Wall Street Signals: Ionic Brands Announces $7.2M Revenues for the Third Quarter 2021, with 11% Unit Sales Increasing Quarter-Over-Quarter

Ionic Brands Announces $7.2M Revenues for the Third Quarter 2021, with 11% Unit Sales Increasing Quarter-Over-Quarter

 


Release Highlights:


(Expressed in US dollars, unless otherwise stated)

  • Q3-2021 sales revenues of $7.2M, up 146% from the prior-year period.
  • The Company improved its gross margin revenue to 16.8% in Q3-2021 compared to 16.2% in Q2-2021, despite substantial pricing pressure from an oversupply of biomass material in the market.
  • Increased Unit Sales by 11% in Q3-2021 over Q2-2021.
  • Realized adjusted EBITDA of ($209K) in Q3-2021 compared to ($964K) in Q2-2021 and ($5.4 million) in Q1-2021, representing a significant improvement of approximately $755K compared to Q2 and nearly $5.2 million compared to Q1.                                                
IONIC BRANDS CORP. (CSE: IONC)(OTCQB: IONKF)(FSE: IB3A) ("IONIC BRANDS'' or the "Company") is a regional manufacturer of innovative cannabis consumables and concentrate extract products, is pleased to report financial results for the three and nine-month periods ended September 30, 2021.

For further information on the financial results of the Company, please review the Company's unaudited condensed consolidated interim financial statements (unaudited) and the accompanying MD&A available under the Company's profile on www.SEDAR.com.

John Gorst, CEO of Ionic Brands, comments on Third Quarter 2021 Results:

"While Management is generally pleased with our Q3-2021 results we remain vigilant and upbeat about the growth of the company. In quarter three, Ionic Brands experienced pricing headwinds in our B2B wholesale and wholesale-to-retail segments of our business, due to a statewide oversupply of biomass in the Washington market. We expect these statewide pricing pressures to gradually ease over the next several months as excess biomass supplies are worked off statewide but will have an interim impact on both revenues and gross margins. However, we believe that Ionic Brands should still achieve positive gross margin improvement in Q4-2021 over Q3-2021.

During the third quarter of 2021, we also experienced supply chain disruptions related to specialty child-proof packaging, which impacted our ability to meet the demand for certain products. The Company continues to grapple with labor and supply chain shortages or delays, which we believe will substantially improve after the holiday season. Management believes with our operating experience for the last 10 years both in the medical and recreational cannabis markets, we are making the necessary operating adjustments to guide the Company through these challenges. Our primary growth focus remains on the expansion of our distribution footprint.

We believe there remains a transformative long-term growth opportunity for Ionic Brands. The Northwest Markets of Washington and Oregon remain a substantial opportunity for organic growth as we expect competition thins out through natural attrition and market consolidation. Ionic Brands remains active in 340 out of approximately 1,130 stores in the Northwest Markets, representing a unique opportunity for organic sales growth. The Company's portfolio of brands continues to generate healthy top-line revenues - consistently landing us in the top five sellers in the state of Washington."

Northwest Market Conditions:

  1. Overall monthly retail sales were down -15% from April 2021 to September 30, 2021, due to the post-pandemic consumer returning to a more normal lifestyle pattern.                                                     
  2. The average item price in the Northwest market fell -5% from $15.30 per unit in April 2021 to $14.36 per unit in September 2021.                                                                                                       
  3. Vape device sales in April 2021 were $22,635,112 falling to $20,465,621 in September down -10%.                                                                                                                                                 
  4. Concentrate sales in April were $16,422,005 falling to $11,132,774 in September down -32%.                                                     
  5. Pre-roll sales were $59,878,563 falling to $52,050,904 in September down -13%; and                                                                    
  6. Ionic Brands' overall brand ranking in the Northwest Markets remains steady at 153 out of approximately 1,865 brands currently being sold in the market.

Ionic Brands Corp. Key Performance Indicators: 11% Increase in Unit Sales Q3-2021 over Q2-2021.
  1. Wholesale to retail sales were $1.9M with 330,936 units being sold in Q3-2021 vs. 111,433 being sold in Q2-2021 equating to a 197% increase in units sold.                                                                 
  2. B2B wholesale sales were $1.1M with 2,261,955 units sold in Q3-2021 vs. $2.22M being sold in Q2-2021 for a slight increase of 2%.                                                                                                    
  3. Wholesale to retail flower sales came in at $3.9M with 1,039,666 units sold in Q3-2021 vs. $3.93M in flower sales with 1,096,655 units sold in Q2-2021 representing a -5% decline.                                          
  4. Oregon wholesale to retail units sold 32,226 in Q3-2021 vs. 23,398 units sold in Q2-2021 equating to a 38% increase in units sold.                                                                                                         
  5. The Company has successfully launched our Direct-to-Consumer CBD site selling our first of five products called Zoots NRG+CBD product. The next product to launch will be our Zoot Drops+CBD sometime in Q1-2022.                                                                                                                                                                                                         
  6. From January to September 2021, the Company has sold a total of 5,101,455 units, exceeding Fiscal 2020 units sold by 3,680,388 units or 359%. Management will continue to focus on acquiring more retail space in our stores served.

Financial Highlights:

  • Adjusted EBITDA was ($209.1K) in Q3-2021 compared to ($964.4K) in Q2-2021 and ($5.4 million) in Q1-2021, representing a significant improvement of approximately $755K compared to Q2 and nearly $5.2M compared to Q1. The reduction of the Adjusted EBITDA loss is primarily attributable to an increase in overall gross margin revenue. The Company remains committed to prudently managing its operating expense on its mission to improve efficiency throughout the organization. Selected 2021 Q3 Financial Information

Selected 2021 Q3 Financial Information

(Unaudited - Expressed in US dollars, unless otherwise stated)1:


Q3 20212
Q3 2020
Change
$$$
Revenue
7,217,4162,921,6504,295,766
Cost of Sales
(5,920,863)(2,136,225)(3,784,638)
Gross Profit
1,215,503785,425430,078
Blended Gross Margin
16.8%26.9%
Adjusted EBITDA3
(209,055)237,481(446,536)
Cash balance
585,79053,697532,093

Operational Highlights:

The Company slightly improved its Gross margin revenue to 16.8% in the third quarter of 2021 compared to 16.2% in the second quarter of 2021, even with substantial downward pricing pressure from an oversupply of biomass material in the market. The Company expects gross margin revenue will continue to increase in Q4-2021 and beyond due to a mix of the higher-margin product (Concentrates) sales from retail. Further, the Company expects quarter-on-quarter margin improvement to continue in Q4-2021 and into 2022, as biomass yields increase from the Company's exclusive licensed partner-operated assets. The Company will continue its efforts to consolidate the purchasing power between CCC and THC Farms, our exclusive manufacturing partners in Washington, and achieve lower raw material input costs for their combined operations.
The Company has begun the planning process of further consolidating its Washington facilities as leases on certain facilities expire in mid-2022. This will create additional operating leverage while contributing to both gross margins and bottom-line financial results.
The Company has successfully launched our Direct-to-Consumer CBD site selling our first of five products Zoots NRG+CBD product. The following product to launch will be our Zoot Drops+CBD sometime in Q1 2022.
The Company has successfully launched the phase one rollout of our brands in the Massachusetts market, starting with Ionic pre-rolls and infused pre-rolls. We expect our Zoots edibles line to be introduced in the state in Q1-2022. We look forward to our continued partnership with both the Pass and M2 Partners in expanding our portfolio of products on the East Coast.



About Ionic Brands Corp.
The Company is dedicated to building a regionally based multi-state consumer packaged goods company with a highly respected cannabis concentrate brand portfolio with strong roots in the premium and luxury segments of vape, concentrates, flower and consumables. The cornerstone Brand of the portfolio, IONIC, is a top concentrates brand in Washington State along with its economy brand Fabulous and has aggressively expanded throughout the Pacific Northwest of the United States. The brand is currently sold in Washington and Oregon. IONIC BRANDS' strategy is to be the leader of the highest-value segments of the cannabis market.
On behalf of IONIC BRANDS CORP.
John Gorst
Chairman & Chief Executive Officer
For more information visit www.ionicbrands.com or contact: +1.253.248.7927