RWB:CC - Red White & Bloom Ekes Out of Debt Tightens Spending
Red White & Bloom Brands Inc. (CSE: RWB)(OTC: RWBYF) delivered its fourth-quarter and full-year earnings report, as well as its first-quarter report. The news comes after the company postponed the release in May due to multiple delays in their year-end audit. All figures are in Canadian dollars.
First Quarter
RWB said that revenue for the first quarter this year was $28 million, a record gain for the company, who saw revenues rise up from $10.7 million in the fourth quarter. RWB has not released an earnings report since last November’s third-quarter results. The company attributed the increase to Cannabis vape product sales by Platinum Vape (PV) California, revenue generated by PV Michigan, sales by RWB operations in Florida and revenue from the acquiring PharmaCo in February.
RWB posted a net loss of $11.3 million for the period with an adjusted EBITDA gain of $360,000. The company has around $5 million in working capital and $5 million cash on hand in the first quarter.
RWB said that its gross profits for the first quarter were $9.2 million, a sequential increase of 44% from gross profits of $6.4 million in the same quarter last year. The increase was reduced by $2.45 million on biological assets and a gain of $270,000 in sold inventory.
“With full operational control and a clear road map, Florida closed and certainty of our ability to complete the closing of the Michigan acquisition, we turned our attention to completing a multi-stage restructuring and “right-sizing” of the business to leverage our strategy long term,” CEO Brad Rogers said . “This included exiting Illinois and the sale of our assets in that state, which enabled the company to pay off over $55 million of liabilities in Q2 of 2022 and reduce our operational and interest expenses by over $20 million per year. These reductions of liabilities and expenses will positively impact our results for fiscal 2022 commencing in late Q2 of this year.”
Going Concern Remains
Despite the improvements in revenue, RWB continues to tell investors in its filings that it remains a going concern. It stated, “As at March 31, 2022, the company has accumulated losses of
$128,303,346 (December 31, 2021 – $116,877,562) since inception, and for the three months ended March 31, 2022, the company incurred a net loss of $ 11,757,188 (March 31, 2021 – $56,887,862), and had a working capital deficiency of $144,735,705 (December 31, 2021 – working capital deficiency of $55,219,691).” The company has said it may need additional funding.
Full Year Results
The company reported revenue from continuing operations for the year ending December 2021 of $37.3 million. This increased by $17.9 million over the $19.3 million in 2020. the jump in sales was related to Cannabis vape product sales generated by PV California, packaging revenue generated by PV Michigan, and cannabis product sales generated by RWB Florida operations. the company also delivered a comprehensive loss of $84 million for 2021 versus a loss of $20 million in 2020.
“On the finance front, we have made significant changes to reduce our overall operational costs and reduce debt servicing payments,” Rogers said. “Some of the savings are a result of exiting the state of Illinois, but we have also seen a reduction of operational expenses and as a result, we are no longer incurring the start-up costs associated with scaling initial operations in Florida, one-time expenses associated with the M&A and divestitures we have completed over the last two years and overall greater attention to reduced spend across the organization. With the first half of 2022 now behind us, we are committed to driving profitable growth throughout the organization as we set our eyes to achieving positive EBITDA by the end of this fiscal year.”