Inner Spirit Holdings Announces Third Quarter 2020 Financial Results

Published: November 17, 2020

Inner Spirit Holdings Announces Third Quarter 2020 Financial Results

Inner Spirit Holdings Ltd., a Canadian company that has established a national network of Spiritleaf retail cannabis stores, has filed its interim Financial Statements and corresponding Management’s Discussion and Analysis for the nine  months ended September 30, 2020. The filings are available for review on the Company’s SEDAR profile at www.sedar.com and the Company’s website at www.innerspiritholdings.com.

“The Company’s financial results for the third quarter of 2020 show significant year over year growth with $31 million recorded in system-wide retail salesfor the Spiritleaf network and a second successive quarter of positive cash flow from operations. For the third quarter as well as for the first nine months of this year, we achieved positive Adjusted EDITDA1 and positive operating profit before other expenses. We have been very fortunate to build a loyal and dedicated group of franchise partners and Spiritleaf staff to bring a now-proven and highly respected cannabis retail experience to local communities and customers across the country. We are strategic in our approach to the market, have an outstanding team developed to seize organic growth opportunities, and are dedicated to delivering an absolutely premium and authentic store experience for our customers,” said Darren Bondar, President and CEO of Inner Spirit.

Inner Spirit reported the following financial highlights for the three months and nine months ended September 30, 2020:

  • System-wide retail sales1 was $31.0 million in the third quarter of 2020, an increase of 243% compared with $9.0 million in the third quarter of 2019 and an increase of 51% compared with $20.5 million in the second quarter of 2020.
  • System-wide retail sales1 was $68.7 million for the first nine months of 2020, an increase of 342% compared with $15.5 million in the comparable period in 2019.
  • Total revenue was $8.1 million in the third quarter of 2020, an increase of 152% compared with $3.2 million in the third quarter of 2019 and an increase of 49% compared with $5.4 million in the second quarter of 2020.
  • Total revenue was $17.6 million for the first nine months of 2020, an increase of 282% compared with $4.6 million in the comparable period in 2019.
  • Operating profit before other expenses was $0.7 million in the third quarter of 2020, an increase of $1.7 million compared with an operating loss before other expenses of $1.0 million in the third quarter of 2019 and an increase of $0.7 million compared with an operating loss before other expenses of $0.03 million in the second quarter of 2020.
  • Adjusted EBITDA1 was $1.3 million in the third quarter of 2020, an increase of $2.2 million compared with an Adjusted EBITDA1 loss of $0.9 million in the third quarter of 2019 and an increase of 151% compared with an Adjusted EBITDA1 of $0.5 million in the second quarter of 2020.
  • Adjusted EBITDA1 was $1.7 million for the first nine months of 2020, an increase of $7.3 million compared with an Adjusted EBITDA1 loss of $5.6 million in the comparable period in 2019.
  • Gross profit was $3.8 million or a gross margin of 46.4% in the third quarter of 2020, compared with $1.5 million or a gross margin of 46.2% in the third quarter of 2019 and $2.5 million or a gross margin of 46.9% in the second quarter of 2020. 
  • Total net loss was $1.0 million, or $0.00 per share, in the third quarter of 2020, compared with $2.5 million, or $0.01 per share, in the third quarter of 2019.
  • Cash flow provided by operations for the first nine months of 2020 was $0.4 million, an improvement of $3.9 million compared with cash flow used in operations of $3.4 million in the comparable period in 2019.
  • Cash increased to $4.5 million as at September 30, 2020, compared with $3.4 million as at June 30, 2020 and compared with $3.2 million as at December 31, 2019.
  • General and administrative expenses were $1.9 million for the first nine months of 2020, compared with $3.4 million in the comparable period in 2019. This improvement in the managing of expenses occurred at the same time total revenue increased to $17.6 million from $4.6 million during the same periods, which demonstrates the Company’s effective control of costs.

During the third quarter of 2020 and subsequently, the Company has been active with store openings in AlbertaOntario, and Newfoundland and Labrador. Recently opened Spiritleaf stores bring the number of locations to 64 across the country – the most cannabis stores being operated under a single retail brand in Canada. Last week, the Company opened a franchised Spiritleaf store in the community of Waterdown, Ontario just north of Hamilton. Other recent store openings in Ontario bring the total there to 14 Spiritleaf locations operating in urban centres such as TorontoOttawaLondonWindsorBurlingtonGuelph and Kingston. Please visit www.spiritleaf.ca for information on store locations and operating hours.

“We continue to expand the Spiritleaf network due to the excellent support and loyalty of our franchise partners, employees, customers, investors and strategic partners. We have developed a strong business model that attracts entrepreneurs to invest their hard-earned capital in the Spiritleaf opportunity and to represent the brand in their local communities. The Company’s ability to manage costs and operate efficiently as we further build out the network is proven and bodes well for our future success and profitability,” said Bondar.

Additional potential store locations have been conditionally secured in British ColumbiaAlbertaSaskatchewanManitobaOntario, and Newfoundland and Labrador. These stores will further solidify Spiritleaf as a true Canadian brand and coast-to-coast retailer.

The Company continues to be recognized for its strong marketing efforts as Spiritleaf received a 2020 MarCom Platinum Award of Excellence for its Spirit Bus Tour campaign. The award recognized the campaign’s creativity and its sales results as the virtual bus tour visited Spiritleaf stores across Canada during the summer months. MarCom is an international creative competition held annually by the Association of Marketing and Communication Professionals.

Due to the ongoing COVID-19 pandemic, Spiritleaf stores have been operating with enhanced customer service processes to ensure the safety of employees and customers. Spiritleaf’s Select & Collect service enables customers to pre-shop and order online prior to pick-up in store. Customers can also connect with their local Spiritleaf store through The Collective customer benefits program to further streamline and individualize their shopping experience. The fast-growing Collective program has over 150,000 members. These loyal supporters of Spiritleaf tend to shop with larger than average basket size, visit stores more regularly and buy more product in bulk when shopping.

1

System-wide retail sales and Adjusted EBITDA are Non-IFRS financial measures. For more detail, see the “Non-IFRS Financial Measures” section below.

Inner Spirit Holdings Ltd. is a franchisor and operator of Spiritleaf recreational cannabis stores across Canada. Learn more at www.innerspiritholdings.com and www.spiritleaf.ca.