Organto an integrated provider of organic and value-added organic fruits and vegetables today announced financial results for the third quarter ended September 30, 2020, revenue guidance for the fourth quarter ending December 31, 2020 plus the conversion of 96% of convertible debentures outstanding following quarter end. All amounts are expressed in Canadian dollars and in accordance with International Financial Reporting Standards (IFRS), except where specifically noted.
Third Quarter Results:
Third quarter revenues of $2,737,081, an increase of approximately 41% versus the same quarter in the prior year. Third quarter revenues represent the largest quarterly revenues realized in the history of Organto.
Year-to-date revenues of $6,510,856, an increase of approximately 206% versus the same period in the prior year. Revenues for the first nine months of fiscal 2020 already exceed the record revenues realized in all of fiscal 2019.
Gross profit of $285,951 or 10.5% of revenues, an increase of approximately 65% versus the same quarter in the prior year, and the largest quarterly gross profit in the history of Organto. YTD gross profit of $678,932 or 10.4% of revenues, an increase of approximately 350% versus gross profit of $150,974 for the same period of the prior year.
Cash overhead costs in the third quarter reduced to 22.7% of revenues versus 29.8% in the second quarter of 2020 and 24.1% in the prior year. These costs include approximately $93,600 related to retail branded product development and on-line digital transformation activities which are not expected to generate returns until fiscal 2021. Excluding the investment in retail and on-line initiatives, cash overhead costs reduced to 19.4% of revenues in the third quarter.
Cash on hand of $884,227 and working capital deficiency $1,873,998 versus a deficiency of $4,647,107 at the end of the first quarter of 2020.
Fourth Quarter Guidance:
Fourth quarter revenue guidance of $4.4 million to $4.6 million, which will represent the largest quarter in the history of Organto, and an approximate 185% increase versus Q-4 2019. Annualized revenue exit run rate of $23 million to $25 million and achieving cash flow breakeven.
Convertible Debenture Exercise:
Subsequent to quarter end, 96% of convertible debentures with a face value of $1,995,300 voluntarily converted to equity, strengthening the Company's balance sheet. Approximately 88% of debentures converted were held by insiders and related parties.
"Our third quarter results represent our fifth consecutive quarter of record revenues and the largest revenue and gross profit quarter in our history. With this accomplishment as a backdrop, combined with the momentum we feel we have going forward as demonstrated by our revenue guidance for Q-4, we believe it is fair to say that we are no longer a repositioning story, but instead an exciting and fast-growing sustainability story. We are pleased with our progress and outlook for the future given the continued strong demand for fresh organic fruits and vegetables, being driven by increased consumer interest in healthy foods that are produced in a sustainable and transparent manner," commented Steve Bromley, Chair and Co-CEO of Organto.
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