National Access Cannabis Generates $17 million in Revenue in Q3 2019. Retail Cannabis Stores Generate $16.8 million in Revenue, and Adjusted EBITDA² of $2.3 million
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. 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.
Mark Goliger, CEO of NAC
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.
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.
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.
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).
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¹The 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.
²Adjusted 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.
³Canaccord Genuity, Canadian Cannabis Report, July 17, 2019
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