Avant Brands Reports Q1 Fiscal 2023 Results with Third Consecutive Quarter of Positive Adjusted EBITDA and Cash Flow from Operations

• Gross Revenue of $7.9 million (+71% vs. Q1 2022)
• Record Adjusted EBITDA¹ of $1.8 million (+2,158% vs. Q1 2022)
• Positive Cash Flow from Operations² of $1.8 million (+2,123% vs. Q1 2022)
• Overall Gross Margin³ increased to 42%
• Record Adjusted Net Income⁴ of $0.2 million (+131% vs. Q1 2022)
• Third consecutive quarter of both positive Adjusted EBITDA¹ and Cash Flow from Operations²
• Achieved Positive Adjusted Net Income and Net Income from Operations

KELOWNA, BC / ACCESSWIRE / April 12, 2023 / Avant Brands Inc (TSX:AVNT)(OTCQX:AVTBF)(FRA:1BU0) ("Avant" or the "Company"), a leading producer of innovative and award-winning cannabis products, today reported its financial results for the first quarter ended February 28, 2023, of the Company's fiscal year ("Q1 2023").

"Continuing on our momentum from a record 2022 fiscal year, as one of the fastest growing Canadian cannabis companies, we have commenced the 2023 fiscal year with record adjusted EBITDA¹ while generating meaningful cash flows from operations," said Norton Singhavon, Founder and CEO of Avant."Furthermore, we expect that the acquisition of the Flowr Group (Okanagan) Inc., will facilitate a continuation of our strong year-over-year growth in sales, cash flow and profitability."

First Quarter 2023 Financial Highlights

All figures compared with Q1 2022

• Gross Revenue of $7.9 million, which is the Company's second highest revenue quarter to date (+71% or +$3.3 million)
  • Total Net Revenue of $7.0 million (+67% or +$2.8 million)
  • Recreational Net Revenue of $4.2 million (+64% or +$1.6 million)
  • Export Net Revenue was a record of $2.8 million (+86% or +$1.3 million)
• Overall Gross margin³ of 42% (vs. 23%)
  • Total Gross Margin of $2.9 million (+207% or +$2.0 million)
  • Recreational (Dried Flower & Pre-rolls) Gross Margin of 51% (vs. 47%)
  • Export Gross Margin of 50% (vs. 47%)
  • Total of 1,424 kg of cannabis sold (+61% or +540 kg)
• Weighted Overall Average Selling price of $5.08 (+6%), with recreational cannabis average selling price of $6.86 (-4%)
• Cash Flow from Operations of $1.8 million (+2,123% or +$1.7 million)
• Adjusted EBITDA¹ was a record of $1.8 million (+2,158% or +$1.7 million)
• Adjusted EBITDA Margin¹ (% of Net Revenue) of 25% (vs. 2%)
• Net loss from operations of $0.1 million (an improvement of 98% or +$1.0 million)
• Adjusted Net Income⁴ of $250,000 (an improvement of 131% or +$1.0 million)
• Net and Comprehensive Loss of $8,000 (an improvement of 98% or +$0.5 million)

First Quarter 2023 Highlights

The Company produced approximately 2,635 kilograms of cannabis (which includes dried flower and biomass) in Q1 2023. The Company sold approximately 1,424 kilograms of cannabis in Q1 2023, which included the following highlights:

• Completed the purchase of the Flowr Group (Okanagan) Inc. ("Flowr Okanagan"), including Flowr Okanagan's Kelowna facility (the "Flowr Facility"). Subsequent to the completion of the transaction, Avant implemented cost-saving initiatives that generated annualized savings of approximately $1 million (over and above the immediate elimination of The Flowr Corporation's corporate overhead costs - achieved by purchasing a subsidiary of Flowr Okanagan, which was a subsidiary of The Flowr Corporation, as opposed to the parent company).
• Completed the first harvest of an Avant cultivar at the Flowr Facility on March 6, 2023.
• Completed the purchase of the remaining 50% of 3PL Venture Inc., which included seller-financing with terms favourable to Avant, below the industry standards on interest rate and security.
• Implemented price increases of 7.5% for the Company's major export clients, in order to help mitigate the impact of inflation, and maintain healthy gross margins.
• Executed an ongoing series of cost-savings initiatives, to enhance Gross Margins by reducing Cost of Good Sold (COGS). These measures are designed to reduce the cost of various inputs, including, but not limited to, labour, energy, packaging, freight, fertilizer and personal protective equipment (PPE).

Key Subsequent Events

• The Company completed the purchase of the remaining 50% of Flowr Okanagan, which included seller-financing (of approximately $1.45 million) with terms favourable to Avant, below the industry standards on interest rate and security.
• The Company continued to execute contract grow deals, on a highly selective basis, in the Thompson-Okanagan region. These agreements are expected to help incremental sales of high-quality indoor flower, without requiring any capital investment by the Company.
• Avant cultivars are currently in production in 17 flower rooms at the Flowr Facility. Furthermore, the Company is implementing a second wave of cost-saving initiatives at Flowr Okanagan, that will generate approximately $0.5 million in additional annual savings. The concurrent implementation of both revenue-generating and cost-saving initiatives is designed to ensure that the Flowr facility will rapidly achieve positive cash flow from operations.

Download the Company's Updated Corporate Presentation:
https://avantbrands.ca/investor/#presentation

Conference Call

Management will host a conference call to discuss the financial results on Thursday, April 13, 2023, at 4:00 PM Eastern Time / 1:00 PM Pacific Time.

Conference Call Dial Details:
Canada/USA TF: +1-800-319-4610
International Toll: +1-604-638-5340

A transcript of the call will be posted on the Company's website at www.avantbrands.ca within two business days of the call.

A copy of the interim financial statements for the quarter ended February 28, 2023 (the "Financial Statements") and the related management's discussion & analysis (the "MD&A") will be available for download on the Company's SEDAR profile, or on its website at www.avantbrands.ca.

About Avant Brands Inc.

Avant is an innovative, market-leading premium cannabis company. Avant has multiple operational production facilities across Canada, which produce high-quality, handcrafted cannabis products, based on unique and exceptional cultivars. Avant's products are distributed via three complementary sales channels: recreational, medical and export. Avant's recreational consumer brands include: BLK MKT™, Tenzo™, Cognōscente™ and Treehugger™, which are sold in British Columbia, Saskatchewan, Manitoba, Ontario, Atlantic Canada, Québec and the territories. The Company's medical cannabis brand, GreenTec™, is distributed nationwide, directly to qualified patients through its GreenTec Medical portal and through various medical cannabis partners.

Avant is a publicly traded corporation listed on the Toronto Stock Exchange (TSX: AVNT), and cross-trades on the OTCQX Best Market (OTCQX: AVTBF) and Frankfurt Stock Exchange (FRA: 1BU0). The Company is headquartered in Kelowna, British Columbia and has operations in British Columbia, Alberta and Ontario.

To learn more about Avant, access the investor presentation, or learn more about its consumer brands, please visit www.avantbrands.ca.

For additional information, please contact:
Investor Relations at Avant Brands Inc.
1-800-351-6358
ir@avantbrands.ca

^{Note 1 - Adjusted EBITDA and Adjusted EBITDA Margin are non-International Financial Reporting Standards ("IFRS") measures. The Company calculates Adjusted EBITDA from continuing operations as net income (loss) before interest expense, income taxes, depreciation and amortization, unrealized gain (loss) on changes in fair value of biological assets, equity loss on investment in associate, loss on sale of assets, investment loss and share based payments. The Company calculates Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of Net Revenue. Management determined that the exclusion of the fair value adjustment is an alternative representation of performance. The fair value adjustment is a non-cash gain (loss) and is based on fair market value less cost to sell. The most directly comparable measure to Adjusted EBITDA (excluding fair value adjustment to biological assets and inventory) calculated in accordance with IFRS is net income (loss) from continuing operations. For more information on the reconciliation of Adjusted EBITDA to net income (loss), please refer to the MD&A at page 10 or view the reconciliation table at the end of this news release.}

^{Note 2 - Cash Flows from Operations before changes in net-working capital is a non-IFRS performance measure and is calculated by adjusting the net loss from continuing operations for items not affecting cash, but before applying changes in non-cash operating working capital. Cash Flow from Operations is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The most directly comparable measure to Cash Flow from Operations before changes in net-working capital in accordance with IFRS is Cash Flows from Operations. For more information on the reconciliation of Cash Flow from Operations, please refer to the MD&A at page 9 or view the reconciliation table at the end of this news release.}

^{Note 3 - Gross Margin before fair value adjustments. Gross Margin is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. For more information on the reconciliation of gross margin, please refer to the MD&A at page 7 or view the reconciliation table at the end of this news release.}

^{Note 4 - Adjusted Net Income is a non-IFRS performance measure and is calculated by adjusting the net income for items not affecting cash such as; equity loss on investment in associate, share based payments, fair value gain on acquisition, and fair value changes on biological assets. The Company has elected to report Adjusted Net Income, which is a non-IFRS measure, as it believes this metric provides more accurate results of the Company's financial performance to readers, as it removes the fair value changes on biological assets (amongst other minor adjustments). The most directly comparable measure to Adjusted Net Income calculated in accordance with IFRS is net income (loss) from continuing operations. For more information on the reconciliation of Adjusted Net Income, please refer to the MD&A at page 10 or view the reconciliation table at the end of this news release.}

RECONCILIATION OF NET INCOME TO EBITDA, ADJUSTED EBITDA, CASH FLOWS FROM OPERATIONS, GROSS MARGIN AND ADJUSTED NET INCOME (LOSS)

ADJUSTED EBITDA (NON-IFRS PERFORMANCE MEASUREMENT)

The Company has identified Adjusted EBITDA as a relevant industry performance indicator. Adjusted EBITDA is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

Management defines Adjusted EBITDA as income (loss) from continuing operations, as reported, adjusted for depreciation and amortization, equity (gain) loss on investment in associate, financing costs, gains and losses on sale of marketable securities, share-based payments, fair value gain on acquisition, change in fair value of biological assets realized through inventory sold, and unrealized gains and losses on changes in fair value of biological assets. Management believes this measure provides useful information as it is a commonly used measure in the capital markets to approximate operating earnings. See table below for determination of specific components of Adjusted EBITDA.

ADJUSTED NET INCOME (NON-IFRS PERFORMANCE MEASUREMENT)

The Company has identified Adjusted Net Income as a relevant industry performance indicator. Adjusted Net Income is a non-IFRS financial measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

Management defines Adjusted Net Income as income (loss) from continuing operations, as reported, adjusted for equity (gain) loss on investment in associate, Canadian emergency wage subsidy, share-based payments, fair value gain on acquisition, change in fair value of biological assets realized through inventory sold, and unrealized gains and losses on changes in fair value of biological assets. Management believes this measure provides useful information as it is a commonly used measure in the capital markets to approximate operating earnings. See table below for determination of specific components of Adjusted Net Income.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION:

This news release includes certain "forward-looking information" as defined under applicable Canadian securities legislation, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: the Company's continued momentum and growth as one of the fastest growing Canadian cannabis companies; the Company's expectations for continued growth in sales, cash flow and profitability as a result of the acquisition of Flowr Okanagan; the Company's annualized savings in connection with the acquisition of Flowr Okanagan; the Company's continued exploration of acquisition and contract growth opportunities; the Company's expectations regarding incremental sales of high-quality flower resulting from contract grow opportunities, without requiring any capital investment by the Company; the expected savings from the Company's second wave of cost-saving initiatives at the Flowr Facility; the implementation of both revenue-generating and cost-saving initiatives at the Flowr Facility; the anticipated achievement of positive cash flow from operations at the Flowr Facility; the timing of the conference call to discuss the financial results; the availability of a transcript of the conference call on the Company's website; the anticipated the Company's capacity utilization rate; the availability of the Financial Statements and the MD&A on the Company's SEDAR profile and on its website; and expectations for other economic, business, and/or competitive factors. To the extent any forward-looking information in this news release constitutes "financial outlooks" within the meaning of applicable Canadian securities laws, such information is being provided as preliminary financial results and the reader is cautioned that this information may not be appropriate for any other purpose and the reader should not place undue reliance on such financial outlooks. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein. The Company's actual financial position and results of operations may differ materially from management's current expectations and, as a result, the Company's financial results may differ materially. Examples include statements that the Company will build long-term shareholder value and reduce operational expenses; or that the Company will increase its revenue and maintain stable costs.

Investors are cautioned that forward-looking information is not based on historical fact but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; changes in consumer demand and preferences; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; compliance with extensive government regulation; public opinion and perception of the cannabis industry; the impact of COVID-19; and the risk factors set out in the Company's annual information form dated February 27, 2023, filed with Canadian securities regulators and available on the Company's profile on SEDAR at www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors that could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information, which speak only as of the date of this news release. The Company 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 required by law.

This news release refers to certain financial performance measures that are not defined by and do not have a standardized meaning under IFRS as issued by the International Accounting Standards Board. These non-IFRS financial performance measures are defined in the MD&A. Non-IFRS financial measures are used by management to assess the financial and operational performance of the Company. The Company believes that these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and prospects in a similar manner to the Company's management. As there are no standardized methods of calculating these non-IFRS measures, the Company's approaches may differ from those used by others, and accordingly, the use of these measures may not be directly comparable. Accordingly, these non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

SOURCE: Avant Brands, Inc.