Red White & Bloom Brands Inc.

Q3 2021 revenue was $11.8 million, compared with $6.1 million in Q3 2020, an increase of 93%. Q3 EBITDA was $5.9 million versus an EBITDA loss of $5.8 million in Q3 2020; net loss was $5.5 million versus $9.5 million. For the nine months ended September 30, 2021, revenue was $36.9 million, up 386% from $7.6 million, and gross profit excluding fair value items was $21.5 million, up 295% from $5.5 million. Nine-month net loss was $73.8 million versus $29.8 million a year ago. Management also said Q3 IFRS revenue was $11.8 million versus adjusted sales of $32.2 million, and nine-month IFRS revenue was $36.9 million versus adjusted sales of $99.2 million. Forward-looking, the company expects first product sales from its Florida facilities in Q1 2022, first harvest from Apopka pods in Q4, and revenue realization from those assets in Q1 2022. Management also said it is working toward Michigan license approvals and aims to move forward with Illinois in the first half of 2022.

Brad Rogers framed the quarter as evidence that the company is building a foundation for premium brands and vertical integration across core states. He repeatedly stressed that Michigan’s reported revenue is understated because of legacy licensing structures and said the company is progressing on regulatory approvals that would allow it to recognize more of the business. His tone was upbeat and promotional, but he also acknowledged delays, quiet-period restrictions, and that some transactions have taken longer than hoped.

Chris Ecken highlighted the Q3 and nine-month numbers, including $11.8 million in Q3 revenue, $5.9 million in Q3 EBITDA, and the improvement in Q3 net loss to $5.5 million. He also pointed to nine-month gross profit excluding fair value items of $21.5 million and explained that SG&A rose from $22 million to $60 million, driven by depreciation, amortization of licenses, and staffing as the company scales. On capital structure, he said the company may refinance shorter-term debt into longer-term debt at lower rates and could consider divesting non-core assets to reduce liabilities.

Analysts and investors focused on Michigan, Illinois, rising liabilities, and how the company intends to become profitable. Management said Michigan consists of two major pieces: bringing the existing Platinum Vape business under a structure that allows full top-line recognition, and closing the investee acquisition once final regulatory approvals are secured; Brad also said the company is doing about 400,000 vapes per month from the PV line, excluding other brands. On Illinois, Brad said the issue is the complexity of acquiring a nonprofit license holder and that the company is working with regulators to structure the deal for the first half of 2022. In response to leverage concerns, Chris said the company may refinance short-term debt and potentially sell non-core assets, and to profitability he pointed to brand strength in Michigan, cost-out from the new processing facility, and Florida’s higher gross-margin profile.