Debra Borchardt
Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWF) announced its financial results for the fiscal 2022 third quarter ended October 29, 2022, as revenue increased 8% sequentially to $43.8 million from $40.7 million. However, revenue fell by 3% from $45.4 million for last year’s third quarter. The company attributed the sequential increase to growth in Retail and Digital segment sales offset by a moderate decrease in Wholesale & Logistics.
Fire & Flower delivered a net loss of $28.1 million in the quarter versus a net loss of $21.6 million in the second quarter and $2.0 million in the prior year’s third quarter. The company stated it had cash and cash equivalents of $17.3 million and positive net working capital of $12.5 million as of October 29, 2022.
“I am excited to see that our team’s hard work and focus on operations is demonstrating measurable operational and financial results at the end of the third quarter as well as in the recent weeks. The Company continues to be focused on driving the goal of positive Adjusted EBITDA and Free Cash Flow. We aim to accomplish our goal through a disciplined approach to driving topline revenue, gross profit dollars and reducing selling, general and administrative expenses,” shared Stéphane Trudel, Chief Executive Officer of Fire & Flower.
Revenue Breakdown
Digital revenue came in at $3.0 million, an increase from $1.9 million in the second quarter and a decrease from $3.8 million in the same quarter of the prior year. Digital Adjusted EBITDA of $1.4 million increased from $0.6 million in Q2 2022 and decreased from $3.4 million in the prior year comparative period. The sequential increase in revenue and Adjusted EBITDA was attributed to the resumption of data subscription agreements and increased project-based data and analytics work during Q3 2022, which the company expects to continue.
More Changes
Since the quarter ended, named John Chou as Interim Chief Financial Officer on November 21, 2022. The company also expanded its strategic relationship with Alimentation Couche-Tard through the addition of four additional cannabis retail store locations under license on November 7, 2022.
The company also agreed to buy two cannabis retail store locations in Kingston, Ontario from a wholly owned subsidiary of Alimentation Couche-Tard, through the issuance of 804,548 Common Shares and up to additional 804,548 Common Shares upon achievement of certain performance metrics. The closing of the transaction is subject to certain closing conditions including the receipt of regulatory approval.
“Our strategic relationship with Alimentation Couche-Tard has been strengthened through our recent license agreement for five additional co-located cannabis stores adjacent to high-traffic Circle K in the Greater Toronto market, expanding on the existing program in Western Canada. In addition, if approved by shareholders, Fire & Flower will benefit from favourable financing to execute on our plans for growth with a $5 million private placement, in addition to the non-dilutive $11 million loan that has been secured.”
