CALGARY, Nov. 27, 2019 /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 its third quarter 2019 financial results
and provide a preliminary fourth quarter outlook. Selected
financial and operational information is outlined below and should
be read in conjunction with YSS' condensed interim consolidated
financial statements for the three and nine months ended
September 30, 2019 and related
management's discussion and analysis ("MD&A") which are
available on SEDAR at www.sedar.com.
Q3 2019 Financial & Operating Highlights
During Q3, the Company achieved numerous strategic milestones
and successfully opened nine new locations, expanding from three
operating stores to a total of 12 by the end of the period and
significantly increasing revenue over the previous quarter.
- Revenue totaled $3.3 million in
Q3 2019, 140% or $1.9 million higher
than the previous quarter, as three locations operated for the full
quarter (YSS Red Deer and Sweet Tree Riverbend and Sweet Tree
Forest Lawn) and nine additional stores were opened during the
quarter.
- Gross margin of $1.1 million, or
32% of sales, and store-level EBITDA contribution of $345 thousand was realized in the quarter.
- General and administrative expenses of $753 thousand were incurred in the quarter.
- Approximately $811 thousand was
directed to investing activities during Q3 2019, primarily relating
to construction of additional retail locations.
- With a cash position of $9.5
million at September 30, 2019,
YSS maintains ample liquidity to continue executing on its measured
growth strategy and capitalize on strategic
opportunities.
- Cannabis and cannabis accessory inventories at quarter end
totaled $1.3 million compared to
$798 thousand at the end of Q2 2019,
primarily attributable to adding inventory across nine stores
opened during the quarter.
"I am extremely proud of our team's performance and
accomplishments in 2019," said Theo
Zunich, President and CEO of YSS. "We've persevered through
industry volatility and executed three acquisitions, built 11
organic stores and grew from zero to 12, and soon to be 16,
operating stores while maintaining prudent capital controls and a
strong balance sheet."
Q4 2019 Outlook
- The Company has made a concerted effort to optimize inventory
through sales on slower moving inventory and has decreased
inventory on hand by over $200
thousand since the end of Q3 2019 while maintaining a gross
margin over 30%.
- Subsequent to quarter-end, the Company opened its
13th location in Swift Current
Saskatchewan, which represents YSS' first operating retail
store outside of Alberta.
- The Company's 14th operating store will be Sweet
Tree Okotoks, which has passed the final AGLC inspection and is
expected to open early December
2019.
- Construction on the Company's Calgary flagship stores, YSS on 4th
Avenue and Sweet Tree on 17th Avenue, is complete and
will represent the Company's 15th and 16th
stores once opened.
- Average capital expenditure on the Company's most recent four
constructed stores is estimated at $360
thousand per store.
"With the improved supply dynamic and less constrained
regulatory environment, the second half of 2019 represents the
baseline for the future of the Canadian cannabis industry, at least
in Western Canada," Zunich added.
"YSS remains committed to the fundamentals of retail profitability
by focusing on store location, operational efficiencies, and
delivering on our customer's demands."
The Company is committed to both upholding and strengthening its
reputation as a trusted destination for cannabis in Canada by creating and delivering a premier
in-store experience through focusing on traditional retail
principles, understanding its customers, implementing standardized
procedures, investing in brand and retail design, offering
interactive in-store technology, and developing an experienced and
welcoming team. YSS recognizes the significance of continued
investment in the retail experience and views customer satisfaction
and trust as instrumental to the future success of the Company.
Additional Information
For information on store locations and opening dates 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.
The YSS retail experience is built on our five fundamental
pillars: convenience, value, selection, team, and above all
else, trust. 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 13 locations across
Calgary, Edmonton, Red
Deer, High River,
Spruce Grove, Stony Plain, Vermilion, Lloydminster, Vegreville and Swift
Current under both the YSS and Sweet Tree brands. In
addition, YSS maintains a strategic portfolio of under
construction, secured and prospective locations that represent
prospective future organic growth for the Company. YSS management
brings proven expertise across capital markets, cannabis, retail
operations, hospitality, financial management and a strong
commitment to deliver shareholder value by leveraging high-quality
opportunities within this exciting new industry in Canada.
Forward-Looking and Cautionary Statements
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 opening,
licensing and construction of future YSS' stores and timing
thereof; future revenue and the expected material contribution of
the opened stores to the Company's financial and operating results
for the fourth quarter of 2019; the ability to build, own and
operate additional retail cannabis stores in Alberta, Saskatchewan and other provinces; the receipt
of necessary permits and licenses to open stores and the ability to
capitalize on potential opportunities that may arise and the
ability to exercise thereon. 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. 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: regulatory and third-party approvals
not being obtained in the manner or timing anticipated, including
inspections, licenses and approvals from the AGLC and the
Saskatchewan Liquor and Gaming Authority, as applicable; the
closing of the acquisition of the retail store in Swift Current; the ability to implement
corporate strategies; the state of domestic capital markets; the
ability to obtain financing; changes in general market conditions;
industry conditions and events; the size of the recreational
cannabis market; changing customer habits; the availability of
cannabis-retail products from licensed producers; government
regulations, including future legislative and regulatory
developments involving recreational cannabis; competition from
other industry participants; 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
Company's annual information form and management's discussion and
analysis for the year ended December 31,
2018 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, investments, balance sheet, gross
margin expenses, sales, store-level adjusted cash flow, profit,
inventories, revenue and cash flow, 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) is not a measure recognized by IFRS and does not have
a standardized meaning prescribed by International Financial
Reporting Standards ("IFRS"). Investors are cautioned that this
measure 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 a measure of its
liquidity and cash flows. The Company's method of calculating the
aforementioned non-IFRS financial measure, may differ from the
methods used by other issuers. Therefore, this measure 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.
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.