Strong Q2 2020 Operations: Generated $13.6 million in revenue at a 30%+ gross margin in Q2, representing over $400,000 per operating store in the quarter, within an increasingly competitive landscape in Western Canada.
Financed for Growth: Strengthened balance sheet, ending the quarter with $15.7 million in cash and an additional $7 million available to be drawn on an unsecured loan.
Priority on Growth Markets: Significant progress in the Ontario market having been granted Cannabis Retail Operator License and with five META branded stores in Ontario currently under the public notice process.
Focused on Profitability: Entered into agreements to divest two non-core assets and have taken cost-cutting steps including headcount and salary reductions.
Commitment to Retail Excellence: Introduced membership and perks program to drive customer loyalty and strengthened industry knowledge and experience with additions to the board of directors.
COVID-19 Update: Subsequent to Q2, META has introduced enhanced e-commerce solutions for customers by implementing pick-up and delivery options for safe customer and staff interactions. Although operations have been impacted by new COVID-19 measures put in place, retail sales have shown consistent demand across operating locations and re-opening of the Ontario marketplace is expected to come shortly.
TORONTO, May 22, 2020 /CNW/ - Meta Growth Corp. (TSXV: META) ("Meta Growth", "META" or the "Company"), a leading Canadian recreational cannabis retailer, today announced its financial and operational results for the second quarter of fiscal 2020 ended February 29, 2020.
Strengthens Balance Sheetto Fund Aggressive Growth Cash and cash equivalents at the end of Q2 2020 were $15.7m, an increase of $8.9m from the end of Q1 2020. This increase is largely attributable to the $10m bought deal prospectus offering which closed in Q2 2020. In Q2 2020 the Company also closed an $11m unsecured loan draw down facility with Opaskwayak Cree Nation ("OCN"), of which only $4m has been drawn to date. As such, META has significantly strengthened its balance sheet in preparation for aggressive store growth, especially within the Ontario market.
Significant Progress in Ontario META has made significant progress in Q2 2020 with respect to its expansion plans in Ontario. Firstly, it executed agreements with two independent cannabis retail operators in Ontario, whereby the Company opened two META branded stores in Q2 2020. Meta Growth acts as a consulting partner and service provider for these retail operators. Secondly, the Company has been approved by the Alcohol and Gaming Commission of Ontario ("AGCO") for a Cannabis Retail Operator Licence ("ROL") in the province of Ontario. Subsequent to receiving its ROL, the Company submitted Retail Store Authorization applications for sites throughout Ontario, for which it has begun the Public Notice Process for five META branded sites. While COVID-19 had a significant impact on META advancing through the licensing process in Ontario over the past few months, the AGCO is now granting Retail Store Authorizations and META is on track to proceed with its plan for aggressive store growth.
Divestiture of Non-Core Assets and Implementation of Cost Saving Initiatives Subsequent to Q2 2020, META entered into two transactions in order to divest of non-core medicinal cannabis assets. One transaction resulted in the divestiture of the Company's pharmacy assets, and the other transaction resulted in META selling its common shares in an Australian medicinal cannabis clinic network. The outcome of these transactions is that META will be able to redeploy cost savings and purchase price proceeds to its retail cannabis expansion strategy. The Company continues to evaluate its operations and will explore divesting other assets that do not fit within its strategic vision.
The Company also initiated cost savings at the corporate level by terminating several consulting arrangements, and by introducing travel restrictions. In response to the COVID-19 pandemic, META implemented additional cost saving measures as a precaution to further preserve cash to fund its growth initiatives. These measures include the layoff or termination of 19 corporate employees and a temporary salary reduction program of up to 47.5% for members of the Company's senior management team.
Introduction of Membership & Perks Programs and Enhancement of E-Commerce Solutions Launched in Q2 2020, MetaXtra™ and NewLeaf Plus™ are membership and perks programs that give customers access to enhanced benefits when they experience META and NewLeaf retail and online offerings. Signing up for the programs is free, easy, open to anyone who is of legal age, and allows customers to receive exclusive access to members-only deals, offers, news and more. The programs launched with an introductory sign up offer of 20% off the customer's next purchase (where allowed by provincial regulations). Select future promotions and offers will be exclusive for members. Another perk is members having access to their online purchase history, making re-ordering simple. Customers will also receive product updates and general news that is curated just for members.
These marketing initiatives allow for more inputs of real-time data to be utilized under the Company's Meta Insights™ program, which collects data from various touchpoints at the retail level. The program produces internal and proprietary research and insights which contribute to sales and operations efficiencies, as well as optimized marketing campaigns.
Subsequent to Q2, META introduced new online ordering options for customers which have been curated based on provincial regulations. These e-commerce platforms, named MetaXpress Pickup™ and NewLeaf Express Pickup™, streamline the customer shopping experience by allowing orders to be placed online, either for pick up in store, pick up at curb side or for delivery (where allowed by provincial regulations). The platforms enable customers to be in and out of retail stores quickly and efficiently. The Company is committed to ensuring an exceptional client experience regardless of whether a client prefers to shop in-store, or by using digital offerings.
Commitment to Retail Excellence While the Company officially changed its name in Q2 2020 from National Access Cannabis Corp. to Meta Growth Corp., a change to align the Company's name with its retail store brand, it also completed an extensive operational improvement plan designed to optimize store profitability and performance. Initiatives included renegotiating contracts with major suppliers, optimizing store staffing levels, evaluating store working hours, and analyzing inventory replenishment processes. The Company expects that these initiatives will result in cost savings in the upcoming quarters.
Subsequent to the quarter end, META significantly strengthened its Board of Directors with the appointment of two new independent directors with extensive retail and real estate experience. Andrea Elliott joined META with over 20 years of retail executive experience at companies including Moose Knuckles, PVH Canada Retail (Calvin Klein, Van Heusen, IZOD & Bass), PwC, Williams-Sonoma, and Gap. While Christopher Brawn joined META with over 30 years of real estate experience, including 15 years as Vice President of Real Estate at Dollarama.
Selected Summary of Quarterly Financial Results
Statement of Loss Highlights
Three Months Ended
Feb 29, 2020
Feb 28, 2019
Cost of Goods Sold
Net Loss and Comprehensive Loss
Net Loss per Share
For a more comprehensive overview of the financial highlights presented in this press release, please refer to Meta Growth's Condensed Interim Consolidated Financial Statements for the three and six months ended February 29, 2020 and February 28, 2019, and the Company's Interim MD&A – Quarterly Highlights for the three and six month period ended February 29, 2020. Both of these documents are available on the Company's SEDAR profile at www.sedar.com.
"We have had an extremely busy and productive quarter on many fronts," said Mark Goliger, CEO of Meta Growth. "Most importantly, we have secured growth capital and have made significant progress in executing on our Ontario expansion strategy. We have also incorporated operational efficiencies that we believe will result in improved EBITDA margins moving forward. As a result of falling wholesale prices and hyper-competition in Alberta, the province where the majority of our retail stores are currently located, our revenue for Q2 2020 decreased compared to the same quarter last year. We believe the Alberta market has negatively impacted all retailers, as more and more retailers compete for the same total available market. With this understanding, we did not open any new stores in Q2 in Alberta as we are focused on delivering the highest return on investment which we feel is best served by expanding into Ontario once the market finally opens. Thankfully that time has now come, and we are ready to execute."
Grant of Restricted Share Units The Company also announces that its Board of Directors has approved a grant of 300,000 restricted share units ("RSUs") to certain directors and officersof the Company pursuant to the Company's restricted share unit plan. The RSUs will fully vest upon one year from the grant date. Each RSU entitles the holder to acquire one common share of the Company upon vesting.As of the date of this news release, the Company has 4,264,601 common shares reserved for issuance under the RSU Plan.
About Meta Growth Meta Growth is a leader in secure, safe and responsible access to legal recreational cannabis in Canada. Through its Canada-wide network of Meta Cannabis Co.™, Meta Cannabis Supply Co.™ and NewLeaf Cannabis™ recreational cannabis retail stores, Meta Growth enables the public to gain knowledgeable access to Canada's network of authorized Licensed Producers of cannabis. Meta Growth is listed on the TSX Venture Exchange under the symbol (TSXV: META).
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 release.
Cautionary Statements This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward looking statements or information. Forward-looking statements and information in this news release includes, but is not limited to, future cost savings and improved EBITDA margins resulting from operational efficiencies implemented by the Company and opening and operating cannabis retail stores in Ontario. Although the Company believes that the expectations and assumptions on which the forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because the Company cannot give any assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results and developments may differ materially from those that are currently contemplated by these statements depending on, among other things, risks relating to receipt of Retail Store Authorizations for Ontario cannabis retail stores; the ability of the Company to submit additional store authorization applications and receipt of related Retail Store Authorizations; future legislative and regulatory developments; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; general business, economic, competitive, political, regulatory and social uncertainties; the delay or failure to receive regulatory approvals; the COVID-19 pandemic nationally and globally which could have a material adverse impact on the Company's business, operations and financial results, including disruptions in supply chains, as well as a deterioration of general economic conditions including national and/or global recessions and the response of governments to the COVID-19 pandemic in respect of the operation of retail stores; and the recreational cannabis industry in Canada generally. The Company cautions that the foregoing list of risks and uncertainties is not exhaustive. The forward-looking statements and information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statement or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
SOURCE Meta Growth Corp.
For further information: Meta Growth, Mark Goliger, Chief Executive Officer, Meta Growth, Tel: 647-689-6382, c[email protected]; Media Inquiries, Matt Ryan, VP of Marketing, Meta Growth, Tel: 647-633-9330, [email protected]