EDMONTON, AB / ACCESSWIRE / November 25, 2020 / Rocky Mountain Liquor Inc. (TSXV:RUM) (the "Company" or "Rocky Mountain"), listed on the TSX Venture Exchange (the "Exchange"), today reported its unaudited financial results for the three month and nine month periods ending September 30, 2020.
The Company has continued to succeed at its objective to grow market share and reduce costs, having increased income from operations by $327,185 for the three month period in 2020 and $1.2M for the nine month period when compared to the same periods in 2019. Sales have increased by $1.4M for the three month period of 2020 and $4.1M for the nine month period. The 36% growth in income from operations in the three month period, and 58% in the nine month period is a result of an increase in sales of 12% in both the three and nine month periods in 2020 while managing operating and administrative expenses.
As at November 25, 2020, all locations are open and operational. The novel coronavirus pandemic continues to positively impact sales at the Company. The Company's financial results show increased sales, driven by increased demand for liquor product following the onset of the crisis and continuing through the year as a result of consumers choosing liquor retailers in lieu of licensed establishments during the COVID-19 pandemic. We continue to incur additional costs for safety and sanitization measures to ensure our employees and customers are working and shopping in a safe environment. The Company has increased sanitation throughout the stores, installed plexiglass shields at counters, installed touchless sanitation units for customer and staff use at store entrances, mandated masks for staff at all locations, provide masks to customers, maintains social distancing measures within the locations, and restricts the number of individuals in the store at a time.
After removing a non-recurring gain of $3.5M from net income in 2019 resulting from the redemption of the Company's convertible debenture, there is an increase in net income for the three month period of $567,499 and nine month period of $2.0M in 2020 over 2019. This is a result management's continued focus on competitive pricing strategies, an increase in sales and reduction to finance costs. The Company remains focused on delivering efficiency and process improvements while managing operating costs.
KEY OPERATING AND FINANCIAL METRICS
Financial highlights, year over year 3 month comparison:
- Sales increased by $1.4M or 12% to $13.2M (2019 was $11.8M) with 26 stores contributing to sales at the end of the period in 2020 versus 29 at the end of the period in 2019
- EBITDAR* increased by 36% to $1.2M (2019 was $909,433)
- Gross margin percentage increased to 22.8% (2019 was 22.0%)
- Income from operations increased by $327,185 or 36% to $1,236,165 (2019 was $908,980)
- Net income is $690,782 (2019 was $123,283 after adjusting for a non-recurring gain of $3.5M as a result of convertible debenture redemption)
Financial highlights, year over year 9 month comparison:
- Sales increased by $4.1M or 12%, to $37.0M (2019 was $32.9M) with 26 stores contributing to sales at the end of the period in 2020 versus 29 at the end of the period in 2019
- EBITDAR* increased by $1.2M to $3.3M (2019 was $2.1M)
- Gross margin percentage increased to 22.8% (2019 was 21.9%)
- Income from operations increased by $1.2M or 58% to $3.3M (2019 was $2.1M)
- Net income is $1.4M (2019 net loss was $599,438 after adjusting for a non-recurring gain of $3.5M as a result of convertible debenture redemption)
Margins have increased from 22.0% to 22.8% for the three month period and 21.9% to 22.8% for the nine month period, as the Company has modeled its marketing, pricing and promotional strategies to maximize gross margins. The Company strategizes the timing of Limited Time Offer purchases with in store promotions, to realize margin growth.
Income from operations as a percent of sales increased to 9.4% from 7.7% for the three month period 2020, and to 9.1% from 6.4% for the nine month period. The increase in income from operations is a result of the increase in sales as well as a 4% increase to gross margins in both periods while managing operating and administrative expenses.
To date, the COVID-19 pandemic has not had a negative impact on the Company's results of operations, however, the Company is not immune to factors beyond its control, including without limitation; forced store closures, labour shortages, potential supply disruptions or other unforeseen circumstances.
At September 30, 2020 the Company operated 26 stores.
*EBITDAR is Earnings before Interest, Taxes, Depreciation, Amortization and Rent.
Going Concern
The going concern basis assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Based on the continued improvement of the Company's performance and statement of financial position we are no longer including disclosure of the uncertainty of the Company as a going concern.
Detailed information in the form of the Company's interim consolidated financial statements and Management Discussion and Analysis are available under the Company's profile on SEDAR at www.sedar.com and also on the Company's website at www.ruminvestor.com. After accessing the website, please choose the "Investor Relations" tab to view Quarterly Reports.
About Rocky Mountain
Rocky Mountain owns 100% of Andersons Liquor Inc. ("Andersons"), headquartered in Edmonton, Alberta, which now own and operate 26 private liquor stores in that province, up from 18 stores since the Common Shares began trading in December 2008. It is listed on the TSX Venture Exchange (TSX-V:RUM).