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Body And Mind Posts Strong Quarterly Consolidated and Managed Revenue Growth

Press Release and Commentary below

Body and Mind Inc. (CSE: BAMM) (OTCQB: BMMJ), a multi-state operator, is pleased to announce its financial results for the fiscal year ended July 30, 2020 and is providing shareholders with an operational update.

FY2020 Financial Summary (results expressed in $USD unless otherwise indicated) :

  • For the fiscal year ended July 31, 2020 , achieved record annual consolidated revenue of $6.23 million ;
  • For the fiscal year ended July 31, 2020 , achieved record system wide managed revenue of $17.66 million *;
  • Gross profit totalled $1.51 million for fiscal 2020, yielding a gross profit margin of 24%;
  • Significant inventory of $1.77 million as of July 31, 2020 ;
  • Basic and Diluted loss per share $(0.04) for the fiscal year;
  • Consolidated revenue is reported from Nevada and San Diego operations only. Income from the Elyria, Ohio dispensary is treated as equity pickup as the licenses for ShowGrow Long Beach and the Elyria, Ohio dispensaries were transferred to the Company after the fiscal year end;
  • At July 31, 2020 , BaM had $1.35 million in cash;
  • Total Current Assets were $5.60 million , Total Assets were $38.8 million , Total Current Liabilities were $2.81 million and Total Liabilities were $5.49 million at July 31, 2020 ; and
  • 107,513,812 common shares were outstanding as at July 31, 2020 .

FY 2020 Q4 Summary :

  • Fourth quarter consolidated sales of $2.17 million , a 106% gain over Q3 consolidated sales;
  • Fourth quarter system wide managed revenue of $5.57 million *, a 39% gain over Q3;
  • Gross profit totalled $0.74 million , yielding a gross profit margin of 34%;
  • Basic and Diluted loss per share $(0.01) for the fourth quarter;
  • Consolidated revenue is reported from Nevada and San Diego operations only.

*Managed revenue: refers to results for the 12 months and 3 months ended July 31, 2020 , including managed revenues, which are sales of cannabis products from entities for which management arrangements or definitive agreements are in place but BaM cannot consolidate due to regulatory restrictions, or from equity investments, in which results cannot be consolidated. Managed entities include Body and Mind’s involvement in certain California , Ohio and Arkansas operations.

Operational Milestones for FY2020 and to Date:

California :

  • Opened the San Diego dispensary in Miramar , San Diego in April 2020 ;
  • Assumed management of ShowGrow Long Beach dispensary effective August 1, 2019 , which is fully operational;
  • Completed license transfer of the ShowGrow Long Beach dispensary into a 100 % owned subsidiary of BaM in September 2020 .
  • Entered into brand management and brand director agreement for production operations for BaM branded products at a licensed Cathedral City facility; and
  • Expended sales of BaM branded products to new dispensaries in California .

Nevada :

  • Completed construction and commenced operating in the new approximately 7,500 square foot production facility designed to allow for expanded edible, extract and white label production;
  • Commenced construction of space conversion in the cultivation facility to convert past production area into new cultivation space to provide an approximate 20% increase in flower canopy;
  • Developed proprietary new strains and expanded Body and Mind branded SKU’s; and
  • Partnered with Her Highness to launch the Her Highness brand in Nevada .

Ohio :

  • Completed license transfer for the Clubhouse Dispensary to a 100% owned subsidiary of BaM in August 2020 ;
  • Commenced construction of approximately 4,000 square foot production facility; and
  • Rebranded The Clubhouse dispensary to Body and Mind.

Arkansas :

  • Body and Mind dispensary awarded “Best Dispensary in Arkansas ” by Ark420.com;
  • Expanded into Arkansas with in-state partner, Comprehensive Care Group LLC, for a dispensary and cultivation facility;
  • Completed construction of the facility which is approximately 10,000 square feet with roughly 4,000 square feet for retail and 6,000 square feet for cultivation and operations;
  • Opened the Body and Mind branded medical marijuana dispensary in West Memphis, Arkansas ; and
  • Commenced set up for the cultivation facility.

“We achieved record sales in fiscal 2020, with consolidated revenues for the fourth quarter increasing by 106% quarter over quarter as sales from dispensaries and demand for our premium branded products continued to drive our strong growth. Our consolidated revenue for fiscal 2020 was primarily booked from our Nevada operations with inclusion of new revenue from ShowGrow™ San Diego dispensary after opening the operation in Miramar , San Diego in late April. We continue to build infrastructure to support all our operations and look forward to consolidating revenue from the Long Beach and Ohio dispensaries now that both license transfers are complete,” stated Michael Mills , President and Chief Executive Officer of BaM.

To read the release in its entirety, please click here.

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TDR Commentary

After the close, Body and Mind announced fiscal year 2020 financial results. While the company achieved record annual consolidated and managed revenues, the real story was the quarterly results, which provided a sneak peek into what is coming directly ahead.

Fourth quarter consolidated sales soared to $2.17 million—increasing 106% on a sequential quarterly basis—reflect augmented growth from existing operations new top line revenues from BaM’s majority-owner San Diego dispensary. Managed revenue also registered a 39% gain over Q3, as revenues from BaM’s Arkansas dispensary were recognized for the first time. Both operations opened near the end of the previous quarter.

In the next fiscal quarter (FY 2021 Q1), investors can expect much more consolidated revenue recognition on the top line. BaM completed the license transfer of both its Long Beach and Ohio dispensaries in early September, allowing managed revenues to shift over. TDR expects approximately two-third of these revenues can be consolidated in the next reporting cycle.

Fourth quarter system wide managed revenue of US$5.57 million—a significant portion of which is attributed to the aforementioned dispensaries.

TDR will have further coverage as events warrant.

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DisclosureThe principal(s) of The Dales Report have an existing agency agreement with Body and Mind Inc. The commentary is neither a solicitation nor endorsement to purchase securities in the profiled security. The information provided has been published for informational purposes only. The principal(s) may divest or make additional purchases of securities without further notice (N/A). Please contact a licensed investment advisor if you are considering investing in Body and Mind.

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