from operations for second consecutive quarter and further expands its
"The Company's financial results for the third quarter of 2020 show significant year over year growth with
- System-wide retail sales1 was
$31.0 million in the third quarter of 2020, an increase of 243% compared with$9.0 million in the third quarter of 2019 and an increase of 51% compared with$20.5 million in the second quarter of 2020. - System-wide retail sales1 was
$68.7 million for the first nine months of 2020, an increase of 342% compared with$15.5 million in the comparable period in 2019. - Total revenue was
$8.1 million in the third quarter of 2020, an increase of 152% compared with$3.2 million in the third quarter of 2019 and an increase of 49% compared with$5.4 million in the second quarter of 2020. - Total revenue was
$17.6 million for the first nine months of 2020, an increase of 282% compared with$4.6 million in the comparable period in 2019. - Operating profit before other expenses was
$0.7 million in the third quarter of 2020, an increase of$1.7 million compared with an operating loss before other expenses of$1.0 million in the third quarter of 2019 and an increase of$0.7 million compared with an operating loss before other expenses of$0.03 million in the second quarter of 2020. - Adjusted EBITDA1 was
$1.3 million in the third quarter of 2020, an increase of$2.2 million compared with an Adjusted EBITDA1 loss of$0.9 million in the third quarter of 2019 and an increase of 151% compared with an Adjusted EBITDA1 of$0.5 million in the second quarter of 2020. - Adjusted EBITDA1 was
$1.7 million for the first nine months of 2020, an increase of$7.3 million compared with an Adjusted EBITDA1 loss of$5.6 million in the comparable period in 2019. - Gross profit was
$3.8 million or a gross margin of 46.4% in the third quarter of 2020, compared with$1.5 million or a gross margin of 46.2% in the third quarter of 2019 and$2.5 million or a gross margin of 46.9% in the second quarter of 2020. - Total net loss was
$1.0 million , or$0.00 per share, in the third quarter of 2020, compared with$2.5 million , or$0.01 per share, in the third quarter of 2019. - Cash flow provided by operations for the first nine months of 2020 was
$0.4 million , an improvement of$3.9 million compared with cash flow used in operations of$3.4 million in the comparable period in 2019. - Cash increased to
$4.5 million as atSeptember 30, 2020 , compared with$3.4 million as atJune 30, 2020 and compared with$3.2 million as atDecember 31, 2019 . - General and administrative expenses were
$1.9 million for the first nine months of 2020, compared with$3.4 million in the comparable period in 2019. This improvement in the managing of expenses occurred at the same time total revenue increased to$17.6 million from$4.6 million during the same periods, which demonstrates the Company's effective control of costs.
During the third quarter of 2020 and subsequently, the Company has been active with store openings in
"We continue to expand the Spiritleaf network due to the excellent support and loyalty of our franchise partners, employees, customers, investors and strategic partners. 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 local communities. The Company's ability to manage costs and operate efficiently as we further build out the network is proven and bodes well for our future success and profitability," said Bondar.
Additional potential store locations have been conditionally secured in
The Company continues to be recognized for its strong marketing efforts as Spiritleaf received a 2020 MarCom Platinum Award of Excellence for its Spirit Bus Tour campaign. The award recognized the campaign's creativity and its sales results as the virtual bus tour visited Spiritleaf stores across
Due to the ongoing COVID-19 pandemic, Spiritleaf stores have been operating with enhanced customer service processes to ensure the safety of employees and customers. Spiritleaf's Select & Collect service enables customers to pre-shop and order online prior to pick-up in store. Customers can also connect with their local Spiritleaf store through The Collective customer benefits program to further streamline and individualize their shopping experience. The fast-growing Collective program has over 150,000 members. These loyal supporters of Spiritleaf tend to shop with larger than average basket size, visit stores more regularly and buy more product in bulk when shopping.
1 | System-wide retail sales and Adjusted EBITDA are Non-IFRS financial measures. For more detail, see the "Non-IFRS Financial Measures" section below. |
About
Inner Spirit Holdings Ltd. (CSE:ISH) is a franchisor and operator of Spiritleaf recreational cannabis stores across
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 represents the sum of the revenue reported to
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 sublease arrangement, financial guarantee liability expense, finance income, interest expense (accretion) - leases, 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.
Three months ended | Nine months ended | |||||||||
September 30 | September 30 | |||||||||
2020 | 2019 | 2020 | 2019 | |||||||
Net loss and comprehensive loss for the period | $ | (1,009,210) | $ | (2,490,323) | $ | (4,182,974) | $ | (7,304,831) | ||
Add back: | ||||||||||
Right of use asset depreciation | 178,167 | - | 520,824 | - | ||||||
Depreciation and amortization | 394,980 | 264,668 | 1,131,639 | 488,901 | ||||||
Unrealized loss (gain) on marketable securities | (357,212) | 969,585 | - | 761,691 | ||||||
Realized loss (gain) on marketable securities | 361,492 | - | 361,492 | (73,634) | ||||||
Impairment loss | 508,622 | 1,070 | 508,622 | 1,070 | ||||||
Loss (gain) on sublease arrangement | 1,401 | - | (209,137) | - | ||||||
Financial guarantee liability expense | 58,096 | - | 74,133 | - | ||||||
Finance income | (308,112) | - | (856,924) | - | ||||||
Interest expense (accretion) - leases | 470,631 | - | 1,393,994 | - | ||||||
Interest expense | 306,667 | 334,458 | 809,883 | 486,840 | ||||||
Convertible debenture accretion | 514,278 | - | 1,578,439 | - | ||||||
Share-based compensation | 166,660 | - | 535,570 | 55,111 | ||||||
Adjusted EBITDA | $ | 1,286,460 | $ | (920,542) | $ | 1,665,561 | $ | (5,584,852) |
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 "potential", "will" 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, a statement regarding additional potential store locations being conditionally secured in
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