Golden Leaf Holdings Reports Fiscal First Quarter 2019 Results

TORONTO, May 31, 2019 (GLOBE NEWSWIRE) -- Golden Leaf Holdings Ltd. (“Golden Leaf” or the “Company”) (CSE:GLH) (GLDFF), a pioneer cannabis oil solutions company and dispensary operator built around recognized brands, today announced financial results for the fiscal first quarter ended March 31, 2019, and a general business update.

Strategic Direction

We believe that a trusted, internationally-recognized brand targeting customers new to cannabis products services the coming wave of new users. These new users are expected to seek health and wellness benefits as restrictions on cannabis use relax over the next three years.  Building the Chalice Farms brand leverages the Company’s dispensary locations, high-touch customer service approach, and management expertise.  Already an established leader in Oregon, Nevada and Canada, the Company intends to expand to California through an innovative approach to consumer-direct sales as well as wholesale sales.  The Company intends to achieve national sales of CBD and other non-THC products in 2019 and will search for global opportunities in 2020 and beyond.

Recent Business and Financial Highlights

• Sales increased 34% over the prior year period
• Operating loss improved 28% to US$3.0 million from US$4.2 million in the prior year period
• Launched Elysium Fields brand
• Launched Jackpot brand in Oregon
• Achieved over 33% increase in Oregon wholesale account base
• Retained Renmark Financial to support investor relations
• Reduced headcount by 19% and initiated other efficiency measures
• Appointed Larry Martin to the Board of Directors
• Appointed Karyn Barsa as Chief Financial Officer

Subsequent Events:

• Appointed Karyn Barsa as Chief Executive Officer
• Appointed Robert Gordon as Director, Human Resources

Ms. Karyn Barsa, Chief Executive Officer of Golden Leaf Holdings, commented, “We saw year-over-year revenue growth of 34% for the first quarter of 2019. We are pleased with the successful launch of two new brands in our Oregon and Nevada markets, Elysium Fields and Jackpot, showing strong customer support and trust.”

“The appointment of Larry Martin to the Board of Directors is another indication of faith in our future.  Larry’s unique background and experience as a successful CEO and entrepreneur, particularly his years of experience in FDA regulatory matters and involvement in the CBD industry, has already led to important contributions to the Board and Company.” 

“During the quarter, we implemented over $3.7 million in annualized cost reductions and operating efficiencies, while launching new brands. Clearly, we believe that Golden Leaf is positioned to succeed in this marketplace. We have refocused our strategic direction to support our customers and expand our product offerings. I look forward to sharing more about our new direction with our shareholders shortly.”

Fiscal First Quarter Ended March 31, 2019 Financial Results

For the first quarter ended March 31, 2019 (“Q1 2019”), total revenue was US$4.3 million as compared to US$3.2 million for the same three-month period in 2018 (“Q1 2018”). The 34% quarter-over-quarter increase is largely attributable to strong revenue streams from the Chalice Farms stores in Oregon and flower sales from our Canadian operations.

Gross profit was US$1.8 million or 41% of total revenue for Q1 2019, compared with US$0.4 million or 11% of total revenue in Q1 2018. The strong Q1 2019 gross margin is primarily due to significant cost reductions and utilization of an improved recording process that better matches revenue and cost of sales.

Operating expenses were US$4.7 million for Q1 2019 compared with US$4.6 million for Q1 2018. Q1 2019 operating expenses included $0.2M in wages and benefits related to headcount reductions and severance.  Operations at three facilities in Oregon were consolidated to one headquarters location.

During Q1 2019, headcount was reduced by 19% throughout the Company, and the reduction in annualized wages and benefits expense is projected at US$3.7 million.

Net loss for Q1 2019 was US$3.0 million or US$0.01 per share, compared with a net gain of US$8.1 million or US$0.02 per share for Q1 2018. Net income for Q1 2018 benefited from favorable changes in the fair value of warrant and debt liabilities of US$13.3 million, compared with $0.5M for Q1 2019. Changes in the fair value of warrant and debt liabilities and other non-cash items are excluded in the Adjusted EBITDA non-GAAP measurement.

Adjusted EBITDA loss was US$2.0 million for Q1 2019, compared with a loss of US$3.1 million for Q1 2018. Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization, non-cash compensation expenses, one-time transaction fees and other non-cash charges that include impairments. The Company considers Adjusted EBITDA an important operational measure for the business. For a reconciliation of Adjusted EBITDA to income (loss) before income taxes, please see the Company’s management discussion and analysis for Q1 2019 (the “MD&A”). 

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