Toronto, Ontario–(Newsfile Corp. – March 22, 2023) – SLANG Worldwide Inc. (CNSX: SLNG) (OTCQB: SLGWF) (“SLANG” or the “Company”), a leading global cannabis consumer packaged goods (CPG) company with a diversified portfolio of popular brands, today issued a letter to shareholders from its Chief Executive Officer, John Moynan.
To our Shareholders,
As we reflect on our fiscal fourth quarter, I would like to take this opportunity to discuss how our continued efforts to optimize the business have continued to produce results. We have built a scalable, nimble and efficient business centered on our unique ability to distribute our award-winning brands. Despite challenging market conditions, SLANG continues to thrive in many of the U.S.’s most competitive cannabis markets. Our team has clearly differentiated SLANG as a company that consistently builds and maintains its market share amidst a crowded industry of multi-state operators and competitive brands.
Our success this past year is a direct result of our commitment to successfully advancing our streamlined business strategy, which continues to prioritize geographic expansion through strategic partnership. We continue to expand our footprint while leveraging a vertically-integrated operational infrastructure in our Core Markets, Colorado and Vermont, as the backbone of our brand and national distribution. Our ability to operate a lean, efficient, and streamlined operation has had a clear impact on our revenue and margins. I am pleased to report that due to the strength of the SLANG business model, we significantly reshaped our financial results in 2022 and set SLANG on a course for continued profitable growth for the remainder of 2023.
In Q4, SLANG generated positive operating cash flow1, and as a result, at the close of our fiscal year 2022, SLANG was operating with a much-improved financial position. As of December 31, 20222,
- Cash and cash equivalents were $11.9 million CDN;
- Clean balance sheet – minimal debt composed of non-material payments;
- Continued margin expansion, increasing to 46.4% for Fiscal Year 2022 compared to 38.3% in Fiscal Year 2021;
- In Colorado, O.pen cartridge sales outperformed the category by 13.5% in H2 2022 vs. H2 2021;
- New vertically integrated operations in Vermont generated $4MM in revenue, significantly outpacing our forecast for the State; and
- THC free wholesale distribution introduced new higher margin sales in a key growth channel.
As you can see, our results show sales momentum as we continue to meet increased demand for our award-winning products in both our Emerging and Core Markets. We continue to keep an eye on the evolving cannabis industry, innovating within our core competencies to further build our brand while operating in the most efficient manner. To this end, we remain focused on consistently undergoing SKU-rationalization, further improving the supply chain and closely following consumer trends to advance strong-performing assets while eliminating weaker ones.
We pride ourselves on our ability to succeed in today’s most competitive cannabis markets, building a portfolio of best-in-class brands that consumers consistently select over other cannabis products. O.pen remains today’s top selling vape cartridge product in Colorado, a position it has maintained for the last 8 years, according to BDSA data. Most notably, despite operating within a declining market category, O.pen sales remain strong, and this year the brand has outpaced the competition by a wide margin despite challenging market conditions.
In addition, we remain focused on the rapidly changing cannabis legalization landscape and continue to successfully enter today’s rapidly growing emerging cannabis. We recently announced our entry into West Virginia through our strategic partnership with Trulieve Cannabis Corp., placing our products now in 13 states that are demonstrating strong growth and driving the brand metrics which we believe will drive long-term value.
As we continue to expand our market share across the most competitive markets, we are focused in 2023 on further leveraging our robust, vertically-integrated operations to advance existing and new product sales channels, such as THC-free, to further diversify our profitable revenue streams. We will continue to build upon our successful partnership model to enter new emerging markets in a capital-efficient manner, strategically positioning our brands at the forefront of the industry.
Once again, I would like to thank our Board of Directors, management team and shareholders for their ongoing support.
Chief Executive Officer
About SLANG Worldwide Inc.
SLANG Worldwide Inc. is the industry leader in branded cannabis consumer packaged goods, with a diversified portfolio of five distinct brands and products distributed across the U.S. Operating in 15 legal cannabis markets nationwide, SLANG specializes in acquiring and developing market-proven regional brands, as well as launching innovative new brands to seize global market opportunities and match evolving consumer tastes. The Company has over a decade of experience operating in the nascent and highly regulated cannabis sector, and its partners enjoy the benefits of that experience, with access to the SLANG playbook for successful operations, sales and marketing. Its strong product pipeline from uniquely positioned and scalable brands like O.pen, Alchemy Naturals, Ceres, Firefly, and partnerships with brands like Greenhouse Seed Company have a proven track record of success with the brands consistently ranking among the top performers in the states where SLANG operates. Learn more atslangww.com.
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This news release contains statements that constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. Forward-looking statements in this news release include, but are not limited to, statements regarding the Company’s expected performance for certain metrics for the three and twelve months ended December 31, 2022.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management of SLANG at this time, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies that could cause actual results to differ materially from those expressed or implied in such statements. Investors are cautioned not to put undue reliance on forward-looking statements. Applicable risks and uncertainties include, but are not limited to regulatory risks, risks related to changes in laws, resolutions and guidelines, market risks, concentration risks, operating history, competition, the risks associated with international and foreign operations, the COVID-19 global pandemic and the other risks identified under the headings “Risk Factors” in SLANG’s annual information form dated April 27, 2022 and other disclosure documents available on the Company’s profile on SEDAR at www.sedar.com. SLANG is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
This news release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the Company’s cash and cash equivalents, margin and revenue in Vermont for the three and twelve months ended December 31, 2022 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading “Forward-Looking Statements”. The actual results of the Company’s operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading “Forward-Looking Statements” above, it should not be relied on as necessarily indicative of future results.
Operating Cash Flow is a non-IFRS financial measure that the Company uses to assess its operating performance. Operating cash flow is defined as cash flow of the business excluding the milestone payments made in connection with the Company’s acquisition of High Fidelity, Inc. pursuant to an Agreement and Plan of Merger dated June 25, 2021, as amended. This data is furnished to provide additional information and is a non-IFRS measure and does not have any standardized meaning prescribed by IFRS. The Company uses this non-IFRS measures to provide shareholders and others with supplemental measures of its operating performance. As other companies may calculate this non-IFRS measure differently than the Company, this metric may not be comparable to similarly titled measures reported by other companies.
Mikel Rutherford, CFO
Media and Investor Inquiries
KCSA Strategic Communications
1 Operating cash flow is defined as cash flow of the business excluding milestone payments made in connection with the Company’s acquisition of High Fidelity, Inc. pursuant to an Agreement and Plan of Merger dated June 25, 2021, as amended. See “Non-IFRS Measures”.
2 These preliminary and unaudited financial results are subject to customary financial statement procedures by the Company. Actual results could be affected by subsequent events or determinations. While the Company believes there is a reasonable basis for these preliminary financial results, the results involve known and unknown risks and uncertainties that may cause actual results to differ materially. These preliminary fiscal results represent forward-looking information. See “Forward-Looking Statements” and “Financial Outlook”.