Namaste Technologies Inc., a marketplace platform for cannabis and wellness products, today reported its financial results for the second quarter ended May 31, 2021 (“Q2 2021”) with references made to financial results for the second quarter ended May 31, 2020 (“Q2 2020”). All financial figures are in Canadian dollars unless otherwise indicated.
Q2 2021 Highlights:
- Three consecutive quarters of improved gross margins before inventory adjustments as a result of increased sales of higher margin products.
- Gross revenue for Q2 2021 was $6.3 million, of which a strong 52% is attributable to cannabis revenues, with cannabis revenues growing 18% in Q2 2021 compared to Q2 2020.
- Operating expenses for the six-month period decreased by 15% compared to the same period in 2020 and contributed to improved EBITDA in all operating segments. Overall EBITDA across operating segments improved 33% in Q2 2021 and 30% in Q2 YTD 2021.
- Inventories decreased by 14% to $5.2 million in Q2 2021 ($6.0 million in the first quarter ended February 28, 2021) demonstrating continued improved inventory management practices.
- The Company’s working capital position remains strong at $25 million as at May 31, 2021.
Recent Corporate Highlights:
- The Company’s wholly owned subsidiary CannMart Inc. (“CannMart”), received a Health Canada renewal of its standard licence for processing and sale of cannabis under the applicable regulations.
- CannMart entered into a number of supply agreements including with CannTx Life Sciences Inc. (CannMart exclusive distributor on a SKU-by-SKU basis), Rilaxe Canna Inc. (CannMart exclusive distributor) and Safari Flower Co. to expand its product offering to both its provincial cannabis board buyers and its own medical customers across Canada at CannMart.com.
- The Company’s wholly owned subsidiary CannMart Labs Inc., (“CannMart Labs”) submitted its application for a Health Canada Controlled Drugs and Substances Dealer’s Licence for future storage and distribution of the following controlled substances: psilocybin, psilocin, ketamine, LSD, DMT and MDMA.
- As part of our sustainability initiative, the Company successfully subleased its Toronto office location until expiry of its lease on October 30, 2024, confirming its commitment to finding top talent all over the world. The decision made by the Company is an initial step towards a long-term commitment to developing an Environment, Social and Governance (ESG) plan for meaningful action to protect our planet.
- The Company’s wholly owned Swedish subsidiary Findify AB, achieved its best ever consecutive four months of sales in the first six calendar months of 2021 with revenue per new customer up 54% and subscription sales value up 106% compared to the same period last year.
- CannMart, signed a Master Distribution Agreement with Rapid Dose Therapeutics Corp. (“RDT”) to be the exclusive distributor of their innovative RDT branded products across Canada.
- CannMart Labs in-house brand “Roilty” received its first purchase orders from the provinces of Manitoba and Saskatechewan for its consumer-focused cannabis concentrates.
- SKU listings at CannMart.com increased 589% to over 800 as of the end of Q2 2021, compared to 116 in Q1 2021 as CannMart received a record amount of requests from vendors across North America to list their products onto the CannMart.com platform.
“We are very pleased with the accomplishments we have made on the operating front which include increased margins over the last three quarters as well as an improvement in EBITDA within all our operating segments,” said Meni Morim, CEO of Namaste. “While this is important, revenues were not where we wanted them to be as Covid-19 continued to have an impact on retail establishments. However, with the reduction of Covid-19 restrictions enabling greater access to retail stores, Covid-19 will have less of an impact on future revenues combined with the continuously improving margins will have a synergistic effect on our financials moving forward. In addition, we believe our various initiatives, including the impending launch of CannMart Labs, our in-house “Roilty” shatter brand hitting the shelves in the coming months, the upcoming launch of our nutraceuticals business in Q4 2021 as well as continuing to increase the number of SKUs available at CannMart.com will contribute to sales growth and improved margins over the next few quarters. We continue to be focused on controlling our operating expenses, improving gross margins and selling the right product mix to position Namaste on a clear path and trajectory towards profitability.”
For further details, the complete Financial Statements for the second quarter ended May 31, 2021 and the related Management’s Discussion & Analysis can be accessed on the Company’s SEDAR profile at www.sedar.com.
(i) Current and deferred income taxes, depreciation and amortization, and share-based compensation were excluded from the Adjusted EBITDA calculation as they do not represent cash expenditures.
(ii) Other income consisting of gain on disposal of subsidiary, interest income, realized gain on disposition of AFS investments, unrealized gain on derivatives and other miscellaneous non-recurring income were excluded from Adjusted EBITDA calculation.
(iii) Non-recurring costs related to restructuring and legacy issues were excluded from Adjusted EBITDA calculation.
(iv) Impairment loss relating to goodwill, customer list, domains and brand names were excluded from Adjusted EBITDA calculation.
(v) Impairment loss relating to receivable is a provision for expected credit loss to an associate and was excluded from Adjusted EBITDA calculation.
(vi) Share of associates loss, net of tax, is excluded due to lack of control.
About Namaste Technologies Inc.
Namaste Technologies is a marketplace platform for cannabis and wellness products. At CannMart.com, the Company provides Canadian medical customers with a diverse selection of hand-picked products from a multitude of federally licensed cultivators and US customers with access to hemp-derived CBD and smoking accessories. The Company also distributes licensed and in-house branded cannabis and cannabis derived products in Canada through a number of provincial government control boards and retailing bodies and facilitates licensed cannabis retailer sales online in Saskatchewan. Namaste’s global technology and continuous innovation address local needs in a burgeoning cannabis industry requiring smart solutions. Information on the Company and its many products can be accessed through the link below: NamasteTechnologies.com