C21 Investments Announces Q1 Results

C21 Investments Announces Q1 Results
Fifth Consecutive Quarter of Positive EBITDA

VANCOUVER, August 13, 2020 – C21 Investments Inc. (“C21” or “The Company”) (CSE: CXXI and OTCQB: CXXIF) today announced unaudited results for its first quarter ended April 30, 2020.

Q1 Highlights: (all currency in U.S. dollars)

(February 1, 2020 to April 30, 2020):

• Revenue of $8.15 million – a Year-over-Year increase of 5%; achieved 86% of Q4 Revenues notwithstanding 6 weeks of delivery-only restrictions in Nevada
• Gross Profit of $2.9 million (before fair value adjustments) – Gross Margin of 36% – reflecting higher cost of sales due to Covid-19
• Adjusted EBITDA[1] of $0.9 million – the fifth consecutive positive quarter
• Cash Flow from Operations of $1.4 million
• Income from Operations of $0.5 million (before fair value adjustments)
• Total Liabilities reduced by $2.5 million
• Net loss, excluding a non-cash, one-time restructuring charge, of ($0.00) per share[2]

Management Commentary:

In Q1, Nevada regulators limited statewide cannabis sales to delivery-only due to the COVID-19 pandemic. C21 successfully mitigated the impact of these restrictions, which included six weeks of operating with “delivery-only” at the Nevada dispensaries. The team quickly pivoted to new sales channels, which initially included increasing third-party delivery, while subsequently establishing an in-house delivery capability. As restrictions eased at the end of the quarter, the Company engineered curbside pickup as its third sales channel.  C21 continued to streamline its Oregon operations and in February acquired the Phantom Farms real estate associated with its outdoor farms in Southern Oregon.

Company President and CEO, Sonny Newman said, “We met the challenges imposed by the pandemic head-on and thanks to the hard work of the team, we have strengthened the Company for the future.  We have seen the impact of these efforts in our Q2 sales results, where we rebounded to record revenue at our Nevada dispensaries. As we prepare for the next stage of growth, we are confident in the strong operational foundation we have built.”

Revenue for Q1 was $8.15 million, up 5% from Q1 last year and 86% of the Q4 revenue. The Company’s Gross Margin was $2.9 million (36%), before fair value adjustments.  This reflects the increased sales costs resulting from the six week period of “delivery-only” operations and costs associated with integrating the Oregon operations.

During Q1, Sales, General and Administrative totaled $1.8 million. C21’s Total Liabilities were reduced by $2.5 million. The Company recorded a one-time, non-cash restructuring charge of $1.2 million from the final settlement of the acquisition of Phantom Farms. The Net Loss per Share for Q1 is ($0.02). Excluding the one-time, non-cash restructuring costs, Net Loss per Share is ($0.00).

Despite six weeks of the dispensaries being closed to in-store sales, C21’s Nevada operations remained one of the most profitable in the cannabis sector, with the segment delivering $2.2 million in Net Income Before Tax for the quarter and a 48% Gross Margin. The Company’s consolidated Net Income Before Tax excluding the restructuring costs was $0.3 million.

Subsequent to the first quarter, the Company has continued to service its debt through operating cash flows, reducing the principal amount of its notes payable by an additional $2.4 million. Silver State Relief has successfully navigated the challenges of operating under COVID-19 restrictions in Nevada and is now reporting record run rate sales. The further roll-out of Oregon brands into Nevada continues to be highly successful, with Hood Oil and Phantom Farms flower performing as top selling products in our retail stores. The Company believes its profitable dispensary model and scalable cultivation and extraction facilities in Nevada will generate strong future growth for the Company.

There have been no other material business developments in the Company’s operations which have not previously been disclosed.

Quarterly Adjusted Operating Earnings:

[1] Adjusted EBITDA is a non-IFRS financial measure, in which IFRS does not prescribe any standard definitions.  As a result, the Company’s Adjusted EBITDA included herein is not necessarily comparable to similar measures presented by other issuers.

[2] Net Loss, excluding non-cash, one-time restructuring charge, of ($0.3) million.

About C21 Investments Inc.

C21 Investments is a vertically integrated cannabis company that cultivates, processes, and distributes quality cannabis and hemp-derived consumer products in the United States. The Company is focused on value creation through the disciplined acquisition and integration of core retail, manufacturing, and distribution assets in strategic markets, leveraging industry-leading retail revenues with high-growth potential multi-market branded consumer packaged goods. The Company owns Silver State Relief and Silver State Cultivation in Nevada, and Phantom Farms, Swell Companies, Eco Firma Farms, and Pure Green in Oregon. These brands produce and distribute a broad range of THC and CBD products from cannabis flowers, pre-rolls, cannabis oil, vaporizer cartridges and edibles. Based in Vancouver, Canada, additional information on C21 Investments can be found at www.sedar.com and www.cxxi.ca.