Q3 Financial Highlights (
- Revenue of
$6.9 million – same store sales increased for a 2nd straight quarter, offset by a decline in wholesale volumes - Earnings (Loss) per Share of (
$0.00 ) - Gross Margin of 40% - an increase of 50 basis points sequentially
- Cash Flow from Operations
$2.7 million year-to-date; Q3 Operating Cash Flow and Free Cash Flow were positive adjusted for tax payments made in the quarter relating to prior periods - Total Liabilities reduced
$2.1 million year-to-date - Appointed Aron Swan as Chief Operating Officer
Q3 Management and Operational Commentary:
"We continued to see stable retail revenue and cash generation again this quarter, a testament to the strength of our operations and management team," stated CEO and President,
C21's Q3 revenue of
Gross Margin was 40.0% for Q3, an increase of 50 basis points sequentially. Gross margins continue to stabilize as the impact of curtailing cultivation in previous quarters has lessened. Margins, while improving, remain compressed relative to historical levels as a result of continued pricing pressures in the state and other factors (see MD&A for full discussion).
C21 reported a Q3 Net Loss of
Cash Flow from Operations remained at
Cash at the end of Q3 was
During the quarter, the Company appointed
Non-GAAP Measures:
C21 reports its financial results in accordance with GAAP and uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures and ratios are not calculated in accordance with GAAP. The Company refers to certain Non-GAAP financial measures such as "Free Cash Flow" and "Adjusted EBITDA". These measures do not have any standardized meanings prescribed by GAAP and may not be comparable to similar measures presented by other issuers. The Company considers these measures to be an important indicator of the financial strength and performance of its business. The Company believes the adjusted results presented provide relevant and useful information for investors because they clarify the Company's actual operating performance, make it easier to compare the Company's results with those of other companies and allow investors to review performance in the same way as the management of the Company. Since these measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, the Company's reported results as indicators of the Company's performance, and they may not be comparable to similarly named measures from other companies. The tables below provide reconciliations of Non-GAAP measures to the most directly comparable GAAP measures.
"Free Cash Flow" is defined as Cash Provided by Operating Activities from Continuing Operations in a period minus capital expenses of property and equipment. Management believes that Free Cash Flow, which measures our ability to generate additional cash from our continuing business operations, is an important financial measure for use in evaluating the Company's financial performance. Free Cash Flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.
Free Cash Flow:
Quarter Ended | |||||
Cash Provided by Operating Activities
OCF Margin% | (110,329)
| $ 1,649,786 | $ 1,204,347
| 1,215,735 | 1,443,585 |
Purchase of Property and Equipment | (259,343) | (202,182) | (41,803) | (9,071) | (11,095) |
Free Cash Flow | (369,372) | $ 1,447,604 | $ 1,162,544 | 1,206,664 | 1,432,490 |
"Adjusted EBITDA" is defined as EBITDA (earnings before depreciation and amortization, depreciation and interest in cost of sales, income taxes, and interest) less accretion, loss from discontinued operations, one-time transaction costs and all other non-cash items. The Company has presented "Adjusted EBITDA" because its management believes it is a useful measure for investors when assessing and considering the Company's continuing operations and prospects for the future. Furthermore, "Adjusted EBITDA" is a commonly used measurement in the financial community when evaluating the market value of similar companies.
Adjusted EBITDA:
Q3 | Q2 | Q1 | Q4 | ||||||||
Net Income (Loss) | (376,150) | $ (416,086) | $ (471,045) | $ (2,119,159) | |||||||
Interest expenses, net | - | 3,956 | 31,254 | 60,530 | |||||||
Provision for Income Taxes | 563,100 | 602,674 | 592,426 | 672,164 | |||||||
Depreciation and Amortization | 355,536 | 346,294 | 347,578 | 340,664 | |||||||
Depreciation and Interest in COGS | 203,092 | 203,092 | 203,092 | 203,091 | |||||||
EBITDA | 745,578 | $ 739,930 | $ 703,305 | $ (842,710) | |||||||
Change in fair value of derivative liabilities | - | - | 392,155 | 14,830 | |||||||
Share based compensation | 5,499 | 5,595 | 5,507 | 20,803 | |||||||
Loss from discontinued operations | 18,932 | 19,351 | 83,891 | 713,712 | |||||||
One-time special project costs | 159,000 | - | - | - | |||||||
Production curtailment, non-cash | - | 206,000 | 450,000 | 1,012,000 | |||||||
Other gain/loss | 13,800 | 921 | (73,695) | 18,723 | |||||||
Adjusted EBITDA | 942,809 | $ 971,797 | $ 1,561,163 | $ 937,358 | |||||||
Q3 Balance Sheet Summary:
(US$) | |||
Assets | |||
Cash | 1,905,089 | 1,891,772 | |
Inventory | 2,839,054 | 4,173,573 | |
Other current | 2,399,908 | 2,677,027 | |
Current Assets | 7,144,051 | 8,742,372 | |
Fixed Assets/ | 47,862,598 | 49,569,032 | |
Total Assets | 55,006,649 | 58,311,404 | |
Liabilities | |||
Accounts payable | 2,733,249 | 2,921,426 | |
Promissory note – current portion | - | 2,026,667 | |
Income taxes payable | 8,495,058 | 7,736,858 | |
Other notes, current lease, deferred tax etc. | 2,325,600 | 2,289,316 | |
Current Liabilities | 13,553,907 | 14,974,267 | |
Lease liabilities | 8,201,231 | 8,554,702 | |
Derivative liability and other | 172,541 | 467,359 | |
Total Liabilities | 21,927,679 | 23,996,328 | |
Shareholders' Equity | 33,078,970 | 34,315,076 | |
Total Liabilities and Shareholders' Equity | 55,006,649 | 58,311,404 | |
Q3 Financial Summary:
(US$) | |||
Revenue
| 6,882,078 | 7,162,107 | |
Cost of Sales | 4,129,429 | 4,331,192 | |
Gross Profit Gross Margin% | 2,752,649 40.0% | 2,830,915 39.5% | |
Total Expenses | 2,532,967 | 2,620,099 | |
Income from Operations | 219,682 | 210,816 | |
Income Tax Expense | (563,100) | (602,674) | |
Net Income (Loss) from Continuing Operations Earnings (Loss) Per Share
| (357,218) (0.00) | (396,735) (0.00) | |
About
Cautionary Statement:
Certain statements contained in this news release may constitute forward-looking statements within the meaning of applicable securities legislation. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Forward looking statements in this news release include, but are not limited to, the Company's ability to expand its existing footprint in
The forward-looking statements contained in this news release are based on certain key expectations and assumptions made by the Company, including, without limitation, the ability of the Company's management to execute its business strategy, objectives and plans. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks and uncertainties arising from general business, economic, competitive, political and social uncertainties and other factors, many of which are beyond the control of the Company.
The forward-looking statements contained in this news release represent the Company's expectations as of the date hereof and are subject to change after such date. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.
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