Mr. John Arbuthnot reports
DELTA 9 REPORTS FINANCIALS FOR Q2 2020
Delta 9 Cannabis Inc. has released its financial and operating results for the three-month and six-month periods ending June 30, 2020.
Financial highlights for the three-month period ending June 30, 2020:
Net revenue of $13.0-million for the second quarter of 2020, an increase of 46 per cent, from $8.9-million for the same quarter last year:
Sequential net revenue increased 11 per cent versus $11.8-million for the three-month period ending March 31, 2020;
- Gross profit of $4.6-million for the second quarter of 2020, an increase of 57 per cent, from $2.9-million for the same quarter last year;
- Net income from operations of $1.7-million for the second quarter of 2020 versus a loss from operations of $1.1-million for the same quarter last year;
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $700,000 for the second quarter of 2020 versus an adjusted EBITDA loss of $700,000 for the same quarter last year;
The company reported earnings per share of one cent;
- The company reported a strong financial position, with working capital of $24.5-million and total assets of $77-million.
Financial highlights for the six-month period ending June 30, 2020:
Net revenue of $24.8-million for the first six months of 2020, an increase of 71 per cent, from $14.5-million for the same period last year;
- Gross profit of $9.5-million for the first six months of 2020, an increase of 100 per cent, from $4.7-million for the same period last year;
Net income from operations of $4.6-million for the first six months of 2020 versus a loss from operations of $2.1-million for the same period last year;
- Adjusted EBITDA of $2.4-million for the first six months of 2020 versus an adjusted EBITDA loss of $2.6-million for the same period last year;
- Cash flows from operations of $4.0-million for the first six months of 2020 versus negative cash flows from operations of $9.0-million for the same period last year.
"We are pleased with the continuation of strong growth in top-line revenue from our three main business units," said John Arbuthnot, chief executive officer of Delta 9. "The COVID-19 crisis has had its challenges but our management team and employees have done an incredible job in continuing to execute on our diversified growth strategy. These results not only demonstrate another quarter of profitability, but continued execution on achieving critical milestones, which will allow us to continue to grow our business."
Second quarter operational highlights:
- The company entered into a master cannabis supply agreement with the Ontario Cannabis Retail Corp. to provide for the supply of Delta 9-branded cannabis products and accessories for sale in retail cannabis stores in Ontario and on-line sales of recreational cannabis products and accessories to customers in Ontario.
Delta 9 opened cannabis retail stores in the First Alberta Place building in Calgary and in Grande Prairie, Alta., that continue the strategy of establishing a chain of Delta 9-branded retail stores across Canada. Delta 9's goal is to add an additional 12 retail stores over the next 24 months.
The company entered into a partnership agreement with the Manitoba Hotel Association to be its exclusive cannabis partner and to canvass and develop interest in establishing cannabis retail outlets and selling Delta 9 cannabis products on site in Manitoba hotels. Delta 9 offers programs in educational, point-of-sale systems, supply chain and product selection, marketing, procurement, branding, and assistance in product ordering to build Delta 9's brand as the partner of choice for cannabis in Manitoba hotels.
Delta 9 has also entered into an agreement with the Province of Newfoundland and Labrador, the Newfoundland and Labrador Liquor Corp. and Oceanic Releaf Inc. pursuant to which Delta 9 will supply cannabis and cannabis-related products in that province. Delta 9 also entered into a definitive agreement with Oceanic Releaf Inc. and Taylor Giovannini to acquire a 5-per-cent interest in the common stock of Oceanic in exchange for the provision by Delta 9 of certain consulting and training services to Oceanic.
- The company received Health Canada approval for its new purpose-built cannabis processing centre, which will allow for fully automated bottling, packaging, capping and labelling of its consumer-packaged dried cannabis products. The company anticipates that once the processing centre is operating at capacity it will allow for processing of up to 25,000 kilograms per year of dried cannabis flower material.
SUMMARY OF QUARTERLY RESULTS
Consolidated statement of net income (loss) Q3 2019 Q4 2019 Q1 2020 Q2 2020
Revenue $6,662,137 $10,585,484 $11,753,406 $13,013,610
Cost of sales 4,628,070 7,356,889 6,858,370 8,394,239
Gross profit before unrealized
Gain from changes in biological assets 2,034,067 3,228,595 4,895,036 4,619,371
Unrealized gain from changes in
fair value of biological assets (net) 1,388,863 1,991,398 2,761,873 2,460,490
Gross profit 3,422,930 5,219,993 7,656,909 7,079,861
General and administrative 2,681,388 3,118,669 3,198,840 3,676,326
Sales and marketing 1,151,158 1,385,700 1,243,115 1,534,875
Share-based compensation 215,456 234,503 314,231 174,779
Total operating expenses 4,048,002 4,738,872 4,756,186 5,385,980
Adjusted EBITDA (loss) (849,760) (91,760) 1,650,398 706,469
Income (loss) from operations (625,072) 481,121 2,900,723 1,693,881
Other income/(expenses) (642,190) (696,667) (711,538) (262,364)
Net income (loss) (1,267,262) (215,556) 2,189,185 1,431,517
Basic and diluted earnings (loss) per share (0.02) (0.01) 0.02 0.01
2020 second quarter results conference call
A conference call to discuss the above results is scheduled for Aug. 17, 2020, premarket. The conference call will be hosted that day at 9 a.m. Eastern Time by John Arbuthnot, chief executive officer, and Jim Lawson, chief financial officer, followed by a question-and-answer period.
Date: Aug. 17, 2020
Time: 9 a.m. Eastern Time
Dial-in number: 1-888-886-7786
Replay: 1-877-674-6060, available until midnight Eastern Time, Nov. 17, 2020
Replay pass code: 764865 followed by the number sign
About Delta 9 Cannabis Inc.
Delta 9 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, Man., Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand.
We seek Safe Harbor.
© 2021 Canjex Publishing Ltd. All rights reserved.