CALGARY, AB, Nov. 26, 2020 /CNW/ - YSS Corp. (the
"Company" or "YSS") (TSXV: YSS) (WKN: A2PMAX), a
premier Canadian cannabis retailer with operations under the
YSSTM and Sweet TreeTM brands and a trusted
destination to explore and discover cannabis in Canada, is
pleased to announce record Q3 2020 financial results, an
outlook for Q4 2020 and an operational update.
Q3 2020 Highlights – A Record Quarter
- Revenue of $5.8 million increased
24% over Q2 2020 and exceeded the Company's Q3 2020 outlook for
growth of 18% - 20% and $5.6
million.
- Gross margin of $1.8 million grew
by 31% compared to Q2 2020 and exceeded the Company's Q2 2020
outlook for growth of 20 - 22% growth and $1.6 million.
- Store-Level EBITDA1 of $560
thousand represented a 56% increase over the previous
quarter.
- General and administrative costs of $733
thousand were $63 thousand, or
9%, higher than in Q2 2020 and represented 13% of revenue, down
from 14% of revenue in Q2 2020.
- YSS has continued to take steps to improve its operational
efficiencies and its store-level EBITDA1 margin, which
has steadily grown from 4% in Q1 2020, 8% in Q2 2020 to 10% in Q3
2020.
- Cash balance of $2.9 million as
at September 30, 2020.
- Record quarterly results were driven solely by success with
existing store growth, as no new stores were opened in Q3
2020.
Q4 2020 Outlook
- Growth has continued into Q4 2020 with YSS achieving record
monthly revenue of $2.0 million in
October.
- Opening and ramp-up of YSS Hamptons in Edmonton on October 16,
2020, will further support Q4 results.
- Forecast revenue for Q4 2020 is expected to exceed $6.0 million, representing quarter-over-quarter
growth of approximately 4 - 6%.
YSS Operational Update
- $2.9 million cash as at
September 30, 2020 and the recently
announced letter of intent in respect of the $4.0 million senior secured term loan will
provide YSS with ample capital to support ongoing industry growth
and accelerate the addition of new stores in Alberta, Saskatchewan and Ontario, while maintaining the financial
flexibility to pursue value-added strategic opportunities.
- YSS remains on target to exit 2020 with positive run-rate
corporate EBITDA1 and expects to deliver further cost
optimization, continued growth and corporate profitability in
2021.
- New store construction and fixturing budgets have been
optimized to average approximately $300,000 per store.
- YSS Country Hills in Calgary
is in the final phase of construction.
- Planning, permitting and construction is underway on four
additional locations, including two in Ontario.
1 Non-International Financial
Reporting Standards ("IFRS") measure. Store-Level EBITDA is defined
as revenue less cost of goods sold and operating costs before
corporate general & administrative expenses and Corporate
EBITDA is defined as Store-Level EBITDA less corporate general
& administrative costs. See disclaimers below.
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Positive growth trends across the YSS store portfolio and the
industry as a whole have continued throughout the year with
Statistics Canada 2020 cannabis retail sales2 on-pace
for a twofold increase, both in Alberta and nationally, relative to
2019. With the exception of oils and capsules, growth is
materializing across all cannabis categories demonstrating
continued capture of black market share coupled with ongoing
adoption of new cannabis product formats. YSS is well positioned to
continue capturing market share while benefitting from ongoing
industry growth with statistically diverse assets, low product
investment, efficient capital requirements and limited exposure to
business interruptions.
"Cannabis is forecasted to be a leading consumer packaged goods
growth segment in Canada, and
across North America, for the next
three years," said Theo Zunich,
President and CEO of YSS. "As an established cannabis retailer with
18 - soon to be 19 - stores, a proven management team with a track
record of operational performance and a strong balance sheet, YSS
offers investors an extremely compelling opportunity to gain
exposure to this high-growth sector."
Additional Information
Selected financial and operational information is outlined in
this press release and should be read in conjunction with YSS'
condensed interim consolidated financial statements for the three
and nine months ended September 30,
2020 and the related management's discussion and analysis
("MD&A"), each of which is filed on SEDAR at
www.sedar.com and posted to the Company's website at
www.ysscorp.ca/.
For information on store locations, updates on promotions, store
openings and to access the Company's click and collect service
please visit www.ysscorp.ca, www.sweettreecannabis.com and follow
us on social media.
For additional information regarding YSS Corp., please see the
Company's website at www.ysscorp.ca/investors and filings available
under the Company's profile on SEDAR at www.sedar.com.
About YSS Corp.
With retail operations under the YSSTM and
Sweet TreeTM brands, YSS Corp. is a premium
cannabis retailer and the trusted destination to explore and
discover cannabis in Canada. YSS
operates 18 locations across Alberta and in Saskatchewan under the YSS and Sweet Tree
brands. In addition, YSS maintains a strategic portfolio of under
construction, secured and prospective locations that represent
future organic growth potential for the Company. YSS management
brings proven expertise across capital markets, retail operations,
hospitality, cannabis, financial management and a strong commitment
to deliver shareholder value by leveraging high-quality
opportunities within this exciting new industry. The YSS retail
experience is built on our five fundamental pillars: convenience,
value, selection, team, and above all else, trust.
1 Non-IFRS
measures. Store-Level EBITDA is defined as revenue less cost
of goods sold and operating costs before corporate general &
administrative expenses and Corporate EBITDA is defined as
Store-Level EBITDA less corporate general & administrative
costs. See disclaimers below.
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2
Statistics Canada. Annualized based on September year-to-date
cannabis retail sales of $1.8 billion Nationally and $400 million
in Alberta for 2020 versus 2019 cannabis retail sales of $1.2
billion Nationally and $255 million in Alberta. See disclaimers
below.
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This news release may include forward-looking statements
including opinions, assumptions, estimates, the Company's
assessment of future plans and operations, and, more particularly,
statements concerning: YSS' retail cannabis business strategy,
including organic growth and strategic activities; the closing of
the term loan and the use of proceeds therefrom; the Company's
operations and retail experience; the Company being positioned with
ample capital to support same-store growth, construction and
planning of new stores and maintain the financial flexibility to
pursue strategic acquisition opportunities; Q4 2020 outlook; the
planning and construction of new retail stores in Alberta, Saskatchewan and Ontario and the forecasted aggregate budget
thereof; the Company's projection of exiting 2020 with
positive run-rate corporate EBITDA; and information relating to
future promotions, store openings and the Company's
click-and-collect service. When used in this document, the
words "will," "anticipate," "believe," "estimate," "expect,"
"intent," "may," "project," "should," and similar expressions are
intended to be among the statements that identify forward-looking
statements.
The forward-looking statements are founded on the basis of
expectations and assumptions made by the Company that
include, but are not limited to, the execution of definitive
documentation in respect of the term loan and the timely receipt of
all required regulatory and third-party approvals.
Forward-looking statements are subject to a wide range of risks and
uncertainties and, although the Company believes that the
expectations represented by such forward-looking statements are
reasonable, there can be no assurance that such expectations will
be realized. Any number of important factors could cause actual
results to differ materially from those in the forward-looking
statements including, but not limited to: the terms and conditions
of the term loan, risks relating to the COVID-19 pandemic,
governmental responses thereto, measures taken by the Company in
response thereto and the impact thereof on the global economy,
capital markets, the cannabis retail industry and the Company; the
success of the Company's operations; ability to execute its
business strategy and future plans of operations; risks relating to
acquisitions; third party credit risks; accuracy and reliability of
data analytics relied on by the Company; ability to obtain, amend
or renew necessary licences, permits and authorizations for the
Company's operations in a timely and cost-efficient manner; ability
to obtain and maintain liability insurance on acceptable terms;
development of new stores including construction delays; increased
competition; ability to locate and secure acceptable store sites
and maintain retail leases on acceptable terms; ability to obtain
quality and diversified cannabis products and cannabis accessories;
ability to attract and retain key personnel and customers;
dependence on key personnel; labour costs, shortages and labour
relations; supply interruption or delays; dependence on suppliers;
intellectual property and cybersecurity risks; risks related to
product recalls, product liability and health and safety;
unfavourable publicity and consumer perception with respect to
cannabis, cannabis products and cannabis accessories; industry
conditions and events; the size of the recreational cannabis
market; changing customer habits; the state of the economy
including general economic conditions in Canada, the U.S. and globally; the
unpredictability and volatility of the price of the common shares;
restrictions on potential growth; availability of sufficient
financial resources to fund the Company's capital expenditures;
changes in tax rates and government mark-ups; the state of domestic
capital markets; the ability to obtain financing on satisfactory
terms; changes in general market conditions; and other factors more
fully described from time to time in the reports and filings made
by the Company with securities regulatory authorities. Please refer
to the MD&A, the Company's management's discussion and analysis
for the year ended December 31, 2019
and the Company's annual information form for the year ended
December 31, 2019 for additional risk
factors relating to the Company, which can be accessed under the
Company's profile on www.sedar.com.
Except as required by applicable laws, the Company does not
undertake any obligation to publicly update or revise any
forward-looking statements.
This news release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about the Company's growth from existing and new stores,
revenue, gross margin, corporate profitability, operational
efficiencies, cost optimization, new store construction and
fixturing budget and EBITDA, which are subject to the same
assumptions, risk factors, limitations, and qualifications as set
forth in the above paragraphs. FOFI contained in this document was
approved by management as of the date of this document and was
provided for the purpose of providing further information about
YSS' future business operations. YSS disclaims
any intention or obligation to update or revise any FOFI contained
in this document, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law.
Readers are cautioned that the FOFI contained in this document
should not be used for purposes other than for which it is
disclosed herein.
Store-level EBITDA (Earnings Before Interest Tax Depreciation
Amortization) and Corporate EBITDA are not measures recognized by
IFRS and do not have standardized meanings prescribed by IFRS.
Investors are cautioned that these measures should not be relied on
as an indicator of the Company's financial performance, of its cash
flows from operating, investing and financing activities or be
relied on as measures of the Company's liquidity and cash flows.
The Company's method of calculating the aforementioned non-IFRS
financial measures, may differ from the methods used by other
issuers. Therefore, these measures may not be comparable to similar
measures presented by other issuers. Please refer to the MD&A
for additional information relating to non-IFRS measures.
Certain information contained herein has been obtained from
published sources prepared by independent industry analysts and
third-party sources (including industry publications, surveys and
forecasts), including Statistics Canada. While such information is
believed to be reliable for the purpose used herein, the Company
does not assume any responsibility for the accuracy of such
information. The sources cited in this news release have not
consented to the inclusion of any data from their reports, nor has
the Company sought their consent.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE YSS Corp.