- PLUS sees million-dollar increases in net revenues, gross profits; significant improvements in operating costs and cash balance.
- Q1 financial results paint picture of healthy company.
- Launch of PLUS CBDRelief brand marks company’s entrance into wellness, relief space of cannabis adult-use market.
Plus Products (CSE: PLUS) (OTCQX: PLPRF), a U.S. cannabis-branded products company, announced its first-quarter financial results (http://cnw.fm/s19nX). The unaudited financial and operational results, reported for the three months ending March 31, 2020, noted an increase in net revenues and gross profits, with an improvement in operating costs and a multimillion-dollar cash balance.
“The start of this year came with a number of difficult decisions that were made in order to accelerate our path to cash flow generation,” said PLUS CEO and co-founder Jake Heimark. “The changes we made helped to cut our cash consumption to less than a fifth of what it was last quarter and, critically, doing so did not undermine our core business, which grew more than 35% quarter-over-quarter.
“Our first-quarter financial results paint the picture of a much healthier business than previous quarters,” he continued. “But the work is far from done. In 2020, we are focused on leveraging our core capabilities to create capital-efficient growth through known distribution channels.”
According to the report filed with the Canadian Securities Exchange (“CSE”), net revenues for the company rose from $3.2 million for Q1 2019 to $4.7 million in Q1 2020—an impressive 46% increase compared to Q1 2019 net revenues of $3.2 million and a 36% increase over last quarter’s revenue of $3.5 million. Company officials noted the growth came primarily from its California adult-use market, with incremental growth attributed to the Nevada adult-use and national hemp-CBD markets.
Plus Products also saw a 35% increase in gross profits compared to the same period last year, rising from $0.70 million in Q1 2019 to $1.7 million for Q1 2020. The filing noted that “higher sales volumes and increasing operational efficiencies in the company’s California production facility diminished the growth of labor and overhead costs relative to sales, thereby increasing gross profits.”
Additional financial highlights included a 31% year-over-year improvement in operating losses, $2.1 million in Q1 2020 from $3.0 million in Q1 2019, and a 75% quarter-over-quarter improvement from Q4 2019’s $8.2 million. Key to this improvement was the company’s January workforce reductions in Q1 2020 as well as fewer upfront investments tied to new-market entry. Finally, PLUS also reported an accumulative $14.2 million in cash and cash equivalents at the end of the quarter.
A business highlight for Q1 2020 include the company’s launch into the wellness and relief space of the California adult-use market with the unveiling of its PLUS CBDRelief brand. Products in this line feature low-THC and high-CBD ratios formulated specifically for cannabis consumers who are looking to cannabis for relief. More than 175 licensed California retailers already carry the brand.
“The majority of our growth initiatives in 2020 will be centered around California,” Heimark said. “Despite experiencing some growing pains, we believe that California unequivocally remains the most valuable market for building a branded-products company in cannabis. In 2019, the state made up 38% of the global adult-use market and is expected to remain 24% of that market through 2024.
“With the two best-selling products in the state, and one of the largest brands in the California edibles market, we believe that we have established an exceptionally valuable position as a company,” he said. “We are excited to take steps that we believe will continue to grow that position throughout the course of this year.”
Plus Products is well positioned for greater growth in California, as well as continued forward progress in Nevada. Of note for investors is that PLUS has a strong management team and a clean capital structure with considerable insider ownership. The company continues to build the world’s largest cannabis brand by applying its successful formula to new products and consumers.
For more information, visit the company’s website at www.PlusProducts.com.
NOTE TO INVESTORS: The latest news and updates relating to PLPRF are available in the company’s newsroom at http://cnw.fm/PLPRF
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