C21 Investments Inc., a vertically integrated cannabis company, today announced its unaudited interim financial statements and management discussion and analysis for the third quarter ended October 31, 2023. The Company’s financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP“). All currency is reported in U.S. dollars.
Q3 Financial Highlights (August 1, 2023 to October 31, 2023)
- Revenue of $6.9 million – same store sales increased for a 2nd straight quarter, offset by a decline in wholesale volumes
- Earnings (Loss) per Share of ($0.00)
- Gross Margin of 40% – an increase of 50 basis points sequentially
- Cash Flow from Operations $2.7 million year-to-date; Q3 Operating Cash Flow and Free Cash Flow were positive adjusted for tax payments made in the quarter relating to prior periods
- Total Liabilities reduced $2.1 million year-to-date
- Appointed Aron Swan as Chief Operating Officer
“We continued to see stable retail revenue and cash generation again this quarter, a testament to the strength of our operations and management team,” stated CEO and President, Sonny Newman. “We experienced a second consecutive quarter of increased same store sales, reflecting our strong brand and loyal customer base. We are also pleased with the success of our drive-thru initiative that commenced during the quarter, which has added new efficiencies to our operations.”
C21’s Q3 revenue of $6.9 million was down 3.9% from the previous quarter. Lower wholesale revenues in the quarter were partially offset by an increase in same store sales for the second straight quarter.
Gross Margin was 40.0% for Q3, an increase of 50 basis points sequentially. Gross margins continue to stabilize as the impact of curtailing cultivation in previous quarters has lessened. Margins, while improving, remain compressed relative to historical levels as a result of continued pricing pressures in the state and other factors (see MD&A for full discussion).
C21 reported a Q3 Net Loss of $0.4 million, or ($0.00) earnings per share, virtually unchanged from the previous quarter. The Company generated $0.9 million of Adjusted EBITDA2, also unchanged from Q2.
Cash Flow from Operations remained at $2.7 million year-to-date, impacted by $1.0 million of income taxes paid during the quarter, including tax payments related to prior periods. Adjusted for only the Q3 tax expense, Operating Cash Flow and Free Cash Flow were both positive for the quarter.
Cash at the end of Q3 was $1.9 million, flat since the start of the year. Income taxes paid in the quarter was $1.0 million with $0.3 million in Capital Expenditures on building drive-thru in Sparks. Total Liabilities have been reduced by $2.1 million year-to-date.
During the quarter, the Company appointed Aron Swan as its Chief Operating Officer (see news release dated September 7, 2023). C21 has established the COO role to support the Company’s long-term growth objectives. In addition, the Company completed construction on drive-through operations at its flagship dispensary in Sparks, commencing operation in September.
