- Flora generated $20.1 million in revenue in Q1 2023, a 307% increase year-over-year.
- Gross profit for Q1 2023 increased 105% year-over-year, to $5.5 million.
- Posting a net loss of $3.9 million for Q1 2023 (decreased from Q1 2022). New leadership plans to further reduce expenses and focus on organic revenue growth.
FORT LAUDERDALE, FLORIDA – May 15, 2023 — Flora Growth Corp. (NASDAQ: FLGC) (“Flora” or the “Company”), a global cultivator, manufacturer, and distributor of cannabis products and brands, reported today its financial and operating results for the quarter ended March 31, 2023. All financial information is provided in U.S. dollars unless indicated otherwise.
“As I take the reins of the organization, I am pleased to share the results of the first quarter of 2023, which included increased revenue generation for the Company,” said Hussein Rakine, newly appointed CEO of Flora. “The first quarter was focused on strengthening our operational performance, focusing on financial discipline, and optimizing the integrations of all our M&A transactions. Our House of Brands continued to be the primary revenue-generating pillar, posting sequential growth and steady margins. Our Commercial and Wholesale division was positively impacted by the addition of our German distribution business while our pharmaceutical initiatives continued to progress.”
Rakine continued, “However, the first quarter was not without its challenges which included impediments in our ability to export cannabis from Cosechemos, delays in the realization of operating expense reductions, and the prior period’s M&A-related transaction costs and liabilities, all affecting both the Company’s liquidity position and ability to fully realize our strategic plan for the quarter.
With respect to the challenges in exporting cannabis, we did not have the inventory of premium cannabis material required for the fulfillment of pending purchase orders and purchase intent notices in the first quarter. In addition, the export process from Colombia has proven to take longer and operate with less consistency than we had anticipated. Additionally, despite implementing various cost-saving initiatives to lower operating expenses, the Company has not yet achieved its ultimate organization-wide cost-reduction goals. To address this challenge, we will continue exploring various strategies to reduce operating costs.”
Rakine noted, “If we are not successful in meeting our business plans we may continue to face cash flow deficiencies. As a result, we may explore debt, equity financing or strategic alternatives to fund continued operations.
My priority is to further optimize the organization, reduce spend and focus on organic growth in revenue areas which offer the highest margin contribution and return on investment. I look forward to sharing our progress in the coming months, as we seek to chart the path to unlock the most shareholder value possible. I would like to thank the Flora team for their hard work and for welcoming me into my new role.”
Q1 2023 Financial and Operational Summary
- 1Q2023 revenue of $20.1 million, representing a 307% increase year-over-year and the highest revenue-generating quarter in the Company’s history.
- Expanding revenue generation in the quarter and for the House of Brands segment, which contributed $14.2 million of the total revenue.
- The Commercial and Wholesale segment delivered nearly $8.0 million in revenue, driven by the German-based pharmaceutical distribution subsidiary.
- Gross profit for 1Q2023 increased by 105% year-over-year to $5.5 million.
- Gross margin was 27%, a decrease from 54% in 1Q2022. This expected reduction was primarily driven by the contribution of lower-margin sales in the German pharmaceutical distribution subsidiary.
- Adjusted EBITDA loss for 1Q2023 was $1.4 million, compared to a loss of $3.4 million in 1Q2022.
- Adjusted EBITDA margin for 1Q2023 improved to -7% from -69% in 1Q2022. This improvement is in line with our expectations for the quarter.
- Net loss for the period was $3.9 million, as compared to $7.6 million for Q12022, and net loss margin for Q12023 improved to -19% from -154% in Q12022.
- Operating expenses for Q12023 were $8.6 million, a 17% decrease year-over-year.
- As a percentage of sales, operating expenses for 1Q2023 decreased to 43% from 209% in 1Q2022.
- As of March 31, 2023, the Company had approximately $5.3 million in cash and cash equivalents as compared to $9.5 million as of December 31, 2022.
- Delays with revenue capture from Cosechemos, challenges in the realization of overhead reductions, and acquisition-related costs and liabilities continue to be the primary contributors to the Company’s liquidity position.
About Flora Growth Corp.
Flora Growth Corp. is a global cannabis company dedicated to bringing the benefits of cannabis to people worldwide. Our commitment is to create, master and connect the international cannabis supply chain by setting the standard for world-class cultivation and manufacturing, thoughtful brand development, and rigorous research and development of medical-grade cannabis products that meet the highest standards of quality, safety, and efficacy. Our mission is to create a world where the benefits of cannabis are accessible to everyone, and we are working toward that goal by becoming a leading importer and exporter of cannabis to meet demand in every corner of the market. Visit www.floragrowth.com or follow @floragrowthcorp on social media for more information.
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Cautionary Statement Concerning Forward-Looking Statements
This press release contains ‘‘forward-looking statements,’’ as defined by federal securities laws. Forward-looking statements reflect Flora’s current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward looking statements. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in Flora’s Annual Report on Form 10-K, previously filed with the SEC on March 31, 2023, as amended April 28, 2023, as such factors may be updated from time to time in Flora’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in Flora’s filings with the SEC. While forward-looking statements reflect Flora’s good faith beliefs, they are not guarantees of future performance. Flora disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to Flora (or to third parties making the forward-looking statements).
1Q2023 – Results – Tables