Solid Q3 2021 Revenue of $9.5MM Gross Profit Improved (pro forma, ex Sonoma Pacific Distribution Inc.) to $4.3MM
Adjusted EBITDA* improved to $1.9MM
SAN DIEGO, CA / ACCESSWIRE / November 24, 2021 / GABY Inc. (" GABY " or the " Company ") (CSE:GABY)(OTCQB:GABLF), a California consolidator of cannabis dispensaries and the parent company of San Diego's Mankind Dispensary (" Mankind Dispensary "), is pleased to announce third quarter revenue of $9.5 million and gross profit of $3.7 million compared to $806.7 thousand and $22.5 thousand, respectively, the same quarter last year.
Gross margin for the period continues to expand with a Company-record 39.3% compared to 2.8% the same quarter last year. Adjusted EBITDA from continuing operations 1 improved to $0.6 million from negative $1.3 million the same quarter last year. The improvements were attributable to the higher volumes and margins generated from the acquisition of Mankind Dispensary on April 1, 2021. In addition, the improved gross margin reflects a higher percentage sale of Mankind Dispensary's proprietary brand, Kind Republic™, which inherently has higher margins.
For the third quarter of 2021 the net loss of $4.3 million for the quarter is $2.8 million higher than the same quarter last year primarily due to an increase in non-cash items, transaction costs and other items of expense (recovery) being $2.8 million while the improvement in Adjusted EBITDA from continuing operations of $1.9 million was offset by higher interest of $1.1 million mostly due to the Notes 1 issued on the Miramar Transaction and higher income tax expense of $0.8 million.
In August 2021, the Company terminated the operations of Sonoma Pacific Distribution (" SPD ") including its low margin wholesale brokerage operations and consolidated all distribution efforts into a single hub in its new headquarters in San Diego.
The closure of SPD's low margin operations resulted in lower revenue of $9.5 million in Q3 down from $11.3 million in Q2. Although revenue decreased Q3 over Q2, variable gross profit margin improved from 38% in Q2 to 42% in Q3 and gross profit margin improved from 35% in Q2 to 39% in Q3 again, primarily due to the decrease in lower margin bulk flower brokerage sales in Q3. Excluding the now discontinued wholesale brokerage business operated by Sonoma Pacific Distribution, gross profit improved to $4.3 million or 50% of revenue in Q3 compared to $4.0 million or 46% of revenue in Q2.
With the closure of SPD and additional synergies going forward at Mankind Dispensary, management believes the Company will continue to grow its top line revenue and gross margins. Gaby has continued to rationalize its asset base and has shed approximately $3 million in annual operating costs commencing Q4-2021 and will continue to seek out opportunities to cut further costs and generate additional revenue, thereby improving Adjusted EBITDA and net income in the future. In addition, management believes its consolidation and integration strategy will further enhance operational synergies of the Miramar Transaction.
"Success in any industry is governed by management's ability to execute on the strategic vision established by the Board and the CEO", said Margot Micallef, Founder and Chief Executive Officer of GABY. "As the market said about Tim Cook, CEO of Apple Inc., ‘… he is the one who was able to take the vision and execute on it in a way never before seen at scale2' . In a nascent industry such as the cannabis industry it is often easier to find visionaries than it is to find operators. Thanks to the focus placed on building a strong management team, GABY has both - a rarity in the cannabis industry", she concluded.
"In the short few months I've been at GABY, I have been impressed by the diversity, commitment, and skillsets displayed by our management team. Not only has the team executed, they've executed rapidly. What this management team has done in the short six months since the acquisition of the Mankind Dispensary is nothing short of impressive", said Marshall Minor, Chief Financial Officer of GABY. "I'm confident that this team will continue to build on the vision Margot has established for us and continue to achieve ever greater heights", he concluded.
ABOUT GABY
GABY Inc. is a California-focused retail consolidator and the owner of Mankind Dispensary, one of the oldest licensed dispensaries in California. Mankind Dispensary is a well-known and highly respected dispensary with deep roots in the California cannabis community operating in San Diego. GABY curates and sells a diverse portfolio of products, including its own proprietary brands, Kind Republic™ and Lulu's™ through Mankind, and manufactures and distributes its brands through its wholly owned subsidiary, Wild West Industries Inc. ("Wild West Industries"), also based in San Diego. A pioneer in the industry with a multi-vertical retail foundation, and a strong management team with experience in retail, consolidation, and cannabis, GABY is poised to grow its retail operations both organically and through acquisition.
GABY's common shares trade on the Canadian Securities Exchange ("CSE") under the symbol "GABY" and on the OTCQB under the symbol "GABLF". For more information on GABY, visit www.GABYInc.com or the Company's SEDAR profile at www.sedar.com.