The company said it was pleased to report strong growth compared to its last quarter, driven by rising consumer demand for its AMA cannabis products in Nevada and growth of its Canna Hemp line in the US
Inc () (OTCQX:TGIFF) announced its third quarter results Tuesday, reporting higher revenue quarter-over-quarter, driven by consumer demand.
The firm reported revenue of C$4.6 million in the third quarter, up from C$3.7 in the previous quarter. The firm pointed to rising demand for its AMA cannabis products in Nevada, as well as the growth of its Canna Hemp line throughout the US.
"Since becoming a publicly-listed issuer two years ago, we have focused on building one of the most valuable and respected CBD brands in the market and in successfully growing THC market share in Nevada, where we continue to be one of the largest suppliers of wholesale branded products in the state, with a major presence in every dispensary," said CEO Chris Rebentisch. "We have spent significantly on the expansion of our infrastructure to support the future growth of our brands and have increased spending in product development, inventory build-out and sales and marketing efforts."
READ: 1933 Industries’ premium Canna Hemp brand of CBD products now available in most of the US
Operating via three subsidiaries, 1933 owns licensed medical and recreational cannabis cultivation and production assets, hemp-based, CBD infused products, CBD extraction services and a specialized cannabis advisory firm.
The firm reported net sales of C$1.14 million compared to $1.44 million during the third quarter of 2018. The revenue decrease was primarily due to increased purchases of third-party biomass by Alternative Medicine Association (AMA) to produce concentrates and final products, while increasing market share. The company noted its ability to cultivate sufficient amounts of biomass from its new facility could lead to an improvement in gross margins.
Partially offsetting the increased costs of AMA, Infused MFG has significantly increased its customer base which has resulted in improved economies of scale in the production of CBD-based products, positively impacting overall gross margin, which exceeded 74%.
The company reported a C$7.28 million loss which it attributed to building infrastructure scale, investing in brand development and a C$3 million impairment adjustment of the company's consulting arm, Spire Global Strategy Inc.
"Our focus moving forward will be the growth of our consumer packaged goods portfolio and the continuous innovation of our unique, differentiated quality-based brands," said Rebentisch. "We also intend to invest in our hemp extraction facility, automate our manufacturing processes and move into strategic markets. We have sustained organic growth with a strong platform, realized operational efficiencies across the organization and as our new assets come online to deliver higher capacity, we expect increased revenues and margins as we continue on the path to profitability".
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