C21 Investments Inc. (CXXI, CXXIF) announced its financial results for the first quarter ended June 30, 2023, reporting revenue of $6.6 million, a 1% increase compared to the fourth quarter. This growth was achieved despite a 1% decline in Nevada sales during the same period.
The company attributed the stable retail revenue to consistent, high transaction volume at its two established dispensaries. However, the average basket size decreased due to ongoing inflationary pressures, causing customers to opt for lower-priced products.
The cannabis company recently changed its fiscal year-end to March 31st. This change means that traditional sequential or year-over-year comparisons are not directly available.
“We are pleased that C21 continues to outperform the state of Nevada in terms of run rate and cash flow,” stated CEO and president, Sonny Newman. “Our flagship Sparks dispensary continues to generate more than twice the run rate of the average dispensary in the county.”
C21’s first quarter highlights included:
* A gross margin of 31%, which was impacted by temporary internal inventory supply issues and product mix adjustments due to the new dispensary launch.
* A net loss of $1.4 million, or a loss of ($0.01) per share. The company attributes the net loss to lower margins, increased SG&A from non-cash share-based compensation, and non-capitalized start-up costs for the new dispensary.
* Adjusted EBITDA of $300,000.
* Cash flow from operations of $600,000, resulting in a positive free cash flow of $400,000.
* The successful acquisition and opening of a third dispensary in South Reno during the final week of the quarter.
* The completion of a C$4.0 million convertible debenture financing, providing capital for the new dispensary acquisition.
Looking ahead, C21 is optimistic about the strong customer reception and momentum generated by the new dispensary and expects continued growth in the future. The company anticipates improved margins in the second half of the year, driven by its ongoing operations and strategic initiatives.
