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 record Q3 2020 financial results, an outlook for Q4 2020 and an operational update.
Q3 2020 Highlights – A Record Quarter
- Revenue of $5.8 million increased 24% over Q2 2020 and exceeded the Company’s Q3 2020 outlook for growth of 18% – 20% and $5.6 million.
- Gross margin of $1.8 million grew by 31% compared to Q2 2020 and exceeded the Company’s Q2 2020 outlook for growth of 20 – 22% growth and $1.6 million.
- Store-Level EBITDA1 of $560 thousand represented a 56% increase over the previous quarter.
- General and administrative costs of $733 thousand were $63 thousand, or 9%, higher than in Q2 2020 and represented 13% of revenue, down from 14% of revenue in Q2 2020.
- YSS has continued to take steps to improve its operational efficiencies and its store-level EBITDA1 margin, which has steadily grown from 4% in Q1 2020, 8% in Q2 2020 to 10% in Q3 2020.
- Cash balance of $2.9 million as at September 30, 2020.
- Record quarterly results were driven solely by success with existing store growth, as no new stores were opened in Q3 2020.
Q4 2020 Outlook
- Growth has continued into Q4 2020 with YSS achieving record monthly revenue of $2.0 million in October.
- Opening and ramp-up of YSS Hamptons in Edmonton on October 16, 2020, will further support Q4 results.
- Forecast revenue for Q4 2020 is expected to exceed $6.0 million, representing quarter-over-quarter growth of approximately 4 – 6%.
YSS Operational Update
- $2.9 million cash as at September 30, 2020 and the recently announced letter of intent in respect of the $4.0 million senior secured term loan will provide YSS with ample capital to support ongoing industry growth and accelerate the addition of new stores in Alberta, Saskatchewan and Ontario, while maintaining the financial flexibility to pursue value-added strategic opportunities.
- YSS remains on target to exit 2020 with positive run-rate corporate EBITDA1 and expects to deliver further cost optimization, continued growth and corporate profitability in 2021.
- New store construction and fixturing budgets have been optimized to average approximately $300,000 per store.
- YSS Country Hills in Calgary is in the final phase of construction.
- Planning, permitting and construction is underway on four additional locations, including two in Ontario.
1 Non-International Financial Reporting Standards (“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. See disclaimers below.
Positive growth trends across the YSS store portfolio and the industry as a whole have continued throughout the year with Statistics Canada 2020 cannabis retail sales2 on-pace for a twofold increase, both in Alberta and nationally, relative to 2019. With the exception of oils and capsules, growth is materializing across all cannabis categories demonstrating continued capture of black market share coupled with ongoing adoption of new cannabis product formats. YSS is well positioned to continue capturing market share while benefitting from ongoing industry growth with statistically diverse assets, low product investment, efficient capital requirements and limited exposure to business interruptions.
“Cannabis is forecasted to be a leading consumer packaged goods growth segment in Canada, and across North America, for the next three years,” said Theo Zunich, President and CEO of YSS. “As an established cannabis retailer with 18 – soon to be 19 – stores, a proven management team with a track record of operational performance and a strong balance sheet, YSS offers investors an extremely compelling opportunity to gain exposure to this high-growth sector.”
Selected financial and operational information is outlined in this press release and should be read in conjunction with YSS’ condensed interim consolidated financial statements for the three and nine months ended September 30, 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.