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3rd qrt unaudited profitability report

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TheQueen
(@gtosali1967)
Reputable Member
Joined: 9 months ago
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$3.3 million Net Income highlights sustained profitability

VANCOUVER, BC, Dec. 16, 2021 /CNW/ - C21 Investments Inc. (CSE: CXXI) (OTCQX: CXXIF) ("C21" or the "Company"), a vertically integrated cannabis company, today announced unaudited results for its third quarter ended October 31, 2021. All currency reported in U.S. dollars (unless otherwise noted).

Financial Highlights (period ending October 31, 2021):

   -- Revenue of $8.2 million; Year-to-Date Nevada revenue up 3% over last year 
 
   -- Gross Profit of $4.4 million; Gross Margin of 43% before fair value 
      adjustments 
 
   -- Adjusted EBITDA1 of $2.2 million (a 27.4% EBITDA Margin) and $8.6 million 
      year-to-date 
 
   -- Nevada EBITDA of $3.8 million, up 14% over Q2; Nevada EBITDA of $11.5 
      million Year-to-Date 
 
   -- Net Income of $3.3 million; Earnings Per Share of $0.03 for Q3 and $0.09 
      year-to-date 
 
   -- Cash Flow from Operations of $5.5 million Year-to-Date which includes 
      $3.1 million Income Tax paid 
 
   -- Total Liabilities reduced by $4.2 million from Q2; $14.7 million in 
      reductions Year-to-Date 

Financial Commentary:

Revenue for the third quarter was $8.2 million, down 9% from Q2, in line with industry trends for the period. Comparatively, the State of Nevada reported a 17% decline in cannabis sales from July to September 2021(2) . Recognizing market conditions, C21 remained vigilant in sustaining the profitability of its operations. The Nevada segment continued to deliver strong results, including $3.8 million in EBITDA for the third quarter -- up 14% over Q2 -- and $11.5 million Nevada EBITDA year-to-date (see Nevada EBITDA table in MD&A and below).

"C21 continues to deliver positive free cash flow and profitable bottom-line performance. Despite challenging markets in the quarter, our focus on efficiency delivered $0.03 in Earnings per Share, and allowed us to make further significant reductions to Total Liabilities," stated Sonny Newman, President and CEO of C21. "The first harvest from our expanded cultivation facility was completed in the third quarter, which delivered an 18% average increase in flower yields. As planned, we are now selling flower in the Nevada wholesale market, which we expect will drive topline growth moving forward. While the consolidation environment in the industry remains highly competitive, we continue to weigh strategic opportunities for the Company to maximize shareholder value."

Gross Profit for the quarter was $4.4 million, with Gross Margin of 43.0% before fair value adjustments down from 52% in Q2. This was impacted primarily by a decline in sales and weaker margins in Oregon. Nevada operations continued to deliver strong Gross Margin of 52.0% before fair value adjustments, up 100 basis points over Q2. The Company delivered $2.2 million of Adjusted EBITDA(1) for the quarter, a 27.4% EBITDA Margin. Year-to-date adjusted EBITDA was $8.6 million, a 32.6% EBITDA Margin. SG&A expenses were relatively flat at $1.9 million (23% of revenue) for Q3.

Cash Flow from Operations was $1.0 million for Q3 -- the tenth consecutive quarter of positive Cash Flow from Operations -- and totals $5.5 million year-to-date after $3.1 million in Income Tax paid (see Statement of Cash Flows). Q3 Cash Flow from Operations was impacted by pay down of accrued Income Tax of $1.4 million as well as Special Project costs of $0.2 million.

The Company reported Net Income of $3.3 million for Q3, or $0.03 Earnings Per Share and $11.4 million Net Income ($0.09 EPS) year-to-date. This included changes in fair value of derivative liabilities (see MD&A). Excluding the changes in derivative liabilities, Adjusted Net Income(1) was $1.0 million for Q3.

Cash position at end of the third quarter was $3.3 million, down $0.9 million from Q2 reflecting the aforementioned accrued Income Tax payments and other one-time costs. The Company's Senior Secured Note was reduced by $1.5 million in the quarter. As a result, Total Liabilities for Q3 were reduced by $4.2 million from last quarter and $14.7 million year-to-date (see Balance Sheet summary provided).

Subsequent to the quarter end, the Company announced plans to transition to U.S. GAAP accounting for the fourth quarter and current fiscal year ending January 31, 2022 (see news release dated November 18, 2021).

________________________________________

 
(1)  See non-IFRS Measures below for "Adjusted EBITDA" and "Adjusted Net 
     Income" 
(2)  State of Nevada cannabis sales: 
      https://tax.nv.gov/uploadedFiles/taxnvgov/Content/TaxLibrary/NV-Cannabis-R  
     evenue-FY22(3).pdf 
(1)  See non-IFRS Measures below for "Adjusted EBITDA" and "Adjusted Net 
     Income" 
 

Non-IFRS Measures:

"Adjusted EBITDA" and "Adjusted Net Income" are supplemental, non-GAAP financial measures. The Company defines EBITDA as earnings before depreciation and amortization (excluding rent classified as lease amortization), income taxes, and interest. Additionally, the Company's Adjusted EBITDA presented above excludes fair value adjustments, accretion, impairment charges, one-time transaction costs and all other non-cash items. The Company has presented "Adjusted EBITDA" and "Adjusted Net Income" because management believes these are useful measures 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" and "Adjusted Net Income" are not measures of performance calculated in accordance with IFRS, and these metrics should not be considered in isolation of, or as a substitute for, the measurement of the Company's performance prepared in accordance with IFRS. "Adjusted EBITDA," as calculated and reconciled in the table above, may not be comparable to similarly titled measurements used by other issuers and is not necessarily a measure of the Company's ability to fund its cash needs.

Balance Sheet:

Financial Summary:

 
                                            Fiscal Year End January 31, 2022 
                                    (US$)   Q3 FYE 2022       Q4 FYE 2021 
                                             October 31, 
                                             2021             January 31, 2021 
Assets 
Cash                                               3,278,993         6,237,182 
Biological and Inventory                           7,640,308         6,758,508 
Other current                                      1,239,385         2,584,431 
Current Assets                                    12,158,686        15,580,121 
 
Fixed Assets / Goodwill / Intangibles             53,597,650        53,229,388 
Total Assets                                      65,756,336        68,809,509 
 
Liabilities 
Accounts payable                                   2,965,462         2,680,996 
Other notes, current lease etc.                    1,852,287         3,585,546 
Promissory note                                    6,080,000         6,080,000 
Income tax                                         2,508,835         3,378,299 
Current Liabilities                               13,406,584        15,724,841 
 
Other                                                492,908           517,294 
Promissory note                                    3,546,667         8,106,667 
Lease Liabilities                                  9,307,292         9,691,215 
Derivative Liability                               2,055,227         9,430,991 
Total Liabilities                                 28,808,678        43,471,008 
 
Equity                                            36,947,658        25,338,501 
Total Liabilities and Shareholder's Equity        65,756,336        68,809,509 
Working Capital Deficit                          (1,247,898)         (144,720) 
 
 
                                       Fiscal Year End January 31, 2022 
 (US$)                                 Q3                Q2 
Revenue                                     $ 8,156,586       $ 8,975,731 
Cost of Sales                                 4,653,131         4,281,788 
Gross Profit (before FV adjustments)          3,503,455         4,693,943 
           GM% (BFVA)                             43.0%             52.3% 
Gross Profit                                  4,394,239         4,541,567 
Total Expenses                                2,415,964         2,353,378 
           SG&A% of Revenue                       23.3%             20.0% 
Income (Loss) from Operations                 1,978,275         2,188,189 
Net Income (Loss)                      3,349,585         3,654,832 
           Earnings Per Share           0.03              0.03 
Adjusted EBITDA1                       2,235,434         3,275,465 
 EBITDA Margin%                         27.4%             36.5% 
 

Adjusted EBITDA:

 
                                                      Nine Months ended 
 Three months ended October 31                        October 31 
                            Q3 2022      Q3 2021      FYE 2022     FYE 2021 
 
Income from operations      $ 1,978,275  $ 2,225,729    6,625,428    4,502,326 
 
Net impact, fair value on 
 biological  assets           (890,784)  (1,394,419)  (1,122,404)    (970,586) 
Depreciation and 
 amortization                   444,839      557,985    1,373,536    1,653,979 
Depreciation/amortization 
 in COGS                        106,686       52,044      264,958      175,157 
ROU amortization/interest 
 in COGS                        299,953      325,838      887,938      741,991 
Share based compensation         67,396      334,307      321,567      397,108 
One-time Special Project 
 costs                          229,069            -      229,069            - 
Inventory impairment                  -    1,042,874            -    1,384,922 
 Adjusted EBITDA            $ 2,235,434  $ 3,144,358    8,580,092    7,884,897 
 

2021-12-16 12:00:00 GMT C21 Investments Announces Q3 Results -2-

Nevada EBITDA (see MD&A):

 
                                            Fiscal Year End January 31, 2022 
                                           Q3                 Q2 
                                           31-Oct-21          31-Jul-21 
Revenue                                 $          7,938,188         8,592,872 
Cost of Sales                                      3,837,958         4,247,586 
Gross Margin before fair value 
 adjustments                                       4,100,230         4,345,286 
                                                         52%               51% 
Gross Profit                                       4,764,760         4,366,201 
                                                         60%               51% 
Expenses 
General and Administration                           938,337         1,016,288 
Sales, Marketing and Promotion                         7,339            11,795 
Depreciation and Amortization                        401,819           402,066 
Total Expenses                                     1,347,495         1,430,149 
Income from Operations                             3,417,265         2,936,052 
                                                         43%               34% 
Add back -- Depreciation and Amortization            401,819           402,066 
NEVADA EBITDA                                      3,819,084         3,338,118 
Nevada EBITDA Margin%                                    48%               39% 
 
 

About C21 Investments Inc.

C21 Investments is a vertically integrated cannabis company that cultivates, processes, and distributes quality cannabis and hemp-derived consumer products in the United States. The Company is focused on value creation through the disciplined acquisition and integration of core retail, manufacturing, and distribution assets in strategic markets, leveraging industry-leading retail revenues with high-growth potential multi-market branded consumer packaged goods. The Company owns Silver State Relief and Silver State Cultivation in Nevada, and Phantom Farms and Eco Firma Farms in Oregon. These brands produce and distribute a broad range of THC and CBD products from cannabis flowers, pre-rolls, cannabis oil, vaporizer cartridges and edibles. Based in Vancouver, Canada, additional information on C21 Investments can be found at http://www.sedar.com and http://www.cxxi.ca.


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D. H. Taylor
(@dhtaylor)
Noble Member Admin
Joined: 2 years ago
Posts: 939
 

@gtosali1967 Solid news here.  The income tax increase from earlier was due to the delays in taxation allowed for by COVID changes to defer taxes.  So, taxes will decline on a relative basis.  The $3.3M net earnings likely would have been closer to $4M.  The decrease in revenue is off and what I'd been watching for.  The whole industry is showing signs that people are no longer sitting at home smoking flower but, heading out to bars/restaurants with friends.  They dipped a little in EBITDA/Revenue percentage but, that is something I think they will overcome quickly.  


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