Wall Street Analyzer – Interview with Elise Coppens, Agraflora CEO
Listen to the interview below:
INTERVIEW NOTES: Talk about the impact of the company’s recent news developments. here do I start? I came on board about a month and a half ago and its been busy to say the least. I knew before I took the position of CEO that Agraflora needed to be restructured and, after visiting the assets, I had a clear picture of what the fastest path to revenue was and where the company would be best aligned for success. After reviewing the assets, management and myself decided to sell AAA Heildberg as it would cost more to bring to revenue than it was worth. Then we had a unique opportunity present itself with Organigram offering us close to $35MM in total for our Edibles facility in Winnipeg. I was excited myself for this opportunity as it positioned us ahead of our competitors with access to cash from the proceeds, aligned us with a large LP for the future and we were able to capitalize on a fair valuation, which for any company that’s restructuring is a large key to success. People forget we have the knowledge base for building EIC in Winnipeg and if the opportunity presents itself down the road the company can potentially duplicate it, but I cannot guarantee that another $35MM offer will be waiting for us, as there are just not enough players in the space with that kind of capital. What are the main trends in the sector, and how you are positioning the company to capitalize. As usual it’s always evolving. If I have learned anything from my experience in this industry is that it’s always to be a step ahead of the competition. As the Canadian market continues to evolve, I am confident that the demand for dried product will always exist. The main differentiating factors are simply cost and quality. We witnessed massive price compression in 2018 with legalization and now the companies who are successful are the ones that are producing quality product at a low cost. Supreme getting acquired by Canopy is a large indicator that the larger LPs are struggling to meet demand for high quality product, and now with Supreme off the market it gives our Delta operation a massive opportunity to fill that void. I also see HUGE potential in the US. We got an early 4/20 gift late last night as the House passed the SAFE act. Obviously the big question remains what its fate will be in the Senate but, regardless, the reforms are pushing forward and we are seeing the most pro-cannabis White House in US history. This is exciting to me, It’s a larger market, with more opportunity and the ability to operate within a growing number of States in every facet of the cannabis ecosystem from growing, to processing, to retail. They also do not have the stringent brand guidelines that we are subject to in Canada. I think we have to be cognizant that MSOs have a first mover advantage, significant size and their valuations continue to climb. I have the experience of weathering the first wave of LPs here in Canada and the company is currently assessing a few US opportunities that would enable AGRA to gain a foothold in the rapidly growing market. If the opportunity presents itself that would allow AGRA to partner with an early-stage entity that doesn’t have the ability to be properly funded or the expertise to take their infant US operations to the next level, then that would be advantageous to us and our shareholders. Can you provide an overview of the company’s products, discussing progress to date, and future milestones. Right now we are focused on one thing… generating REVENUE from our Delta operation. We were fortunate to secure some incredible genetics early on and have our first commercial crops well underway. That will go a long way in helping us to meet our internal revenue targets this summer. My management style is hands-on and methodical. I believe it’s important to walk before you run. Once we have our current 130,000 sq/ft dialed-in and producing, the it’s easy to duplicate and expand. The mistake you don’t want to make is blowing your budget and expanding too fast out of the gate and having to go back to retrofit and fix environmental conditions. I am confident in our calculated approach and our genetics and I do not believe it make sense for me to lock in a supply agreement at this point. I know the quality of our product and I know we’ll get a premium dollar for it when it’s ready. History and background of company and key management as well as investment outlook. The history of AGRA… well I’ve never been one to BS and I think it’s important to acknowledge that there was some hair on this story when I took over as CEO. AGRA had a diverse portfolio of assets that reflected the approach across industry two years ago but, as you have seen, the company has pivoted, we’re restructuring to focus on being good at a couple of things rather than mediocre at many things. I’m combing through everything, tying up loose ends and cleaning up what doesn’t belong. When I first looked at AGRA, I saw an undervalued company that lacked a clear direction. To no fault of previous management, it’s just a very fast-paced and evolving industry and as I said earlier you have to be a step ahead of it or you will fall behind quickly. To say the industry is dynamic and ever-evolving would be an understatement. I love a challenge and the potential I saw in AGRA appealed to me. I have the full support of the board to restructure, get to revenue and expand. I don’t like to lose and I would not have come onboard if I wasn’t confident that I could steer the company in the right direction. What do you believe are the specific growth factors and value drivers, which could positively impact your stock price. Firstly, I think if you ask that question to any executive most if not all would say their stock is undervalued and should be bought. I think you have to look at us as an evolving and repositioning story. Yes we were a lot of things but we weren’t anything that one could hang their hat on and say that’s why you buy the stock. We are transitioning ourselves and have made moves to put us in the best position possible to be successful and get to revenue. We are fine-tuning our operations and, at the same time, looking for opportunities that would be complimentary and accretive to AGRA shareholders and stakeholders. If one believes in our vision and what we are trying to do, then like always investors vote with their money and buy the stock. Execution is the deciding factor on all. I can say a bunch of things that sound impressive and have a bunch of buzz words but if you can’t execute then the words mean nothing. I believe that I and my team can and will execute. The purpose of the interview is to offer a strategic perspective, providing your shareholders and potential investors with insight into the company’s big picture and investment story.