YSS Corp. reports its financial results for Q3 2019

YSS Corp. (TSXV: YSS) (WKN: A2PMAX), has just announced its financial results for the third quarter of 2019 and a preliminary outlook for the fourth quarter.

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YSS Corp. financial and operating results for the 3rd quarter of 2019

In the third quarter, YSS Corp. achieved numerous strategic milestones and successfully opened nine new locations.

This represents an expansion from three existing businesses to a total of 12 businesses at the end of the period, significantly increasing revenues compared to the previous quarter.

Q3 2019 revenues totaled $3.3 million, an increase of 140%, or $1.9 million, over the previous quarter as three locations (YSS Red Deer, Sweet Tree Riverbend, and Sweet Tree Forest Lawn) operated throughout the quarter and nine additional stores were opened during the quarter.

The quarterly gross margin amounted to $1.1 million, or 32% of net sales, and a store EBITDA contribution of $345,000. General and administrative expenses were $753,000 for the quarter.

Investments go towards expanding retail locations

Approximately $811,000 was spent on investing activities in the third quarter of 2019, including the construction of additional retail locations.

With a liquidity position of $9.5 million as of Sept. 30, 2019, YSS Corp. continues to have ample cash and cash equivalents to continue implementing its well-considered growth strategy and capitalizing on strategic opportunities.

Stocks of cannabis and cannabis accessories totaled $1.3 million at the end of the quarter compared to $798,000 at the end of the second quarter of 2019, primarily due to the buildup of inventory in the nine stores opened during the quarter.

Outlook for the fourth quarter of 2019

The company has focused its efforts on optimizing inventory by selling less popular products and reducing inventory by more than $200,000 since the end of the third quarter of 2019 while maintaining a gross margin in excess of 30%.

After the end of the quarter, the company opened its 13th location in Swift Current, Saskatchewan, which is YSS Corp.’s first retail store outside Alberta.

Sweet Tree Okotoks has successfully passed its final review by the Alberta Gaming, Liquor and Cannabis Commission (AGCL), and the company’s 14th store location is expected to open in early December.

The rest of the year will kick-start a promising 2020

The average capital cost for the company’s four most recently established businesses is an estimated $360,000 per business.

“With improved supply dynamics and a less restrictive regulatory environment, the second half of 2019 is the foundation for the future of the Canadian cannabis industry, at least in western Canada,” Zunich explained. “YSS Inc. is committed to further strengthening the fundamentals of retail profitability by focusing on store locations, operational efficiency, and customer satisfaction.”

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(Featured image by Jungwoo Hong via Unsplash)

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