TORONTO, July 30, 2019 /CNW/ - National Access Cannabis
Corp. ("NAC" or the "Company") (TSXV: META), the
largest private retailer of recreational cannabis in Canada3, today announced its
financial results for the third quarter ended May 31, 2019. All amounts are expressed in
Canadian dollars.
Q3-2019 Highlights –– Continued expansion in retail cannabis
store financial results
- Sequential quarterly revenue growth (compared to Q2-2019) of
5.2% at a gross profit margin of 33% compared to 32% in
Q2-2019
- The Company's retail cannabis stores generated $16.8 million in revenue in Q3-2019, or 5.5%
growth compared to Q2-2019. Gross profit margin was 32% in Q3-2019,
compared to 31% in Q2-2019.
- Retail cannabis stores produced $2.3
million in adjusted EBITDA in Q3-2019, growth of 32.4%
compared to Q2-2019. Adjusted EBITDA margin expanded to 14% in
Q3-2019, compared to 11% in Q2-2019.
- As of the date of this press release, the Company has received
AGLC approval for 24 of its 34 retail cannabis store license
applications, all of which are operating under the NewLeaf
brand.
- The Company currently has a portfolio of 34 licensed
recreational cannabis retail stores, 24 in Alberta, 9 in Manitoba, and 1 in Saskatchewan.
"In Q3 2019, the efforts of our team translated into steady
growth in the Company's top line while a focus on optimizing
working capital and driving higher profitability drove
significantly improved adjusted EBITDA on a sequential basis," said
Mark Goliger, CEO of NAC. "We are
just at the beginning of NAC's growth trajectory with a target of
growing to 40 total stores by the end of calendar 2019. We expect
the Canadian cannabis market to continue to find its footing
through the remainder of 2019 after a rocky start in late 2018. We
expect to see supply issues continue to abate and we anticipate
seeing a lifting of restrictions on new licences in new
jurisdictions and the ability to offer our customers a wider
selection of products. As the Canadian cannabis market matures, NAC
is positioned to continue to gain share and drive continued growth
in financial performance out of both existing and new stores."
This press release should be read in conjunction with the
unaudited condensed interim consolidated financial statements and
accompanying notes for the three and nine months ended May 31, 2019 and the related Interim MD&A –
Quarterly Highlights for the three and nine-month period ended
May 31, 2019.
Summary Tables – Three Months Ended May 31, 2019
|
Medical
Cannabis
Education Clinics
|
Retail
Cannabis
Stores
|
Research
|
Corporate
|
Total
|
Revenue
|
286,163
|
16,759,606
|
-
|
-
|
17,045,769
|
Cost of goods
sold
|
(32,447)
|
(11,470,303)
|
-
|
-
|
(11,502,750)
|
Gross
profit
Gross profit margin
(%)
|
253,716
89%
|
5,289,303
32%
|
-
-
|
-
-
|
5,543,019
33%
|
Operating
expenses
|
(636,140)
|
(5,812,588)
|
(257,950)
|
(4,025,597)
|
(10,732,275)
|
Loss from
operations
|
(382,424)
|
(523,285)
|
(257,950)
|
(4,025,597)
|
(5,189,256)
|
Adjusted
EBITDA
Adjusted EBITDA
%
|
(215,949)
-
|
2,343,072
14%
|
(257,950)
-
|
(2,432,987)
-
|
(563,814)
-
|
Other
expenses
|
(16,064)
|
(84,418)
|
-
|
-
|
(100,482)
|
Deferred tax
recovery
|
-
|
-
|
-
|
509,589
|
509,589
|
Net loss
|
(398,488)
|
(607,703)
|
(257,950)
|
(3,516,008)
|
(4,780,149)
|
Summary Tables – Nine Months Ended May
31, 2019
|
Medical
Cannabis
Education Clinics
|
Retail
Cannabis
Stores
|
Research
|
Corporate
|
Total
|
Revenue
|
1,101,157
|
35,933,941
|
-
|
-
|
37,035,098
|
Cost of goods
sold
|
(170,778)
|
(24,755,208)
|
-
|
-
|
(24,925,986)
|
Gross
profit
Gross profit margin
(%)
|
930,379
84%
|
11,178,733
31%
|
-
-
|
-
-
|
12,109.112
33%
|
Operating
expenses
|
(1,833,394)
|
(13,025,502)
|
(562,410)
|
(14,120,994)
|
(29,542,300)
|
Loss from
operations
|
(903,015)
|
(1,846,769)
|
(562,410)
|
(14,120,994)
|
(17,433,188)
|
Adjusted
EBITDA
Adjusted EBITDA
%
|
(583,184)
-
|
4,705,960
13%
|
(562,410)
-
|
(7,590,270)
-
|
(4,029,904)
-
|
Other
expenses
|
(16,064)
|
(84,418)
|
-
|
(1,642,857)
|
(1,743,339)
|
Deferred tax
recovery
|
-
|
-
|
-
|
876,567
|
876,567
|
Net loss
|
(919,079)
|
(1,931,187)
|
(562,410)
|
(14,887,284)
|
(18,299,960)
|
Financial Measures
There are measures included in this news release that do not
have a standardized meaning prescribed by IFRS and therefore may
not be comparable to similarly titled measures and metrics
presented by other publicly traded companies. The Company includes
these measures because it believes certain investors use these
measures and metrics as a means of assessing financial performance.
EBITDA (earnings before interest, taxes, depreciation and
amortization) is a non-IFRS financial measure that does not have
any standardized meaning prescribed by IFRS and may not be
comparable to similar measures presented by other companies.
Adjusted EBITDA
Three months ended
May 31, 2019
|
Medical
Cannabis
Education Clinics
|
Retail
Cannabis
Stores
|
Research
|
Corporate
|
Total
|
Loss from
operations
|
(382,425)
|
(523,284)
|
(257,950)
|
(4,025,597)
|
(5,189,256)
|
Amortization of
property and equipment
|
166,475
|
435,650
|
-
|
-
|
602,125
|
Amortization of
intangible assets
|
-
|
-
|
-
|
419,133
|
419,133
|
Finance and other
costs
|
-
|
-
|
-
|
734,353
|
734,353
|
Professional fees –
fundraising and acquisition
|
-
|
-
|
-
|
161,913
|
161,913
|
Integration and
restructuring costs
|
-
|
-
|
-
|
-
|
-
|
Pre-operating retail
expenses
|
-
|
2,430,707
|
-
|
-
|
2,430,707
|
Share based
compensation
|
-
|
-
|
-
|
277,211
|
277,211
|
Adjusted
EBITDA
Adjusted EBITDA
%
|
(215,949)
-
|
2,343,072
14%
|
(257,950)
-
|
(2,432,987)
-
|
(563,814)
-
|
Nine months ended
May 31, 2019
|
Medical
Cannabis
Education Clinics
|
Retail
Cannabis
Stores
|
Research
|
Corporate
|
Total
|
Loss from
operations
|
(903,015)
|
(1,846,770)
|
(562,410)
|
(14,120,994)
|
(17,433,188)
|
Amortization of
property and equipment
|
319,830
|
864,102
|
-
|
-
|
1,183,932
|
Amortization of
intangible assets
|
-
|
-
|
-
|
1,257,399
|
1,257,399
|
Finance and other
costs
|
-
|
-
|
-
|
2,848,253
|
2,848,253
|
Professional fees –
fundraising and acquisition
|
-
|
-
|
-
|
1,096,210
|
1,096,210
|
Integration and
restructuring costs
|
-
|
-
|
-
|
380,480
|
380,480
|
Pre-operating retail
expenses
|
-
|
5,688,629
|
-
|
-
|
5,699,629
|
Share based
compensation
|
-
|
-
|
-
|
948,382
|
948,382
|
Adjusted
EBITDA
Adjusted EBITDA
%
|
(583,184)
-
|
4,705,960
13%
|
(562,410)
-
|
(7,590,270)
-
|
(4,029,904)
-
|
Management defines Adjusted EBITDA as the net loss from
operations, as reported, before interest, tax, and adjusted by
removing non-cash items, including stock-based compensation
expense, depreciation, and further adjusted to remove integration
and restructuring related costs, as well as upfront costs required
to open a retail store. Management believes Adjusted EBITDA is a
useful financial metric to assess its operating performance on a
cash adjusted basis before the impact of non-cash items and
acquisition related costs. Adjusted EBITDA is a non-IFRS financial
measure that does not have any standardized meaning and therefore
may not be comparable to similar measures presented by other
issuers.
Subsequent Events
NAC Enters Conditional Share Purchase Agreement
On July 15, 2019 the Company
entered into a conditional share purchase agreement as previously
announced, to acquire 19.9% of Sicamous Trading Company
Incorporated ("STC"). Pursuant to the share purchase
agreement, the Company will acquire 199,000 common shares in the
capital of STC, being 19.9% of the issued and outstanding shares in
the capital of STC, in exchange for $200,000, payable by the issuance of common
shares of the Company at a price of $0.53 per share.
NAC Enters Loan Agreement with OCN
Pursuant to the terms of a letter agreement between the Company
and Opaskwayak Cree Nation ("OCN") dated July 23, 2019, the Company and OCN agreed to
extend the maturity of a $9,000,000
loan previously entered into between the Company and OCN (the
"OCN Loan") from December 14,
2019 to August 1, 2020,
subject to certain conditions precedent. Under the terms of the
letter agreement, if the Company elects to extend the term of the
OCN Loan to a maturity date of August 1,
2020, the interest rate of the OCN Loan shall increase to
12% per annum and the Company shall be obligated to deliver
1,000,000 common share purchase warrants registered in the name of
OCN. Such warrants shall be exercisable for a term of 36 months at
an exercise price equal to the closing price of the common shares
of the Company on the TSX Venture Exchange on the date prior to the
issuance of such warrants.
About National Access Cannabis Corp.
NAC is
Canada's largest recreational
cannabis retailer3. With 34 licensed retail locations
nationwide, NAC is the leader in secure, safe and responsible
access to legal recreational cannabis in Canada. Through its Canada-wide network of Meta Cannabis Supply
Co.™ and NewLeaf Cannabis™ recreational cannabis retail stores and
NAC Medical's cannabis clinics and pharmacy partnerships, NAC
enables the public and registered patients to gain knowledgeable
access to Canada's network of
authorized Licensed Producers of cannabis. NAC is listed on the TSX
Venture Exchange under the symbol (TSXV: META).
For more information, visit:
www.nationalaccesscannabis.com
www.metacannabis.com
www.newleafcannabis.ca
www.nacbio.com
www.nacmedical.com
Cautionary Statements
This news release contains
forward-looking statements and forward-looking information within
the meaning of applicable securities laws. The use of any of the
words "expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends" and similar expressions are intended to identify forward
looking statements or information. Forward-looking statements and
information in this news release includes, but is not limited to,
the number of NAC cannabis retail stores expected to open and/or
become licensed, the potential lifting of restrictions on
new retail licences in new jurisdictions, the ability of the
Company to offer customers a wider selection of products, the
ability of the Company to gain market share and growth in the
financial performance of the Company. Although the Company believes
that the expectations and assumptions on which the forward-looking
statements and information are based are reasonable, undue reliance
should not be placed on the forward-looking statements and
information because the Company cannot give any assurance that they
will prove to be correct. Since forward-looking statements and
information address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results and developments, including the number of NAC cannabis
retail stores expected to open, may differ materially from those
that are currently contemplated by these statements depending on,
among other things, risks relating to the AGLC reinstating its
moratorium, the ability to obtain or maintain licences to retail
cannabis products; future legislative and regulatory developments
involving cannabis including Ontario opening up licensing to more private
retailers; inability to access sufficient capital from internal and
external sources, and/or inability to access sufficient capital on
favourable terms; general business, economic, competitive,
political and social uncertainties; timing and completion of
construction of the Company's retail locations; the delay or
failure to receive regulatory approvals; the competitive conditions
of the cannabis industry; the competitive and business strategies
of the Company; the labour market generally and the ability to
access, hire and retain employees; and the recreational and medical
cannabis industry in Canada
generally. The Company cautions that the foregoing list of risks
and uncertainties is not exhaustive. The forward-looking statements
and information contained in this news release are made as of the
date hereof and the Company undertakes no obligation to update
publicly or revise any forward-looking statement or information,
whether as a result of new information, future events or otherwise,
unless so required by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
__________________________
|
1 The
Company had 24 retail locations in operation as of May 31, 2019
resulting in total revenue of $35,933,941 from retail operations
for the nine months ended May 31, 2019.
|
2 Adjusted
EBITDA is a non-IFRS measure that does not have a standardized
meaning prescribed by IFRS. For more information and a
reconciliation of non-IFRS measures to the closest IFRS measure,
see below under "Financial Measures", or find additional detail in
the "Non-IFRS Financial Measures" section in the Company's Interim
MD&A – Quarterly Highlights for the three and nine-month period
ended May 31, 2019, available on SEDAR and on the Company's
website.
|
3
Canaccord Genuity, Canadian Cannabis Report, July 17,
2019
|
SOURCE National Access Cannabis Corp.