WINNIPEG, Manitoba, March 31, 2021 (GLOBE NEWSWIRE) — DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: DLTNF) (“Delta 9” or the “Company”), is pleased to announce financial and operating results for the fourth quarter and full year ending December 31, 2020.
Financial Highlights for the Year 2020
-
Record net revenues of $52 million in 2020, up 64% in 2020 compared to $31.8 million in 2019, including the following revenue segmentation highlights:
- Retail revenue increased 109% to $32.2 million in 2020
- Wholesale revenue increased 24% to $11.8 million in 2020
- Business to business revenue increased 38% to $8.6 million in 2020
-
Gross profit
1
of $17.8 million in 2020 was up 105% compared to $8.7 million last year. - Gross profit margin of 34% in 2020 compared to 27% last year.
-
Adjusted EBITDA
2
of $3.8 million in 2020 compared to an Adjusted EBITDA
2
(loss) of $(3.4 million) last year. - Income (Loss) from Operations of $(2.8 million) in 2020 compared to Income (Loss) from Operations of $(5.0 million) last year.
-
Working capital was up 18% to $22.9 million as at December 31, 2020.
Financial Highlights for Fourth Quarter of 2020
-
Record quarterly net revenues of $14.15 million for the fourth quarter of 2020, up 34% compared to $10.6 million for the same quarter last year.
- Sequentially net revenues increased 8% for the fourth quarter of 2020 compared to $13.1 million in the third quarter of 2020.
-
Gross profit
1
of $4.4 million for the fourth quarter of 2020, up 132% compared to $1.9 million for the same quarter last year.-
Sequentially gross profit
1
was up 11% in the fourth quarter of 2020 compared to $3.96 million in the third quarter of 2020.
-
Sequentially gross profit
- Gross profit margin was 31% for the fourth quarter of 2020.
-
Sequentially Adjusted EBITDA
2
improved to $1.9 million in the fourth quarter of 2020 compared to and Adjusted EBITDA (loss) of $(474,039) in the third quarter of 2020. -
Income (Loss) from Operations of $(2.4 million) in the fourth quarter compared to Income (Loss) from operations $(5.0 million) in the third quarter of 2020.
“Our focus on disciplined, profitable growth has paid dividends for Delta 9 as we are reporting record Adjusted EBITDA and record year over year and sequential revenue results”, said John Arbuthnot, CEO. “Delta 9 Cannabis continues to execute its vertically integrated strategy as it continues to accelerate revenue growth and implement prudent control costs. We are incredibly proud of our 300 plus employees for helping make this a record year for Delta 9.”
Summary of Quarterly Results:
|
Consolidated Statement of Net Income (Loss) |
Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
||||||||
|
Revenue |
$ 11,753,406 |
$ 13,013,610 |
$ 13,130,320 |
$ 14,149,717 |
||||||||
| Cost of Sales | 6,858,370 | 8,394,239 | 9,168,026 | $9,794,536 | ||||||||
| Gross Profit Before Unrealized Gain From Changes In Biological Assets | 4,895,036 | 4,619,371 | 3,962,294 | 4,355,181 | ||||||||
| Unrealized gain from changes in fair value of biological assets (Net) | 2,761,873 | 2,460,490 | (2,338,699) | (2,717,281) | ||||||||
|
Gross Profit |
$ 7,656,909 |
$ 7,079,861 |
$ 1,623,595 |
$ 1,637,900 |
||||||||
| Expenses | ||||||||||||
| General and Administrative | 3,198,840 | 3,676,326 | 4,047,063 | 1,600,778 | ||||||||
| Sales and Marketing | 1,243,115 | 1,534,875 | 1,753,461 | 2,091,947 | ||||||||
| Share Based Compensation | 314,231 | 174,779 | 776,705 | 353,798 | ||||||||
|
Total Operating Expenses |
$ 4,756,186 |
$ 5,385,980 |
$ 6,577,229 |
$ 4,046,523 |
||||||||
|
Adjusted EBITDA (Loss) 1 |
1,650,398 |
706,469 |
(474,039) |
1,912,931 |
||||||||
|
Income (Loss) from Operations |
$ 2,900,723 |
$ 1,693,881 |
$ (4,953,634) |
$ (2,408,623) |
||||||||
| Other Income/ Expenses | (711,538) | (262,364) | (595,547) | (747,084) | ||||||||
|
Net Income (Loss) |
$ 2,189,185 |
$ 1,431,517 |
$ (5,549,181) |
$ (3,155,707) |
||||||||
|
Basic and Diluted Earnings (Loss) Per Share |
$ 0.02 |
$ 0.01 |
$ (0.07) |
$ (0.04) |
||||||||
-
Adjusted EBITDA is a non-IFRS measure, and is calculated as earnings before interest, tax, depreciation and amortization, share-based compensation expense, fair value changes and other non-cash items.
The following chart provides a breakdown of the Company’s revenue by segment:
|
Revenue from the Sale of Cannabis |
Three-month period ending December 31, 2019 |
Three-month period ending September 30, 2020 |
Three-month period ending December 31, 2020 |
Year ending December 31, 2019 |
Year ending December 31, 2020 |
||||||||||
|
Wholesale Cannabis Revenue |
$1,448,992 | $2,965,190 | $4,444,106 | $9,535,789 | $11,838,608 | ||||||||||
|
Retail Cannabis Revenue |
5,050,690 | 7,905,731 | 10,200,466 | 15,366,804 | 32,163,980 | ||||||||||
|
Medicinal Cannabis Revenue |
48,911 | 50,743 | 51,859 | 299,657 | 222,356 | ||||||||||
|
Revenue from Other categories |
|||||||||||||||
| B2B activities | 3,793,559 | 1,897,690 | 633,946 | 6,226,670 | 8,596,120 | ||||||||||
|
Merchandise and cannabis devices |
220,344 | 285,018 | 284,110 | 718,300 | 994,651 | ||||||||||
|
Marketing, Promotion and, Other |
53,451 | 436,202 | (460,442) | 194,174 | 203,246 | ||||||||||
|
Sub total |
$ 10,615,947 |
$ 13,558,574 |
$ 15,154,044 |
$ 32,341,394 |
$ 54,018,960 |
||||||||||
| (Less) Excise Taxes | (30,463) | (428,254) | (1,004,327) | (575,434) | (1,971,907) | ||||||||||
|
Net Revenue |
$ 10,585,484 |
$ 13,130,320 |
$ 14,149,717 |
$ 31,765,960 |
$ 52,047,053 |
||||||||||
Discussion of Operations:
|
Key Performance Indicators |
For the three-month period ending September 30, 2020 |
For the three-month period ending December 31, 2020 |
||
|
Production/ Wholesale Unit |
||||
| Total Grams Produced | 1,908,875 | 2,128,288 | ||
|
Direct Production Cost Per Gram* |
$0.74 | $0.67 | ||
| Total Cost Per Gram** | $0.86 | $0.80 | ||
|
Total Grams Released for Sale |
1,156,012 | 1,417,096 | ||
|
Total Grams Sold (Medical and Recreational) |
961,052 | 1,245,317 | ||
| Avg Selling Price per Gram | $3.08 | $3.57 | ||
| Retail Unit | ||||
| Total Grams Sold (Retail) | 1,087,522 | 1,490,825 | ||
| Avg Selling Price per Gram | $7.26 | $5.81 | ||
|
Number of Transactions Processed |
184,750 | 202,347 | ||
| Avg Transaction Size | $49.62 | $50.13 | ||
*Direct Production Cost per gram includes direct labour, nutrients, utilities, growing materials and supplies costs
**Total Cost per gram includes Direct Production Cost per gram plus processing labour, packaging, bottling, and labelling costs
A comprehensive discussion of Delta 9’s financial position and results of operations is provided in the Company’s Management Discussion & Analysis for the fourth quarter and year ending December 31, 2020 filed on SEDAR and can be found at
www.sedar.com
.
Q4 Results 2020 Conference Call
Delta 9 has scheduled a conference call to discuss the results of the fourth quarter and full year ending December 31, 2020. The conference call will be hosted April 1, 2020 at 9:00 a.m. Eastern Time by John Arbuthnot, Chief Executive Officer and Jim Lawson, Chief Financial Officer, followed by a question-and-answer period.
| DATE: | April 1, 2020 |
| TIME: | 9:00 a.m. Eastern Time |
| DIAL IN # | 1-888-886-7786 |
| REPLAY: |
1-877-674-6060 Available until 12:00 midnight Eastern Time, July 1, 2021 |
| REPLAY PASSCODE: | 641689 # |
For more information contact:
Investor & Media Contact:
Ian Chadsey VP Corporate Affairs
Mobile: 204-898-7722
E-mail: [email protected]
About Delta 9 Cannabis Inc.
Delta 9 Cannabis Inc. is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. The company sells cannabis products through its wholesale and retail sales channels and sells its cannabis grow pods to other businesses. Delta 9’s wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9’s shares trade on the Toronto Stock Exchange under the symbol “DN” and on the OTCQX under the symbol “DLTNF”. For more information, please visit www.delta9.ca.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to (i) the Company’s expansion plans; and (ii) the Company’s cannabis production. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including all risk factors set forth in the annual information form of Delta 9 dated March 31, 2021 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.
1
The Company’s “
g
ross
p
rofit” Is calculated before adjustments for changes in biological assets.
2
The Company’s “Adjusted EBITDA” is a measure used by management that does not have any standardized meaning prescribed by International Financial Reporting Standards and may not be comparable to similar measures presented by other companies. Management defines the Adjusted EBITDA as the income (loss) from operations, as reported, before interest and tax, adjusted for removing share-based compensation expense, depreciation and amortization, and the fair value effects of accounting for biological assets and inventories. Management believes that Adjusted EBITDA, and the attribution of Adjusted EBITDA in the manner described above, provides meaningful and useful financial information as these measures demonstrate the performance of the Company’s operating businesses.
