Planet 13 Announces Record Third Quarter 2020 Financial Results
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Planet 13 Announces Record Third Quarter 2020 Financial Results

Tuesday, November 24, 2020 4:30 PM
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Topic:
Earnings
  • Q3 2020 Revenue of $22.8 million; Adjusted EBITDA of $6.2 million

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

LAS VEGAS, NV / ACCESSWIRE / November 24, 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 nine-month period ended September 30, 2020. Planet 13's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS").

Larry Scheffler, Co-CEO of Planet 13 said, "Our performance in the third quarter exceeded expectations - leading to our highest quarter of sales ever. Despite being impacted by the ongoing global pandemic and our Las Vegas SuperStore only at 50% capacity, we achieved 36% higher revenue compared to pre-COVID quarters. This is a testament to the strength of Planet 13's business model and the success of the operational improvements we put in place to ensure our ability to serve local customers. As Las Vegas returns to normal and the economy recovers, we will undertake further strategic initiatives to grow revenue at the SuperStore and increase our sales to local customers in Las Vegas."

"In the third quarter, our in-house brands contributed 25% to SuperStore revenue - continuing to be one of the most recognized and fastest-growing segments within the Planet 13 portfolio. In the wholesale market we saw increasing sales month over month throughout the quarter and continuing into October. Building on this momentum, we continue to invest in cultivation with our recently announced acquisition of a 45,000 square foot facility in Las Vegas, better positioning us to supply wholesale and retail sales within the state," commented Bob Groesbeck, Co-CEO. "We are excited to leverage our knowledge and experience from Nevada to California, with the opening of our new dispensary in Santa Ana in 2021 - the world's second largest dispensary. Planet 13 is well capitalized, and we look forward to executing on future expansion into other major growth markets."

Financial Highlights - Q3 - 2020

Operating Results

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

  • Revenues were $22.8 million as compared to $16.7 million, an increase of 36.5%
  • Gross profit before biological adjustments was $13.0 million or 56.9% as compared to $9.9 million or 59.1%, an increase of 31.4%
  • Operating expenses, excluding non-cash compensation expense and depreciation and amortization, was $7.2 million as compared to $6.7 million, an increase of 7.9%
  • Net income before taxes of $3.4 million as compared to a net income of $0.3 million
  • Net income of $0.2 million as compared to a net loss of $1.7 million
  • Adjusted EBITDA of $6.2 million as compared to Adjusted EBITDA of $3.4 million

Balance Sheet

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

  • Cash of $56.8 million as compared to $12.8 million
  • Total assets of $125.5 million as compared to $62.9 million
  • Total liabilities of $39.3 million as compared to $21.6 million

Q3 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 Nine Months Ended September 30, 2020 (the "MD&A").

  • 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.
  • On September 10, 2020, Planet 13 announced closing of a CDN$23 million bought deal public offering.
  • On October 13, 2020, Planet 13 announced the addition of non-cannabis retail space to the Las Vegas SuperStore.
  • On October 19, 2020, Planet 13 announced expanding the dispensary floor of the Las Vegas SuperStore.
  • On October 19, 2020, Planet 13 announced a CDN$20 million bought deal public offering.
  • On October 20, 2020, Planet 13 announced an upsize to bought deal public offering to CDN$25 million.
  • On November 5, 2020, Planet 13 announced the closing of a CDN$28.8 million bought deal public offering.
  • On November 20, 2020, Planet 13 announced opening the Medizin dispensary.

Results of Operations (Summary)

The following tables set forth consolidated statements of financial information for the three-month and nine-month periods ending September 30, 2020 and September 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 September 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           NV Cannabis Ops     Consolidated              
 
  Three Months     Three Months     Three Months           Nine Months     Nine Months     Nine Months        
 
  Ended     Ended     Ended     Percentage     Ended     Ended     Ended     Percentage  
 
  Sep-30-2020     Sep-30-2020     Sep-30-2019     Change     Sep-30-2020     Sep-30-2020     Sep-30-2019     Change  
EBITDA
                                               
Profit (loss) before taxes
    4,811,541       3,371,829       251,122       1242.7 %     5,124,677       389,503       1,457,619       (73.3 %)
Add back:
                                                               
Biological asset adjustments
    504,069       504,069       52,291       864.0 %     225,294       225,294       129,101       74.5 %
Non-cash share based payments
    -       569,227       2,016,803       (71.8 %)     -       2,006,067       3,128,417       (35.9 %)
Depreciation and amortization
    1,076,774       1,076,774       680,056       58.3 %     3,103,847       3,103,847       1,945,186       59.6 %
Depreciation included in COGS
    406,322       406,322       157,297       158.3 %     819,579       819,579       286,987       185.6 %
Interest and non-operating expense (income)
    264,542       264,542       211,298       25.2 %     1,041,745       1,041,745       625,674       66.5 %
 
                                                               
EBITDA
    7,063,248       6,192,763       3,368,867       83.8 %     10,315,142       7,586,035       7,572,984       (0.2 %)
Margin
    31.0 %     27.2 %     20.2 %             20.5 %     15.1 %     16.1 %        
                                                                 

 

                   
Expressed in USD$
  Three Months     Three Months        
 
  Ended     Ended     Percentage  
 
  Sep-30-2020     Sep-30-2019     Change  
Revenue
                 
Revenues, net of discounts
    22,797,338       16,696,932       36.5 %
Cost of Goods Sold
    (9,821,561 )     (6,820,706 )     44.0 %
Gross Profit, Before Biological Asset Adjustment
    12,975,777       9,876,226       31.4 %
Gross Profit Margin %
    56.9 %     59.1 %        
Realized fair value amounts included in COGS
    (961,235 )     (562,461 )     70.9 %
Unrealized fair value gain on growth of biological assets
    457,166       510,170       (10.4 %)
Gross profit
    12,471,708       9,823,935       27.0 %
Gross Profit Margin %
    54.7 %     58.8 %        
 
                       
Expenses
                       
General and Administrative
    6,198,121       4,902,355       26.4 %
Sales and Marketing
    991,215       1,762,301       (43.8 %)
Depreciation and Amortization
    1,076,774       680,056       58.3 %
Share based payments
    569,227       2,016,803       (71.8 %)
Total Expenses
    8,835,337       9,361,515       (5.6 %)
 
                       
Income (Loss) From Operations
    3,636,371       462,420       686.4 %
 
                       
Other (Income) Expense:
                       
Interest Expense, net
    438,687       314,389       39.5 %
Realized Foreign Exchange gain (loss)
    -       (6,203 )     (100.0 %)
Other expense (income)
    (174,145 )     (96,888 )     79.7 %
Total Other Expense (Income)
    264,542       211,298       25.2 %
 
                       
Income (loss) for the period before tax
    3,371,829       251,122       1242.7 %
Provision for income tax (current and deferred)
    3,010,880       1,973,475       52.6 %
Income (Loss) for the period
    360,949       (1,722,353)       (121.0 %)
 
                       
Other Comprehensive Income (Loss)
                       
Items that may be reclassified subsequently to profit/loss
                       
Foreign exchange translation adjustment
    (152,313 )     28,932          
Net Comprehensive Income (Loss) for the period
    208,636       (1,693,421)          
Income (Loss) per share for the period
                       
Basic and fully diluted loss per share
  $ 0.00     $ (0.01)          
 
                       
Weighted Average Number of Shares Outstanding
                       
Basic and fully diluted
    162,536,424       135,503,007          
                         

Outstanding Shares

As of November 24, 2020, the Company had 121,987,683 common shares and 55,232,940 class A convertible, restricted voting shares issued and outstanding for a total of 177,220,623 shares outstanding. There were 333,840 options issued and outstanding of which all have fully vested. There were 11,743,904 warrants outstanding and 1,764,250 RSU's outstanding of which nil RSUs had fully vested as at the date of this MD&A.

Conference Call

Planet 13 will host a conference call on Tuesday, November 24, 2020 at 5:00 p.m. EST to discuss its third 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: November 24, 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: 38726
Listen to webcast: https://bit.ly/358WpIA

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, Planet 13's first California location and the timeline for opening of the Santa Ana dispensary.

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 and California 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 California; 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  
 
  September 30,     December 31,  
 
  2020     2019  
Assets
           
Current Assets
           
Cash
  $ 56,760,860     $ 12,814,712  
HST receivable
    63,860       16,544  
Inventories (Note 5)
    7,721,586       5,474,004  
Biological assets (Note 6)
    1,370,090       514,526  
Prepaid expenses and other current assets (Note 10)
    2,153,334       3,694,272  
Total Current Assets
    68,069,730       22,514,058  
 
               
Property and equipment (Note 7)
    31,638,285       30,211,154  
Licenses (Note 8)
    6,215,073       -  
Right of use assets (Note 9)
    18,520,944       9,478,733  
Long-term deposits and other assets
    1,031,352       694,601  
 
    57,405,654       40,384,488  
Total Assets
  $ 125,475,384     $ 62,898,546  
 
               
Liabilities
               
Current Liabilities
               
Accounts payable (Note 16)
  $ 2,095,692     $ 864,260  
Accrued expenses
    3,026,090       1,910,046  
Income taxes payable
    12,356,301       7,015,606  
Notes payable - current portion (Note 11)
    884,000       884,000  
Total Current Liabilities
    18,362,083       10,673,912  
 
               
Long -term lease liabilities (Note 12)
    20,437,005       10,522,377  
Other long-term liabilities
    28,000       28,000  
Deferred tax liability
    467,486       379,665  
 
    20,932,491       10,930,042  
Total Liabilities
    39,294,574       21,603,954  
 
               
Shareholders' Equity
               
Share capital (Note 13)
    101,809,657       51,986,849  
Restricted share units (Note 13)
    2,719,357       4,119,485  
Warrants (Note 13)
    7,753,818       5,961,091  
Option reserve (Note 13)
    311,401       399,439  
Accumulated other comprehensive loss
    (812,650 )     (607,707 )
Deficit
    (25,600,773 )     (20,564,565 )
Total Shareholders' Equity
    86,180,810       41,294,592  
Total Liabilities and Shareholders' Equity
  $ 125,475,384     $ 62,898,546  
                 

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

             
Expressed in United States Dollars
  Three months     Three months  
 
  Ended     Ended  
 
  September 30,     September 30,  
 
  2020     2019  
Revenue
           
Revenues, net of discounts
  $ 22,797,338     $ 16,696,932  
Cost of Goods Sold
    (9,821,561 )     (6,820,706 )
Gross Profit before fair value asset adjustment
    12,975,777       9,876,226  
Realized fair value amounts included in inventory sold
    (961,235 )     (562,461 )
Unrealized fair value gain on growth of biological assets
    457,166       510,170  
Gross Profit
    12,471,708       9,823,935  
 
               
Expenses
               
General and Administrative (Note 14)
    6,198,121       4,902,355  
Sales and Marketing
    991,215       1,762,301  
Depreciation and Amortization (Note 7 & 9)
    1,076,774       680,056  
Share-Based Compensation Expense (Note 13 and Note 16)
    569,227       2,016,803  
Total Expenses
    8,835,337       9,361,515  
 
               
Income (Loss) From Operations
    3,636,371       462,420  
 
               
Other Expense:
               
Interest expense, net
    438,687       314,389  
Realized foreign exchange loss
    -       (6,203 )
Other income
    (174,145 )     (96,888 )
Total Other Expense
    264,542       211,298  
 
               
Income (Loss) before income taxes
    3,371,829       251,122  
Provision for tax - current
    2,620,603       2,172,429  
Provision for tax - deferred
    390,277       (198,954 )
Income (Loss) for the Period
  $ 360,949     $ (1,722,353)  
 
               
Other Comprehensive Income
               
 
               
Foreign exchange translation gain (loss)
    (152,313 )     28,932  
Net Comprehensive Income (Loss) for the Period
  $ 208,636     $ (1,693,421)  
 
               
Income (Loss) per share for the Period
               
Basic and diluted Income (loss) per share
  $ 0.00     $ (0.01)  
 
               
Weighted Average Number of Common Shares Outstanding
               
Basic and Diluted
    162,536,424       135,503,007  
                 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

             
Expressed in United States Dollars
  Nine Months     Nine Months  
 
  Ended     Ended  
 
  September 30,     September 30,  
 
  2020     2019  
Operating activities
           
Net loss for the period
  $ (5,036,208 )   $ (4,081,165 )
Add (deduct) non-cash items:
               
Share based payments (Note 13)
    2,006,067       3,128,417  
Depreciation and amortization (Note 7 & 9)
    4,451,334       2,417,847  
Deferred tax liability
    87,821       (198,954 )
Deferred tax asset
    -       -  
Realized fair value amounts included in inventory sold
    -       (759,856 )
Non-cash interest expense on ROU Liabilities (Note 12)
    1,769,500       -  
 
               
Net change in non-cash working capital
               
HST receivable
    (47,316 )     77,473  
Inventories (Note 5)
    (2,247,582 )     422,949  
Biological assets (Note 6)
    (855,564 )     380,263  
Prepaid expenses and other assets (Note 10)
    1,540,938       (3,226,185 )
Long term deposits and other assets
    (336,751 )     (85,000 )
Accounts payable
    1,231,431       2,832,431  
Accrued expenses
    1,116,045       559,030  
Income tax payable
    5,340,695       5,737,738  
Other liabilities
    -       407,593  
Cash flow provided by operating activities
    9,020,410       7,612,581  
 
               
Investing activities
               
Purchase of property, plant and equipment (Note 7)
    (3,101,240 )     (12,682,554 )
Purchase of license (Note 8)
    (1,053,353 )     -  
Cash flow used in investing activities
    (4,154,593)       (12,682,554)  
 
               
Financing activities
               
Issuance of shares on warrant and option exercises (Note 13)
    16,941,543       3,965,736  
Issuance of shares and warrants on financings
    23,807,651       -  
Payment on lease liabilities
    (1,463,920 )     (50,614 )
Cash flow provided by financing activities
    39,285,274       3,915,122  
 
               
Net increase in cash
    44,151,091       (1,154,851)  
Cash at beginning of the period
    12,814,712       19,364,086  
Effect of foreign exchange on cash
    (204,943 )     (106,122 )
Cash at end of the period
  $ 56,760,860     $ 18,103,113  
                 

SOURCE: Planet 13 Holdings Inc.

Planet 13 Holdings
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