“We are pleased with the incremental change for the better seen in Q3, as we have minimized losses and made strides towards achieving our goals,” said CEO Jakob Ripshtein. “While we are proud of our progress, we recognize that there is always room for improvement, and we remain committed to continuously raising the bar and doing even better in the future.”
During Q3, the Company recorded an AR improvement of $2.5 million compared to Q2. In addition, the gross margin improved by 4.2% in the North American accessories business compared to Q2. The Company also reduced its inventory balance by $3.9 million compared to the end of the prior fiscal year, resulting in better supply chain management and timely deliveries.
“As a result of our focus on profitability, financial controls and customer service, we see significant margin improvement at the end of Q3, but we are confident there is more we can do in this area,” said Mr. Ripshtein.
The Company optimized talent and resource allocation, reducing salary and wages by $614k compared to Q2. The Company also upgraded talent and promoted functional experts within the business, resulting in improved commercial performance reporting and strengthened financial controls.
Mr. Ripshtein continued, “By implementing more robust financial controls and optimizing our headcount, our team can now generate financial reports more frequently, enabling us to make more informed business decisions.”
Furthermore, the Company reclassified its priority SKUs to focus on profit margin, positioning itself for success by prioritizing AR collection while providing value-added communication and advice to partners and dispensaries. The Company also enhanced its retail excellence promise ahead of schedule by resetting its approach to customer service.
The Company has upgraded our customer facing technology to better align with our business practices, which has enabled us to monitor our field performance more effectively, ensuring that we provide our customers with the highest level of service and efficiency. As a result, the Company can now identify areas for improvement and take proactive measures in real time to enhance our operations, resulting in improved customer satisfaction.
Mr. Ripshtein concluded, “By combining our disciplined approach with targeted initiatives, we have effectively minimized losses and are now poised for continued growth. We are confident that our concerted efforts will help us achieve our long-term objectives, resulting in sustainable value creation for all our stakeholders.”
The financial statements, notes to the financial statements, and Management’s Discussion and Analysis for the nine and three months ended March 31, 2023, are available on the SEDAR website at www.sedar.com.
Humble & Fume Inc. is a leading North American distributor of cannabis and cannabis accessories, supported by a customer-centric sales team and a 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. 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, the Company’s ability to achieve its long-term objectives and the sustainable value creation for the Company’s stakeholders 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.
Matthew MacKay, CFO
Humble & Fume, Inc.