Revenue growth of 30% from the second quarter
of 2021 driven by continued execution of the Value Buds growth
EDMONTON, AB, Nov. 10, 2021 /CNW/ - Nova Cannabis Inc. (the
"Company" or "Nova") (TSX: NOVC) today released
its unaudited condensed interim consolidated financial statements
(the "interim financial statements") and management's
discussion and analysis ("MD&A") for the three and nine
months ended September 30, 2021.
"Since our last quarterly report, we have been aggressively
expanding our footprint adding stores at an average pace of one per
week and now have 71 stores opened across Alberta and Ontario," said Darren
Karasiuk, CEO of Nova. "The rate of our sales growth shows
that our Value Buds format is resonating with consumers and
capturing market share, and our operating performance in the third
quarter demonstrates the Company's progress toward its scaled
FINANCIAL AND OPERATING HIGHLIGHTS
- Sales of $38.7 million, a 141.9%
increase from the third quarter of 2020, and a 30.2% increase from
the second quarter of 2021
- Gross profit of $6.5 million, or
16.9% of sales, a 21.8% increase from the third quarter of 2020 and
a 26.0% increase from the second quarter of 2021
- Generated positive operating profit (pre-IFRS 16 adjustments)
and cash flow across the portfolio of operating stores before
pre-opening and other non-operating lease expenses and head office
- Opened eleven (11) new Value Buds stores: six (6) in
Ontario and five (5) in
Alberta, approximately one per
week since the release of our Q2 2021 financial results
- Nova now has seventy-one (71) stores operating and a pipeline
of organic opportunities under development or active negotiation,
the majority of which are in Ontario
The Company continues to be on track toward its objective of two
hundred (200) stores in 2023. All but three (3) Alberta stores with the Nova banner remain and
the Company expects them to be converted to Value Buds in Q4 2021.
Management believes the Company's current operating performance
points to its growth and progress towards a profitable financial
model at scale:
- Nova's total store count now sits at seventy-one (71) and the
Company's revenue continues to grow with the Value Buds stores
generating $3 million in annual run
rate sales1 on average across the portfolio,
inclusive of stores only recently opened or converted.
Improved operating leverage across the store portfolio as variable
costs such as labour and store operating expenses declined as a
percentage of sales from the second quarter of 2021 to the third
quarter of 2021.
- Fixed operating expenses, including head office costs, remained
stable and consistent from Q2 2021 to Q3 2021.
THIRD QUARTER 2021 FINANCIAL RESULTS
For further information, refer to the Company's interim
financial statements and MD&A for the three and nine months
ended September 30, 2021, which are
available from the Company's profile on SEDAR, at www.sedar.com, or
on the Company's website at www.novacannabis.ca.
Management will conduct a conference call on November 11, 2021 at 3:00p.m. ET (1:00 p.m.
MT) to discuss its third quarter operating and financial
results. To participate, please dial (416) 406-0743 or (800)
806-5484 and use the required participant access code: 5789350#.
The playback will be made available approximately four hours after
the event at (905) 694-9451 or (800) 408-3053, required access
ABOUT NOVA CANNABIS INC.
Nova Cannabis Inc. (TSX: NOVC) is one of Canada's largest and fastest growing cannabis
retailers with a goal to disrupt the cannabis retail market by
offering a wide range of high-quality cannabis products at
every-day best value prices. The Company currently operates
seventy-one (71) locations across Alberta, Ontario, and Saskatchewan primarily under its Value Buds
and Nova Cannabis banners. The Company is majority owned by Alcanna
Inc. (TSX: CLIQ).
Additional information about Nova Cannabis Inc. is available at
www.sedar.com and the Company's website at
NON-IFRS FINANCIAL MEASURES
Average sales on an annual run-rate basis is not a measure
recognized by IFRS and does not have a standardized meaning
prescribed by IFRS. Investors are cautioned that this measure
should not replace sales, net earnings or loss (as determined in
accordance with IFRS) as an indicator of the Company's performance,
of its cash flows from operating, investing and financing
activities or as a measure of its liquidity and cash flows. The
Company's method of calculating the aforementioned non-IFRS
financial measure may differ from the methods used by other
issuers. Therefore, the measure may not be comparable to similar
measures presented by other issuers.
Average sales on an annual run-rate basis has been calculated by
taking the average of the actual weekly sales for October 2021 for the Value Buds stores (excluding
those stores that have not been open for at least 2 weeks), and
multiplying this average by fifty-two (52) weeks. This is one of
the key metrics that the Company uses to assess performance and
provides a useful comparison as to how these stores that have been
converted to our Value Buds discount banner are performing.
Management believes the presentation of average sales on an annual
run-rate basis provides useful information to investors and
shareholders as it provides increased transparency on the current
performance of these stores.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements or
information (collectively "forward-looking statements")
within the meaning of applicable securities legislation.
Forward-looking statements are typically identified by words such
as "continue", "anticipate", "will", "should", "plan", "intention",
and similar words suggesting future events or future performance.
All statements and information other than statements of historical
fact contained in this news release are forward-looking statements.
In particular, this news release contains forward-looking
statements pertaining to: Nova's average sales on an annual
run-rate basis; Nova's retail cannabis business strategy, including
organic growth and strategic acquisitions; Nova's discount pricing
model; the conversion of Nova Cannabis stores to the Value Buds
banner and the timing thereof; the Company's objectives, including
planned construction of new stores and target of two hundred (200)
stores by 2023, timing of new store openings, evaluation of
potential sites and sales growth, particularly in the Value Buds
banner; the profitability of Nova's financial model; and Nova's
gross margin as a percentage of sales and sales forecast for the
balance of 2021.
With respect to forward-looking statements contained in this
news release, the Company has made assumptions regarding, among
other things: the Company's ability to identify locations for,
construct and open new stores and the costs related thereto; the
availability of hardware and equipment for those stores; government
regulation and applicable laws will not change in a manner adverse
to the Company; receipt of necessary regulatory approvals to open
new stores; the Company's ability to obtain leases for new sites
and attract the necessary personnel to operate new stores; the cost
of converting existing stores to the Value Buds banner; demand for
the products the Company sells; other factors that will drive sales
growth in the Value Buds banner; availability of acquisition
opportunities; sustainability of competitors' businesses and
competition in the retail cannabis industry, including from the
illicit cannabis market; consumer demands; and factors that
influence consumer behavior.
Although the Company believes that the expectations reflected in
the forward-looking statements, and the assumptions on which such
forward-looking statements are made, are reasonable, especially
given the unprecedented uncertainty of the full extent and impact
of COVID-19, there can be no assurance that such expectations and
assumptions will prove to be correct. Readers should not place
undue reliance on forward-looking statements included in this news
release. Forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that
may cause actual performance and financial results to differ
materially from any estimates, forecasts or projections. These
risks and uncertainties include, among other things, the duration
and severity of the COVID-19 pandemic on the business, operations
and financial condition of the Company; the risk that Nova will be
unable to execute its strategic plan and growth strategy, as
planned without significant adverse impacts from various factors
beyond its control; dependence on suppliers; potential delays or
changes in plans with respect to capital expenditures and the
availability of capital on acceptable terms; risks inherent in the
retail cannabis industry; competition for, among other things,
customers, supply, capital and skilled personnel; changes in labour
costs and markets; incorrect assessments of the value of
acquisitions; general economic and political conditions in
Canada (including Alberta and Ontario), and globally; industry conditions,
including changes in government regulations; fluctuations in
foreign exchange or interest rates; unanticipated operating events;
failure to obtain regulatory and third–party consents and approvals
when required; changes in tax and other laws that affect us and our
shareholders; the potential failure of counterparties to honour
their contractual obligations; stock market volatility; and the
other factors described in the Company's public filings available
at www.sedar.com. Readers are cautioned that this list of risk
factors should not be construed as exhaustive.
The forward-looking statements contained in this news release
are made as of the date hereof. Except as expressly required by
applicable securities legislation, Nova does not undertake any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. The forward-looking statements contained in this news
release are expressly qualified by this cautionary statement.
1 Annual run
rate is a non-IFRS financial measure that does not have any
standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other issuers. For more
information on non-IFRS financial measures, see the 'Non-IFRS
Financial Measures' section in our MD&A for the three and nine
months ended September 30, 2021, which is available on the
Company's website (www.novacannabis.ca) and on the
SEDAR website (www.sedar.com).
SOURCE Nova Cannabis Inc.