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Clever Leaves Holdings Inc. (CLVR)·Q2 2023 Earnings Summary

Executive Summary

  • Q2 2023 revenue rose 21% year over year to $4.981M, driven by 151% YoY growth in the cannabinoid segment; adjusted EBITDA improved to $(2.122)M from $(3.494)M YoY, while the company reaffirmed FY2023 guidance (revenue $19–$22M; adjusted gross margin 58%–63%; adjusted EBITDA $(13.6)M–$(10.6)M) .
  • Sequentially, gross margin held near mid-50s (56.2% in Q1 vs 54.7% in Q2) and cost per gram fell 45% QoQ (from $1.29 to $0.70), reflecting restructuring and the Portugal wind-down benefits .
  • Liquidity improved post quarter via a $2.7M sale of Portuguese processing assets in July; quarter-end cash was $5.141M (including restricted cash) vs $12.888M at year-end 2022; management disclosed substantial doubt about going concern, highlighting the need for additional funding .
  • Stock reaction catalysts: continued international flower ramp (Australia; Germany pending), Brazil ANVISA GMP certification, and execution on reiterated FY guidance amid cost reductions and asset monetization .

What Went Well and What Went Wrong

What Went Well

  • Cannabinoid segment strength: “We drove 21% year-over-year growth in our revenues, driven by 151% growth in the cannabinoid segment as a result of sales traction for our extracts” .
  • Cost discipline: Operating expenses fell ~25% YoY to $5.901M; adjusted EBITDA improved to $(2.122)M vs $(3.494)M in Q2 2022, reflecting restructuring benefits .
  • Commercial progress and certifications: Post-Q2 asset sale added $2.7M cash; Brazilian ANVISA GMP certification strengthens market access; expanding partnerships (ANTG in Australia; SOMAI in Portugal; Astrasana in Switzerland/Czech Republic) .

What Went Wrong

  • Non-cannabinoid softness: Ongoing specialty channel headwinds compressed non-cannabinoid revenues despite margin stability (gross margin down YoY: 54.7% vs 60.5%; adjusted gross margin 58.8% vs 66.3%) .
  • Going concern risk: Management explicitly noted “substantial doubt” about the ability to continue as a going concern; liquidity dependent on funding, working capital reduction, and asset monetization .
  • Net loss widened YoY to $(3.595)M (vs $(1.046)M), given prior-year non-recurring gains (Cansativa investment gain $6.851M; warrant remeasurement $1.323M) not repeating .

Financial Results

Headline Financials vs Prior Periods

MetricQ2 2022Q1 2023Q2 2023
Revenue ($USD Millions)$4.100 $4.000 $4.981
Gross Margin (%)60.5% 56.2% 54.7%
Adjusted Gross Margin (%)66.3% 59.2% 58.8%
Operating Expenses ($USD Millions)$7.829 $6.400 $5.901
Adjusted EBITDA ($USD Millions)$(3.494) $(3.000) $(2.122)
Net Loss ($USD Millions)$(1.046) $(4.1) (narrative; EPS not disclosed in Q1 press release) $(3.595)

EPS vs Prior Year

MetricQ2 2022Q2 2023
Net Loss per Share (Basic & Diluted) ($USD)$(0.03) $(0.08)

Segment Breakdown

Segment Revenue ($USD Millions)Q2 2022Q1 2023Q2 2023
Cannabinoid$0.7 $1.2 $1.9
Non-CannabinoidCommentary: declined due to specialty channel headwinds $2.8 Commentary: declined; margin maintained

KPIs

KPIQ2 2022Q1 2023Q2 2023
All-in Cost per Gram (Dry Flower) ($/gram)n/a; no harvest $1.29 $0.70
Kilograms Harvestedn/a n/a1,132 kg
Cash, Cash Equivalents & Restricted Cash ($USD Millions)n/a$6.700 (approx.; $6.7M) $5.141

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2023)Current Guidance (Q2 2023)Change
Revenue ($USD Millions)FY 2023$19–$22 $19–$22 Maintained
Adjusted Gross Margin (%)FY 202358%–63% 58%–63% Maintained
Adjusted EBITDA ($USD Millions)FY 2023$(13.6)–$(10.6) $(13.6)–$(10.6) Maintained
Capital Expenditures ($USD Millions)FY 2023$0.5–$0.7 $0.5–$0.7 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2022)Previous Mentions (Q1 2023)Current Period (Q2 2023)Trend
Cash management / restructuringWind-down Portugal; large restructuring charges; plan to reduce cash burn Expect lower cash burn in Q2; asset sales targeted in 2023 Cash burn reduced; $2.7M asset sale in July; going concern noted Improving but liquidity risk persistent
Production shift to ColombiaExclusive focus on Colombia; prep for flower exports Ramp Colombian flower; right-size harvests THC flower strains advancing; continued ramp to Australia/Germany Executing per plan
Regulatory/legalGermany recreational framework monitored; Colombia legalization bill Brazil ANVISA GMP certification; Colombian market reimbursement Brazil GMP certification reaffirmed; Germany narcotics list removal catalyst Positive regulatory tailwinds
Regional trends (Australia, Brazil, Israel, UK)Brazil/Australia/API Israel traction Brazil shipments strong; UK early opportunities; Australia sold Portuguese flower Australia flower shipments via ANTG; extract strength in Brazil/Israel; Czech/Switzerland expansion Broadening footprint
Non-cannabinoid segmentMacro headwinds; inventory reductions Margin improvement despite marketplace adjustments Continued softness in specialty channels; margins maintained Stabilizing margins; revenue headwinds persist

Management Commentary

  • “We drove 21% year-over-year growth in our revenues, driven by 151% growth in the cannabinoid segment as a result of sales traction for our extracts.” — Andres Fajardo, CEO .
  • “Operating expenses in the second quarter of 2023 improved to $5.9 million… The 25% decrease reflects continued benefits of our restructuring and cost reduction initiatives.” — Hank Hague, CFO .
  • “We completed the sale of our Portuguese processing assets to a Curaleaf affiliate in early July, generating $2.7 million in additional non-dilutive capital…” — Hank Hague, CFO .
  • “We are tracking towards launching our Colombian flower shipments in the second half of 2023 [Germany]… We are closely monitoring Germany’s regulatory progress.” — Andres Fajardo, CEO .

Q&A Highlights

  • Growth drivers and mix: Management expects continued growth in Australia, Brazil, and Israel; increasing contribution from Colombian flower; cannabinoid revenue mix to rise as non-cannabinoid retail complexity persists .
  • Liquidity runway: No specific timing for capital raise; quarter-end cash $5.1M, plus $2.7M from asset sale supports near-term operations, but funding options remain under evaluation .
  • International commercialization: Additional flower strains planned for Australia (Q3/Q4) and Germany by year-end; extract sales to expand under certifications .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2023 EPS and revenue was unavailable via our tool due to missing CIQ mapping for CLVR; therefore, estimate-based beat/miss comparisons are not provided.

Key Takeaways for Investors

  • Cannabinoid-led growth with improving unit economics: 151% YoY cannabinoid revenue growth and 45% QoQ cost-per-gram reduction ($1.29→$0.70) suggest margin tailwinds as flower scales .
  • Reaffirmed FY guidance indicates confidence: Revenue $19–$22M, adjusted gross margin 58%–63%, adjusted EBITDA $(13.6)M–$(10.6)M maintained quarter over quarter .
  • Liquidity remains the key risk: Cash $5.141M at Q2-end and $2.7M post-quarter asset sale help, but going concern disclosure signals continued capital needs; watch for asset monetization and ATM usage .
  • Execution on international flower ramp: First commercial shipments to Australia via ANTG; Germany launch targeted by year-end; expanding EU presence via SOMAI and Astrasana (Switzerland/Czech Republic) .
  • Non-cannabinoid segment headwinds persist: Specialty channel softness weighed on revenue; margins maintained via pricing and cost discipline—expect cannabinoid mix to rise further .
  • Strategic certifications/regulatory positioning: ANVISA GMP in Brazil and monitoring Germany’s regulatory progress enhance market access and potential demand .
  • Near-term trading: Stock likely sensitive to liquidity updates and progress on Germany/Australia flower expansion; medium-term thesis hinges on scaling flower, maintaining mid-to-high 50s adjusted gross margins, and delivering on FY guidance .