins of 43% in Q2 of 2022

Adjusted gross profit¹ of $4.5 million in Q2 2023, compared with $4.3 million in Q2 2022, representing a 6.3% increase year-over-year

Continued strong sales growth in Vermont, with revenue increasing by $1.8 million and $3.87 million, for the three month and six-month periods respectively ending June 30, 2023

$11.23 million in cash and restricted cash at August 15, 2023

Toronto, Ontario–(Newsfile Corp. – August 24, 2023) – SLANG Worldwide Inc. (CNSX: SLNG) (OTCQB: SLGWF) (“SLANG” or the “Company“), a leading global cannabis consumer packaged goods (CPG) company with a diversified portfolio of popular brands, today released financial results for the three and six months ended June 30, 2023. All figures in this press release are stated in Canadian dollars unless otherwise noted.

“In Q2 2023, SLANG achieved another significant milestone with our strongest adjusted gross margins to date, showcasing our dedication to driving financial results across all areas of the business. We also used the quarter to introduce a compelling range of new high-margin products, which will continue to position us as leaders in a rapidly evolving cannabis market,” commented John Moynan, Chief Executive Officer of SLANG. “Our capacity to reduce operating expenses, streamline our vertically integrated operations, and introduce new higher-margin revenue channels in our Core Markets continues to drive our margin expansion and enhance our bottom-line growth. With a strong operational infrastructure in place to advance new growth initiatives, we are strategically focused on constant innovation for our customers in order to deliver today’s most demanded cannabis brands to key cannabis markets nationwide.”

“SLANG maintained strong sales growth in Vermont, increasing revenue by $1.8 million and $3.87 million, for the respective three month and six-month periods ending June 30, 2023. Our wholesale sales in Vermont in Q2 2023 also grew by 380% from Q1, showing strong growth momentum quarter-over-quarter. Despite Colorado’s slower growth, we are still outperforming our competitors in the state, with O.pen maintaining its #1 ranking by the BDSA as the top-performing vape cartridge brand in the state throughout Q2. For the first six months of 2023, we increased sales of O.pen cartridges in Colorado by 16% to 415,082 units from the comparable period of 2022 as our portfolio of leading brands has continued to drive solid sales performance.”

Second Quarter 2023 Operational Highlights and Growth Drivers:

• Reported continued strong growth in Vermont, with revenue increasing by $1.8 million and $3.87 million, for the three month and six-month periods respectively ending June 30, 2023.
• SLANG increased wholesale sales in Vermont in Q2 2023 by 380% from the first quarter of 2023, showing strong quarter-over-quarter growth momentum.
• In Colorado, O.pen maintained its #1 ranking by the BDSA as the top-performing vape cartridge brand in Colorado throughout Q2. For the first six months of 2023, we increased unit sales of O.pen cartridges by 16% from the comparable period of 2022.
• In June, launched the new 2-gram disposable cartridge in Colorado, exceeding our initial sales goal by 241%, selling over 7,200 new 2-gram disposable cartridges in the first month alone, and producing over $570,000 in sales through August 21, 2023².
• Post-quarter end, the Company launched its first line of fast-acting cannabis-infused gummies under its Alchemy Naturals all-natural THC gummy brand in Vermont.

Second Quarter 2023 Financial Summary:

• Revenue from continuing operations for the three months ended June 30, 2023, was $8.44 million, compared with $9.87 million in the three months ended June 30, 2022. The year-over-year decline was primarily driven by a reduction of $1.63 million in our Distribution sales and $0.96 million in our Emerging Market sales, partially offset by a $1.05 million increase in Core Market sales driven by growth in Vermont. For the six months ended June 30, 2023, revenue from continuing operations increased 5.6% to $19.3 million from $18.2 million in the prior year six-month period.
• Gross profit of $4.4 million (52% gross margin) in Q2 2023, compared with $4.5 million (43% gross margin) in Q2 2022. Adjusted gross profit¹ was $4.5 million (54% adjusted gross margin) in Q2 2023, compared with $4.3 million (43% adjusted gross margin) in Q2 2022, representing a 6.3% increase year-over-year.
• EBITDA¹ of $(1.2) million in Q2 2023, compared with $(1.1) million in Q2 2022. The reduction in EBITDA is primarily attributable to a $0.28 million reduction in gross profit offset by a $0.21 million reduction in operating expenses, both of which exclude depreciation costs.
• Adjusted EBITDA¹ of $(0.76) million in Q2 2023, compared with $(0.70 million) in Q2 2022. The reduction in Adjusted EBITDA is primarily attributable to a $0.19 million increase in operating expenses (excluding depreciation expenses, expected credit losses and share based payments), offset by $0.13 million increase in adjusted gross profit, excluding depreciation costs.
• $10.07 million in cash and restricted cash on June 30, 2023, compared to $11.67 million in cash and restricted cash on March 31, 2023. The Company received an additional $1.63 million in ERTC (Employee Retention Tax Credit) from the Internal Revenue Service post quarter-end. As of August 15, 2023, SLANG had $11.23 million in cash and restricted cash compared to $11.92 million on December 31, 2022.

Second Quarter 2023 Financial Review

The consolidated financial statements were prepared in accordance with IFRS. The following is a selected presentation of the Income Statement for the three and six months ended June 30, 2023.

See the Company’s management’s discussion and analysis for the three and six months ended June 30, 2023 (the “Q2 2023 MD&A“) for a detailed reconciliation of EBITDA and Adjusted EBITDA to Operating Income / (Loss). SLANG’s financial statements and the Q2 2023 MD&A are available on SEDAR+ at www.sedarplus.ca, and on the Company’s Investor Relations website at www.slangww.com.

Non-IFRS Measures

EBITDA, Adjusted EBITDA, adjusted gross profit and adjusted gross margin 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. Management defines adjusted gross profit as gross profit before fair value adjustment of biological assets. This data is furnished to provide additional information and are non-IFRS measures and do 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. During 2022, the Company updated its definition of Adjusted EBITDA to include the impact of fair value amounts included in inventory sold and unrealized gain on changes in fair value of biological assets.

Conference Call Details

Management plans to host an investor conference call today, August 24, at 10:00 am ET to discuss the results.

Timing: Thursday, August 24, 2023 at 10:00 am ET
Dial In: 1(888) 440-5983 (US toll-free) or 1(646) 960-0202 (international)
Conference ID: 6291438
Webcast: A live webcast can be accessed via the Company’s website at www.slangww.com or https://events.q4inc.com/attendee/459259871

About SLANG Worldwide

SLANG Worldwide Inc. is the industry leader in branded cannabis consumer packaged goods, with a diversified portfolio of five distinct brands and products distributed across the U.S. Operating in 13 legal cannabis markets nationwide, SLANG specializes in acquiring and developing market-proven regional brands, as well as launching innovative new brands to seize global market opportunities and match evolving consumer tastes. The Company has over a decade of experience operating in the nascent and highly regulated cannabis sector, and its partners enjoy the benefits of that experience, with access to the SLANG playbook for successful operations, sales and marketing. Its strong product pipeline from uniquely positioned and scalable brands like O.pen, Alchemy Naturals, Ceres, Firefly, and partnerships with brands like Greenhouse Seed Company have a proven track record of success with the brands consistently ranking among the top performers in the states where SLANG operates. Learn more at slangww.com.

Forward-Looking Statements

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 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, risks related to the COVID-19 global pandemic, 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 annual information form dated April 27, 2022 and other disclosure documents available on SEDAR+ at www.sedarplus.ca. 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.

Financial Outlook

This news release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the Company’s sales in certain markets during the period of July and August 2023, as well as cash balances 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 “Forward-Looking Statements”. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections 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.

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.

Reader Advisory

Neither the Canadian Securities Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Company Contact
Mikel Rutherford, CFO
833-752-6499

Media and Investor Inquiries
Investors@SLANGww.com

KCSA Strategic Communications
Phil Carlson
SLANG@kcsa.com

________________________
¹ See “Non IFRS measures”.
² Preliminary and unaudited financial results are subject to customary financial statement procedures by the Company and its auditors. Actual results could be affected by subsequent events or determinations. While the Company believes there is a reasonable basis for these preliminary financial results, the results involve known and unknown risks and uncertainties that may cause actual results to differ materially. These preliminary fiscal results represent forward-looking information. See “Forward-Looking Statements” and “Financial Outlook”.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

Revenue up 18% Y/Y to $116.7 Million, Excluding Discontinued Operations

Company Delivers Record Adjusted EBITDA¹ of $29.4 Million, up 78% Y/Y, 12% Sequentially, with Adjusted EBITDA Margin of 25%

GAAP Loss from Operations Improved 81% Y/Y, 79% Sequentially to $(4.5) Million, Excluding Discontinued Operations

MIAMI, Aug. 17, 2023 (GLOBE NEWSWIRE) — AYR Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (“AYR” or the “Company”), a leading vertically integrated U.S. multi-state cannabis operator (“MSO”), is reporting financial results for the second quarter ended June 30, 2023. Unless otherwise noted, all results are presented in U.S. dollars.

The following financial measures are reported as results from continuing operations due to the sale of the Company’s business in Arizona in March 2023, which are reported as discontinued operations. All historical comparisons have been restated accordingly.

David Goubert, President & CEO of AYR, said, “The second quarter represented a meaningful step in AYR’s journey towards generating meaningful cash flow, as we simultaneously got leaner and more efficient while continuing to lay the foundation for revenue growth. We generated record Adjusted EBITDA, up 78% year-over-year with an Adjusted EBITDA margin of 25% and improved our GAAP loss from operations by 81% year-over-year to a loss of $4.5 million. Our efforts around cost savings and optimization accelerated margin expansion ahead of our expectations, and we believe these efforts will enable us to maintain Adjusted EBITDA margin in the mid-twenties for the second half as we unlock working capital through aggressive inventory management throughout the remainder of the year.

“We have also made meaningful progress on improving our liquidity profile in the second quarter. Along with the amendments to various earnout considerations completed in May, we also reached contingent agreements to extend the maturity of $69 million in promissory notes by two years and recently refinanced and upsized our Gainesville cultivation facility mortgage. As a result of the collective amendments to the vendor notes, contingent promissory notes and earn-out payments, and refinancing and upsizing of our Gainesville facility mortgage, we have extended the payment terms of more than $120 million of obligations, inclusive of the $69 million of contingent agreements. These important milestones reflect our commitment to strengthening AYR’s balance sheet, as we are intently focused on improving our working capital and liquidity.

“We are positioning AYR for sustainable long-term growth and profitability across all our markets, while prioritizing the financial health of the Company. As we look to the rest of the year, we plan to accelerate our cash generation via our 2023 optimization plan, making strides in inventory optimization, continuing to align our production with demand, and developing further synergies within our supply chain, retail, wholesale and purchasing functions. Additionally, we believe our ongoing initiatives to grow our Florida footprint, improve operations in New Jersey, and build out retail footprints in Ohio, Illinois, and Connecticut will enable us to accelerate growth in the quarters ahead.”

Second Quarter Financial Summary (excludes results from AZ for all periods) ($ in millions, excl. margin items)

¹Adjusted EBITDA, Adjusted Gross Profit and Adjusted EBITDA Margin are non-GAAP measures, and accordingly are not standardized measures and may not be comparable to similar measures used by other companies. See Definition and Reconciliation of Non-GAAP Measures below. For a reconciliation of Operating Loss to Adjusted EBITDA as well as Gross Profit to Adjusted Gross Profit, see the reconciliation tables appended to this release.

Second Quarter and Recent Highlights

• Retail Updates
  • Opened the Company’s 86^th retail location, subsequent to quarter end.
  • Q2 retail sales increased 1% sequentially from Q1, with total transactions up 6%.
  • The Company has opened 10 Florida stores thus far in 2023, bringing its Florida store total to 62 open locations to date. The Company plans to exit 2023 with a total of Florida 64 stores, compared to 52 to start the year.
  • Completed re-brand of full fleet of Florida stores to AYR Cannabis Dispensary.
  • Announced agreement to acquire third Ohio dispensary license.
  • Announced an exclusive licensing and retail agreement in Florida with Kiva Confections, a global leader in cannabis edibles. As previously announced, the agreement will bring Kiva’s collection of award-winning cannabis edibles to the Florida market for the first time via AYR’s retail locations across the state.

• Corporate Updates
  • Closed the acquisition of Tahoe Hydroponics, an award-winning cultivator and one of Nevada’s top producers of high-quality cannabis flower.
  • As previously announced, reached an agreement to amend the terms of contingent consideration under the membership interest purchase agreements of GSD NJ, LLC and Sira Naturals Inc.
  • As previously announced, reached contingent agreements to defer approximately $69 million of promissory note payments.
  • Subsequent to quarter end, closed a $40 million refinancing and upsizing of its existing mortgage for its Gainesville cultivation facility, contributing a net $14 million of cash proceeds. The new loan carries an interest rate of 5-year FHLB Rate + 4%.

Financing and Capital Structure

• The Company deployed $6.7 million of capital expenditures in Q2 and ended the quarter with a cash balance of $60.0 million.
• The Company has approximately 77.2 million fully diluted shares outstanding based on a treasury method calculation.ⁱ
• Subsequent to the quarter end, the Company closed on a $40 million refinancing and upsizing of its existing mortgage for its Gainesville cultivation facility. Following the July 7, 2023, paydown of its existing $25.3 million mortgage, the Company had a pro forma cash balance of $74 million.
• In 2023, the Company filed an application with the U.S. Internal Revenue Service (“IRS”) for the employee retention credit (“ERC”), as originally enacted through the U.S. Coronavirus Aid, Relief, and Economic Security Act. The Company anticipates receiving $12.3 million relating to its ERC application.

Outlook

The Company remains committed to its financial health and is positioning itself to achieve sustainable long-term growth and profitability across all markets of operation. AYR expects to generate revenue and Adjusted EBITDA growth in the second half of 2023 and into 2024 and to generate positive GAAP cash flow from operations for the calendar year 2023.

AYR’s expectations for future results are based on the assumptions and risks detailed in its Management’s Discussion and Analysis (“MD&A”) for the period ended June 30, 2023, as filed on SEDAR+ and with the U.S. Securities and Exchange Commission (“SEC”).

Conference Call

AYR management will host a conference call today, followed by a question-and-answer period.

Date: Thursday, August 17, 2023
Time: 8:30 a.m. ET
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10022068

Please dial into the conference call 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the Company’s investor relations team at ir@ayrwellness.com.

The conference will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available for one month until end of day Sunday, September 17, 2023.

Toll-free replay number: (855) 669-9658
International replay number: (412) 317-0088
Replay ID: 0257

Financial Statements

Certain financial information reported in this news release is extracted from AYR’s Consolidated Financial Statements and MD&A for the quarter ended June 30, 2023. AYR files its financial statements and MD&A on SEDAR+ and with the SEC. All financial information contained in this news release is qualified in its entirety by reference to such financial statements and MD&A.

Definition of GAAP
“GAAP” means generally accepted accounting principles.

Definition and Reconciliation of Non-GAAP Measures

The Company reports certain non-GAAP measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable GAAP measures.

Rather, these are provided as additional information to complement those GAAP measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under GAAP. Non-GAAP measures used to analyze the performance of the Company’s businesses include “Adjusted EBITDA,” and “Adjusted Gross Profit.”

The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the GAAP measures.

Adjusted EBITDA

“Adjusted EBITDA” represents (loss) income from continuing operations, as reported under GAAP, before interest and tax, adjusted to exclude non-core costs, other non-cash items, including depreciation and amortization, and further adjusted to remove non-cash stock-based compensation, impairment expense, the accounting for the incremental costs to acquire cannabis inventory in a business combination, acquisition and transaction related costs, and start-up costs.

Adjusted Gross Profit

“Adjusted Gross Profit” represents gross profit, as reported, adjusted to exclude the accounting for the incremental costs to acquire cannabis inventory in a business combination, interest, depreciation and amortization, start-up costs and other non-core costs.

A reconciliation of how AYR calculates Adjusted EBITDA and Adjusted Gross Profit is provided in the tables appended below. Additional reconciliations of Adjusted EBITDA, Adjusted Gross Profit and other disclosures concerning non-GAAP measures are provided in our MD&A for the three months ended June 30, 2023.

Forward-Looking Statements

Certain statements are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, those statements relating to the Company and its financial capacity and availability of capital and other statements that are not historical facts. These statements are based upon certain material factors, assumptions, and analyses that were applied in drawing a conclusion or making a forecast or projection, including experience of the Company, as applicable, and perception of historical trends, current conditions, and expected future developments, as well as other factors that are believed to be reasonable in the circumstances. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies, and outlook of the Company. Forward-looking statements are often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “project”, “expect”, “target”, “continue”, “forecast”, “design”, “goal” or negative versions thereof and other similar expressions.

Forward-looking estimates and assumptions involve known and unknown risks and uncertainties that may cause actual results to differ materially. While AYR believes there is a reasonable basis for these assumptions, such estimates may not be met. These estimates represent forward-looking information. Actual results may vary and differ materially from the estimates.

Assumptions and Risks

Forward-looking information in this release is subject to the assumptions and risks as described in our MD&A for the quarter ended June 30, 2023, and Annual Information Form as of and for the year ended December 31, 2022.

Additional Information

For more information about the Company’s Q2 and 2023 operations and outlook, please view AYR’s corporate presentation posted in the Investors section of the Company’s website at www.ayrwellness.com.

About AYR Wellness Inc.

AYR Wellness is a vertically integrated, U.S. multi-state cannabis business. The Company operates simultaneously as a retailer with 85+ licensed dispensaries and a house of cannabis CPG brands.

AYR is committed to delivering high-quality cannabis products to its patients and customers while acting as a Force for Good for its team members and the communities that the Company serves. For more information, please visit www.ayrwellness.com.

Company Contact:

Jon DeCourcey
Head of Investor Relations
T: (786) 885-0397
Email: ir@ayrwellness.com

Media Contact:

Robert Vanisko
VP, Public Engagement
T: (786) 885-0397
Email: comms@ayrwellness.com

Investor Relations Contact:

Sean Mansouri, CFA
Elevate IR
T: (786) 885-0397
Email: ir@ayrwellness.com

^[i] Includes pending M&A and contingent considerations related to GSD and Sira Naturals purchase considerations. Excludes AYR granted but unvested service-based LTIP shares totaling 4.8 million.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

Most profitable pure play public cannabis company in Canada^1,2

CALGARY, AB, Aug. 17, 2023 /CNW/ – Decibel Cannabis Company Inc. (the “Company” or “Decibel”) (TSX-V: DB) (OTCQB: DBCCF), a market leader in premium cannabis and extract manufactured products, is pleased to announce its interim financial results for the three and six month periods ending June 30, 2023.

“Our strong second quarter sequential net revenue growth, driven by demand for our core products and international exports, continues to exceed our publicly-stated targets.” said Paul Wilson, CEO of Decibel. “We continue to highlight the success in our new, unique and innovative product strategy, demonstrated through clear consumer preference to our infused pre-roll strategy. In 2023, our industry leading brand, General Admission, has grown category share to 49%³ (+6% YTD³) in light of significant category competition through new competitive brands: +50 Brands³ (+56% YTD³) & New SKU’s: +156 SKU’s³ (+62% YTD³). Currently the infused pre-roll segment makes up ~34% of the Canadian pre-roll category³, in established US markets it makes up ~60% (California & Arizona YTD Sales ’23³). We continue to see tailwinds for our core business that will further reinforce our Canadian market position and international presence.”

Second Quarter Highlights

• Record National Market Share⁽⁴⁾ of 7.5% in Q2 2023 which placed Decibel as the 2^nd largest licensed producer in Canada by market share.
• Record Net Revenue of $30.9 million in the second quarter of 2023, with sequential growth of 14% over the prior quarter, and year over year growth of 66%. Net revenue improvement was driven by net Canadian recreational sales through growth in demand for vapes and infused products, increased manufacturing capacity, international sales, and the launch of the Company’s new brand Vox and General Admission Edibles near the end of the quarter.
• Gross Margin Before Fair Value Adjustments was 42% in the second quarter of 2023, compared to 49% in the prior quarter and 41% in the first quarter of 2022. The second quarter was impacted by a $754 thousand write off of aged product and increased temporary labour of $0.9 million to meet market demand as the Company is in the process of expanding manufacturing capacity.
• Record Adjusted EBITDA⁽²⁾ of $7.3 million in the second quarter of 2023, with sequential growth of 8% over the prior quarter and year over year growth of 126%.
• Positive Free Cash Flow⁽²⁾ of $0.5 million in the second quarter of 2023, with sequential decline of 75% over the prior quarter and a year over year decline of 51%. During the quarter, the Company reduced accounts payable by $4.2 from the prior quarter, which negatively impacted Free Cash Flow.
• Record Adjusted Net Income⁽²⁾ of $4.3 million in the second quarter of 2023, with sequential growth of 27% over the prior quarter and a year over year improvement of $4.2 million.
• Adjusted Earnings Per Share (“Adjusted EPS”)⁽⁵⁾: of $0.01 Adjusted EPS in the second quarter, consistent with the prior quarter and a year over year improvement of $0.01.

Year to Date Highlights

• Net Revenue of $58.0 million, an increase of 65% over 2022.
• Adjusted EBITDA⁽²⁾ of $14.1 million, an increase of 147% over 2022.
• Positive Free Cash Flow⁽²⁾ of $2.3 million, a decrease of 14% over 2022 driven by a $3.7 million reduction in accounts payable.
• Adjusted EPS⁽⁴⁾ of $0.02, an increase of $0.02 over 2022.

Link to Decibel’s Investor Presentation

Decibel’s interim financial statements for the three and six month periods ending June 30, 2023 (“Financial Statements”) and related Management’s Discussion & Analysis for three and six month periods ending June 30, 2023, are available under the Company’s profile at www.sedar.com.

As of June 30, 2023, Decibel was in compliance with all of its financial covenants under its credit facilities and expects to remain in compliance for the remainder of its twelve-month forecast period.

About Decibel 

Decibel is a consumer-focused cannabis company focused on delivering products that delight customers through a commitment to robust innovation and product quality. Leading brands General Admission, Qwest, and Vox are among its portfolio sold both across Canada and beginning to extend towards new countries to create a global footprint. Decibel operates a processing and manufacturing facility in Calgary, Alberta, and two cultivation facilities in Creston, British Columbia, and Battleford, Saskatchewan.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Statements 

Non-GAAP Measures 

This press release contains certain financial performance measures that are not recognized or defined under IFRS (termed “Non-GAAP Measures”). As a result, this data may not be comparable to data presented by other licensed producers and cannabis companies. For an explanation of these measures to related comparable financial information presented in the Financial Statements prepared in accordance with IFRS, refer to the discussion below. The Company believes that these Non-GAAP Measures are useful indicators of operating performance and are specifically used by management to assess the financial and operational performance of the Company. Accordingly, these Non-GAAP Measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. 

Non-GAAP Financial Measures 

Adjusted EBITDA is a non-GAAP financial measure that is calculated as net loss and comprehensive loss excluding unrealized gain on changes in fair value of biological assets, change in fair value of biological assets realized through inventory sold, depreciation and amortization expense, share-based compensation, other income, finance costs, foreign exchange loss, non-cash production costs and severance payments. Non-cash production costs relate to amortization expense allocations included in production costs. This non-GAAP financial measure should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the Decibel’s operating results, underlying performance and prospects in a manner similar to Decibel’s management.

Adjusted Net Income is a non-GAAP financial measure that is calculated as net loss and comprehensive loss excluding unrealized gain on changes in fair value of biological assets and change in fair value of biological assets realized through inventory sold. Adjusted EPS is a non-GAAP ratio that is calculated as net loss and comprehensive loss excluding unrealized gain on changes in fair value of biological assets and change in fair value of biological assets realized through inventory sold, divided by the weighted average common shares outstanding.  These measures intended to provide a proxy for the Company’s net income and comprehensive income and is used to compare Decibel to its competitors and derive expectations of future financial performance of the Company and should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the Decibel’s operating results, underlying performance and prospects in a manner similar to Decibel’s management.²

Free Cash Flow is a non-GAAP financial measure that is calculated as cash flow from operations less cash used in investing activities. This non-GAAP financial measure should be considered together with other financial information prepared in accordance with IFRS to enable investors to evaluate the Decibel’s operating results, underlying performance and prospects in a manner similar to Decibel’s management.

Supplementary Financial Measures

Retail Sales is a supplementary financial measure that is intended to provide a more accurate depiction of the revenue earned by the Company’s retail operations. Inventory transferred directly from the Company’s wholesale operations to the Company’s retail operations is removed from Retail Revenue as presented in the Financial Statements.

International Sales is a supplementary financial measure intended to provide a more accurate depiction of international sales earned by the Company’s wholesale operations.

Gross Canadian Recreational Sales is a supplementary financial measure intended to provide a more accurate depiction of gross revenue earned by the Company’s wholesale operations. Inventory transferred directly from the Company’s wholesale operations to the Company’s retail operations is added to Gross Canadian Recreational Sales as found in the Financial Statements to arrive at Gross Canadian Recreational Sales.

Net Canadian Recreational Sales is a supplementary financial measure intended to provide a more accurate depiction of net revenue earned by the Company’s wholesale operations. Inventory transferred directly from the Company’s wholesale operations to the Company’s retail operations is added to Net Canadian Recreational Sales as found in the Financial Statements to arrive at Net Canadian Recreational Sales.

Forward Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements.

In this news release, forward-looking statements relate to, among other things: that the Company has strong momentum heading into 2023; expectations that demand for Decibel’s products will grow; the Company’s expectations for continued growth and momentum in the second half of 2023, the Company’s expectations for additional catalysts late summer and early fall and the timing and results of the same; the Company’s expectation that it will remain in compliance with all of its financial covenants under its credit facilities for the remainder of its twelve-month forecast period and its other business plans and expectations. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, the Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

Forward-looking statements and FOFI (as defined herein) are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to delays, regulatory changes and impacts, capital requirements, construction impacts, the ability to obtain and maintain licences to retail cannabis products; review of the Company’s production facilities by Health Canada and maintenance of licences (including any amendments thereto) from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; general business, economic, competitive, political and social uncertainties; the risk that the Company may not be able to meet consumer demand; the risk that the Company may not improve its operational capacity when anticipated, or at all; the risk that Decibel may not remain in compliance with its financial covenants for the remainder of its twelve-month forecast period; and the delay or failure to receive board, regulatory or other approvals, including any approvals of the TSX Venture Exchange, as applicable.

With respect to forward-looking statements and FOFI contained in this press release, Decibel has made assumptions regarding, but not limited to: growth of the brand and recognition in Canada will lead to growth internationally; demand for Decibel‘s products; Decibel’s ability to enter new markets and industry verticals; Decibel’s ability to attract, develop and retain key personnel; Decibel’s ability to raise additional capital and to execute on its expansion plans; the timelines for new product launches, Decibel’s ability to continue investing in infrastructure and implement scalable controls, systems and processes to support its growth; the impact of competition; the changes and trends in Decibel’s industry or the global economy; the Company’s ability to generate sufficient cash flow from operations and obtain financing, if needed, on acceptable terms or at all; the general economic, financial market, regulatory and political conditions in which the Company operates; the ability of the Company to ship its products and maintain supply chain stability; consumer interest in the Company’s products; anticipated and unanticipated costs; government regulation of the Company’s activities and products; the timely receipt of any required regulatory approvals; the Company’s ability to conduct operations in a safe, efficient and effective manner; the Company’s construction plans and timeframe for completion of such plans; and the changes in laws, rules, regulations, and global standards.

Any financial outlook or future oriented financial information (in each case “FOFI”) contained in this news release regarding prospective financial position, including, but not limited to: anticipated revenue growth and Decibel’s expectations that it will remain in compliance with its financial covenants for the remainder of its twelve-month forecast period, is based on reasonable assumptions about future events, including those described above, based on an assessment by management of the relevant information that is currently available. The actual results will likely vary from the amounts set forth herein and such variations may be material.

Readers are cautioned that the foregoing list of assumptions and risk factors is not exhaustive. The forward-looking statements and FOFI contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and FOFI included in this news release are made as of the date hereof and Decibel does not undertake any obligation to publicly update such forward-looking statements and FOFI to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

Notes About Comparables

This news release outline’s the Company’s performance relative to third-party issuer metrics (the “Comparables“). The Comparables were considered to be an appropriate basis for comparison with Decibel as they are publicly provided by similar pure play issuers. The information relating to the Comparables has been obtained or derived from public sources, see “Market, Independent Third Party and Industry Data”. Comparables may be affected by, among other things, the size of the business, capital structure, principal market served, historical performance and growth expectations, which can vary significantly among Decibel and the issuers providing the Comparables. In addition certain Comparables may be calculated differently by other issuers, see “Non-GAAP Measures”. Accordingly, an investment decision should not be made in reliance on the Comparables.

Market, Independent Third Party and Industry Data

Certain market, independent third party and industry data contained in this news release is based upon information from government or other independent industry publications and reports or based on estimates derived from such publications and reports. Government and industry publications and reports generally indicate that they have obtained their information from sources believed to be reliable, but Decibel has not conducted its own independent verification of such information. This news release also includes certain data derived from independent third parties. While Decibel believes this data to be reliable, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Decibel has not independently verified any of the data from independent third party sources referred to in this news release or ascertained the underlying assumptions relied upon by such sources.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

–Cash increased to $22.7 million from $16.4 million in Q1 2023, as operating cash flow reached a record $8.3 million

– Adjusted EBITDA¹ was $9.5 million versus a $0.1 million loss in Q1 2023

-Revenue was $44.7 million, up 54% sequentially and 171% year-over-year

-Gross margin was 55% versus 41% in Q1 2023, and 2% in the prior year period

-Q2 Biomass production² was up 311% year-on-year and biomass revenue increased 358% year-on-year

-Cost per Equivalent Dry Pound of Production³ was $139 per pound, down 12% versus Q2 2022

-Average selling price was $340 per pound, up 43% versus last year, and 17% versus Q1 2023

-Conference Call to be held today August 14, 2023 at 5:00 p.m. ET

LONG BEACH, CA and TORONTO, Aug. 14, 2023 /CNW/ – Glass House Brands Inc. (“Glass House” or the “Company”) (NEO: GLAS.A.U) (NEO: GLAS.WT.U) (OTCQX: GLASF) (OTCQX: GHBWF), one of the fastest-growing, vertically integrated cannabis companies in the U.S., today reported financial results for its second quarter ending June 30, 2023.

Second Quarter 2023 Highlights
(Unless otherwise stated, all results and dollar references are in U.S. dollars)

• Net Sales of $44.7 million increased 171% from $16.5 million in Q2 2022 and up 54% sequentially from $29.0 million in Q1 2023;
• Gross Profit was $24.4 million compared to $0.3 million in Q2 2022 and $12.0 million in Q1 2023;
• Gross Margin was 55%, compared to 2% in Q2 2022 and 41% in Q1 2023;
• Adjusted EBITDA¹ was $9.5 million, compared to $(9.8) million in Q2 2022 and $(0.1) million in Q1 2023;
• Cost per Equivalent Dry Pound of Production³ was $139 a decrease of 12% compared to the same period last year and down 29% sequentially versus Q1 2023;
• Equivalent Dry Pound Production² was 103,336 pounds, up 311% year-over-year and up 115% sequentially;
• Cash balance was $22.7 million at quarter-end, up 39% from Q1 2023 quarter end.

Management Commentary

“The second quarter of 2023 was the best in our history. We achieved record levels of operating cash flow, exceeded Q2 guidance across several operating metrics and marked our first quarter of positive adjusted EBITDA¹,” stated Kyle Kazan, Co-Founder, Chairman and CEO of Glass House.

“In Q2 2023, we saw our biomass revenues and pounds sold more than quadruple versus the previous year. Revenues from our retail dispensaries doubled to $10 million year-over-year, due to growth from acquisitions. Consolidated gross margin surpassed 50% and cultivation cost per pound³ fell by 12% versus last year. Finally, Adjusted EBITDA¹ flipped to a positive $9.5 million compared to negative $9.8 million a year ago.

“I believe that our position as a vertically-integrated California cannabis company with a competitive core competency in the cost-efficient cultivation of premium flower is the reason why we’ve been able to persevere in this difficult market environment. We value our retail and brand businesses for the revenues and market awareness they provide, and we see potential for our brands to create significant shareholder value over the long term.”

Kazan concluded, “We anticipate this momentum will continue through the remainder of 2023, and surpassing our second quarter guidance by significant margins only builds our confidence.”

Second Quarter 2023 Operational Highlights

Subsequent Events

Q2 2023 Financial Results Discussion

Net revenues for Q2 2023 were $44.7 million, 171% growth versus Q2 2022 and a 54% sequential increase versus Q1 2023. This result was 12% higher than the high end of our Q2 guidance range of $38 million to $40 million.

Wholesale biomass revenue of $30.6 million increased 358% versus Q2 2022 and was up 112% sequentially versus Q1 2023. In the quarter, product sold increased 354% year-on-year to 90,174 pounds of equivalent dry weight. The increase in weight available for sale was driven by a 311% increase in production² versus last year to 103,336 pounds as a result of incremental production from the Company’s SoCal farm.

Retail revenue in Q2 2023 of $10.1 million increased 108% year-over-year and was up 7% on a sequential basis. The year-over-year increase was primarily a result of incremental revenues from four retail locations we acquired in Q3 2022, and from three new stores – Farmacy Isla Vista which opened in mid-December last year, Farmacy Santa Ynez which opened in January, as well as NHC Turlock which opened in late April.

Wholesale CPG revenues were $4.0 million, a decrease of 20% compared to the prior year and a 24% decline sequentially. We had expected negative sequential growth in our CPG wholesale sales due to the financial difficulties of HERBL, one of the state’s largest distributors, along with the challenges facing all brands in the current California marketplace. We are currently distributing our CPG product via our co-packer who is providing distribution service to our retail accounts. For our own stores, we now sell direct and treat this as an intercompany transaction instead of booking the sale through the distributor; and this reduced Q2 CPG revenue by $1.1 million – accounting for almost the entire sequential decline in CPG sales. Without the change, CPG sales would likely have been about flat.

Consolidated gross profit was $24.4 million, or 55% of net revenues, compared to $0.3 million, or 2%, in Q2 2022 and $12.0 million, or 41% in Q1 2023. This is the highest gross margin percent ever achieved by Glass House. The two key drivers were wholesale biomass average selling price reaching $340 per pound, well above $290 per pound in the first quarter, and cost of production³ falling to $139 per pound in Q2 from $196 per pound in Q1 2023.

General and administrative expenses were $13.1 million for the quarter compared to $11.4 million in Q1 2023. The $1.7 million increase was primarily attributable to bad debt expense of $1.1 million as a result of HERBL ceasing business operations and to increased wholesale biomass taxes paid to Ventura County due to the large sequential increase in wholesale biomass revenues.

Sales and marketing expenses were $1.0 million, up 11% year-on-year and 53% sequentially. Professional fees were $2.2 million, down 18% year-on-year and up 47% from Q1 2023. The sequential increase in professional fees was due to increased legal fees related to litigation, the Turlock acquisition and expenses related to our annual shareholders meeting. Our plan all along has been to limit growth in SG&A spending as we increased revenue to improve cash flow and profitability.

Depreciation and amortization in Q2 2023 was $3.6 million, down 7% from Q1 2023.

Adjusted EBITDA¹ was $9.5 million in Q2 2023, compared to adjusted EBITDA loss of $(0.1) million in Q1 2023. This was driven by top-line growth, higher gross margins, and disciplined management of operating expenses.

We generated $8.3 million of cash from operations in Q2 2023 versus cash generated from operations of $4.5 million in Q1 2023 and cash usage of $7.8 million in Q2 2022. In Q2, cash impact from net income turned positive for the first time, reaching $2.5 million from negative $4.1 million in Q1. Cash flow also benefited by $5.3 million because there was no income tax paid in the quarter.

Capital spending was $0.2 million in Q2, as there were no major spending projects in the quarter. Q1 capital spending was $1.1 million.

2023 Outlook

The Company is providing the following guidance for 2023 based on the strength of our second quarter results and current trends from the first half of 2023.

2023 Cash Flow and EBITDA
Based on our current wholesale average selling price, which we assume maintains for the balance of the year, we expect to have positive operating cash flow and positive adjusted EBITDA¹ in Q3 and Q4.

Q3 2023 Outlook
We expect Q3 2023 revenue to be between $45 million and $47 million. The increase vs. Q2 2023 is being driven by projected low-to-mid single digit percent growth in wholesale biomass revenue with pricing projected to increase slightly to above the Q2 2023 average selling price of $340 per pound as a seasonally favorable increase in the percentage of flowers and smalls relative to trim offsets a seasonal dip in prices due to increased summer output from outdoor and mixed light farms. We also assume that CPG and Retail revenue will collectively be flat relative to Q2 due to the continued difficult retail environment. Production² is expected at 100,000 to 103,000 pounds, roughly in line with Q2 levels. While the second half of the year is usually our highest in terms of production, we do not expect the typical seasonal uptick in Q3 compared to Q2 this year due to efficiency improvements in post-harvest processing that boosted Q2 production by approximately 10,000 pounds and because unusually low sunlight levels in May, June and the first half of July reduced the normal seasonal lift in biomass bulk harvests that we typically see in Q3. As a reminder, plants harvested today are the cumulative result of sunlight in the preceding 60-90 days.

We expect consolidated gross margin percent to be flat to up slightly versus Q2’s 55% as cost of production³ is projected to decline to $120 per pound, a 14% reduction from $139 per pound in Q2. Gross margin for CPG and Retail are projected to be flat to up slightly.

In addition, we expect adjusted EBITDA¹ to be similar to Q2 and expect operating cash flow to be about $4 million to $6 million, which is lower than the Q2 level of $8 million.

We expect non-expansion capex to be below $1 million.

2023 Fiscal Year
We are raising our revenue guidance to $165 to $170 million⁴ for 2023 due to higher than projected wholesale biomass production. We are increasing our wholesale revenue projection to a range of $105 to $110 million from $100 million. Projected average selling price per pound remains at approximately $330 per pound, while we are raising our biomass production² estimate to 350,000 to 355,000 pounds, an increase of 35,000 to 40,000 pounds over our previous guidance. We are maintaining our cost of production³ estimate at $140 per pound, with second half cost of production projected at $120 per pound or below. This is still an 8% decrease vs. the same period in 2022. This guidance represents an 84% increase for production at the mid-point of guidance and a 2% reduction in costs vs. FY 2022.

Revenue projections for our Retail and CPG businesses remain unchanged at $40 million and $20 million, respectively.

None of the above guidance includes any impact from the ongoing retrofit of Greenhouse 5, which began in early July. We expect to have plants in Greenhouse 5 by early 2024, with the first sale projected for Q2 2024. Once operational, we expect Greenhouse 5 will increase our cultivation capacity by roughly 250,000 pounds to a total of 600,000 pounds. At current pricing, Greenhouse 5 is capable of producing over $80 million of incremental revenue annually and over $30 million in incremental EBITDA¹.

Financial results and analyses will be available on the Company’s website on the ‘Investors’ and ‘News & Events’ drop down menus (www.glasshousebrands.com) and SEDAR+ (www.sedarplus.ca).

Unless otherwise stated, all results are in U.S. dollars.

Conference Call
The Company will host a conference call to discuss the results today, August 14, 2023 at 5:00 p.m. Eastern Time.

Webcast:             Register Here
Dial-In Number:  1-888-664-6392
Conference ID:   96853256
Replay:               1-888-390-0541
Replay Code:      853256#
(replay available until 12:00 midnight Eastern Time Monday, August 21, 2023)

Non-GAAP Financial Measures

Glass House defines EBITDA as Net Loss (GAAP) adjusted for interest and financing costs, income taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA excluding share-based compensation, stock appreciation rights expense, loss (income) on equity method investments, change in fair value of derivative liabilities, change in fair value of contingent liabilities, acquisition related professional fees, and non-operational start-up costs.

EBITDA and Adjusted EBITDA are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. Such supplemental non-GAAP financial measures are not standardized financial measures under U.S. GAAP used to prepare the Company’s financial statements and might not be comparable to similar financial measures disclosed by other companies and, thus, should only be considered in conjunction with the GAAP financial measures presented herein.

The Company has provided a table above that provides a reconciliation of the Company’s net loss to Adjusted EBITDA for the three months ended June 30, 2023 compared to three months ended June 30, 2022 and three months ended March 31, 2023.

Footnotes and Sources:

ABOUT GLASS HOUSE

Glass House is one of the fastest-growing, vertically integrated cannabis companies in the U.S., with a dedicated focus on the California market and building leading, lasting brands to serve consumers across all segments. From its greenhouse cultivation operations to its manufacturing practices, from brand-building to retailing, the company’s efforts are rooted in the respect for people, the environment, and the community that co-founders Kyle Kazan, Chairman and CEO, and Graham Farrar, Board Member and President, instilled at the outset. Through its portfolio of brands, which includes Glass House Farms, PLUS Products, Allswell, Forbidden Flowers, and Mama Sue Wellness, Glass House is committed to realizing its vision of excellence: outstanding cannabis products, produced sustainably, for the benefit of all. For more information and company updates, visit www.glasshousebrands.com and https://glasshousebrands.com/press-releases/.

Forward Looking Statements
This news release contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as “forward-looking statements”). Forward-looking statements reflect current expectations or beliefs regarding future events or the Company’s future performance or financial results. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “continues”, “forecasts”, “projects”, “predicts”, “intends”, “anticipates”, “targets” or “believes”, or variations of, or the negatives of, such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. Forward-looking statements in this news release include, without limitation, the company’s: potential to create significant shareholder value from its brands over the long-term; projection that the current momentum in its operating business will continue through the remainder of 2023; projection of producing positive cashflow and positive Adjusted EBITDA in both Q3 and Q4 2023; guidance that revenues will be $45 to $47 million in Q3 2023; projection that Q3 pricing will increase slightly to above the Q2 23 average selling price of $340 per pound as a seasonally favorable increase in the percentage of flowers and smalls relative to trim offsets a seasonal dip in prices due to increased summer output from outdoor and mixed light farms; guidance that Q3 2023 CPG and Retail revenue will collectively be flat compared to Q2 2023; projection that Q3 2023 wholesale biomass production will be 100,000 to 103,000 pounds, roughly in line with Q2 levels; guidance that Q3 consolidated gross margin percent will be flat to up slightly versus Q2’s 55% with cost of production projected to decline to $120 per pound; guidance that Q3 2023 adjusted EBITDA will be similar to Q2 2023 and that Q3 2023 operating cash flow will be about $4 to $6 million; guidance that Q3 2023 non-expansion capex will be below $1 million; guidance that fiscal year 2023 revenues will reach $165 to $170 million due to higher than initially projected wholesale biomass production; guidance that fiscal year 2023 wholesale biomass revenue will be $105 to $110 million; projection that fiscal year 2023 average selling price per pound will be $330 per pound; estimate that fiscal year 2023 biomass production will reach 350,000 to 355,000 pounds; guidance that fiscal year 2023 cost of production will be $140 per pound, with second half 2023 cost of production at $120 per pound or below; guidance that fiscal year 2023 retail revenues will be $40 million and fiscal year 2023 CPG revenues will be $20 million; projection that Glass House will have plants in Greenhouse 5 by early 2024, with the first sale from Greenhouse 5 projected for Q2 2024; ability to fund its planned retrofit of Greenhouse 5; projection that once operational, Greenhouse 5 will increase cultivation capacity by roughly 250,000 pounds to a total of 600,000 pounds; projection that at current pricing, Greenhouse 5 is capable of producing over $80 million of incremental revenue annually and over $30 million in incremental EBITDA. All forward-looking statements, including those herein are qualified by this cautionary statement.

Although the Company believes that the expectations expressed in such statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the statements. There are certain factors that could cause actual results to differ materially from those in the forward-looking information, including financial and operational results not proving to be as expected or on the timelines expected; the Company not completing certain proposed acquisition or financing transactions at all, or on the timelines expected; the Company not achieving the synergies expected; and other risks disclosed in the Company’s Annual Information Form and other public filings on SEDAR+ at www.sedarplus.ca. Accordingly, readers should not place undue reliance on forward-looking statements.

For more information on the Company, investors are encouraged to review the Company’s public filings on SEDAR+ at www.sedarplus.ca. The forward-looking statements and financial outlooks contained in this news release speak only as of the date of this news release or as of the date or dates specified in such statements. The Company disclaims any intention or obligation to update or revise any forward- looking information, whether as a result of new information, future events or otherwise, other than as required by law.

SOURCE Glass House Brands Inc.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

Bottom Line Continued to Improve with Further Reductions in Operating Expenses and Gross Margin Expanding by 440 Basis Points

SEATTLE, Aug. 09, 2023 (GLOBE NEWSWIRE) — Jones Soda Co. (CSE: JSDA, OTCQB: JSDA) (“Jones Soda” or the “Company”), the original craft soda known for its unconventional flavors and user-submitted photo labels, announced its financial results for the second quarter ended June 30, 2023.

Second Quarter 2023 Financial Summary vs. Year-Ago Quarter

• Revenue was $4.8 million compared to $6.0 million. The second quarter of 2023 included approximately $400,000 in revenue from the Company’s new cannabis business.
• Gross profit as a percentage of revenue increased 440 basis points to 32.4% compared to 28.0%.
• Net loss improved to $1.0 million, or $(0.01) per share, compared to a net loss of $1.4 million, or $(0.02) per share.
• Adjusted EBITDA¹ improved to approximately $(729,000) compared to $(1.1) million.

Management Commentary

“I’m proud to report Jones Soda sustained its momentum in the second quarter with strong gross margin expansion and further improvements to our bottom line,” said David Knight, the new President, and CEO of Jones Soda. “While the Company’s strong performance in the first half of 2022 continued to present a difficult year-over-year revenue comparison, our Q2 sales revenue numbers were in-line with expectations, and I believe our team made significant progress setting us up for success in the back-half of the year. While I’ve only been at the helm of Jones Soda for approximately six weeks, the operational rigor and determination throughout the organization has me excited about the Company’s potential future growth trajectory.

“From a core bottled soda perspective, we continue to expand our retail presence across multiple channels by building upon relationships with existing customers and establishing new relationships with potential customers. In particular, we are returning to individual bottle sales with one of our major retailers, which we believe will help increase sales velocity in the back-half of 2023. We believe our pricing strategy has also held up with consumers, and our focus on product costs, warehousing and freight continue to improve margins. Additionally, we continue to be aggressive with our unique and targeted promotional strategies. I believe that the reception we received from our customers regarding our PRIDE labels in June proves that our marketing team understands what resonates best with our customer base, and we intend to continue to leverage these tactics to further expand brand awareness and gain market share.

“Turning to Mary Jones, our revenues from cannabis products doubled to approximately $400,000 in Q2 2023 from $200,000 in Q1 2022. During the second quarter of 2023, we continued to grow our product portfolio with the addition of two new flavors in two new formats. We’re also pleased to report that we remain on track with our footprint expansion as we expect to be fully operational in three new states by the end of the year. We believe we have only begun to scratch the surface within the cannabis industry, and we are highly confident in our ability to unlock the significant upside we see in this business to further bolster our consolidated financial performance.

“Overall, I’m very pleased with the progress we’ve made through the first half of the year and believe that we are on track for an even better back-half of the year. It is clear to me that Jones Soda has significant brand equity in the broader consumer environment. I firmly believe we have the right team and right strategy in place to capitalize on the power of our brand as we further scale our business across industries with innovative product offerings. Ultimately, we believe this will translate into significant value for our stakeholders and we look forward to delivering on those expectations.”

Second Quarter 2023 Financial Results

Revenue in the second quarter of 2023 was $4.8 million compared to $6.0 million in the prior year period. The decrease in the current quarter was primarily attributable to the prior year period having approximately $1,000,000 in revenues from core bottle soda sales from a one-time inventory stocking event with one of our largest retailers in 2022 that was not repeated in 2023. In addition, the Company’s cannabis segment generated approximately $400,000 in revenue in the second quarter of 2023 compared to $200,000 in revenue in the first quarter of 2023 and no revenue in the second quarter of 2022.

Gross profit as a percentage of revenue increased 440 basis points to 32.4% for the second quarter of 2023 compared to 28.0% in the year-ago period. This increase was primarily driven by continued strategic pricing adjustments, along with lower freight costs and raw material costs.

Net loss for the second quarter of 2023 improved to $1.0 million, or $(0.01) per share, compared to a net loss of $1.4 million, or $(0.02) per share, in the second quarter of 2022. The improvement in net loss was primarily attributable to the expansion in gross profit margin and a decrease in total operating expenses in the second quarter of 2023 compared to the same quarter of 2022.

Adjusted EBITDA¹ improved to $(729,000) in the second quarter of 2023 compared to $(1.1) million in the second quarter of 2022, mostly as a result of the aforementioned gross profit margin expansion and lower total operating expenses.

At June 30, 2023, cash and cash equivalents totaled $5.1 million compared to $8.0 million at December 31, 2022.

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¹ Adjusted EBITDA is defined as net income (loss) from operations before interest expense, interest income, taxes, depreciation, amortization and stock-based compensation and is a non-GAAP measure (reconciliation provided below).

Conference Call

Jones Soda will hold a conference call today at 4:30 p.m. Eastern time to discuss its results for the second quarter ended June 30, 2023.

Date: Wednesday, August 9, 2023
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: 1-844-826-3035
International dial-in number: 1-412-317-5195
Conference ID: 10181555

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.jonessoda.com.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through August 16, 2023.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10181555

Presentation of Non-GAAP Information

This press release contains disclosure of the Company’s Adjusted EBITDA which is not a United States Generally Accepted Accounting Principle (“GAAP”) financial measure. The difference between Adjusted EBITDA (a non-GAAP measure) and Net Loss (the most comparable GAAP financial measure) is the exclusion of interest expense and income, income tax expense, depreciation and amortization expense and stock-based compensation. We have included a reconciliation of Adjusted EBITDA to Net Loss under “Jones Soda Co. Non-GAAP Reconciliation” at the end of this press release. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA has certain limitations in that it does not take into account the impact of certain expenses to our consolidated statements of operations. In addition, because Adjusted EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. We believe that Adjusted EBITDA provides useful information to investors about the Company’s results attributable to operations, in particular by eliminating the impact of non-cash charges related to stock-based compensation, amortization and depreciation that is consistent with the manner in which management evaluates the Company’s performance. These adjustments to the Company’s GAAP results are made with the intent of providing a more complete understanding of the Company’s underlying operational results and provide supplemental information regarding the Company’s current ability to generate cash flow. Adjusted EBITDA is not intended to be considered in isolation or as a replacement for, or superior to Net Loss as an indicator of the Company’s operating performance, or cash flow, as a measure of its liquidity. Adjusted EBITDA should be reviewed in conjunction with Net Loss as calculated in accordance with GAAP.

About Jones Soda Co.

Jones Soda Co.® (CSE: JSDA, OTCQB: JSDA) is a leading craft soda manufacturer with subsidiaries dedicated to cannabis products. The Company markets and distributes premium craft sodas under the Jones® Soda and Lemoncocco® brands, and a variety of cannabis products under the Mary Jones brand. Jones’ mainstream soda line is sold across North America in glass bottles, cans and on fountains through traditional beverage outlets, restaurants and alternative accounts. The Company is headquartered in Seattle, Washington. For more information, visit www.jonessoda.com.

Forward-Looking Statements Disclosure

Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing words such as “will,” “aims,” “anticipates,” “becoming,” “believes,” “continue,” “estimates,” “expects,” “future,” “intends,” “plans,” “predicts,” “projects,” “targets,” or “upcoming.” Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Factors that could affect the Company’s actual results, including its financial condition and results of operations, include, among others: its ability to successfully execute on its growth strategies and operating plans for the future; the Company’s ability to continue to effectively utilize the proceeds from its financings completed in 2022; the Company’s ability to continue to develop and market THC/CBD-infused and/or cannabis-infused beverages and edibles, and comply with the laws and regulations governing cannabis, hemp or related products, and the timing and costs of the development of these new product lines; the Company’s ability to manage operating expenses and generate sufficient cash flow from operations; the Company’s ability to create and maintain brand name recognition and acceptance of its products; the Company’s ability to adapt and execute its marketing strategies; the Company’s ability to compete successfully against much larger, well-funded, established companies currently operating in the beverage industry generally and in the craft beverage segment specifically; the Company’s ability to respond to changes in the consumer beverage marketplace, including potential reduced consumer demand due to health concerns (including obesity) and legislative initiatives against sweetened beverages (including the imposition of taxes); its ability to develop and launch new products and to maintain brand image and product quality; the Company’s ability to maintain and expand distribution arrangements with distributors, independent accounts, retailers or national retail accounts; its ability to manage inventory levels and maintain relationships with manufacturers of its products; its ability to maintain a consistent and cost-effective supply of raw materials and flavors and to manage factors affecting its supply chain; its ability to attract, retain and motivate key personnel; its ability to protect its intellectual property; the impact of future litigation and the Company’s ability to comply with applicable regulations; its ability to maintain an effective information technology infrastructure, fluctuations in freight and fuel costs; the impact of currency rate fluctuations; its ability to access the capital markets for any future equity financing; the Company’s ability to maintain disclosure controls and procedures and internal control over financial reporting; dilutive and other adverse effects from future potential securities issuances; and any actual or perceived limitations by being traded on the OTCQB Marketplace. More information about factors that potentially could affect the Company’s operations or financial results is included in its most recent annual report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 29, 2023 and in the other reports filed with the SEC since that that date. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, the Company undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

Company Contact:

David Knight
President and CEO
1-206-624-3357

Investor Relations Contact:

Cody Cree
Gateway Group
1-949-574-3860
JSDA@gateway-grp.com