Fire & Flower Announces 2021 Fiscal and Fourth Quarter Financial and Operational Results

Fire & Flower Holdings Corp. announced its financial and operational results for the fiscal year and fourth quarter ended January 29, 2022.

“Fiscal 2021 has been a year of significant advancement and growth for Fire & Flower and we have delivered meaningful year-over-year revenue growth. The Hifyre Digital Platform has exhibited impressive 129% annual and 7% quarterly sequential growth and is the core value proposition of our business. This year, we have refined our vision to, ‘Deliver Cannabis to the World’ positioning our business as a consumer e-commerce platform, supported by a distributed retail network enhanced by our Circle K store co-location program. This position is enabled through the acquisition of Pineapple Express Delivery, one of the largest cannabis delivery platforms in the world,” shared Trevor Fencott, Chief Executive Officer of Fire & Flower.

“In the fourth quarter of fiscal 2021, while we have continued to see growth in our Hifyre digital business segment, we saw a decline in our retail revenue due to increased competitive pressures within the Canadian cannabis retail landscape. We announced a further competitive price and product strategy aimed at continuing to build an expanded consumer base. As we look out to  fiscal 2022, we anticipate continued growth in our digital business and driving further revenue opportunities in the U.S. We look forward to greater continued alignment with our partners at Alimentation Couche-Tard through the retail store co-location program which will be important in delivering a clear, convenience-oriented value proposition to our customers in brick-and-mortar retail and e-commerce.”

Consolidated Financial Highlights

• Revenue of $42.7 million and $175.5 million for the fourth quarter and fiscal year ended January 29, 2022, representing a modest decrease of 1% for the comparable quarter (from $43.2 million) and a 37% increase year-over-year (from $128.1 million).
• While all business segments contributed to the year-over-year revenue increase, the quarter-over-quarter revenue decrease was primarily due to increasing competition from new licences issued and pricing pressures in the retail market.
• Gross profit of $13.7 million and $62.1 million for the fourth quarter and fiscal year ended January 29, 2022 represented a decrease of 17% for the comparable quarter (from $16.4 million) and a 37% increase year-over-year (from $45.4 million).
• Adjusted EBITDA of negative $2.4 million for the fourth quarter and positive $5.1 million for the fiscal year ended January 29, 2022.
• Net loss of $19.5 million for the quarter and $63.6 million for the fiscal year ended January 29, 2022, compared to a net loss of $11.4 million for the comparable quarter and $79.0 million for the fiscal year ended January 30, 2021.
• An increase of 32 stores during the fiscal year, with 105 stores open and operating at the fiscal year end.
• Alimentation Couche-Tard increased its equity ownership to 20.8% with $20 million outstanding on the ACT Loan and $2.4 million in convertible debentures outstanding.
• As part of the Company’s continued digital strategy, completed the acquisitions of Pineapple Express Delivery, PotGuide and Wikileaf.
• Amended the strategic licensing agreement with Fire & Flower U.S. Holdings (formerly American Acres Managers) to derive additional U.S. based digital revenue.

• Retail revenue for the 2021 fiscal year increased 29% to $130.8 million from $101.5 million in fiscal year 2020.
• Retail revenue for the fourth quarter, decreased 5% to $31.7 million from $33.2 million in the prior year comparative period. Revenue decreased $2.0 million or 6% sequentially from Q3 fiscal 2021.
• Gross profit for the 2021 fiscal year was $41.5 million compared to $35.1 million in 2020 fiscal year.
• Gross profit for the fourth quarter was $8.2 million, a decrease of 31% compared to $11.9 million for the prior year comparative period.
• Gross profit margin was 25.8% for the fourth quarter ended January 29, 2022 and 31.7% for the 2021 fiscal year.
• Segment Adjusted EBITDA for the 2021 fiscal year was $1.2 million compared to $7.5 million in fiscal year 2020. Segment Adjusted EBITDA decreased to negative $2.1 million in the fourth quarter 2021 from positive $1.9 million in the same quarter the prior year.
• The Company had 105 stores open and in operation at the end of January 29, 2022, compared to 73 stores at the end of January 30, 2021.

• Wholesale distribution revenue for the 2021 fiscal year increased 49% to $30.3 million compared to $20.3 million in 2020 fiscal year.
• Wholesale distribution revenue in Q4 fiscal 2021 of $7.0 million was approximately flat compared to the same quarter of the prior year.
• Gross profit was $6.4 million for the 2021 fiscal year compared to $4.1 million in 2020 fiscal year.
• Gross profit in Q4 fiscal 2021 increased to $1.6 million year-over-year from $1.4 million in the same quarter of the prior year.
• Segment Adjusted EBITDA for the 2021 fiscal year was $4.7 million compared to $2.9 million in 2020 fiscal year. Segment Adjusted EBITDA decreased to $1.0 million in Q4 2021 from $1.1 million in the same quarter of the prior year.

• Hifyre Digital Platform revenue for the 2021 fiscal year increased 129% to $14.3 million compared to $6.3 million in 2020 fiscal year.
• Q4 2021 Hifyre revenue was $4.1 million compared to $3.1 million in the same quarter of the prior year.
• Gross profit margin was 97.3% for the fourth quarter ended January 29, 2022 and 99.2% for the 2021 fiscal year.
• Adjusted EBITDA for the 2021 fiscal year was $7.7 million compared to $1.8 million in 2020 fiscal year. Adjusted EBITDA increased to $1.9 million in Q4 2021 from $1.6 million in the same quarter the prior year.

• Amended the Strategic Licensing Partnership and Option to Acquire Fire & Flower U.S. Holdings (formerly American Acres Managers) and the creation of an additional high margin U.S. digital revenue stream on January 31, 2022.
• Pineapple Express Delivery launched next-day delivery services with BC Cannabis Stores in the Vancouver region on February 24, 2022.
• Completed one of the last remaining steps in the Company’s NASDAQ listing through obtaining DTC Eligibility for the Company’s common shares on April 13, 2022.
• Expanded logistics and delivery services through a cross-docking Distribution Agreement with Manitoba Liquor & Lotteries on April 14, 2022.
• Announced a highly competitive product and pricing strategy to drive an expanded customer base on April 21, 2022.
• On April 20, 2022, announced intent to exercise Series B warrants by strategic partner Alimentation Couche-Tard, owner of Circle K convenience stores, resulting in a post exercise ownership stake of approximately 35%.