C21 Investments Inc. (CSE: CXXI) (OTCQX: CXXIF) posted results late after the market closed on Wednesday that showed slimming revenue in a state that has seen less tourist and local spending as wallets get tighter. The vertically integrated cannabis company released its financial report card for the second quarter ending July 31, 2022.
The company posted revenue of $7.2 million – down 4% sequentially, “narrowly outperforming Nevada market sales which saw an overall decline of 5% in total sales over the same period,” the company said.
C21 saw a net income of $1.9 million, up $1.6 million sequentially. The earnings per share were two cents. This was driven by $1.5 million net income from continuing operations and $300,000 from discontinued operations in Oregon. Net income results include a $600,000 derivative gain, the company said.
“I am pleased that again this quarter, C21 reported solid results, maintaining its strong margin and cash flow profile, despite the challenging market and macro conditions that persist,” stated CEO Sonny Newman. “Notwithstanding industry headwinds and state-level pricing pressures, the Nevada market appears to be showing signs of stabilizing.”
Gross Margin was up 40 basis points over the quarter at 53.8%. C21 delivered $2.2 million of Adjusted EBITDA – a 31% EBITDA Margin, consistent with the previous two quarters.
Cash flow from operations was $1.8 million, up 15% since the first quarter – the thirteenth consecutive quarter of positive cash flow, the company said.
C21 had $2.3 million worth of cash in the second quarter, down $200,000 from the first quarter. The company’s senior secured note was reduced by $1.5 million and total liabilities were cut by $1.6 million during the quarter.
Following the second quarter, the company has paid down its senior secured note by an additional $1 million, with $4.1 million outstanding as of September 1, 2022.
Last week, the city of Sparks, Nevada approved drive-thru windows at its licensed dispensaries, and C21’s Silver State Relief dispensary intends to build out this sales channel in the coming months. The company previously said it would pivot its focus toward locals away from The Strip.
“We believe the current industry environment will afford growth opportunities to those companies able to consistently generate positive free cash flow and that have strong balance sheets,” Newman said. “Our strategy and focus has been to ensure C21 is well positioned to take advantage of growth opportunities that will produce long-term benefits to stakeholders.”