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    CHOO   CA17040B1013

CHOOM HOLDINGS INC.

(CHOO)
  Report
Delayed Quote. Delayed CANADIAN NATIONAL STOCK EXCHANGE - 06/17 03:59:59 pm
0.08 CAD   --.--%
06/01CHOOM  : Announces Q3 2021 Results with Year-to-Date Revenue Growth of 404%
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05/26CHOOM  : IIROC Trade Resumption - CHOO
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05/25CHOOM  : Announces Recapitalization Transactions
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Choom : Announces Q3 2021 Results with Year-to-Date Revenue Growth of 404%

06/01/2021 | 08:02am EDT

VANCOUVER, BC, June 1, 2021 /CNW/ - Choom Holdings Inc. ("Choom" or the "Company") (CSE: CHOO) (OTCQB: CHOOF), a fast-expanding Canadian retail cannabis Company is pleased to report its financial and operating results for Q3 2021, ending March 31, 2021.

Q3 Financial Highlights:

  • Q3 2021 Revenue of $5.10M
    • Increase of $3.05M and 147.94% over Q3 2020 revenue of $2.06M
  • Q3 2021 Gross Margin of 37.85%
    • Increase of 8.46% over Q3 2020 gross margin of 29.39%
  • Q3 2021 General and Administrative of $0.90M or 17.69% of revenue
    • Versus $1.12M or 54.46% of revenue in Q3 2020
  • Q3 2021 Salary and Wages of $0.95M or 18.54% of revenue
    • Versus $0.98M or 47.54% of revenue in Q3 2020
  • Q3 2021 Adjusted EBITDA1 of $0.05M or 0.92% of revenue
    • Versus -$1.59M or -77.12% of revenue in Q3 2020

Year to Date (9 months ending March 31, 2021) Financial Highlights:

  • YTD Revenue of $17.17M
    • Increase of $13.76M and 403.67% over YTD 2020 revenue of $3.41M
  • YTD Gross Margin of 36.49%
    • Increase of 7.68% over YTD 2020 gross margin of 28.81%
  • YTD General and Administrative of $2.67M or 15.52% of revenue
    • Versus $4.05M or 118.95% of revenue YTD 2020
  • YTD Salary and Wages of $3.10M or 18.05% of revenue
    • Versus $1.76M or 51.77% of revenue YTD 2020
  • YTD Adjusted EBITDA1 of $0.30M or 1.73% of revenue
    • Versus -$5.40M or -158.57% of revenue YTD 2020

"I am pleased with the Q3 performance and the growth for the quarter" says Choom CEO, Corey Gillon "Despite the increased COVID-19 restrictions and this traditionally being a slower season in cannabis retail, we continued to see strong year-over-year growth, coupled with high customer demand. The business optimization continued with a record setting quarter for margins, and ongoing improvement across key expense lines".

Fiscal 2021 Strategic Pillars: 

  • Finance: Maximizing profitable sales through responsible new store growth and optimization of the existing business.
  • Brand: Propelling the Choom story and unifying the in-store and online experience.
  • Culture: Enabling and rewarding a culture of high performance.
  • Operations: Investing and building best in class retail infrastructure.

Q3 Operational Highlights: 

Finance:

Choom's momentum continues with its year-over-year sales increase, rightsizing of expenditures, improving margins, and operational efficiencies through its centralized business model. During the quarter, the brand strengthened its balance sheet with a $1.95M private placement. Proceeds are now being used for general working capital purposes as well as new store growth.

Subsequent to the quarter, and as announced by the Company on March 25, 2021, the Company entered into an engagement letter with Canaccord Genuity Corp. in connection with a proposed public offering (the "Offering") of units of the Company for a minimum aggregate gross proceeds of $3.5 million and up to maximum aggregate gross proceeds of $5.0 million.  Concurrently, the Company entered into a series of agreements with existing debenture holders to restructure its debt (collectively, the "Restructuring"). The Restructuring is conditional upon, among other things, the receipt of all requisite regulatory approvals and the completion of the Offering. If completed, the Offering and the Restructuring will significantly improve Choom's balance sheet and are expected to be critical milestones to accelerate growth.

Highlights of the Restructuring include:

Aurora Debenture 5

Current State

Future State

  Principal

$20,000,000

$6,000,000

  Interest Rate

6.5%

7.0%

  Interest Due Date 2

Annually

Maturity

  Maturity Date

November 2022

December 2024

  Restructuring Fee 3

N/A

1.25%

  Aurora Ownership % 4

3.0%

19.9%




December 2019 Debenture 5

Current State

Future State

  Principal

$4,100,000

$4,100,000

  Interest Rate

10%

10%

  Interest Due Date

Bi-annually

Bi-annually

  Maturity Date

December 2021

December 2024

"In the past year Choom has been focused on building strong foundational infrastructure" says Choom CEO, Corey Gillon "Upon joining the organization, I initiated a full assessment of the business, developed a new strategy, organizational structure and hired the right people capable of building a best-in-class retailer. I am proud of the strides this team has made in many areas, including our most recent announcement of debt restructuring and concurrent capital raise. This significantly improves our balance sheet and is a critical milestone to accelerate growth".

Brand:

Choom ecommerce sales increased 137% in Q3 vs. Q2 with the brand's new proprietary ecommerce platform now fully integrated. Brand continues to realize the value of its in-house digital agency, PlatformWD, which was acquired in 2020. Choom's elevated retail attributes have now been applied to the new ecommerce platform.

Development of Choom Plus, the brand's new digital loyalty program is now well underway. The aim of the program is to attract, engage, connect, and retain loyal Choom members through promotional and other value-added programs. The Choom Plus program will enable the optimization of its current database, whilst exponentially growing it through the acquisition of new subscribers to the program.  

Culture:

Choom's Retail and Store Support Center continue to attract, retain, and enable top talent, dedicated to the success of the Company. With the ongoing pandemic, which included store closures and capacity limitations, Choom's Senior Management Team voluntarily took a temporary pay reduction throughout Q3, supporting the future success of the Company.

Operations: 

During the quarter there were increased COVID-19 related restrictions in Alberta and Ontario. Choom's 12 Alberta locations saw in-store capacity reduced to as low as 15%. Choom's Niagara location was open for in-store purchases only 44 of the 90 calendar days in the quarter, reducing the location to curbside pick-up and delivery only. Throughout the continued time of uncertainty, Choom remained committed to ensuring safety in all its locations.

Choom opened its second Vancouver location, in the heart of trendy Yaletown in late January 2021. The location has seen continued growth in the months since its opening and Choom is optimistic that the location will be amongst the brand's top performers.

In March of the quarter, Choom broke ground on it first Toronto flagship location in Liberty Village. With construction 90% complete, a summer opening is expected. Choom's Hamilton location is next in the pipeline. With its building permit secured, construction for the location is currently out for tender.

About Choom™

Choom™ is a fast-expanding retail cannabis Company that has established one of the largest store networks in Canada. The Choom brand is inspired by Hawaii's "Choom Gang"—a group of buddies in Honolulu during the 1970's who loved to smoke weed—or as the locals called it, "Choom". Evoking the spirit of the original Choom Gang, our brand caters to the Canadian market with the ethos of 'cultivating good times'. Choom™ is focused on delivering an elevated customer experience through our curated retail environments, offering a diversity of brands for Canadians across a national retail network. 

Cautionary Statement on Forward-looking information   

This news release contains forward-looking information relating to the Company's proposed activities and other statements that are not historical facts. Forward-looking information relates to management's outlook and anticipated events or results and includes statements or information regarding the future or prospects of the Company. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. These factors include risks and uncertainties associated with or arising as a result of delays in obtaining or an inability to obtain required regulatory approvals, access to sufficient quantities of cannabis, the results of diligence investigations, the actions of third parties, the results of negotiations with third parties, developments in the cannabis sector, the ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays and other risks and uncertainties discussed in the management discussion and analysis section of the Company's interim and most recent annual financial statement or other reports and filings, including those made with the CSE and applicable Canadian securities regulators. There can be no assurance that such forward looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. 

1:   Non-IFRS Measures – Adjusted EBITDA

Adjusted EBITDA is a Non-IFRS metric used by management and does not have any standardized meaning prescribed by IFRS. The metric may not be comparable to similar measures presented by other companies. Management defines Adjusted EBITDA as the Income (loss) for the period, as reported, before interest, tax, depreciation, and amortization, share based payments, interest income, rental income, gains and losses, fair value adjustments on marketable securities, impairment, termination costs, debt extinguishments, discontinued operations and other non-recurring income and expenses.  Management believes Adjusted EBITDA is a useful financial metric to assess its operating performance.  A reconciliation of net income to Adjusted EBITDA is presented below and included in the corresponding MD&A:

(CNW Group/Choom Holdings Inc.)

2: Subsequent to the Restructuring, interest on the Aurora Debenture will be due on maturity of the debenture.  The debenture will be secured by a second ranking security interest in all of the Company's present and after-acquired assets.

3: Aurora will be paid a perpetual restructuring fee equal to 1.25% of all revenue (net of taxes) received by the Company from the sale of products at the Company's retail locations. The Company has the option, exercisable at any time after the fifth anniversary of the completion of the Restructuring to purchase the Restructuring Fee for a cash amount equal to six (6) times the preceding twelve-month Restructuring Fee.

4: Concurrently with the completion of the Offering, Aurora has agreed to convert into Common Shares such portion of the indebtedness represented by the existing Amended and Restated Aurora Debenture as will result in Aurora holding a maximum of 19.9% of the Company's issued and outstanding Common Shares on a post-Offering basis.

5: The Restructuring is to be completed immediately following, and is conditional upon, the completion of the Offering

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR ITS REGULATION SERVICES PROVIDER HAS REVIEWED OR ACCEPTED RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE Choom Holdings Inc.

© Canada Newswire, source Canada Newswire English

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Financials
Sales 2020 7,95 M 6,43 M 6,43 M
Net income 2020 -20,3 M -16,5 M -16,5 M
Net Debt 2020 26,2 M 21,2 M 21,2 M
P/E ratio 2020 -1,41x
Yield 2020 -
Capitalization 26,0 M 21,1 M 21,1 M
EV / Sales 2019 343x
EV / Sales 2020 7,27x
Nbr of Employees 5
Free-Float 98,5%
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Managers and Directors
NameTitle
Corey Gillon Chief Executive Officer & Director
Christopher Bogart President & Director
Dylan Murray Chief Financial Officer
Richard Mather Vice President-Operations
Stephen Tong Independent Director
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