Nova Announces Third Quarter 2021 Results
Revenue growth of 30% from the second quarter of 2021 driven by continued execution of the Value Buds growth strategy
EDMONTON, AB, Nov. 10, 2021 /CNW/ – Nova Cannabis Inc. (the “Company” or “Nova”) (TSX: NOVC) today released its unaudited condensed interim consolidated financial statements (the “interim financial statements”) and management’s discussion and analysis (“MD&A”) for the three and nine months ended September 30, 2021.
Since our last quarterly report, we have been aggressively expanding our footprint adding stores at an average pace of one per week and now have 71 stores opened across Alberta and Ontario.
Darren Karasiuk, CEO of Nova
The rate of our sales growth shows that our Value Buds format is resonating with consumers and capturing market share, and our operating performance in the third quarter demonstrates the Company’s progress toward its scaled financial model.
FINANCIAL AND OPERATING HIGHLIGHTS
- Sales of $38.7 million, a 141.9% increase from the third quarter of 2020, and a 30.2% increase from the second quarter of 2021
- Gross profit of $6.5 million, or 16.9% of sales, a 21.8% increase from the third quarter of 2020 and a 26.0% increase from the second quarter of 2021
- Generated positive operating profit (pre-IFRS 16 adjustments) and cash flow across the portfolio of operating stores before pre-opening and other non-operating lease expenses and head office expenses
- Opened eleven (11) new Value Buds stores: six (6) in Ontario and five (5) in Alberta, approximately one per week since the release of our Q2 2021 financial results
- Nova now has seventy-one (71) stores operating and a pipeline of organic opportunities under development or active negotiation, the majority of which are in Ontario
The Company continues to be on track toward its objective of two hundred (200) stores in 2023. All but three (3) Alberta stores with the Nova banner remain and the Company expects them to be converted to Value Buds in Q4 2021. Management believes the Company’s current operating performance points to its growth and progress towards a profitable financial model at scale:
- Nova’s total store count now sits at seventy-one (71) and the Company’s revenue continues to grow with the Value Buds stores generating $3 million in annual run rate sales¹ on average across the portfolio, inclusive of stores only recently opened or converted.
- Improved operating leverage across the store portfolio as variable costs such as labour and store operating expenses declined as a percentage of sales from the second quarter of 2021 to the third quarter of 2021.
- Fixed operating expenses, including head office costs, remained stable and consistent from Q2 2021 to Q3 2021.
THIRD QUARTER 2021 FINANCIAL RESULTS
For further information, refer to the Company’s interim financial statements and MD&A for the three and nine months ended September 30, 2021, which are available from the Company’s profile on SEDAR, at www.sedar.com, or on the Company’s website at www.novacannabis.ca.
Management will conduct a conference call on November 11, 2021 at 3:00p.m. ET (1:00 p.m. MT) to discuss its third quarter operating and financial results. To participate, please dial (416) 406-0743 or (800) 806-5484 and use the required participant access code: 5789350#. The playback will be made available approximately four hours after the event at (905) 694-9451 or (800) 408-3053, required access code: 8403552#.
ABOUT NOVA CANNABIS INC.
Nova Cannabis Inc. (TSX: NOVC) is one of Canada’s largest and fastest growing cannabis retailers with a goal to disrupt the cannabis retail market by offering a wide range of high-quality cannabis products at every-day best value prices. The Company currently operates seventy-one (71) locations across Alberta, Ontario, and Saskatchewan primarily under its Value Buds and Nova Cannabis banners. The Company is majority owned by Alcanna Inc. (TSX: CLIQ).
Additional information about Nova Cannabis Inc. is available at www.sedar.com and the Company’s website at www.novacannabis.ca.
NON-IFRS FINANCIAL MEASURES
Average sales on an annual run-rate basis is not a measure recognized by IFRS and does not have a standardized meaning prescribed by IFRS. Investors are cautioned that this measure should not replace sales, net earnings or loss (as determined in accordance with IFRS) as an indicator of the Company’s performance, of its cash flows from operating, investing and financing activities or as a measure of its liquidity and cash flows. The Company’s method of calculating the aforementioned non-IFRS financial measure may differ from the methods used by other issuers. Therefore, the measure may not be comparable to similar measures presented by other issuers.
Average sales on an annual run-rate basis has been calculated by taking the average of the actual weekly sales for October 2021 for the Value Buds stores (excluding those stores that have not been open for at least 2 weeks), and multiplying this average by fifty-two (52) weeks. This is one of the key metrics that the Company uses to assess performance and provides a useful comparison as to how these stores that have been converted to our Value Buds discount banner are performing. Management believes the presentation of average sales on an annual run-rate basis provides useful information to investors and shareholders as it provides increased transparency on the current performance of these stores.
¹Annual run rate is a non-IFRS financial measure that does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. For more information on non-IFRS financial measures, see the ‘Non-IFRS Financial Measures’ section in our MD&A for the three and nine months ended September 30, 2021, which is available on the Company’s website (www.novacannabis.ca) and on the SEDAR website (www.sedar.com).