Green Rise Announces Fourth Quarter and Year End 2019 Financial and Operating Results
Toronto, Ontario--(Newsfile Corp. - April 17, 2020) - Green Rise Capital Corporation, doing business as Green Rise Foods, (TSXV: GRF) ("Green Rise" or the "Company") today released its financial and operating results for the fourth quarter and year ended December 31, 2019. Green Rise's audited and consolidated financial statements (the "Financial Statements") and related management's discussion and analysis (the "MD&A") for the periods ended December 31, 2019 are available on SEDAR. As 2019 was the Company's first full year of operations, management is very pleased with the results, which met or exceeded internal expectations.
KEY BACKGROUND INFORMATION
Partway through the 2018 growing season, the Company acquired an 81-acre farm with an existing 51-acre producing greenhouse in Leamington, Ontario. As such, the Company's 2018 production represents approximately 60% of 2019 levels on a comparable basis.
On September 30, 2019, the previously announced reverse takeover of Green Rise by Bull Market Farms Inc. ("Bull Market") was completed (the "RTO Transaction"), which represented the Company's qualifying transaction as defined by the policies of the TSX Venture Exchange ("TSXV"). Accordingly, the current period and comparative figures in the MD&A and Financial Statements are reflective of Bull Market's operating activities, and should be read in conjunction with the audited consolidated financial statements ("financial statements") as at December 31, 2019 of Green Rise along with the audited consolidated financial statements of Bull Market Farms Inc. and the notes to those statements as at, and for the year ended, December 31, 2018, which are available on SEDAR. All figures referred to in this news release are denominated in Canadian dollars, unless otherwise noted.
Annual revenue for 2019 totaled $13.7 million, a 65% increase over 2018, primarily due to the Company operating its greenhouse for the full year in 2019 compared to a partial year in 2018, as the farm was acquired mid-growing season. Further, Green Rise's decision to plant a new variety of beefsteak tomatoes improved yields in 2019 by approximately 5% and contributed to an increase in production relative to 2018.
Fourth quarter revenue was $2.4 million, or 16% higher than the same period in 2018, reflecting warmer weather conditions which led to a longer growing season and more sun days in 2019, allowing Green Rise to continue harvesting into December.
EBITDA1 in 2019 totaled $4.2 million, 91% higher than in 2018 and at the high end of the Company's internal forecasts, attributable to stronger revenue as outlined above, as well as management's success in decreasing operating costs, enhancing production yields and improving operating efficiencies.
Fourth quarter 2019 EBITDA1 of $0.20 million compares to $0.24 million in 2018, reflecting higher production costs due to the longer growing season and the impact of expanding and strengthening the Company's management team for continued business growth, which were offset by increased operating efficiencies.
Operating cash flow was $3.3 million in 2019, which reflects net cash from the private placement, offset by debt and shareholder loan repayments, and further impacted by net investments in property, plant and equipment as well as bearer plants. At year end 2019, Green Rise had cash of $2.9 million, current liabilities of $1.8 million and working capital of $1.9 million.
Earnings from operations generated in 2019 totaled $0.9 million, compared to $0.4 million in 2018, reflecting a full year of greenhouse operations and lower production costs stemming from efficiency improvements, such as mechanization of a packing line and resource streamlining. As a result, production costs as a percentage of revenue declined to 56.4% compared to 64.4% in 2018.
Net loss for the year was $2.2 million, which included a one-time listing expense of $2.3 million related to the closing of the RTO Transaction, compared to net income of $3.7 million in 2018, which included a one-time non-cash bargain purchase gain of $3.8 million related to the acquisition of the farm. Fourth quarter net loss totaled $1.1 million, unchanged compared to the same period the prior year.
Green Rise began operating as "Green Rise Foods" during the fourth quarter of 2019 and changed its TSX-V stock ticker symbol to "GRF".
Building on the success realized in 2019, Green Rise intends to continue executing its business model of being a "best-in-class" contract grower of greenhouse-grown fresh produce. With proven capabilities for improving cost structures, enhancing operational efficiencies and streamlining organizational processes, Green Rise is well positioned to continue providing locally grown, fresh produce.
With added bench strength on its management team, Green Rise plans to continue pursuing opportunities for growth, including potential acquisitions to which management can apply its proven formula for capturing operational efficiencies and expanding margins. During 2020, Green Rise expects to meet its debt servicing, principal payments, and working capital requirements over both the short and long term, while continuing to actively focus on measures designed to increase profitability, employ disciplined working capital management and allocate capital expenditures prudently. The Company regularly reviews all of its assets to ensure appropriate returns on investment are being achieved and fit with the Company's long-term strategic objectives.
The Company's greenhouse operations positively contribute to efforts designed to reduce the global carbon footprint and offer an innovative approach to farming, demonstrating Green Rise's natural alignment with environmental, social and governance ("ESG") priorities. In addition, management anticipates the demand for fresh and local produce will continue to increase, further supported by consumers' heightened focus on security of local food supply driven by the recent COVID-19 pandemic. In the interests of ensuring the safety and security of its key assets - namely, its people and products - during this pandemic, Green Rise has enacted stringent protocols and procedures such as staggered shifts for staff, restricted greenhouse access and a healthy stocking of supplies, all of which are designed to prevent any negative impact to operations through the growing season.
ABOUT GREEN RISE
Green Rise is a grower of fresh produce with a producing, 51-acre greenhouse on its 81-acre farm located in Leamington, Ontario. Poised to be the "best-in-class" contract grower of fresh produce, the Company takes pride in providing high-quality, consistent and reliable product to meet the growing consumer demand for locally grown fresh produce. By leveraging innovative growing solutions and embracing technology, Green Rise seeks to optimize its operations to generate improved product quality and shelf life, expand profit margins, and provide investors with meaningful and growing returns.
For further information, please contact:
Vincent Narang, Chief Executive Officer
This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction and associated transactions. Any such forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements. The statements in this news release are made as of the date of this release. Green Rise undertakes no obligation to update any such forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on any such forward-looking statements. Green Rise undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of Green Rise and Bull Market, or their respective financial or operating results or (as applicable), their securities.
This news release contains references to certain measures that do not have a standardized meaning under International Financial Reporting Standards ("IFRS") as prescribed by the International Accounting Standards Board and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing a further understanding of operations from management's perspective. Accordingly, non-IFRS measures should not be considered in isolation nor as a substitute for analysis of financial information reported under IFRS. The Company believes that non-IFRS measures, specifically EBITDA and Adjusted EBITDA, are frequently used by securities analysts, investors and other interested parties as measures of financial performance and to provide supplemental measures of operating performance and thus highlight trends that may not otherwise be apparent when relying solely on IFRS financial measures.
1 See "Non-IFRS Measures".
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