Fire & Flower Holdings (TSX:FAF) is an independent retailer of regulated cannabis products and accessories. The company has 83 locations in Alberta, Manitoba, Ontario, Yukon, and Saskatchewan. Although the company is not yet profitable, I think it’s well-positioned for strong growth in the coming years.
Fire & Flower Results: Strong Growth in 2021
For the company’s 2021 fiscal year, consolidated revenue grew 37%, to a record $175.5 million. Consolidated adjusted EBITDA was $5.1 million, in line with the prior year.
Hifyre, the company’s digital business segment, generated a record $14.3 million for the fiscal year, a 129% year-over-year increase. Meanwhile, retail revenue increased 29% to a record $130.8 million in fiscal 2021.
For the fourth quarter, consolidated revenue and adjusted EBITDA came in at $42.7 million and negative $2.4 million, respectively.
Net loss was $19.5 million for the quarter and $63.6 million for the year ended January 29, 2022, compared with a net loss of $11.4 million for the prior-year quarter and $79 million for the prior year.
Fire & Flower acquired Pineapple Express Delivery, PotGuide, and Wikileaf to expand logistics capabilities and web traffic.
The company opened 32 stores during the year, with a total of 105 stores open and in operation at the end of the year.
“Fiscal 2021 has been a year of significant advancement and growth for Fire & Flower,” said Trevor Fencott, who has since resigned as chief executive. “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.”
Nasdaq Listing and Partnership With Alimentation Couche-Tard
After the quarter, Fire & Flower completed one of the final steps in preparation for a listing on the NASDAQ, including the filing of a 40-F registration statement and DTC eligibility for common stock.
On April 20, the company announced its intention to exercise Series B warrants by its strategic partner Alimentation Couche-Tard (TSX:ATD), owner of Circle K convenience stores, resulting in after-exercise ownership of approximately 35%.
Fire & Flower also announced the expansion of the industry-first Spark Select program, a new product and pricing strategy, in hopes of attracting a broader customer base in response to the rapidly growing value-driven cannabis consumer segment
Expansion of Delivery Services
Fire & Flower recently launched Firebird Delivery in Toronto, Kingston, London, Ottawa, Oshawa, Guelph, and North Bay, Ontario. The expansion of the company’s current delivery program will enable same-day delivery and a new one-hour delivery option. Firebird Delivery will soon be launched in Alberta, Manitoba, Saskatchewan, and other markets.
Is Fire & Flower a Good Investment?
Shares of Fire & Flower have has fallen about 35% year to date. They rebounded slightly after closing on May 11 at a 2022 low point of $2.52. This cannabis stock remains a speculative buy at the moment, but allocating a small portion of your portfolio to Fire & Flower might be rewarding in the long term.
