Planet 13 Announces Second Quarter 2020 Financial Results
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Planet 13 Announces Second Quarter 2020 Financial Results

Monday, August 31, 2020 4:30 PM
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Topic:
Earnings
  • Q2 2020 Revenue of $10.8 million; EBITDA loss of $0.7 million
  • July 2020 & August revenue of $15.1 million1

All figures are reported in United States dollars ($) unless otherwise indicated

LAS VEGAS, NV / ACCESSWIRE / August 31, 2020 / Planet 13 Holdings Inc. (CSE:PLTH) (OTCQB:PLNHF) ("Planet 13" or the "Company"), a leading vertically-integrated Nevada cannabis company, today announced its financial results for the three-month and six-month period ended June 30, 2020. Planet 13's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS").

Larry Scheffler, Co-CEO of Planet 13 commented, "Q2 was a challenging environment for all Nevada businesses. I'm pleased with the way the team worked under these conditions to add new customers and preserve capital. As the State has reopened, we've seen an incredible pickup in our business, with July and August being our highest months of sales to date. The SuperStore is seeing increased customer conversion and higher tickets, while our delivery team is servicing local customers and providing approximately 15% of our sales compared to less than 1% pre-COVID."

Bob Groesbeck, Co-CEO added, "Our brands are performing well at the SuperStore, up from 14% in Q4 2019 to 28.5% of sales in Q2 2020. This number will continue to increase now that we have expanded cultivation to supply our popular Medizin line. We are also seeing initial success in the wholesale market, which we began supplying in June. Our products are now available in 33 dispensaries in Nevada, and we have multiple SKUs in the top 10 of their respective categories; edibles, concentrates, and beverages2. Planet 13 has resumed its growth trajectory. In July and August we've generated our highest revenue ever, over $7 million per month. We are set to build on this momentum reopening our Medizin dispensary shortly and Santa Ana in 2021. I'm incredibly excited about what the future holds for Planet 13."

1August revenue is for the first 30 days of the month

Financial Highlights - Q2 - 2020

Operating Results

All comparisons below are to the quarter ended June 30, 2019, unless otherwise noted

  • Revenues were $10.8 million as compared to $16.5 million, a decrease of 34.9%
  • Gross profit before biological adjustments was $4.7 million or 43.8% as compared to $9.7 million or 58.7%, a decrease of 51.5%
  • Operating expenses, excluding non-cash compensation expense, were $5.8 million as compared to $7.1 million, a decrease of 18.5%
  • Net loss before taxes of $3.3 million as compared to a net income of $1.1 million
  • Net loss of $4.0 million as compared to a net loss of $0.9 million
  • Adjusted EBITDA loss of $0.7 million as compared to Adjusted EBITDA of $2.7 million

Balance Sheet

All comparisons below are to December 31, 2019, unless otherwise noted

  • Cash of $22.7 million as compared to $12.8 million
  • Total assets of $81.9 million as compared to $62.9 million
  • Total liabilities of $30.9 million as compared to $21.6 million

Q2 Highlights and Recent Developments

For a more comprehensive overview of these highlights and recent developments, please refer to Planet 13's Management's Discussion and Analysis of the Financial Condition and Results of Operations for the Three Months and Six Months Ended June 30, 2020 (the "MD&A").

  • On April 13, 2020, Planet 13 announced termination of the Santa Ana acquisition.
  • On April 17, 2020, Planet 13 announced the renegotiation of the Santa Ana acquisition.
  • On May 21, 2020, Planet 13 announced the acquisition of a dispensary license and the close of the Santa Ana acquisition.
  • On June 15, 2020, Planet 13 announced a CDN$10 million bought deal public offering.
  • On July 3, 2020, Planet 13 announced closing of a CDN$11.5 million bought deal public offering.
  • On July 17, 2020, Planet 13 announced an acquisition of 45,000 square feet of indoor cultivation.
  • On August 10, 2020, Planet 13 was awarded a Nevada dispensary license.
  • On August 20, 2020, Planet 13 announced a CDN$15 million bought deal public offering.
  • On August 21, 2020, Planet 13 announced an upsize to bought deal public offering to CDN$20 million.

Results of Operations (Summary)

The following tables set forth consolidated statements of financial information for the three-month and six-month periods ending June 30, 2020 and June 30, 2019. For further information regarding the Company's financial results for these periods, please refer to the Company's interim financial statements for the period ended June 30, 2020 together with the MD&A, available on Planet 13's issuer profile on SEDAR at www.sedar.com and the Company's website https://www.planet13holdings.com.

Adjusted EBITDA

 
  NV Cannabis Ops     Consolidated     Consolidated        
 
  Three Months     Three Months     Three Months        
 
  Ended     Ended     Ended     Percentage  
 
  Jun-30-2020     Jun-30-2020     Jun-30-2019     Change  
EBITDA
                       
Profit (loss) before taxes
    (2,425,120 )     (3,286,823 )     1,064,222       (408.8 %)
Add back:
                               
Biological asset adjustments
    (44,356 )     (44,356 )     89,519       (149.5 %)
Non-cash share based payments
    -       626,017       539,262       16.1 %
Depreciation and amortization
    1,040,065       1,040,065       668,041       55.7 %
Depreciation included in COGS
    406,322       406,322       157,297       158.3 %
Interest and non-operating expense (income)
    568,154       568,154       213,115       166.6 %
 
                               
EBITDA
    (454,935 )     (690,621 )     2,731,456       (125.3 %)
Margin
    (4.2 %)     (6.4 %)     16.5 %        
                                 
Expressed in USD$
  Three Months     Three Months        
 
  Ended     Ended     Percentage  
 
  Jun-30-2020     Jun-30-2019     Change  
Revenue
                 
Revenues, net of discounts
    10,760,996       16,521,717       (34.9 %)
Cost of Goods Sold
    (6,051,963 )     (6,826,598 )     (11.3 %)
Gross Profit, Before Biological Asset Adjustment
    4,709,033       9,695,119       (51.4 %)
Gross Profit Margin %
    43.8 %     58.7 %        
Realized fair value amounts included in COGS
    (327,997 )     102,919       (418.7 %)
Unrealized fair value gain on growth of biological assets
    372,353       (192,438 )     (293.5 %)
Gross profit
    4,753,389       9,605,600       (50.5 %)
Gross Profit Margin %
    44.2 %     58.1 %        
 
                       
Expenses
                       
General and Administrative
    5,559,623       5,476,208       1.5 %
Sales and Marketing
    246,353       1,644,752       (85.0 %)
Depreciation and Amortization
    1,040,065       668,041       55.7 %
Share based payments
    626,017       539,262       16.1 %
Total Expenses
    7,472,058       8,328,263       (10.3 %)
 
                       
Income (Loss) From Operations
    (2,718,669)       1,277,337       (312.8 %)
 
                       
Other (Income) Expense:
                       
Interest Expense, net
    572,257       372,456       53.6 %
Realized Foreign Exchange gain (loss)
    -       2,337       (100.0 %)
Other expense (income)
    (4,103 )     (161,678 )     (97.5 %)
Total Other Expense (Income)
    568,154       213,115       166.6 %
 
                       
Income (loss) for the period before tax
    (3,286,823)       1,064,222       (408.8 %)
Provision for income tax (current and deferred)
    701,272       1,999,690       (64.9 %)
(Loss) for the period
    (3,988,095)       (935,468)       326.3 %
 
                       
Other Comprehensive Income (Loss)
                       
Items that may be reclassified subsequently to profit/loss
                       
Foreign exchange translation adjustment
    (83,699 )     (82,316 )        
Net Comprehensive (Loss) for the period
    (4,071,794)       (1,017,784)          
(Loss) per share for the period
                       
Basic and fully diluted loss per share
  $ (0.03)     $ (0.01)          
 
                       
Weighted Average Number of Shares Outstanding
                       
Basic and fully diluted
    143,947,783       133,533,681          
                         

Outstanding Shares

As of August 30, 2020, the Company had 104,104,733 common shares and 59,173,872 class A convertible, restricted voting shares issued and outstanding for a total of 163,278,605 shares outstanding. There were 433,840 options issued and outstanding of which all have fully vested. There were 5,430,332 warrants outstanding and 1,764,250 RSU's outstanding of which nil RSUs had fully vested as of August 30, 2020.

Conference Call

Planet 13 will host a conference call on Monday, August 31, 2020 at 5:00 p.m. EST to discuss its second quarter financial results and provide investors with key business highlights. The call will be chaired by Bob Groesbeck, Co-CEO, Larry Scheffler, Co-CEO, and Dennis Logan, CFO.

CONFERENCE CALL DETAILS

Date: August 31, 2020 | Time: 5:00 p.m. EST
Participant Dial-in: Toll Free 877-407-8035 or International 201-689-8035
Replay Dial-in: Toll Free 877-481-4010 or International 919-882-2331
(Available for 2 weeks)
Reference Number: 36624
Listen to webcast: https://bit.ly/3h6DVfA

Financial Measures

There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The Company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization) is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles and is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

For further inquiries, please contact:

LodeRock Advisors Inc., Planet 13 Investor Relations
[email protected]
(416) 519-2156 ext. 2230

Bob Groesbeck and Larry Scheffler
Co-Chief Executive Officers
[email protected]

About Planet 13
Planet 13 (www.planet13holdings.com) is a vertically integrated cannabis company based in Nevada, with award-winning cultivation, production and dispensary operations in Las Vegas - the entertainment capital of the world. Planet 13's mission is to build a recognizable global brand known for world-class dispensary operations and a creator of innovative cannabis products. Planet 13's shares trade on the Canadian Stock Exchange (CSE) under the symbol PLTH and OTCQX under the symbol PLNHF.

Cautionary Note Regarding Forward-Looking Information

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward looking-statements relate to, among other things, future expansion plans.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: final regulatory and other approvals or consents; risks associated with COVID-19 and other infectious diseases presenting as major health issues; fluctuations in general macroeconomic conditions; fluctuations in securities markets; expectations regarding the size of the Nevada cannabis market and changing consumer habits; the ability of the Company to successfully achieve its business objectives; plans for expansion; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; and the presence of laws and regulations that may impose restrictions on cultivation, production, distribution and sale of cannabis and cannabis related products in the State of Nevada; and employee relations. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational and medicinal cannabis marketplace in the United States through licensed subsidiary entities in states that have legalized marijuana operations, however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company's business, including COVID-19, are contained under the heading "Risk Factors" and elsewhere in the Company's annual information form dated April 13, 2020 filed on its issuer profile on SEDAR at www.sedar.com.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

             
Expressed in United States Dollars
  As at     As at  
 
  June 30,     December 31,  
 
  2020     2019  
Assets
           
Current Assets
           
Cash
  $ 22,724,824     $ 12,814,712  
HST receivable
    110,192       16,544  
Inventories (Note 5)
    5,775,633       5,474,004  
Biological assets (Note 6)
    699,850       514,526  
Prepaid expenses and other current assets (Note 10)
    1,723,608       3,694,272  
Total Current Assets
    31,034,107       22,514,058  
 
               
Property and equipment (Note 7)
    30,053,518       30,211,154  
Licenses (Note 8)
    5,607,238       -  
Right of use assets (Note 9)
    13,555,904       9,478,733  
Deferred tax asset
    28,779       -  
Long-term deposits and other assets
    1,189,318       694,601  
 
    50,434,757       40,384,488  
Total Assets
  $ 81,468,864     $ 62,898,546  
 
               
Liabilities
               
Current Liabilities
               
Accounts payable
  $ 2,516,299     $ 864,260  
Accrued expenses
    2,210,801       1,910,046  
Income taxes payable
    9,838,881       7,015,606  
Notes payable - current portion (Note 11)
    884,000       884,000  
Total Current Liabilities
    15,449,981       10,673,912  
 
               
Long -term lease liabilities (Note 12)
    15,060,344       10,522,377  
Other long-term liabilities
    28,000       28,000  
Deferred tax liability
    -       379,665  
 
    15,088,344       10,930,042  
Total Liabilities
    30,538,325       21,603,954  
 
               
Shareholders' Equity
               
Share capital (Note 13)
    69,411,212       51,986,849  
Restricted share units (Note 13)
    3,397,735       4,119,485  
Warrants (Note 13)
    4,367,973       5,961,091  
Option reserve (Note 13)
    375,678       399,439  
Accumulated other comprehensive loss
    (660,337 )     (607,707 )
Deficit
    (25,961,722 )     (20,564,565 )
Total Shareholders' Equity
    50,930,539       41,294,592  
Total Liabilities and Shareholders' Equity
  $ 81,468,864     $ 62,898,546  
                 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE
INCOME (LOSS)

             
Expressed in United States Dollars
  Three months     Three months  
 
  Ended     Ended  
 
  June 30,     June 30,  
 
  2020     2019  
Revenue
           
Revenues, net of discounts
  $ 10,760,996     $ 16,521,717  
Cost of Goods Sold
    (6,051,963 )     (6,826,598 )
Gross Profit before fair value asset adjustment
    4,709,033       9,695,119  
Realized fair value amounts included in inventory sold
    (327,997 )     102,919  
Unrealized fair value gain on growth of biological assets
    372,353       (192,438 )
Gross Profit
    4,753,389       9,605,600  
 
               
Expenses
               
General and Administrative (Note 14)
    5,559,623       5,476,208  
Sales and Marketing
    246,353       1,644,752  
Depreciation and Amortization (Note 7 & 9)
    1,040,065       668,041  
Share-Based Compensation Expense (Note 13)
    626,017       539,262  
Total Expenses
    7,472,058       8,328,263  
 
               
Income (Loss) From Operations
    (2,718,669)       1,277,337  
 
               
Other Expense:
               
Interest expense, net
    572,257       372,456  
Realized foreign exchange loss
    -       2,337  
Other income
    (4,103 )     (161,678 )
Total Other Expense
    568,154       213,115  
 
               
Income (Loss) before income taxes
    (3,286,823)       1,064,222  
Provision for tax - current
    866,710       1,999,690  
Provision for tax - deferred
    (165,438 )     -  
Loss for the Period
  $ (3,988,095)     $ (935,468)  
 
               
Other Comprehensive Income
               
 
               
Foreign exchange translation gain (loss)
    (83,699 )     (82,316 )
Net Comprehensive Loss for the Period
  $ (4,071,794)     $ (1,017,784)  
 
               
Loss per share for the Period
               
Basic and diluted loss per share
  $ (0.03)     $ (0.01)  
 
               
Weighted Average Number of Common Shares Outstanding
               
Basic and Diluted
    143,947,783       133,533,681  
                 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

             
Expressed in United States Dollars
  Six Months     Six Months  
 
  Ended     Ended  
 
  June 30,     June 30,  
 
  2020     2019  
Operating activities
           
Net loss for the period
  (5,397,157 )   (2,358,812 )
Add (deduct) non-cash items:
               
Share based payments (Note 13)
    1,436,840       1,224,131  
Depreciation and amortization (Note 7 & 9)
    2,846,655       1,580,761  
Deferred tax liability
    (379,665 )     (284,491 )
Deferred tax asset
    (28,779 )     -  
Realized fair value amounts included in inventory sold
    -       (102,919 )
Unrealized fair value gain on growth of biological assets
    -       192,438  
Non-cash interest expense on ROU Liabilities
    1,075,663       -  
 
               
Net change in non-cash working capital
               
HST receivable
    (93,648 )     (78,597 )
Inventories (Note 5)
    (301,629 )     (11,150 )
Biological assets (Note 6)
    (185,324 )     (89,519 )
Prepaid expenses and other assets (Note 10)
    1,970,664       (2,780,552 )
Long term deposits and other assets
    (494,717 )     (70,000 )
Accounts payable
    1,652,038       1,510,420  
Accrued expenses
    300,756       256,246  
Income tax payable
    2,823,275       3,849,799  
Cash flow provided by operating activities
    5,224,972       2,837,755  
 
               
Investing activities
               
Purchase of property, plant and equipment (Note 7)
    (2,352,575 )     (5,946,852 )
Purchase of license (Note 8)
    (1,153,407 )     -  
Cash flow used in investing activities
    (3,505,982)       (5,946,852)  
 
               
Financing activities
               
Issuance of shares on warrant and option exercises (Note 13)
    9,195,063       3,744,711  
Payment on lease liabilities
    (951,311 )     (15,934 )
Cash flow provided by financing activities
    8,243,752       3,728,777  
 
               
Net increase in cash
    9,962,742       619,680  
Cash at beginning of the period
    12,814,712       19,364,086  
Effect of foreign exchange on cash
    (52,630 )     (26,436 )
Cash at end of the period
  22,724,824     19,957,330  
                 

SOURCE: Planet 13 Holdings Inc.

Planet 13 Holdings
Exchange:
Ticker:
OTCQB
PLNHF
$5.82
$11.99
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