Joel Toguri, Chief Executive Officer of Humble, commented: “Our focus continues to be optimizing growth opportunities while proactively right-sizing the business. We are very pleased with our efforts to expand our portfolio of cannabis brands and broaden the scope and scale of our retail relationships.”
The California cannabis distribution business revenue grew quarter-over-quarter by 68%. Restructuring initiatives completed last fiscal year are positively impacting the P&L, with operational expenses relating to the North American accessories down quarter-over-quarter by $3.8m or 44%.
Inventory levels with the North American accessories business continue to decrease, selling off old/slow-moving items. Year over year inventory has decreased by $6.5m, with the prior year having a balance of $17.8m vs the current balance of $11.2m. Quarter-over-quarter inventory has decreased by 10% or $1.3m.
Mr. Toguri continued, “California continues to be a dynamic market providing ongoing growth opportunities to help great brands, like Cookies, scale throughout the state.”
Cookies, the leading California-based lifestyle, and cannabis brand was successfully onboarded with revenue starting in October. Operational costs in Q1 have been incurred ahead of the revenue, with additional headcount, vehicles, and other one-time costs added to ensure successful onboarding & to have the infrastructure in place to start selling on October 1, 2022.
The California cannabis distribution business continues to grow, with revenue increasing quarter-over-quarter.
“Our ongoing focus on profitable growth includes right-sizing our organization to ensure we have the most effective and efficient team in place to serve the needs of our brand and retail partners,” said Mr. Toguri.
Restructuring & cost-saving initiatives taken last year are starting to show in the P&L, with overall operational expenses down year over year by $1.5m & down $3.8m quarter-over-quarter relating to the North American accessories business. Salary and wages experienced the most significant reduction, with YoY savings of 20.7% and QoQ reduction of 14.6%
Humble & Fume, Inc. is a leading North American distributor of cannabis and cannabis accessories, supported by a customer-centric sales team and strong fulfillment infrastructure. As the only fully-integrated cannabis distribution solution, Humble bridges the gap for retailers, licensed cannabis producers, multi-state operators, and cannabis consumers to maximize sales penetration, and increase financial performance. With over 20 years of North American operating experience, Humble has cultivated extensive vendor and customer relationships, distributing premium cannabis consumables and consumption devices.
EBITDA and Adjusted EBITDA are financial measures that are not defined under IFRS. We define EBITDA as net income (loss), or “earnings”, before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as EBITDA before: (i) fair value adjustments on biological assets and fair value adjustments on sale of inventory; (ii) share-based compensation expense; (iii) RTO listing expense; and (iv) goodwill impairment losses. We believe Adjusted EBITDA is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of our operating business performance and other one-time or non- recurring expenses, and also provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS financial measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the IFRS financial measures presented herein.
This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposed listing on the CSE, the focus of the Company’s business, and intentions of those subject to early warning disclosure requirements. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "intends", "contemplates", "believes", "projects", "plans" and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Statements about, among other things, Humble & Fume Inc.'s strategic plans including future growth opportunities and strategies in the United States are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that such forward-looking statements will occur as described herein. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances or actual results unless required by applicable law. Readers are encouraged to refer to the Company’s disclosure available on its SEDAR profile (at www.sedar.com) for information as to the risks and other factors which may effect the Company’s business objectives and strategic plans.
Graham Meneray, CFO
Humble & Fume Inc.