Alcanna Reports First Quarter 2019 Results
EDMONTON, Alberta, May 09, 2019 (GLOBE NEWSWIRE) -- Alcanna Inc. (the “Company” or “Alcanna”) (TSX: CLIQ) today reported its results for the three months ended March 31, 2019.
Alcanna Inc. reported same-store sales growth of 6.2% in Canada and 6.3% in Alaska in the first quarter of 2019. This continues the strong same-store sales performance Alcanna posted in Q4 2018. Total sales rose 16.2% versus the first quarter of 2018.
In the first quarter of 2019, Alcanna continued to successfully transform to a growth-orientated company. We followed on our strong Q4 results with further market share gains in Alberta, B.C. and Alaska
said James Burns, Vice Chair and CEO.
We recently entered into a new $70 million asset-based credit facility with CIBC which provides us with flexibility to invest to enhance shareholder value over the next two to three years with no cash-flow short-term covenant tests. This financing provides ample room to make all the capital investments planned for the next two years
Q1 also saw the launch of our new discount liquor partnership, the Canadian Liquor Retailers Alliance Limited Partnership, with the acquisition of twelve stores from Ace Liquor Corporation. Initial same-store sales results in rebranded stores have been excellent in the first few months and we anticipate having all stores in the partnership rebranded and renovated by the end of May. With the recently announced receivership of Solo Liquor Holdings Limited and Solo Liquor Stores Ltd., the Alliance is solidly the leading retailer by number of stores in the discount segment of the market in Alberta
said Mr. Burns.
Our newest Wine and Beyond store opens today in Lethbridge, Alberta with another to follow in St. Albert, Alberta later this month. Our MD&A provides a detailed listing of planned capital expenditures on further Wine and Beyond locations and other investments designed to position the Company for the future
For our Nova Cannabis division, sales per store were strong but overall performance was hindered by the continued shortage of cannabis supply and the moratorium on new licences in Alberta which lasted throughout Q1. Subsequent to the end of the quarter Nova Cannabis received 3 licences for new locations which have been built out and ready to go for many months
Alcanna has partnered with a winner of the Ontario government’s cannabis license lottery who opened a Nova Cannabis branded store at 499 Queen Street West in Toronto on April 20, 2019. We anticipate this location will be the highest volume Nova Cannabis store for the foreseeable future – until supply shortages ease and Ontario grants more retail licenses
The message to investors and stakeholders alike remains identical to that from our last few MD&As. Alcanna remains firmly on track to turn our strong balance sheet into a strong generator of cash flow in the medium to long term. These first-quarter results indicate exactly the trend established in the back half of 2018 - that the metrics most important to understanding our strategy and the objectives essential to our future growth continue to be met or exceeded
said Mr. Burns.
|(In thousands of Canadian dollars
except per share amounts, unaudited)
|Three months ended March 31
|Operating profit (loss) before amortization1||879||(2,289)|
|Net loss from continuing operations||(9,295)||(1,826)|
|Basic and diluted loss per share|
|from continuing operations||(0.24)||(0.06)|
On January 1, 2019, the Company adopted the new accounting standard, IFRS 16, Leases (“IFRS 16”) using the modified retrospective approach and has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The adoption of IFRS 16 has had a significant effect on the comparability of our reported results, including operating profit (loss) before amortization, which is disclosed in the unaudited Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2019 and 2018 and discussed further in the Company’s Management, Discussion and Analysis for the three months ended March 31, 2019.
The adoption of IFRS 16 results in a significant increase in Operating profit (loss) before amortization in 2019 which may not provide for a meaningful comparison to 2018 given that the comparatives for 2018 have not been restated. The adoption of IFRS 16 resulted in the recognition of depreciation expense related to right-of-use-assets of $4.2 million, lease liability interest charge of $4.4 million and a reduction to rent expense of $9.1 million, for the three-month period ended March 31, 2019.
Sales in Q1 2019 were positively impacted compared to the prior year by:
- The rebrand of forty-nine (49) of the fifty (50) legacy Liquor Depot, Liquor Barn, and Deep Discount Liquor stores to the “Ace Liquor” discount banner throughout the quarter in the Canadian Liquor Retailers Alliance Limited Partnership (the “Alliance”), along with the renovation of thirty-four (34) of these rebranded stores.
- The acquisition of thirteen (13) new liquor stores operating under the Ace Liquor discount banner by the Alliance in Q1 2019; and
- Operating five (5) retail cannabis stores that opened on October 17, 2018.
- These increases were offset by a shift in the timing of Easter in 2019 compared to 2018 (which we estimate had a negative 1.4% impact on Canadian same-store sales in Q1 2019), and unfavourable weather in the quarter in Alberta and British Columbia compared to the prior year.
Net loss from continuing operations during the first quarter of 2019 compared to first quarter of 2018 were impacted primarily by increased costs incurred during the transition period while the Company rebranded and renovated the legacy Liquor Depot, Liquor Barn, and Deep Discount Liquor stores to the “Ace Liquor” discount banner, increased operating expenses related to the new Cannabis division, an increase in labour costs in the Liquor division as a result of increases in minimum wage in Alberta and British Columbia in 2018, and investments in the shared services team to support the growing and transitioning company.
Alcanna Inc. will host an analyst and investor conference call on May 9, 2019 to discuss results for the three months ended March 31, 2019. The conference call will take place at 10:00 a.m. M.T.
To participate in the call, please dial (416) 340-2217 or toll-free (800) 806-5484. An archived recording of the conference call will be available approximately one hour after the completion of the call, by dialling: (905) 694-9451 or Toll-Free Access: (800) 408-3053. The required passcode is: 2927680.
ABOUT ALCANNA INC.
Alcanna is one of the largest private sector retailers of alcohol in North America and the largest in Canada by number of stores – operating 236 locations in Alberta, British Columbia and Alaska. The Company also operates six cannabis retail stores under the “Nova Cannabis” brand, with five locations in the Province of Alberta and one the Province of Ontario. With revenues in excess of $600 million per year, Alcanna processes over 18 million individual retail transactions of beverage alcohol and cannabis.
Alcanna's common shares and convertible subordinated debentures trade on the Toronto Stock Exchange under the symbols "CLIQ" and "CLIQ.DB", respectively.
This news release contains forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as “continue”, “anticipate”, "will", "should", “plan”, “intention”, and similar words suggesting future events or future performance. All statements and information other than statements of historical fact contained in this news release are forward-looking statements. In particular, this news release contains forward-looking statements pertaining to implementing the Company’s strategy and objectives related to the growth of its liquor and cannabis brands.
With respect to forward-looking statements contained in this news release, the Company has made assumptions regarding, among other things: the ability of management to execute the Company’s strategic plan and growth strategy, including its capital allocation strategy and specifically its ability significantly grow its cannabis retail store locations and enhance profitability of its liquor business.
Although the Company believes that the expectations reflected in the forward-looking statements, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations and assumptions will prove to be correct. Readers should not place undue reliance on forward-looking statements included in this news release. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that may cause actual performance and financial results to differ materially from any estimates, forecasts or projections. These risks and uncertainties include, among other things, the risk that we will be unable to execute our strategic plan and growth strategy, including the capital allocation and retail cannabis strategy, as planned without significant adverse impacts from various factors beyond our control; dependence on suppliers; potential delays or changes in plans with respect to capital expenditures and the availability of capital on acceptable terms; risks inherent in the liquor retail and cannabis industries; competition for, among other things, customers, supply, capital and skilled personnel; changes in labour costs and markets; incorrect assessments of the value of acquisitions; general economic and political conditions in Canada (including Alberta), Alaska and globally; industry conditions, including changes in government regulations; fluctuations in foreign exchange or interest rates; unanticipated operating events; failure to obtain regulatory and third‐party consents and approvals when required; changes in tax and other laws that affect us and our security holders; the potential failure of counterparties to honour their contractual obligations; stock market volatility; and the other factors described in the Company’s public filings (including the Annual Information Form) available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking statements contained in this news release are made as of the date hereof. Except as expressly required by applicable securities legislation, Alcanna does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
For Further Information
Executive Vice President and Chief Financial Officer
1 Same-store sales and Operating profit (loss) before amortization is a non-IFRS measure that does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. For more information on non-IFRS measures, see the ‘Non-IFRS Financial Measures’ in our Management Discussion and Analysis (“MD&A”) for the three months ended March 31, 2019, which is available on the Company’s website (www.alcanna.ca/investors) and on the SEDAR website (www.sedar.com).