Avant Brands, a leading producer and distributor of premium cannabis products, announced its financial results for the fourth quarter and the fiscal year 2023 on Thursday. The company reported a revenue of $30.1 million for the quarter, up by 47% from the previous quarter and by 139% from the same period last year. However, the company also incurred a net loss of $5.4 million, mainly due to higher operating expenses and taxes.
Revenue breakdown and margins
The company attributed its revenue growth to the increased demand for its cannabis products, especially the premium flower and pre-roll categories, which accounted for 85% of the total revenue. The company also expanded its distribution network to over 1,300 retail stores across Canada, and launched its products in Germany and Poland through its international partner, Medican Holdings.
The company’s gross margin for the quarter was 48%, down from 51% in the previous quarter and 53% in the same quarter last year. The company explained that the lower margin was due to the higher cost of sales associated with the ramp-up of production at its new facility in Aldergrove, British Columbia, which became fully operational in December 2023. The company expects the margin to improve as the production efficiency increases and the product mix shifts to higher-margin categories.
Operating expenses and net loss
The company’s operating expenses for the quarter were $19.5 million, up by 33% from the previous quarter and by 77% from the same quarter last year. The increase was mainly driven by the higher sales and marketing expenses related to the brand awareness and customer acquisition initiatives, as well as the higher general and administrative expenses related to the corporate development and legal and regulatory compliance activities.
The company’s net loss for the quarter was $5.4 million, compared to a net income of $0.4 million in the previous quarter and a net loss of $2.9 million in the same quarter last year. The company attributed the net loss to the higher operating expenses and the higher income tax expense of $3.2 million, which resulted from the revaluation of deferred tax assets due to the change in tax rates in Canada.
Outlook and strategy
The company’s CEO, Ruben Houweling, expressed his satisfaction with the company’s performance in 2023, stating that the company achieved its revenue target of $100 million for the fiscal year, and increased its market share in the premium cannabis segment. He also highlighted the company’s strategic initiatives for 2024, which include:
- Launching new products in the edibles, beverages, and topicals categories, as well as innovating its existing products to meet the evolving consumer preferences and needs.
- Expanding its international presence by entering new markets in Europe, Asia, and Latin America, as well as strengthening its existing partnerships with Medican Holdings and Aurora Cannabis.
- Improving its operational efficiency and reducing its cost structure by optimizing its production processes, leveraging its economies of scale, and implementing automation and digitalization solutions.
- Pursuing strategic acquisitions and partnerships that can enhance its brand portfolio, distribution network, and product offerings, as well as create synergies and value for its shareholders.
Houweling concluded his statement by saying that the company is confident that it can achieve its growth objectives and deliver positive and sustainable earnings in 2024 and beyond.
