C21 Investments FY Revenue Almost Unaffected By Drop In Q4 Retail Cannabis Sales

C21 Investments Inc. CXXIF CXXI released unaudited results for its fiscal year ended January 31, 2022, revealing revenue of $33.0 million, down 1% year-over-year.

Note that all current and prior period financial results are presented with the company's Oregon activities having been classified as discontinued, with the exception of net income.

Fiscal Year Financial Highlights (February 1, 2021 to January 31, 2022):

• Gross profit of $18.8 million;

• Record gross margin of 57% - up 310 basis points from last year

• Record adjusted EBITDA of $12.4 million – up 6% year-over-year with 38% EBITDA Margin

• Income from operations of $9.8 million – a 6% increase over the prior year

• Cash flow from operations of $8.2 million, after $3.1 million income tax paid

• Total liabilities reduced by $16.8 million from the previous year

• Net income of $11.0 million

Q4 Financial Highlights (November 1, 2021 to January 31, 2022):

• Revenue of $7.7 million

• Gross margin of 52%

• Adjusted EBITDA of $2.3 million

• Income from operations of $1.8 million

• Eleventh consecutive quarter of positive free cash flow

• Discontinued and divested of Oregon operations

"C21 delivered record year-end results across all profitability metrics and reported $0.09 in earnings per share for the year. Despite continued industry headwinds, a consistent focus on bottom-line results generated an eleventh straight quarter of positive free cash flow in Q4. Our strong operational performance, coupled with the elimination of the drag on earnings from the Oregon operations, allowed us to double cultivation capacity in Nevada while further fortifying our balance sheet," stated Sonny Newman, president and CEO of C21. "Despite cannabis retail sales in the State of Nevada being down 16.2% in Q4, C21's 4^th quarter sales were down 3.6%. This is a testament to our loyal customer base, strong brands and quality retail operations, which delivered record profitability for the year in the face of very challenging markets."

Cash at end of the fourth quarter was $3.1 million, down $0.2 million from Q3. The company's senior secured note was reduced by $1.5 million in Q4.

Subsequent to year end, the company has paid down its senior secured note by an additional $2.5 million, with $5.6 million outstanding as of June 1, 2022.

MCTO Status Update

On May 30, 2022, the company applied for a management cease trade order from the British Columbia Securities Commission (the "BCSC") due to an expected delay in filing of the audited consolidated financial statement for the year ended January 31, 2022, annual management's discussion and analysis for the same period and management certifications of annual filings beyond the deadline of May 31, 2022 prescribed by Canadian securities laws.

The MCTO was granted by the BCSC on June 1, 2022. The MCTO prohibits the company's management from trading in the securities of the company until such time as the filings are filed. The MCTO does not affect the ability of any other shareholders of the company to trade securities of the company.

C21 and its auditors continue to work diligently toward completing the filings as soon as possible. The ongoing auditor review is primarily addressing non-operational derivative accounting and certain other non-cash items as it pertains to GAAP conversion for restatement of previous periods, which could result in a change to net income and earnings per share.

Photo by Mackenzie Marco on Unsplash

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