VANCOUVER, June 14, 2023 – C21 Investments Inc. (CSE: CXXI and OTCQX: CXXIF) (“C21” or the “Company”), a vertically integrated cannabis company, today announced the filing of its audited financial statements and management discussion and analysis for its fiscal year ended January 31, 2023 on SEDAR. The Company’s audited fiscal year end are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All currency is reported in U.S. dollars.
Audited Fiscal Year Financial Highlights (February 1, 2022 to January 31, 2023):
- Revenue of $28.9 million – down 12% year-over-year; state of Nevada cannabis sales were down 16% over the comparative period[1]
- Net Income from Continuing Operations of $1.4 million (increase of $0.4 million from unaudited results reported in the June 2, 2023 news release)
- Earnings Per Share from Continuing Operations of $0.01
- Gross Margin of 46.4%; Adjusted Gross Profit Margin[2] of 49.0%
- Adjusted EBITDA2 of $7.4 million – a 26% EBITDA Margin
- Cash Flow from Operations of $6.0 million – a fourth consecutive year of positive quarterly Free Cash Flow2
- Total Liabilities reduced by $4.1 million ($0.3 million further reduction from unaudited results reported in the June 2, 2023 news release)
- Senior Note reduced by $6.1 million, with remaining balance fully retired as of June 1, 2023
Changes to the Unaudited Year End Financial Results previously released on June 2, 2023:
The Company previously disclosed its unaudited financial results for the year ended January 31, 2023 in its June 2, 2023 news release (the “Prior News Release”). There have been no changes to Revenue, Gross Profit, Income from Operations, adjusted EBITDA2, or Cash Flow from Operations in the audited financial results as compared to the unaudited financial results disclosed in the Prior News Release.
There are no material changes from the unaudited financial results disclosed in the Prior News Release other than the adjustments to Net Income from Continuing Operations and Net Income in the current period due to the tax provision changes previously disclosed in the Prior News Release and the news release dated June 6, 2023. Changes to the Prior News Release’s Income Statement and Balance Sheet for the current and the comparative previous period are listed below as well as highlighted in red in the summary tables provided.
The British Columbia Securities Commission (“BCSC”) issued a cease trade order (the “CTO”) on June 6, 2023 in respect of the Company’s securities in connection with the delay in the Company filing its audited consolidated financial statement for the year ended January 31, 2023, annual management’s discussion and analysis for the same period and management certifications of annual filings (collectively, the “Annual Filings”). The Company has provided notice to the British Columbia Securities Commission (“BCSC”) of the completion of the Annual Filings and has been informed that the CTO will be revoked June 15, 2023.
“We are pleased to announce the release of our audited year-end financial statements. We appreciate the patience of our shareholders during this delay while our tax provision changes for our previous fiscal year were corrected and restated,” stated CEO and President, Sonny Newman.
Non-GAAP Measures:
C21 reports its financial results in accordance with GAAP and uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures and ratios are not calculated in accordance with GAAP. The Company refers to certain Non-GAAP financial measures such as “Free Cash Flow”, “Adjusted Gross Profit”, “Adjusted Gross Profit Margin” and “Adjusted EBITDA”. These measures do not have any standardized meanings prescribed by GAAP and may not be comparable to similar measures presented by other issuers. The Company considers these measures to be an important indicator of the financial strength and performance of its business. The Company believes the adjusted results presented provide relevant and useful information for investors because they clarify the Company’s actual operating performance, make it easier to compare the Company’s results with those of other companies and allow investors to review performance in the same way as the management of the Company. Since these measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, the Company’s reported results as indicators of the Company’s performance, and they may not be comparable to similarly named measures from other companies. The tables below provide reconciliations of Non-GAAP measures to the most directly comparable GAAP measures.
“Free Cash Flow” is defined as Cash Provided by Operating Activities from Continuing Operations in a period minus capital expenses of property and equipment. Management believes that Free Cash Flow, which measures our ability to generate additional cash from our continuing business operations, is an important financial measure for use in evaluating the Company’s financial performance. Free Cash Flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity.
Free Cash Flow:
| Fiscal Year Ended | January 31, 2023 | January 31, 2022 |
|
Cash Provided by Operating Activities from Continuing Operations
OCF Margin% |
5,971,267
|
8,438,609 |
| Purchase of Property and Equipment | (442,285) | (2,562,304) |
| Free Cash Flow | 5,528,982 | 5,876,305 |
“Adjusted Gross Profit” and “Adjusted Gross Profit Margin” are defined as Gross Profit and Gross Profit Margin adjusted for certain material non-cash items including the one-time relief of fair value of inventory on acquisition, non-cash write downs of inventory, non-recurring expenses related to the strategic maintenance of cultivation facilities and other one-time adjustments to gross profit that management does not believe are reflective of ongoing operations.
Adjusted Gross Profit:
| Fiscal Year Ended | January 31, 2023 | January 31, 2022 |
|
Gross Profit Gross Profit Margin % |
13,401,146 46.4% |
18,809,985 57.0% |
| Production curtailment, non-cash inventory adjustments | 759,000 | – |
|
Adjusted Gross Profit Adjusted Gross Profit Margin% |
14,160,146 49.0% |
18,809,985 57.0% |
“Adjusted EBITDA” is defined as EBITDA (earnings before depreciation and amortization, depreciation and interest in cost of sales, income taxes, and interest) less accretion, loss from discontinued operations, one-time transaction costs and all other non-cash items. The Company has presented “Adjusted EBITDA” because its management believes it is a useful measure for investors when assessing and considering the Company’s continuing operations and prospects for the future. Furthermore, “Adjusted EBITDA” is a commonly used measurement in the financial community when evaluating the market value of similar companies.
Adjusted EBITDA:
| FY2023 | Q4 | Q3 | Q2 | Q1 | |||||||||
| Jan 31, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | |||||||||
| Net Income (Loss) | $ 293,211 | $ (2,119,159) | $ 248,507 | $ 1,857,043 | $ 306,820 | ||||||||
| Interest expenses, net | 456,691 | 60,530 | 98,657 | 133,455 | 164,049 | ||||||||
| Provision for Income Taxes | 2,809,768 | 672,164 | 1,154,189 | 485,152 | 498,263 | ||||||||
| Depreciation and Amortization | 1,365,018 | 340,664 | 341,782 | 341,286 | 341,286 | ||||||||
| Depreciation and Interest in COGS | 812,367 | 203,091 | 203,093 | 203,091 | 203,092 | ||||||||
| EBITDA | $ 5,737,055 | $ (842,710) | $ 2,046,228 | $ 3,020,027 | $ 1,513,510 | ||||||||
| Change in fair value of derivative liabilities | (742,483) | 14,830 | (127,813) | (629,500) | – | ||||||||
| Share based compensation | 209,441 | 20,803 | 31,788 | 54,064 | 102,786 | ||||||||
| Loss from discontinued operations | 1,088,329 | 713,712 | (11,154) | (344,554) | 730,325 | ||||||||
| One-time special project costs | 345,790 | – | 206,459 | 89,331 | 50,000 | ||||||||
| Production curtailment, non-cash inventory adjustments | 759,000 | 1,012,000 | (253,000) | – | – | ||||||||
| Other gain/loss | 49,722 | 18,723 | 13,173 | 21,972 | (4,146) | ||||||||
| Adjusted EBITDA | $ 7,446,854 | $ 937,358 | $ 1,905,681 | $ 2,211,340 | $ 2,392,475 | ||||||||
FYE Balance Sheet Summary:
| (US$) | January 31, 2023 | January 31, 2022 | ||
| Assets | ||||
| Cash | 1,891,772 | 3,067,983 | ||
| Inventory | 4,173,573 | 4,054,473 | ||
| Other current | 2,677,027 | 3,162,018 | ||
| Current Assets | 8,742,372 | 10,284,474 | ||
| Fixed Assets/Goodwill/Intangibles, deferred tax | 49,569,032 | 51,559,976 | ||
| Total Assets | 58,311,404 | 61,844,450 | ||
| Liabilities | ||||
| Accounts payable | 2,921,426 | 2,508,869 | ||
| Promissory note – current portion | 2,026,667 | 6,080,000 | ||
| Income taxes payable | 7,736,858 | 4,870,170 | ||
| Other notes, current lease, deferred tax etc. | 2,289,316 | 2,515,077 | ||
| Current Liabilities | 14,974,267 | 15,974,116 | ||
| Lease liabilities | 8,554,702 | 8,953,425 | ||
| Promissory note | – | 2,026,667 | ||
| Derivative liability and other | 467,359 | 1,161,640 | ||
| Total Liabilities | 23,996,328 | 28,115,848 | ||
| Shareholders’ Equity | 34,315,076 | 33,728,602 | ||
| Total Liabilities and Shareholders’ Equity | 58,311,404 | 61,844,450 | ||
| FY Financial Summary: |
|
||
| FY 2023 | FY 2022 | ||
| (US$) | January 31, 2023 | January 31, 2022 | |
|
Revenue
|
28,888,410 | 32,982,976 | |
| Cost of Sales | 15,487,264 | 14,172,991 | |
|
Gross Profit Gross Margin% |
13,401,146 46.4% |
18,809,985 57.0% |
|
| Total Expenses | 9,445,908 | 9,055,175 | |
| Income from Operations | 3,955,238 | 9,754,810 | |
|
Adjusted EBITDA2 EBITDA Margin%
|
7,446,854 25.8% |
12,443,162 37.7% |
|
Changes to the Unaudited Year End Financial Results:
Audited Balance Sheet (as at year ended January 31, 2023)
- Current Assets – decrease of $0.18 million
- Total Assets – decrease of $0.16 million
- Current Liabilities – decrease of $0.25 million
- Total Liabilities – decrease of $0.25 million
- Equity – increase of $0.09 million
- Equity + Liability – decrease of $0.16 million
Audited Income Statement (year ended January 31, 2023)
- Revenue, Gross Profit, Income from Operations – No change
- Net Income from Continuing Operations – increase of $0.4 million
- Net Income – increase of $0.2 million
Comparative Year Audited Balance Sheet (as at Jan 31, 2022):
- Current Assets – no change
- Total Assets – decrease of $0.01 million
- Current Liabilities – increase of $0.11 million
- Total Liabilities – increase of $0.11 million
- Equity – decrease of $0.12 million
- Equity + Liability – decrease of $0.01 million
Comparative Year Audited Income Statement (ended January 31, 2022)
- Revenue, Gross Profit, Income from Operations – No change
[1] State of Nevada Cannabis Tax Revenue: https://tax.nv.gov/Publications/Cannabis_Statistics_and_Reports/
[2] “Free Cash Flow”, “Adjusted Gross Profit”, “Adjusted Gross Profit Margin” and “Adjusted EBITDA” and are non-GAAP measures. See “Non-GAAP Measures” below for a discussion of such non-GAAP measures and a reconciliation to the closest comparable GAAP measures.
For further inquiries, please contact:
Investor contact: Company contact:
Investor Relations Michael Kidd
info@cxxi.ca Chief Financial Officer and Director
+1 833 289-2994 Michael.Kidd@cxxi.ca
About C21 Investments Inc.
C21 Investments Inc. 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, including legacy Oregon brands Phantom Farms, Hood Oil and Eco Firma Farms. 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 can be found at www.sedar.com and www.cxxi.ca.
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.