MedMen Reviews Third Quarter Fiscal 12 months 2019 Monetary Outcomes

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LOS ANGELES–(BUSINESS WIRE)–MedMen Enterprises Inc. (“MedMen” or the “Firm”) (CSE: MMEN) (OTCQX: MMNFF) as we speak launched its consolidated monetary outcomes for the third quarter of fiscal 2019. All monetary info for the 13 week interval ended March 30, 2019 is reported in U.S. {dollars}, except in any other case indicated.

Administration Commentary

“Over the previous 9 years, MedMen has constructed probably the most helpful retail model within the cannabis trade by benefiting from the land seize alternative and scaling with velocity to safe as many flagship belongings as attainable,” stated Adam Bierman, MedMen co-founder and chief government officer. “We proceed to march onward in direction of profitability. The most important driver for this part of the enterprise stays income, which continues to extend considerably with new retailer openings and similar retailer gross sales development. The place we’re impressively forward of schedule is in leveraging our scale to create better operational efficiencies throughout the group. Execution retains bettering whereas company SG&A is lowering.”

Since going public one yr in the past, MedMen has established a observe file of success, together with attaining a 7% market share in California (inclusive of income from pending and pre-closing income from just lately closed acquisitions), an $11 billion cannabis market. The Firm is slated to open 15 new areas throughout the U.S. through the the rest of calendar 2019. Of the deliberate areas, 12 will likely be in Florida, the place MedMen is licensed for as much as 35 areas.

Third Quarter 2019 Overview

Monetary:

  • Income: Elevated to $36.6 million for the quarter, which represents a 22% sequential enhance over fiscal 2019 second quarter ended December 29, 2018
  • Gross Margin: California retail gross margin elevated from 51% to 57%, reflecting elevated buying energy and optimization of merchandising and provide chain administration
  • Company SG&A: Declined 9% from $40.9 million to $37.5 million, with an general goal discount of 20% from the earlier quarter
  • Adjusted EBITDA Loss: Decreased 3% from $43.9 million to $42.6 million

Retail Highlights:

  • California: General retail income elevated sequentially by 5% through the quarter because the Firm continues to carry a 7% market share within the state (inclusive of income from pending and pre-closing income from just lately closed acquisitions). MedMen Beverly Hills reported the very best sequential development fee amongst California shops at 13%
  • Nevada: General retail income elevated sequentially by 34% through the quarter. MedMen’s Las Vegas location on Paradise, the closest dispensary to the airport, is now the Firm’s second best-performing retailer throughout the U.S.
  • Arizona: Vital sequential development, primarily attributable to M&A with two new shops in Tempe and Scottsdale
  • Florida: The Firm expects to open 12 further areas through the the rest of calendar yr 2019

Company Growth:

  • Southern California: Closed on acquisition of non-operational retail license in San Diego, which has subsequently opened as MedMen Sorrento Valley; closed on acquisition of possession pursuits in MedMen-branded retail retailer in Santa Ana, which was beforehand managed by the Firm, however owned by a 3rd occasion
  • Northern California: Closed on acquisitions of two cannabis retailers in Northern California – Buddy’s in San Jose and Sugarleaf in Seaside
  • Arizona: Closed on acquisition of Kannaboost Know-how Inc. and CSI Options LLC, collectively known as “Stage Up” offering licenses for 2 vertically-integrated operations in Arizona, together with retail areas in Scottsdale and Tempe and 25,00Zero sq. ft of cultivation and manufacturing capability in Tempe and Phoenix
  • Illinois: Closed on acquisition of Seven Level, a licensed medical cannabis dispensary positioned within the Chicago suburb of Oak Park, Illinois

Model and Digital Technique:

  • Advertising: Launched the advertising marketing campaign, The New Regular. On the middle of the marketing campaign was a brief movie directed by Academy Award profitable Spike Jonze and starring actor Jesse Williams that chronicled the American historical past of cannabis
  • Investor Web site: Created a brand new enhanced investor relations web site, which incorporates detailed info on the Firm’s technique, long-term imaginative and prescient and different infographics on Firm operations
  • Way of life: Launched the Firm’s first athleisure clothes assortment stocked in shops and on-line starting from graphic t-shirts, fleece hoodies and varsity jackets all incorporating the signature purple MedMen emblem

Capital Markets and Financing Actions:

  • Credit score Facility: Introduced a senior secured convertible credit score facility of as much as US$250,000,00Zero from funds managed by Gotham Inexperienced Companions, an investor within the world cannabis trade
  • Property Gross sales: Entered into sale-leaseback transactions with Treehouse Actual Property Funding Belief for 3 storefront properties and two cultivation and manufacturing factories with gross proceeds of roughly $72.Zero million

Subsequent Occasions

Company Growth:

  • Southern California: Signed definitive settlement to amass a retail operation in Lengthy Seashore, the third largest metropolis in Southern California

Model and Digital Technique:

  • Home Manufacturers: Take a look at launched our value-oriented MedMen RED line in our Las Vegas shops

Company SG&A:

  • Govt Compensation: As a part of broader SG&A and profitability initiatives, Adam Bierman, chief government officer, and Andrew Modlin, president, have entered into revised employment agreements with annual salaries of $50,000

Capital Markets and Financing Actions:

  • Credit score Facility: Closed on preliminary US$100,000,00Zero tranche of beforehand introduced secured convertible credit score facility with Gotham Inexperienced Companions
  • ATM Program: Entered into an fairness distribution settlement with Canaccord Genuity Corp. in respect of an “at-the-market” providing of subordinate voting shares for gross proceeds of as much as C$60 million

Company Governance:

  • Govt Chairman: Ben Rose, earlier Chairman of the Board, transitioned to an Govt Chairman position, successfully instantly, the place he will likely be extra actively concerned within the Firm’s day-to-day operations

Third Quarter Fiscal 12 months 2019 Assessment

Consolidated:

For the third quarter of fiscal 2019, systemwide income was $36.6 million. This represents a 22% quarter-over-quarter enhance over the fiscal 2019 second quarter ended December 30, 2018 and an 156% enhance over the identical quarter final yr.

Gross revenue for the third quarter of fiscal 2019, earlier than organic asset adjustment, was $15.5 million, as in comparison with $13.Three million within the earlier quarter. For the third quarter, gross revenue margin after organic asset adjustment was 53.7%, in comparison with 53.2% within the earlier quarter.

For the quarter, the Firm reported an Adjusted EBITDA lack of $42.6 million, which decreased by 3% from the earlier quarter. The Firm reported a internet loss attributable to the Firm of $63.1 million, or lack of $0.20 per fundamental and diluted share attributable to MedMen Enterprises shareholders, for the third quarter of fiscal 2019, in comparison with a internet lack of $64.6 million, or lack of $0.25 per share, for the second quarter of fiscal 2019.

Retail:

Systemwide retail income for the quarter elevated by 16% to $34.6 million. That is based mostly on 21 retail shops that had been operational on the finish of the quarter. The rise is primarily attributable to the Firm’s operations in Nevada and Arizona. Regardless of the everyday slowdown in retail gross sales post-holiday season, the Firm recorded constructive same-store gross sales development.

The Firm recorded 53% retail gross margins for the quarter, which is in step with the final quarter. Nonetheless, retail gross retail margins for California had been up from 51% to 57%, reflecting elevated buying energy and provide chain optimization. Retail EBITDA margins decreased from 16.6% to 12.5% for the quarter, reflecting decrease margins in medical markets equivalent to Arizona and Illinois and enhance in payroll prices. The Firm expects margins to extend within the subsequent quarter.

Cultivation and Manufacturing:

For the quarter, the Firm reported $4.7 million adjusted EBITDA loss for cultivation and manufacturing, of which roughly $4.Three million was associated to prices related to the Firm’s Challenge Mustang facility in Nevada. These prices had been anticipated through the ramp up interval, and the Firm expects to break-even by the top of the calendar yr.

Company SG&A:

For the quarter, the Firm recorded a 9% sequential discount in company SG&A, contributing $37.5 million to adjusted EBITDA loss. The important thing drivers of the lower had been throughout advertising, authorized and HR. The Firm is concentrating on an general 20% discount in SG&A from the second quarter and expects nearly all of value financial savings to return from a lower in corporate-level payroll.

Pre-Opening Bills:

The Firm incurred $4.6 million of pre-opening bills in Q3, primarily pushed by hire bills of retail shops, cultivation/manufacturing websites and amenities that aren’t but operational. That is up from $3.Zero million within the earlier quarter.

ADDITIONAL INFORMATION

Extra info regarding the Firm’s third quarter 2019 outcomes is offered on SEDAR at www.sedar.com within the Firm’s Interim Monetary Statements and Administration Dialogue & Evaluation (“MD&A”) for the quarter.

MedMen refers to sure non-IFRS monetary measures equivalent to Earnings Earlier than Curiosity, Taxes, Depreciation and Amortization (EBITDA), adjusted EBITDA (outlined as earnings earlier than curiosity, taxes, depreciation, amortization, much less sure non-cash fairness compensation expense, together with one-time transaction charges and all different non-cash gadgets) and 4 wall retail gross margins. These measures wouldn’t have any standardized which means prescribed by IFRS and is probably not akin to related measures offered by different issuers.

Please see the “Supplemental Data (Unaudited) Relating to Non-IFRS Monetary Measures” on the finish of this press launch and the MD&A for extra detailed info relating to non-IFRS monetary measures.

CONFERENCE CALL AND WEBCAST:

MedMen Enterprises will host a convention name and audio webcast with Chief Govt Officer and Co-Founder Adam Bierman and Chief Monetary Officer Michael Kramer as we speak at 5:00 pm Jap to debate the monetary ends in additional element.

Webcast Data:
A dwell audio webcast of the decision will likely be out there on the Occasions and Shows part of MedMen’s web site at: https://buyers.medmen.com/events-and-presentations/default.aspx.

Calling Data:
Toll Free Dial-In Quantity: (844) 559-7829
Worldwide Dial-In Quantity: (647) 689-5387
Convention ID: 1895524

ABOUT MEDMEN:

MedMen is a cannabis retailer with operations throughout the U.S. and flagship shops in Los Angeles, Las Vegas and New York. MedMen’s mission is to offer an unparalleled expertise that invitations the world to find the exceptional advantages of cannabis as a result of a world the place cannabis is authorized and controlled is a safer, more healthy and happier world.

Be taught extra at www.medmen.com

Cautionary Be aware Relating to Ahead-Trying Data and Statements

This press launch accommodates sure “forward-looking info” inside the which means of relevant Canadian securities laws and can also include statements that will represent “forward-looking statements” inside the which means of the secure harbor provisions of the USA Personal Securities Litigation Reform Act of 1995. Such forward-looking info and forward-looking statements aren’t consultant of historic information or info or present situation, however as a substitute symbolize solely MedMen’s beliefs relating to future occasions, plans or targets, lots of which, by their nature, are inherently unsure and out of doors of MedMen’s management. Usually, such forward-looking info or forward-looking statements may be recognized by way of forward-looking terminology equivalent to “plans”, “expects” or “doesn’t anticipate”, “is anticipated”, “finances”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “doesn’t anticipate”, or “believes”, or variations of such phrases and phrases or could include statements that sure actions, occasions or outcomes “could”, “might”, “would”, “would possibly” or “will likely be taken”, “will proceed”, “will happen” or “will likely be achieved”. The forward-looking info and forward-looking statements contained herein could embody, however aren’t restricted to, info regarding proposed acquisitions, expectations relating to whether or not such proposed acquisitions will likely be consummated, together with whether or not circumstances to the consummation of the proposed acquisitions will likely be happy and whether or not the proposed acquisitions will likely be accomplished on the present phrases, the timing for finishing the proposed acquisitions, expectations for the results of the proposed acquisitions (together with on the Firm’s footprint, revenues and asset base) on the flexibility of the Firm to efficiently obtain enterprise targets, statements relating to annualized revenues, expectations for gross margins within the subsequent quarter and expectations for the timing of cultivation and manufacturing operations to interrupt even, and expectations for different financial, enterprise, and/or aggressive elements.

By figuring out such info and statements on this method, MedMen is alerting the reader that such info and statements are topic to identified and unknown dangers, uncertainties and different elements that will trigger the precise outcomes, stage of exercise, efficiency or achievements of MedMen to be materially completely different from these expressed or implied by such info and statements. As well as, in reference to the forward-looking info and forward-looking statements contained on this press launch, MedMen has made sure assumptions, together with that future revenues for the Firm and for pending and just lately closed acquisitions will at the very least be as excessive as present revenues (for functions of annualizing income), that prices at cultivation and manufacturing amenities will likely be decrease after the ramp-up interval and that the Firm’s focused reductions on the whole and administrative prices will likely be efficiently achieved. Among the many key elements that might trigger precise outcomes to vary materially from these projected within the forward-looking info and statements are the next: the lack to consummate the proposed acquisitions; the failure to acquire requisite regulatory approvals and third occasion consents and the failure to fulfill different circumstances to the consummation of the proposed acquisitions, which might affect closing or closing on the proposed phrases and schedule; the potential affect of the announcement or consummation of the proposed acquisitions on relationships, together with with regulatory our bodies, staff, suppliers, clients and rivals; modifications on the whole financial, enterprise and political circumstances, together with modifications within the monetary markets; modifications in relevant legal guidelines; compliance with in depth authorities regulation; diminished demand for cannabis merchandise; difficulties or delays in attaining value reductions. Ought to a number of of those dangers, uncertainties or different elements materialize, or ought to assumptions underlying the forward-looking info or statements show incorrect, precise outcomes could differ materially from these described herein as supposed, deliberate, anticipated, believed, estimated or anticipated.

Though MedMen believes that the assumptions and elements utilized in making ready, and the expectations contained in, the forward-looking info and statements are cheap, undue reliance shouldn’t be positioned on such info and statements, and no assurance or assure may be provided that such forward-looking info and statements will show to be correct, as precise outcomes and future occasions might differ materially from these anticipated in such info and statements. The forward-looking info and forward-looking statements contained on this press launch are made as of the date of this press launch, and MedMen doesn’t undertake to replace any forward-looking info and/or forward-looking statements which are contained or referenced herein, besides in accordance with relevant securities legal guidelines. All subsequent written and oral forward-looking info and statements attributable to MedMen or individuals performing on its behalf is expressly certified in its entirety by this discover.

MEDMEN ENTERPRISES INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 30, 2019 AND JUNE 30, 2018
(Quantities Expressed in United States {Dollars} Except In any other case Acknowledged)
March 30,

2019

June 30,

2018

ASSETS
Present Belongings:
Money and Money Equivalents $ 21,896,764 $ 79,159,970
Restricted Money 1,844,252 6,163,599
Accounts Receivable 1,224,440 318,159
Present Portion of Pay as you go Hire – Associated Occasion 1,929,763 1,898,863
Pay as you go Bills 19,046,412 9,387,047
Organic Belongings 6,044,002 1,952,580
Stock 21,799,713 6,248,754
Different Present Belongings 24,741,338 2,790,772
Due from Associated Occasion 6,347,194 3,509,035
Complete Present Belongings 104,873,878 111,428,779
Non-Present Belongings:
Pay as you go Hire – Associated Occasion, Web of Present Portion 1,357,916 2,652,149
Property and Gear, Web 195,410,952 88,748,447
Intangible Belongings, Web 130,662,874 48,792,757
Goodwill 108,231,990 18,165,161
Different Belongings 11,532,467 12,403,049
Complete Non-Present Belongings 447,196,199 170,761,563
TOTAL ASSETS $ 552,070,077 $ 282,190,342
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Present Liabilities:
Accounts Payable and Accrued Liabilities $ 36,881,382 $ 18,001,505
Different Present Liabilities 16,695,595 1,186,148
By-product Liabilities 10,950,390
Present Portion of Finance Lease Legal responsibility 2,969,480
Present Portion of Notes Payable 11,244,259 52,353,625
As a consequence of Associated Occasion 5,640,821 9,858,445
Complete Present Liabilities 84,381,927 81,399,723
Non-Present Liabilities:
Finance Lease Legal responsibility, Web of Present Portion 96,068,288
Different Non-Present Liabilities, Web of Present Portion 23,465,189
Notes Payable, Web of Present Portion 88,748,416 3,593,334
Complete Non-Present Liabilities 208,281,893 3,593,334
TOTAL LIABILITIES 292,663,820 84,993,057
SHAREHOLDERS’ EQUITY:
Share Capital 365,011,343 129,145,994
Extra Paid-In Capital 81,804,572 47,091,271
Amassed Deficit (154,944,124 ) (66,647,221 )
Complete Fairness Attributable to Shareholders of MedMen Enterprises Inc. 291,871,791 109,590,044
Non-Controlling Curiosity (32,465,534 ) 87,607,241
TOTAL SHAREHOLDERS’ EQUITY 259,406,257 197,197,285
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 552,070,077 $ 282,190,342

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