C21 Investments Inc. CXXIF CXXI released unaudited results for its fiscal year ended January 31, 2023, revealing revenue of $28.9 million, a decrease of 12.4% compared to $33 million in the prior year.
FY 2023 Unaudited Financial Highlights (February 1, 2022 to January 31, 2023)
Gross profit was $13.4 million, compared to $18.8 million in the previous year.
Gross profit margin was 46.4% compared to 57% in the previous year.
Income from operations was $4 million compared to $9.8 million in the prior year.
Adjusted EBITDA of $7.4 million, compared to $12.4 million in the prior year.
Cash at the end of Q4 was $1.9 million, down $400,000 from Q3.
“We are pleased to report a fourth straight year of significant positive free cash flow, notwithstanding continued industry and macro headwinds” stated CEO and president of C21, Sonny Newman. “The Nevada market experienced a decline in cannabis sales year-over-year which resulted in persistent downward pressure on retail margins. C21 responded to these market dynamics by launching a new loyalty program which enabled us to maintain our half million customer transactions annually at our dispensaries. Also, in the second half of the year, the Nevada wholesale market experienced dislocation due to a number of competitors ceasing operations and liquidating inventory.”
“The Nevada wholesale market has since stabilized and we have generated record wholesale revenues for Nevada in the first quarter of the new year. Our strategy and relentless focus on generating sustained free cash flow and deleveraging our balance sheet allows us to capitalize on those opportunities in the current environment that support our goal of delivering value to our shareholders.”
Repayment of $30 Million Senior Secured Note
Subsequent to the end of Q4, the company has fully paid down the Newman note by an additional $2.0 million as of June 1, 2023.
The promissory note was originally issued in January 2019 in connection with the company’s acquisition of 100% of the membership interests of both Silver State Relief LLC and Silver State Cultivation LLC, both Nevada limited liability companies, from Sonny Newman, the sole owner of Silver State. The promissory note carried an annual interest rate of 10% (subsequently reduced to 9.5%) and was secured against the Silver State companies and their assets.
In connection with the debt retirement, the security against Silver State has been fully discharged. The debt retirement eliminates the company’s annual principal repayment obligation of $6.0 million plus interest.
Silver State has experienced a strong increase in wholesale sales in Q1-FY2024, including for the company’s branded Phantom Farms flower available in select stores throughout the state.