WINNIPEG, Manitoba, May 14, 2020 (GLOBE NEWSWIRE) -- DELTA 9 CANNABIS INC. DN VRNDF ("Delta 9" or the "Company"), is pleased to announce financial and operating results for the three-month period ending March 31, 2020.
Financial Highlights for Q1, 2020:
| • | Operating revenues of $11.75 million for the three-month period ending March 31, 2020, up 109% from $5.63 million for the same quarter last year. | |||
| • | Sequential net revenues increased 11% versus $10.59 million for the three-month period ending December 31, 2019. | |||
| • | Gross profit of $4.90 million for the three-month period ending March 31, 2020, up 170% from $1.82 million for the same quarter last year. | |||
| • | Sequential gross profit increased 51% versus $3.23 million for the three-month period ending December 31, 2019. | |||
| • | Gross profit margin improved to 42% for Q1, 2020. | |||
| • | Net income from operations was $2.90 million for the three-month period ending March 31, 2020 versus a loss from operations of $(946,180) for the three-month period ending March 31, 2019. | |||
| • | Sequential net income from operations increased 503% versus $481,121 for the three-month period ending December 31, 2019. | |||
| • | Adjusted EBITDA was $1.65 million for the three-month period ending March 31, 2020 versus an adjusted EBITDA loss of $(1.98 million) for the three-month period ending March 31, 2019. | |||
| • | Also compares with an adjusted EBITDA loss of $(91,760) for the three-month period ending December 31, 2019. | |||
| • | The Company reported an earnings per share of $0.02 for the three-month period ending March 31, 2020. | |||
| • | The Company reported a strong financial position, with working capital of $23.90 million and total assets of $72.05 million. | |||
"We were fortunate to be able to maintain continuous operations of our retail stores, wholesale and business to business ("B2B") business units throughout the COVID-19 crisis. This allowed Delta 9 to be one of the few cannabis companies in Canada to report positive net income and adjusted EBITDA results," said John Arbuthnot, CEO of Delta 9. "Our company was able to generate increases in sequential quarterly revenue and strong performance in our retail and B2B segments and a general rebound in our wholesale business volumes and wholesale average selling prices."
Q1, 2020 Operational Highlights
| • | Delta 9 received Health Canada approval for its new purpose-built cannabis processing center which will allow for fully automated bottling, packaging, capping and labelling of its consumer-packaged dried cannabis products. The Company anticipates that once the processing center is operating at capacity it will allow for processing of up to 25,000 kilograms per year of dried cannabis flower material. | |
| • | Delta 9 completed its final services milestone under an agreement with a micro cultivation partner, Oliver Acres Ltd., (operating as "Cypress Craft"). As one of the Company's micro cultivation partners, Cypress Craft entered into a strategic cooperation agreement with Delta 9 whereby Delta 9 provides services relating to the cannabis production facility design and construction, development of standard operating procedures and sanitation programs, consulting on Health Canada licensing, and other services supporting the acquisition of a Health Canada license. | |
| • | Delta 9 entered into a second supply agreement with Auxly Cannabis Group Inc. ("Auxly") who will supply Delta 9's retail stores with a suite of cannabis 2.0 products including cannabis oils, chocolates, chewables and vape products. This is in addition to the strategic partnership that was signed in September 2018 that included a supply agreement which granted Auxly the right to purchase up to 5,000 kilograms of cannabis and 500 kilograms of cannabis trim per year until July 1, 2030. In exchange, Auxly invested $16.25 million in the Company by purchasing 5,909,090 common shares of the Company, becoming one of Delta 9's early strategic investors. | |
| • | Delta 9 completed its final services milestone under an agreement with its micro cultivation partner Because You Cann Inc. As one of the Company's micro cultivation partners, Because You Cann entered into a strategic cooperation agreement with Delta 9 whereby Delta 9 provides services relating to cannabis production facility design and construction, development of standard operating procedures and sanitation programs, consulting on Health Canada licensing, and other services supporting the acquisition of a Health Canada licence. |
Summary of Quarterly Results:
| Consolidated Statement of Net Loss | Q2 2019 | Q3 2019 | Q4 2019 | Q1 2020 |
| Revenue | $8,886,155 | $6,662,137 | $10,585,484 | $11,753,406 |
| Cost of Sales | 5,936,975 | 4,628,070 | 7,356,889 | 6,858,370 |
| Gross Profit Before Unrealized Gain From Changes In Biological Assets | 2,949,180 | 2,034,067 | 3,228,595 | 4,895,036 |
| Unrealized gain from changes in fair value of biological assets (Net) | 586,366 | 1,388,863 | 1,991,398 | 2,761,873 |
| Gross Profit | $3,535,546 | $3,422,930 | $5,219,993 | $7,656,909 |
| Expenses | ||||
| General and Administrative | 3,075,803 | 2,681,388 | 3,118,669 | 3,198,840 |
| Sales and Marketing | 1,324,537 | 1,151,158 | 1,385,700 | 1,243,115 |
| Share Based Compensation | 244,848 | 215,456 | 234,503 | 314,231 |
| Total Operating Expenses | $4,645,188 | $4,048,002 | $4,738,872 | $4,756,186 |
| Adjusted EBITDA (Loss) 1 | (663,705) | (849,760) | (91,760) | 1,650,398 |
| Income (Loss) from Operations | $(1,109,642) | $(625,072) | $481,121 | $2,900,723 |
| Other Income/ Expenses | (206,231) | (642,190) | (696,667) | (711,538) |
| Net Income (Loss) | $(1,315,873) | $(1,267,262) | $(215,556) | $2,189,185 |
| Basic and Diluted Earnings (Loss) Per Share | $(0.01) | $(0.02) | $(0.01) | $0.02 |
The following chart provides a breakdown of the Company's revenue by segment:
| Revenue from the Sale of Cannabis | Three-month period ending March 31, 2019 | Three-month period ending December 31, 2019 | Three-month period ending March 31, 2020 |
| Wholesale Cannabis Revenue | $2,935,641 | $1,448,992 | $2,991,299 |
| Retail Cannabis Revenue | 2,437,094 | 5,050,690 | 5,854,017 |
| Medicinal Cannabis Revenue | 96,560 | 48,911 | 58,026 |
| Revenue from Other categories | |||
| Business to business activities | 45,000 | 3,793,559 | 2,977,859 |
| Merchandise and cannabis devices | 155,071 | 220,344 | 166,334 |
| Other | 46,737 | 53,451 | 64,466 |
| Sub total | $5,716,103 | $10,615,947 | $12,112,001 |
| (Less) Excise Taxes | (83,919) | (30,463) | (358,595) |
| Net Revenue | $5,632,184 | $10,585,484 | $11,753,406 |
Discussion of Operations:
| Key Performance Indicators | Q1, 2019 | Q2, 2019 | Q3, 2019 | Q4, 2019 | Q1, 2020 |
| Production/ Wholesale Unit | |||||
| Total Grams Produced | 418,901 | 675,233 | 871,516 | 1,305,806 | 1,198,983 |
| Direct Production Cost Per Gram* | $1.44 | $1.05 | $1.08 | $0.91 | $0.98 |
| Total Cost Per Gram** | $1.60 | $1.21 | $1.21 | $1.04 | $1.10 |
| Total Grams Released for Sale | 185,626 | 565,599 | 519,596 | 718,353 | 729,085 |
| Total Grams Sold (Medical and Recreational) | 399,787 | 527,693 | 548,981 | 416,729 | 591,080 |
| Avg Selling Price per Gram | $7.58 | $5.63 | $4.19 | $3.59 | $4.50 |
| Retail Unit | |||||
| Total Grams Sold (Retail) | 189,796 | 282,336 | 349,410 | 491,941 | 692,661 |
| Avg Selling Price per Gram | $12.84 | $12.42 | $12.47 | $10.27 | $8.45 |
| Number of Transactions Processed | 44,885 | 84,882 | 108,438 | 134,132 | 149,440 |
| Avg Transaction Size | $58.27 | $41.46 | $41.67 | $39.29 | $45.40 |
| Unique Website Visitors (delta9.ca) | 180,774 | 152,680 | 150,279 | 165,415 | 171,218 |
*Direct Production Cost per gram includes direct labour, nutrients, utilities, growing materials and supplies costs
**Total Cost per gram includes Direct Production Cost per gram plus processing labour, packaging, bottling, and labelling costs
A comprehensive discussion of Delta 9's financial position and results of operations is provided in the Company's Management Discussion & Analysis for the first quarter ended March 31, 2020 filed on SEDAR and can be found at www.sedar.com.
Q1 Results 2020 Conference Call
Delta 9 has scheduled a conference call to discuss the results for its first quarter ended March 31, 2020. The conference call will be hosted May 15, 2020 at 9:00 a.m. Eastern Time by John Arbuthnot, Chief Executive Officer, and Jim Lawson, Chief Financial Officer, followed by a question and answer period.
| Date | May 15, 2020 |
| Time | 9:00 EST |
| Dial in # | 1-888-886-7786 - Toll free North America |
| Replay information: | 1-877-674-6060 |
| Replay Password | 634784# |
| Available until August 15, 2020 |
For more information contact:
Investor & Media Contact:
Ian Chadsey VP Corporate Affairs
Mobile: 204-898-7722
E-mail: ian.chadsey@delta9.ca
About Delta 9 Cannabis Inc.
Delta 9 Cannabis Inc. is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. The company sells cannabis products through its wholesale and retail sales channels and sells its cannabis grow pods to other businesses. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9's shares trade on the Toronto Stock Exchange under the symbol "DN" and on the OTCQX under the symbol "VRNDF". For more information, please visit www.delta9.ca.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company's future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to the Company's expansion plans. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including all risk factors set forth in the annual information form of Delta 9 dated March 19, 2020 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.
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