The Valens Company’s Q2,2020 Results Beat Estimates

The Valens Company’s (TSX:VLNS) (OTCQX:VLNCF) Q2,2020 financial results reported revenue of $17.6M, which beat analyst estimates by 36%, and earned more year-over-year by 100%.

The company’s adjusted EBITDA of $2.7M, was also higher than the street estimate by 125%.

The growth was credited to the company’s various partnership agreements which helped see its revenue segments like custom manufacturing, white label products, and co-packaging operations expand.

During the quarter, Valens signed an agreement with Cannvalate Pty Ltd, which is Australia’s biggest medical cannabis distributor. Through this partnership the company hopes to penetrate the Autralian market as it evolves.

Subsequently, the company also entered a partnership with TREC Brands to produce vape pens under its existing TREC brands. Additional partnerships with Verse Cannabis, BRNT Ltd., High 12 Brands, and FPS Brands were also formed with the goal of manufacturing and delivering various derivative products and vape accessories to the market.

These initiatives were in line with Tyler Robson, CEO of the Valens Company’s statement, where he mentioned that the company strives to join hands with those who recognize the value of their capabilities, in the hope of driving revenue during the second half of this year.

Operational Performance

The ramp up of the company’s production this quarter saw it manufacture 36 SKUs, which was 26 more SKU’s than the previous quarter.

In terms of extraction volume, the company processed 30,059kg of Biomass this quarter, 51% more than the first quarter of this year.

As a result of its higher output, the company exhausted more cash this quarter than the same period of fiscal 2019 by approximately $4M.  Considering that it currently has $36.5M cash left in the vault, the company only has enough liquidity to sustain its current level of operations for another quarter and a half.

Therefore investors should expect various fund raising financial activities to occur in the near term.

Stock Performance

Valen’s share price performance is fairly better than the MJ marijuana ETF, due to its growing market share.

Management intervention is also responsible in holding up its value because they believe that the share price is undervalued. During its second quarter, the company repurchased 43,600 common shares at prices between $2.24-2.25 per share. Additionally, management claims that they will continue to repurchase more shares in the coming quarters until their desired target value is achieved.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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