CALGARY, May 27, 2020 /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 Q1 2020 financial results, operational
update and Q2 2020 outlook.
Q1 2020 Highlights
- Revenue of $4.2 million increased
15% over Q4 2019, in-line with previous expectations.
- Gross margin of $1.3 million grew
21% over Q4 2019, consistent with YSS' earlier forecasts.
- Store-Level EBITDA1 of $159,000 represents a 342% increase over the
previous quarter.
- General and administrative costs of $820,000 were $112,000 lower than in Q4 2019.
- Cash balance of $4.6 million as
at March 31, 2020, with no debt or
interest obligations, positions YSS with the financial flexibility
to support operational ramp-up, organic growth initiatives and
strategic merger and acquisition opportunities.
- Opened three new stores, including two flagship stores in
Calgary (YSS 4th Avenue and Sweet
Tree 17th Avenue), as well as YSS Grande Prairie, which brought the
Company's operating store count to 17.
- Organic store build-out costs averaged approximately
$379,000 on the most recent six
stores, a 27% decrease from the first six constructed stores.
- Introduced dozens of new product types, highlighted by expanded
dried flower selection, edibles, and cannabis oil vaporizer
products, coupled with wholesale price reductions.
At the end of the first quarter of 2020, YSS had increased the
number of EBITDA1 positive stores to 13 compared to four
at year-end 2019. These growth trends and operational
improvements are anticipated to continue throughout the remainder
of 2020, supporting the Company's forecast to exit 2020 with
positive run-rate corporate EBITDA1 and ample financial
flexibility. Any positive contribution from the construction
of new stores planned for Q3 2020 would accelerate this 2020
objective.
"The introduction of new product types coupled with black market
competitive prices and quality have been critical to driving recent
market growth," said Theo Zunich,
President and CEO of YSS. "Year-to-date results and market
statistics are early indictors of the cannabis market potential in
Canada and YSS is well-positioned
to capitalize on future growth."
1 Non-IFRS
measure. Store-Level EBITDA is defined as revenue less cost
of goods sold and operating costs before corporate general &
administrative expenses and Corporate EBITDA is defined as
Store-Level EBITDA less corporate general & administrative
costs.
|
Q2 2020 Outlook
- Growth into Q2 2020 paired with operational efficiencies
continues to drive improved store profitability and progress toward
the Company's objective of exiting 2020 with a positive run-rate
corporate EBITDA.
- Forecast revenue for Q2 2020 is expected to exceed $4.6 million, representing approximately 8 to 10%
growth over Q1 2020.
- Forecast gross margin for Q2 2020 is expected to exceed
$1.3 million, representing
approximately 4 to 5% growth over Q1 2020.
- Further expansion of product types, including dried flower
selection, beverages, edibles, topicals and extracts have been met
with strong demand.
- In mid-April, YSS successfully launched its
internally-controlled and Canadian-domiciled click and collect
platform which now represents over 10% of sales and delivers an
average online order, or 'basket size', that is approximately 80%
larger than that realized through in-store purchases.
YSS Operational Update
- YSS remains focused on fundamental retail principles as the
keys to success while continuing to build a fiscally conservative
organization that is focused on sustainability and measured growth
in 2020 and beyond.
- In Ontario, YSS has received
its Retail Operator License from the Alcohol and Gaming Commission
of Ontario ("AGCO") and the
Company's Waterloo location is currently in the AGCO 15-day public
notice period.
- Construction planning is ongoing for the Waterloo store and
additional Alberta locations. The
Company expects that two to three of these locations will be
constructed by year end.
Concurrent with today's market open, the TMX
Group launched a corporate video featuring an interview with YSS'
CEO, Theo Zunich, available at the
following link:
https://www.youtube.com/watch?v=hSNvoK0llJk&feature=youtu.be.
In addition, the Company has remained active year-to-date
conducting numerous proactive investor outreach activities,
engaging with current and potential investors, meetings with
analysts, and being interviewed by online media outlet, The
Fly, which is available on the Company's website.
During the COVID-19 pandemic, YSS and Sweet Tree stores have
remained open, with operations continuing without meaningful
disruption. Consistent with its overall strategy, the Company
continues to pursue optimization opportunities and is collaborating
with landlords and investigating government sponsored assistance
programs that would further improve corporate stability.
In the face of COVID-19, YSS' business value of trust has been
prioritized more than ever. The Company cares deeply about
the safety and well-being of its employees, customers, and
partners, and is pleased with the positive outcome of measures put
in place to ensure stores are clean and safe, and with the success
to date of its click and collect program, which minimizes the
in-store time required for customers.
The Company also announces that it has granted an aggregate of
4.3 million options to acquire common shares (the "Options")
of YSS, of which 3.35 million were issued to directors and officers
of the Company. The Options are exercisable for a period of
five years at a price of $0.175 per
common share and vest as to 1/3 immediately, 1/3 on the first
anniversary of the grant date and the final 1/3 on the second
anniversary of the grant date. All Options were granted in
accordance with the Company's stock option plan.
Executive Compensation Disclosure
The Company is relying on the blanket relief provided by the TSX
Venture Exchange, the Canadian Securities Administrators and
Alberta Securities Commission Blanket Order 51-518 - Temporary
Exemptions from Certain Requirements to File or Send Securityholder
Materials with respect to its obligation to file a statement of
executive compensation within 180 days of the Company's year end,
as set out in section 9.3.1(2.2) of National Instrument 51-102 –
Continuous Disclosure Obligations, and will include such statement
of executive compensation in the information circular to be mailed
to securityholders and filed on SEDAR in connection with the
Company's next annual meeting of shareholders.
The Company confirms that its annual financial statements and
related management's discussion and analysis for the year ended
December 31, 2019 were filed on
April 22, 2020, copies of which are
available on SEDAR at www.sedar.com.
Additional Information
Selected financial and operational information is outlined in
this press release and should be read in conjunction with YSS' the
audited consolidated financial statements for the quarter ended
March 31, 2020 and the related
management's discussion and analysis ("MD&A"), each of
which is filed on SEDAR at www.sedar.com and posted to the
Company's website at www.ysscorp.ca/.
For information on store locations, updates on promotions, store
openings and to access the Company's click and collect service
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.
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 17 locations across Alberta and in Saskatchewan under the YSS and Sweet Tree
brands. In addition, YSS maintains a strategic portfolio of
under construction, secured and prospective locations that
represent future organic growth potential for the Company. YSS
management brings proven expertise across capital markets, retail
operations, hospitality, cannabis, financial management and a
strong commitment to deliver shareholder value by leveraging
high-quality opportunities within this exciting new industry. The
YSS retail experience is built on our five fundamental pillars:
convenience, value, selection, team, and above all else, trust.
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
Company's operations; COVID-19, the Company's continuous
monitoring thereof, actions taken in response thereto and the
impact on the Company's business, financial condition and results
of operations; the Company being positioned with the
financial flexibility to support operational increases, organic
growth initiatives and strategic merger and acquisition
opportunities; the Company's 2020 objectives including
expected growth trends and operational improvements and forecast to
exit 2020 with positive run-rate corporate EBITDA and ample
financial flexibility and the measures the Company intends to adopt
to execute on its objectives; the Company's planned construction of
new stores, timing thereof and impact thereon on the Company's 2020
objectives; the future performance of the operating retail cannabis
stores; the Company being well positioned to capitalize on future
growth; the Company expanding product types in the future; and
expectations as to consumer demands.
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: risks relating to the COVID-19
pandemic, governmental responses thereto, measures taken by the
Company in response thereto and the impact thereof on the global
economy, capital markets, the cannabis retail industry and the
Company; the success of the Company's operations; ability to
execute its business strategy and future plans of operations; risks
relating to acquisitions; third party credit risks; accuracy and
reliability of data analytics relied on by the Company; ability to
obtain, amend or renew necessary licences, permits and
authorizations for the Company's operations in a timely and
cost-efficient manner; ability to obtain and maintain liability
insurance on acceptable terms; development of new stores including
construction delays; increased competition; ability to locate and
secure acceptable store sites and maintain retail leases on
acceptable terms; ability to obtain quality and diversified
cannabis products and cannabis accessories; ability to attract and
retain key personnel and customers; dependence on key personnel;
labour costs, shortages and labour relations; supply interruption
or delays; dependence on suppliers; intellectual property and
cybersecurity risks; risks related to product recalls, product
liability and health and safety; unfavourable publicity and
consumer perception with respect to cannabis, cannabis products and
cannabis accessories; industry conditions and events; the size of
the recreational cannabis market; changing customer habits; the
state of the economy including general economic conditions in
Canada, the U.S. and globally; the
unpredictability and volatility of the price of the common shares;
restrictions on potential growth; availability of sufficient
financial resources to fund the Company's capital expenditures;
changes in tax rates and government mark-ups; the state of domestic
capital markets; the ability to obtain financing on satisfactory
terms; changes in general market conditions; 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 management's discussion and analysis for the year
ended December 31, 2019 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 revenue, gross margin and EBITDA, 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.