Planet 13 Announces Record Third Quarter 2020 Financial Results

  • 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
mark.kuindersma@loderockadvisors.com
(416) 519-2156 ext. 2230

Bob Groesbeck and Larry Scheffler
Co-Chief Executive Officers
ir@planet13lasvegas.com

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 (LOSSAND
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.