Indus Holdings, Inc. Reports First Quarter 2020 Results and Announces Final Closing of Convertible Debenture Financing

 Indus Holdings, Inc. a leading, vertically-integrated, California-focused cannabis company, announces its financial results for the first quarter 2020 (ended March 31, 2020). All figures stated are in US Dollars.

First Quarter Financial and Operational Highlights:

• Revenue generated for the three-month period ended March 31, 2020, was $9.4 million; a 46.7% year-over-year growth from the first quarter last year and a decrease of 12.6% from the prior quarter. As a percentage of revenues, owned brands grew from 51% in the prior quarter to 55% in the first quarter while agency brands declined from 41% to 29% and distributed brands grew from 8% to 16% from the corresponding quarters.
• EBITDA for the three-month period ended March 31, 2020, was ($4.5 million); EBITDA for the previous quarter ended December 31, 2019, was ($13.4 million). See “Use of Non-IFRS Financial Information” below.
• Net loss for the three-month period ended March 31, 2020, was ($4.0) million, compared to ($18.3) million in the prior quarter and ($4.9) million in the first quarter last year. The $14.3 million improvement from the fourth quarter was due to cost reduction initiatives, strategic product mix improvements, a favorable biological asset fair value change, and elimination of certain charges that impacted the prior quarter.
• Gross margin was 26.8% and 10.9% in the three months ended March 31, 2020, and the same quarter in 2019, respectively. Excluding the net effect of change in fair value of biological assets, the corresponding gross margins were (12.3)% and 21.0% for the three months ended March 31, 2020, and the same quarter in 2019, respectively.

“The financial results reflect our strategic initiatives, are in line with what we expected, and represent an interim snapshot amidst our transition to a profitable and thriving enterprise,” said Mark Ainsworth, Chief Executive Officer for Indus Holdings, Inc. “Our commitment to increase our margins, retain relationships that support that goal, and focus on driving revenue growth for company owned products are reflected in these results and will continue in the second quarter of this year.” 

Operational Highlights and Initiatives Underway in 2020:
The Company remains focused on initiatives that will drive profitable growth, with top priorities of finalizing renovation of its cultivation facilities, improving operational efficiency, and becoming profitable. 

• California Cultivation Facility Build-out: 
  • The Company continues to be on track with the renovation of its greenhouses, with two greenhouses completely renovated and fully planted in May, a third greenhouse expected to be renovated and planted by August 2020, and the nursery greenhouse completed by the end of the third quarter.
  • These renovations will add 110,000 square feet of additional cultivation resulting in an annual harvest capacity of approximately 45,000 pounds starting in the fourth quarter of this year compared to 9,000 pounds harvested in 2019.
• Cultivation Quality and Efficiency: 
  • Improved cultivation processes, combined with the newly renovated grow rooms, have led to increased potency and enhanced yields. The company will continue to have additional rooms come online in the coming months, with yield and potency test results to be in line with company expectations.
  • Preliminary results from initial harvests are extremely promising, with increased potency levels ranging from 15% to 22% in previous quarters, to a current level of 22% to 34%.

• Indus Owned Core Brands:
  • Indus owned brands remain at the top of their categories in the California market according to BDS Analytics for first the quarter of 2020:
    • Moon, an edible brand, is the third highest revenue brand in chocolate.
    • Cypress Cannabis, a flower brand, is the sixth highest volume flower brand.
    • Flavor, a concentrate brand, is the leading revenue brand in shatter and the second highest revenue brand in wax and crumble categories.
• Distribution Capabilities:
  • After a careful evaluation, the Company has terminated its relationship with a third-party technology service provider and has since implemented an alternative service platform to support its distribution business, which allows Indus to improve the efficiency and performance of distribution operations and control the process from start to finish.  
• Closed Previously Announced Convertible Debenture:
  • The Company closed the convertible debenture announced in April 2020 with the funding of an additional $1 million in financing that had previously been committed, bringing the total debenture to $16.1 million.

“We know we still have a lot to do in order to deliver on our objectives, but we are bullish and determined to achieve our goal of reaching profitability in 2020,” said Ainsworth. “It is no small task, but everything we have done is methodical and calculated. We are where we have planned to be.”

Q1 Financial Results Earnings Conference Call Details:
Indus Holdings, Inc. plans to host a conference call with management Friday, May 29, at 8:30 a.m. EDT.

The call can be accessed using the following dial-in information:

U.S. and Canadian Toll-free:          +1-877-407-0789
International:                                   +1-201-689-8562
Conference ID:                                13704529

Please dial-in at least 15 minutes before the call to register.

The conference call will be webcast live and archived on the investor relations section of the Indus Holdings, Inc. website at https://ir.indusholdingco.com/.

About Indus Holdings, Inc.
Indus Holdings, Inc. is a vertically-integrated cannabis company with advanced production capabilities, including cultivation, extraction, manufacturing, brand sales & marketing, and distribution. Founded in 2014 and based in Salinas, California, Indus offers services supporting every step of the supply chain and an extensive portfolio of award-winning brands, including Cypress Cannabis, House Weed, The Original Pot Co., MOON, Acme, and Kaizen Medicinals. Indus Distribution, a division of Indus Holdings, Inc., is a leading distributor of cannabis products, servicing an extensive portfolio of brands and licensed retailers.

Investor Relations Contact
Bill Mitoulas
Indus Holdings, Inc.
ir@indusholdingco.com
Office: 1.416.479.9547

Media Contact
Renata Follmann
Rossetti Public Relations
pr@indusholdingco.com