Joel Toguri, Chief Executive Officer of Humble, commented, “As our business fundamentals are improving, we can prioritize the market expansion of the Cannabis business that will generate positive gross margins.”
With the California cannabis distribution operations launch, the company experienced solid revenue performance in Q4. Further topline growth is expected in FY2023 as we ramp up efforts with existing industry-leading brands such as Canndescent and Humbolt Farms, as well as onboarding new cannabis brands like Cookies and adding additional retail partners.
The company continues to execute its focus on shifting the gross margin mix, and, on a QoQ basis, cannabis now represents 17% of gross margin dollars in Q4 vs 10% in the prior quarter.
Mr. Toguri continued, “As we continue our efforts to right-size our business, delivering a seamless end-to-end-user experience for our brand and retail partners is always top of mind. To ensure faster turnaround times and accuracy in our fulfillment process, we completed the closure of the Nevada warehouse location ahead of schedule and under budget.”
The business continues to focus on tighter working capital management, significantly reducing the number of low-margin, slow-moving SKUs held for sale.
As management continues to streamline operations by leveraging technology and e-commerce capabilities, improved fulfillment efficiencies, and increased sales have been realized in the North American accessories business via websites and software partnerships. Continued use of data-driven technology allows for frictionless transactions for the North American customer base.
“As we look ahead, we are focused on accelerating our Cannabis expansion efforts in the U.S., building stronger relationships with our brand and retail partners throughout North America, and seeking out the most sought-after cannabis brands. We are committed to becoming the industry-leading distributor of cannabis and accessories, generating a sustainable profit and positive cash flow to deliver long-term shareholder value.”
April 2022 – The Company announced that further to the Company’s press release on November 15, 2021, it has formed HC Solutions Holdings Inc., a Joint Venture with Green Acre Capital Distribution Corp., for the purpose of distribution of cannabis throughout the United States, initially focused on accelerating the Company’s expansion into cannabis distribution operations in California. Subsequent to the formation of the Joint Venture, Green Acre Capital Distribution Corp. completed a US$2 million investment directly in the Joint Venture. Green Acre Capital Distribution Corp. has funded its investment through an option agreement with Johnson Brothers, a leading wine, spirits, and beer distributor in the United States.
April 2022 – Humble Cannabis Solutions California announced an exclusive distribution service agreement with the sought-after California brand house, Canndescent Brands, for the sale and distribution of all its product lines. Well-known to retailers and consumers alike, Canndescent’s brand portfolio offers something for all consumer groups. Humble will provide exclusive sales agent representation and distribution services for Canndescent across the California market, focusing on generating new listings, trade marketing services, promotional services, commercial planning support, and order fulfillment. The team will service all product lines in the Canndescent Brands portfolio.
June 2022 - Mark Hubler joined the board as a new Independent Director. Mark is President and CEO of Johnson Brothers, a leading wine, spirits, and beer distributor, providing world-class service to customers across the U.S.
September 2022 - Entered an exclusive sales and distribution agreement with leading cannabis brand Cookies. Humble will distribute all products marketed and sold under the Cookies brand name in California and any new consumer-branded cannabis products. Sales and marketing support will include multi-channel advertising, promotional activities, and the stewardship of a focused brand ambassador team. The California-based lifestyle and cannabis brand Cookies was named one of AdAge’s “Hottest Brands of 2021.” Its Co-Founder and CEO, Bay Area rapper, Berner, has been the focus of numerous feature articles, including the August / September 2022 issue of Forbes, where he was the first cannabis executive to be featured on the magazine’s cover.
September 2022 - Green Acre to invest an additional US$6 million into Joint Venture to distribute Cannabis in the United States with an initial focus on California fulfilling its rights under the previously announced joint venture. Subsequent to the formation of the JV, Green Acre previously completed a US$2 million investment directly in the JV and is now investing a further US$6 million into the JV to increase its ownership interest to 45%. Green Acre has funded its investment through an option agreement with Johnson Brothers, a leading wine, spirits, and beer distributor in the United States. Further information on the JV, Green Acre and Johnson Brothers is set out in the Company’s November 15, 2021, and April 25, 2022 press releases.
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.
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.
SOURCE Humble & Fume Inc.
Graham Meneray, CFO
Humble & Fume Inc.