FINANCIAL RESULTS
- Total revenue was
$26.8 million , an increase of 244% compared with$7.8 million in 2019. - Royalty revenue was
$4.2 million , an increase of 217% compared with$1.3 million in 2019. The increase in franchise royalties collected byInner Spirit illustrates the rapid growth of the Spiritleaf network and highlights the benefits of the franchise model. - System-wide retail sales1 was
$105.3 million , an increase of 258% compared with$29.4 million in 2019. System-wide retail sales represent the aggregate revenue earned by franchised Spiritleaf retail cannabis stores and corporate-owned Spiritleaf retail cannabis stores, and do not solely represent the Company's revenue. The Company only receives royalties and advertising fees in respect of franchised Spiritleaf retail cannabis store revenue forming part of the system-wide retail sales. - Gross profit was
$12.7 million or a gross margin of 47.2%, an increase of$8.9 million compared with$3.7 million or a gross margin of 47.9% in 2019. - Operating loss before other expenses was
$0.1 million , an improvement of$6.3 million compared with$6.4 million in 2019. - Total net loss was
$3.1 million , or$0.01 per share, compared with$11.3 million , or$0.06 per share, in 20192. - Adjusted EBITDA1 was
$3.4 million , an improvement of$8.2 million compared with an Adjusted EBITDA1 loss of$4.8 million in 2019. - Cash flow provided by operations was
$4.2 million , an improvement of$9.3 million compared with cash flow used in operations of$5.2 million in 2019. - Cash increased to
$4.7 million as atDecember 31, 2020 , compared with$2.0 million as atDecember 31, 2019 .
- Total revenue was
$9.2 million , an increase of 174% compared with$3.3 million in the fourth quarter of 2019. - System-wide retail sales1 was
$36.6 million , an increase of 164% compared with$13.9 million in the fourth quarter of 2019. System-wide retail sales represent the aggregate revenue earned by franchised Spiritleaf retail cannabis stores and corporate-owned Spiritleaf retail cannabis stores, and do not solely represent the Company's revenue. The Company only receives royalties and advertising fees in respect of the franchised Spiritleaf retail cannabis store revenue forming part of the system-wide retail sales. - Total net income was
$1.1 million , an improvement of$5.1 million compared with a total net loss of$4.0 million in the fourth quarter of 20192.
"The Company's financial results for 2020 show excellent year over year growth as we posted record revenue of
BOUGHT DEAL OFFERING
Subsequent to the year-end,
NETWORK EXPANSION
The Company has developed a proven model of opening and operating Spiritleaf retail cannabis stores in key markets across
"We're able to expand the Spiritleaf network organically due to the support and dedication of our franchise partners, employees, customers, strategic partners and investors. We have developed a strong business model that attracts entrepreneurs to invest their hard-earned capital in the Spiritleaf opportunity and to represent the brand in their communities. We have additional Spiritleaf store locations being prepared to open across the country and expect to exceed 100 stores by the end of the year," said Bondar.
New Spiritleaf stores are expected to open in the Company's existing markets of
OPERATIONS UPDATE
Spiritleaf stores have been operating with enhanced customer service processes to ensure the safety of employees and customers due to the ongoing COVID-19 pandemic. Spiritleaf's Select & Collect service enables customers to pre-shop and order online prior to pick-up in store or curbside or via delivery where permitted. The fast-growing and popular Spiritleaf Collective customer benefits program, which recently surpassed 230,000 members, streamlines and individualizes the shopping experience for guests. Please visit www.spiritleaf.ca for information on store openings, locations and operating hours.
"The Company certainly didn't experience anything near a normal retail environment in 2020 due to the ongoing pandemic. Our Spiritleaf franchise partners and employees have been instrumental in keeping the organization focused and able to serve our communities and our customers to the best of our ability and in a safe manner at all times. These efforts enabled us to achieve many goals in 2020 as we became the largest single brand cannabis retailer in the country while delivering a truly authentic Spiritleaf experience to our customers," said Bondar.
1 | System-wide retail sales and Adjusted EBITDA are non-IFRS financial measures. For more details, see the "Non-IFRS Financial Measures" section below. |
2 | The comparative period has been restated to correct an accounting error treatment of the initial measurement and recognition of the convertible debentures issued in the second quarter of 2019. For more details, see the "Prior Period Restatement" section below. |
About
Inner Spirit Holdings Ltd. (CSE:ISH) is a franchisor and operator of Spiritleaf recreational cannabis stores across
Prior Period Restatement
The Company has restated its
Non-IFRS Financial Measures
In this news release, the Company reports "system-wide retail sales" and "Adjusted EBITDA", financial measures that are not determined or defined in accordance with the International Financial Reporting Standards, as issued by the
System-Wide Retail Sales
System-wide retail sales represents the sum of the revenue reported to the Company by franchisees of Spiritleaf retail cannabis stores and by corporate-owned Spiritleaf retail cannabis stores. System-wide retail sales represent the aggregate revenue earned by franchised Spiritleaf retail cannabis stores and corporate-owned Spiritleaf retail cannabis stores, and do not solely represent the Company's revenue. The Company only receives royalties and advertising fees in respect of the franchised Spiritleaf retail cannabis store revenue forming part of the system-wide retail sales. This measure is useful to management and the investment community in evaluating brand scale and market penetration and is used by management of
The following table reconciles the Company's system-wide retail sales to revenue, being the most directly comparable measure calculated in accordance with IFRS.
3 Months ended | Years ended | |||||||
2020 | 2019 | 2020 | 2019 | |||||
(restated) | (restated) | |||||||
System-Wide Retail Sales | $ | 36,628,028 | $ | 13,857,808 | $ | 105,286,746 | $ | 29,397,606 |
Less: | ||||||||
Franchise store sales | (30,140,269) | (11,855,193) | (86,915,232) | (26,226,831) | ||||
Add back: | ||||||||
Royalties | 1,393,241 | 604,056 | 4,207,269 | 1,328,301 | ||||
Advertising | 306,368 | 120,811 | 885,100 | 265,662 | ||||
Millwork | 741,677 | 368,312 | 1,931,135 | 1,930,884 | ||||
Franchise fee | 172,500 | 148,850 | 510,000 | 565,100 | ||||
Supply and other | 49,555 | (67,614) | 894,030 | 534,310 | ||||
Revenue | $ | 9,151,100 | $ | 3,177,030 | $ | 26,799,048 | $ | 7,795,032 |
Adjusted EBITDA
Adjusted EBITDA is defined as the net and comprehensive income (loss) for the period, as reported, adjusted for right-of-use asset depreciation, depreciation and amortization, unrealized and realized gain (loss) on marketable securities, gain (loss) on lease derecognition, gain (loss) on sublease arrangement, financial guarantee liability expense, finance income, interest expense (accretion) - leases, impairment loss on intangible assets, interest expense, convertible debenture accretion, share-based compensation, taxes, and other non-cash and non-recurring items. Management believes Adjusted EBITDA is a useful financial metric to assess its operating performance prior to consideration of how operations are financed, how the results are taxed, and how the results are impacted by non-cash charges and charges that are irregular in nature or not reflective of the Company's core operations.
The following table reconciles the Company's net loss and comprehensive loss, being the most directly comparable measure calculated in accordance with IFRS, to Adjusted EBITDA.
Years ended | 2020 | 2019 | |||
(restated) | |||||
Net loss and comprehensive loss | $ | (3,095,418) | $ | (11,295,424) | |
Add back: | |||||
Right of use asset depreciation | 712,138 | 809,184 | |||
Depreciation and amortization | 1,555,972 | 825,502 | |||
Impairment loss on intangible assets | 508,622 | - | |||
Share-based compensation | 684,517 | 687,067 | |||
Unrealized loss on marketable securities | - | 1,170,789 | |||
Realized loss (gain) on marketable securities | 361,492 | (73,634) | |||
Unrealized loss on investment | - | 78,276 | |||
Net gain on leases | (493,470) | (3,842) | |||
Financial guarantee liability expense (income) | (49,534) | 305,921 | |||
Finance income | (1,257,073) | (234,930) | |||
Interest expense (accretion) - leases | 2,017,923 | 1,190,988 | |||
Interest expense | 1,103,217 | 862,190 | |||
Issuance cost expense | - | 61,182 | |||
Revaluation gain (loss) on derivative | 50,218 | (290,926) | |||
Convertible debenture accretion | 1,260,916 | 1,105,892 | |||
Adjusted EBITDA | $ | 3,359,520 | $ | (4,801,765) |
Forward-Looking Information
This news release contains statements and information that, to the extent that they are not historical fact, may constitute "forward-looking information" within the meaning of applicable securities legislation. Forward-looking information is typically, but not always, identified by the use of words such as "will", "expected", "anticipated" and similar words, including negatives thereof, or other similar expressions concerning matters that are not historical facts. Forward-looking information in this news release includes, but is not limited to, statements regarding: the expected closing of the Offering on or about
Such forward-looking information is based on various assumptions and factors that may prove to be incorrect, including, but not limited to, factors and assumptions with respect to: the ability of the Company to successfully implement its strategic plans and initiatives and whether such strategic plans and initiatives will yield the expected benefits; the ability of the Company to complete the Offering on acceptable terms or at all, and the timing thereof; and the receipt by the Company and its franchise partners of necessary retail cannabis licences, approvals and authorizations from regulatory authorities, and the timing thereof.
Although the Company believes that the assumptions and factors on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that it will prove to be correct or that any of the events anticipated by such forward-looking information will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. Actual results could differ materially from those currently anticipated due to a number of factors and risks including, but not limited to: conditions in the cannabis industry; fluctuations in market conditions, including in securities markets; the risk that the Offering will not be completed as anticipated or at all, including the risk that the Company will not receive the approvals necessary in connection with the Offering; the risk that the Company and its franchisees do not receive the necessary retail cannabis licences or that they are not able to open additional retail cannabis stores as anticipated or at all; the ability of management to execute its business strategy, objectives and plans; the availability of capital to fund the build-out and opening of additional corporate and franchised retail cannabis stores; and the impact of general economic conditions and the COVID-19 pandemic in
Additional information regarding risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in the Company's annual information form for the financial year ended
SOURCE
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