VANCOUVER, BC, June 1, 2021 /CNW/ - Choom Holdings Inc. ("Choom" or the "Company") (CSE: CHOO) (OTCQB: CHOOF), a fast-expanding Canadian retail cannabis Company is pleased to report its financial and operating results for Q3 2021, ending March 31, 2021.
Q3 Financial Highlights:
Q3 2021 Revenue of $5.10M
Q3 2021 Gross Margin of 37.85%
Q3 2021 General and Administrative of $0.90M or 17.69% of revenue
Q3 2021 Salary and Wages of $0.95M or 18.54% of revenue
Q3 2021 Adjusted EBITDA1 of $0.05M or 0.92% of revenue
Year to Date (9 months ending March 31, 2021) Financial Highlights:
YTD Revenue of $17.17M
YTD Gross Margin of 36.49%
YTD General and Administrative of $2.67M or 15.52% of revenue
YTD Salary and Wages of $3.10M or 18.05% of revenue
YTD Adjusted EBITDA1 of $0.30M or 1.73% of revenue
"I am pleased with the Q3 performance and the growth for the quarter" says Choom CEO, Corey Gillon "Despite the increased COVID-19 restrictions and this traditionally being a slower season in cannabis retail, we continued to see strong year-over-year growth, coupled with high customer demand. The business optimization continued with a record setting quarter for margins, and ongoing improvement across key expense lines".
Fiscal 2021 Strategic Pillars:
Finance: Maximizing profitable sales through responsible new store growth and optimization of the existing business.
Brand: Propelling the Choom story and unifying the in-store and online experience.
Culture: Enabling and rewarding a culture of high performance.
Operations: Investing and building best in class retail infrastructure.
Q3 Operational Highlights:
Finance:
Choom's momentum continues with its year-over-year sales increase, rightsizing of expenditures, improving margins, and operational efficiencies through its centralized business model. During the quarter, the brand strengthened its balance sheet with a $1.95M private placement. Proceeds are now being used for general working capital purposes as well as new store growth.
Subsequent to the quarter, and as announced by the Company on March 25, 2021, the Company entered into an engagement letter with Canaccord Genuity Corp. in connection with a proposed public offering (the "Offering") of units of the Company for a minimum aggregate gross proceeds of $3.5 million and up to maximum aggregate gross proceeds of $5.0 million. Concurrently, the Company entered into a series of agreements with existing debenture holders to restructure its debt (collectively, the "Restructuring"). The Restructuring is conditional upon, among other things, the receipt of all requisite regulatory approvals and the completion of the Offering. If completed, the Offering and the Restructuring will significantly improve Choom's balance sheet and are expected to be critical milestones to accelerate growth.
Highlights of the Restructuring include:
Aurora Debenture 5
Current State
Future State
Principal
$20,000,000
$6,000,000
Interest Rate
6.5%
7.0%
Interest Due Date 2
Annually
Maturity
Maturity Date
November 2022
December 2024
Restructuring Fee 3
N/A
1.25%
Aurora Ownership % 4
3.0%
19.9%
December 2019 Debenture 5
Current State
Future State
Principal
$4,100,000
$4,100,000
Interest Rate
10%
10%
Interest Due Date
Bi-annually
Bi-annually
Maturity Date
December 2021
December 2024
"In the past year Choom has been focused on building strong foundational infrastructure" says Choom CEO, Corey Gillon "Upon joining the organization, I initiated a full assessment of the business, developed a new strategy, organizational structure and hired the right people capable of building a best-in-class retailer. I am proud of the strides this team has made in many areas, including our most recent announcement of debt restructuring and concurrent capital raise. This significantly improves our balance sheet and is a critical milestone to accelerate growth".
Brand:
Choom ecommerce sales increased 137% in Q3 vs. Q2 with the brand's new proprietary ecommerce platform now fully integrated. Brand continues to realize the value of its in-house digital agency, PlatformWD, which was acquired in 2020. Choom's elevated retail attributes have now been applied to the new ecommerce platform.
Development of Choom Plus, the brand's new digital loyalty program is now well underway. The aim of the program is to attract, engage, connect, and retain loyal Choom members through promotional and other value-added programs. The Choom Plus program will enable the optimization of its current database, whilst exponentially growing it through the acquisition of new subscribers to the program.
Culture:
Choom's Retail and Store Support Center continue to attract, retain, and enable top talent, dedicated to the success of the Company. With the ongoing pandemic, which included store closures and capacity limitations, Choom's Senior Management Team voluntarily took a temporary pay reduction throughout Q3, supporting the future success of the Company.
Operations:
During the quarter there were increased COVID-19 related restrictions in Alberta and Ontario. Choom's 12 Alberta locations saw in-store capacity reduced to as low as 15%. Choom's Niagara location was open for in-store purchases only 44 of the 90 calendar days in the quarter, reducing the location to curbside pick-up and delivery only. Throughout the continued time of uncertainty, Choom remained committed to ensuring safety in all its locations.
Choom opened its second Vancouver location, in the heart of trendy Yaletown in late January 2021. The location has seen continued growth in the months since its opening and Choom is optimistic that the location will be amongst the brand's top performers.
In March of the quarter, Choom broke ground on it first Toronto flagship location in Liberty Village. With construction 90% complete, a summer opening is expected. Choom's Hamilton location is next in the pipeline. With its building permit secured, construction for the location is currently out for tender.
