The Valens Company (CVE:VLNS) (OTCMKTS:VLNCF) said it posted a record financial performance in its 2019 year and became the largest white label product development, manufacturing and third-party extraction firm in Canada.
The cannabinoid-product focused firm partners with leading Canadian and international brands by providing, proprietary services including CO2, ethanol, terpene extraction, analytical testing and white label product development.
In its fourth quarter to end November, adjusted underlying earnings (EBITDA) came in at C$17.7 million, or 57.7% of revenue, compared to adjusted EBITDA of C$9.8 million, or 59.4% of revenue, in the third quarter.
Group revenue increased to C$30.6 million, an 86% increase over the third quarter and above the high-end of the guidance range announced on December 16 last year.
For the year as a whole, revenue rose to C$58.1 million, while gross profit increased to C$41.4 million.
The firm said it processed 61,394 kg of dried cannabis and hemp biomass in fiscal 2019 (24,426 kg in the fourth quarter).
Processing white label products in preparation for the launch of edibles and concentrates for Cannabis 2.0 led to its revenue-per-gram of input increasing to C$1.25 in the fourth quarter, compared to $0.61 per gram in the third quarter, Valens revealed..
Revenue-per-gram is expected to increase throughout 2020 as product development contracts continue to grow in number, the company added.
Last year, Valens added 'significant scale' to its operations, explained Tyler Robson, the group's chief executive.
"In the second half of 2019, we broadened our offering to include white label product development and we now produce a broad portfolio of safe, consistent and innovative products to help our partners build brands and differentiate themselves in the market. These white label product development initiatives contributed to record revenues in the fourth quarter of 2019 as new and existing customers pushed to roll out Cannabis 2.0 oil-based products into the market."
Robson said the firm was now shifting to become a 'next generation' product company with greater EBITDA per input gram but a more conservative margin profile.
"This strategic shift is now well underway," he said.
Other operational highlights last year included signing a multi-year white label agreement with leading cannabis firm BRNT Ltd to launch a line of unique cannabis vape pens in Canada.
Also the acquisition of Pommies Cider Co., a leading Ontario-based beverage company and mature micro-processing license applicant for a total of C$7.6 million.
Subsequent to the year end, Valens also announced receipt of its first international purchase orders of white label products to customers in Australia.
Initial shipments will consist of three SKUs (stock-keeping units) of tinctures, totaling over 3,000 units, and are expected to be shipped in the second quarter, pending receipt of necessary import and export permits.
As at November 30 last year, the firm had C$58.7 million in cash and a net working capital position of C$88.2 million.
Contact the author at [email protected]