Nova Cannabis Inc. (OTCQB:NVACF) (TSX:NOVC) released its unaudited interim consolidated financial statements for the three months ended September 30, 2022, revealing record sales of CA$58.9 million ($43.6 million), a 52.4% increase from the third quarter of 2021, and a 4.6% increase from the second quarter of 2022.
Q3 Highlights
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Gross margin of CA$11.1 million, or 18.9% of sales, a 70.8% increase from the third quarter of 2021 and consistent with the gross margin percentage for the second quarter of 2022.
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Operating profit excluding depreciation, impairment and other costs for the three months ended September 30, 2022, was CA$2.3 million (Q3 2021 – CA$1.0 million loss).
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Net loss was CA$1.5 million compared to a CA$6.2 million loss in the third quarter of 2021 and CA$1.4 million loss in the second quarter of 2022.
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Value Buds' private label offerings is expected to launch at the end of November 2022.
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Liquidity, including cash and credit facility availability, of CA$11.6 million as at September 30, 2022.
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85 stores currently operating, an increase of five stores since June 30, 2022, and 11 stores since the beginning of 2022.
"Our team continues to execute against our plan, and this shows in our third quarter results, which feature record sales for the quarter," stated Marcie Kiziak, CEO of Nova. "Our encouraging results come despite hyper-competitive cannabis retail markets across the country along with inflationary pressures and capital markets disruption. We are excited about our private label launch and believe that, along with our expanded data agreement program, our gross margin should continue to increase in the quarters to come. We see significant market share in the province of Alberta where Value Buds has captured 21.5% of market share with a 58-store footprint, and we are noticing an increase in market share in Ontario with 2.9% in August of 2022 with only 23 stores."
Revolving Credit Facility
Nova has an uncommitted revolving credit facility with SNDL Inc. (NASDAQ:SNDL) in an aggregate principal amount not to exceed CA$15.0 million. On October 31, 2022, the term of the credit facility was extended to April 30, 2023.
As at November 7, 2022, CA$9.8 million in principal and accrued interest was outstanding on the credit facility.
ATM Program
On July 22, 2022, the company announced the establishment of an at-the-market equity offering program that allows the company to issue up to CA$20.0 million of common shares from treasury to the public at the discretion of the company and subject to regulatory requirements. Any common shares sold through the ATM Program will be sold at prevailing market prices when issued in ordinary broker's transactions on the TSX, or another Canadian marketplace on which the common shares are listed, quoted, or otherwise traded. No common shares have been issued through the ATM Program to date due to the current market conditions in the cannabis equity markets. The ATM Program provides Nova optionality to access additional capital if needed.
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Photo by Esteban Lopez on Unsplash
