Valens GroWorks Corporation (CSE:VGW) (OTCMKTS:MYMSF) released its 2Q financial numbers Monday, showing a boost in revenue to C$8.8 million in its second fiscal quarter.
"The second quarter of 2019 provided a number of significant achievements for Valens as the team continued to successfully execute on our commercial production plan which translated into revenues of $8.8 million for the second quarter, a 296% increase from the first quarter of 2019," said CEO Tyler Robson in a statement. "This increase in production volume also allowed the team at Valens to achieve increased efficiency targets resulting in strengthening gross margins to 58.0% of revenue in the second quarter of 2019, up from the 38.3% realized in the first quarter of 2019."
The firm said its gross profit increased to C$5.1 million, or 58.0% of revenue, for the second quarter of 2019 compared to C$0.9 million or 38.3% of revenue in the first quarter.
It processed 8.5 million grams of dried cannabis and hemp biomass in 2Q 2019, a 376% increase over the first quarter of 2019. The firm noted it has already processed 7.35 million grams of biomass in the first 45 days of the third quarter.
Kelowna-based Valens is a multi-licensed provider of cannabis products and its services are focused on various proprietary extraction methodologies, distillation, cannabinoid isolation and purification, as well as associated quality testing. Valens has extraction processing and supply agreements with a number of leading producers across Canada.
The firm boosted its annual extraction capacity to 425,000 kg of dried cannabis and hemp biomass in the second quarter of 2019, thanks to increasing customer demand. The firm has plans to boost capacity further, to more than 1,000,000 kg annually, with the buildout of its adjacent facility in Kelowna, BC, which is anticipated to be completed in early 2020.
"With the recent increase in annual production capacity to 425,000 kg, and significant interest from our industry partners in white label product development and manufacturing for vape cartridges, tinctures, gel capsules, beverages and topicals, we remain focused on the expansion of our footprint in Kelowna to capitalize on these significant opportunities. With this and other strategic investments, we expect to continue to strengthen Valens' position as the world's leading production partner in the cannabis industry and for growth to accelerate throughout the remainder of fiscal 2019 and beyond," said Robson.
The firm had a number of highlights in the quarter, including three new extraction partners in the second quarter of 2019, including The Green Organic Dutchman Holdings Ltd (TSE:TGOD) (OTCMKTS:TGODF) HEXO Corp (NYSEAMERICAN:HEXO) (TSE:HEXO) and Tantalus Labs, and expanded contracted extraction capacity with Tilray Inc (NASDAQ:TLRY) by 300% to 60,000 kg per year, while adding contract manufacturing services.
Other notable achievements including Valens being accepted for listing the common shares and warrants on the TSX Venture exchange as a Tier 1 life sciences issuer.
Shares of Valens were up 3.6% C$4.34 on Monday.
Contact Katie Lewis at [email protected]