C21 Investments Inc. (CSE: CXXI) (OTCQX: CXXIF) (“C21” or the “Company”), a vertically integrated cannabis company, today announced unaudited results for its first quarter ended April 30, 2021. All currency reported in U.S. dollars (unless otherwise noted).
Q1 Highlights (February 1, 2021 to April 30, 2021):
- Revenue of $9.2 million – same store sales in Nevada up 28% over the same period last year, with a record daily revenue run rate of $98,600 per day at the Nevada dispensaries
- Gross Profit of $4.8 million – Gross Margin (BFVA) of 49% with Nevada Operations at 55% (BFVA)
- Operating Cash Flow1 of $2.9 million – up 150% from Q1 2020
- Adjusted EBITDA1 of $2.6 million – 148% higher than Q1 2020
- Net Income of $4.4 million; record Earnings Per Share of $0.04
Management Commentary:
“C21 continues to deliver strong bottom line performance, with Operating Cash Flow for the first quarter up 150% from 2020 and a record of $0.04 in Earnings per Share,” said Sonny Newman, President and CEO of C21. “We are excited that the first phase of expansion in our Nevada cultivation facilities is complete and, pending city and state inspections, expect to be operational in the next couple of weeks.”
Q1 Financial Highlights:
Revenue for the quarter was $9.2 million, reflecting a record revenue run rate at the Nevada dispensaries of $98,600 per day, up 28% year-over-year. The Nevada operations generated a 55% Gross Margin for the quarter, before fair value adjustments on biological assets, and $3.9 million in Income from Operations.
Gross Profit for the quarter was $4.8 million, with Gross Margin of 49% (before fair value adjustments). The Nevadabusiness generated Gross Margin (BFVA) of 55%, but the overall company Gross Margin was negatively impacted by the cost of goods sold and valuation of biological assets in Oregon. The company delivered $2.6 million of Adjusted EBITDA1 for the quarter, up 148% year-over-year.
Operating Cash Flow1 of $2.9 million (before working capital changes) was reported for the quarter, up 150% from Q1 last year. This cash flow generation enabled C21 to pay down $1.5 million of principle debt, expend $1.3 million of capital on the cultivation buildout, and reduce its Income Tax liability by $0.9 million. Cash Provided by Operating Activities (after working capital changes) was $1.9 million.
C21 reported Income from Operations of $2.5 million for the first quarter, up 310% from the same period last year. SG&A expenses were $1.8 million (19% of revenue), reflecting the continued focus on cost management and operating efficiencies.
The Company reported Net Income of $4.4 million for Q1, or $0.04 Earnings Per Share. This included changes in fair value of derivative liabilities (see MD&A). Excluding the changes in derivative liabilities, Adjusted Net Income1 was $1.7 million for the first quarter or $0.014 earnings per share.
Cash position at end of the first quarter was $6.1 million, down $0.1 million from the prior quarter. As noted above, the $2.9 million of Operating Cash Flow generated this quarter was used for the cultivation buildout and the paydown of principal debt and income taxes owing. Total liabilities for Q1 were reduced by $5.7 million from last quarter (see Balance Sheet summary provided).
Subsequent to the quarter, the Company has completed construction on the previously announced first phase of its cultivation expansion and is awaiting city and state inspections, which are scheduled for July 12, 2021.
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| 1 See non-IFRS Measures below for “Adjusted EBITDA”, Operating Cash Flow”, “After-tax Operating Cash Flow”, and “Adjusted Net Income” |
Non-IFRS Measures:
“Adjusted EBITDA”, “Operating Cash Flow”, “After Tax Operating Cash Flow”, 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”, “After tax operating cash flow”, 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”, “After tax operating cash flow”, 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:
