Planet 13 Is A One-Hit Wonder So Far

Based on this information, I have projected revenue of about $5.16 million for November and December and $5.67 million for January. Based the January number, growth from a year ago was 39%. This has been driven by 18% growth in customers and 18% growth in spending per customer. Some of that spend includes the food offerings.

Total revenue for Q4 looks to be $15.94 million which would be a sequential decline of almost 5%. In the prior quarter, sequential growth was just 1%. It appears that growth has maxed out.

Looking at the last reported quarter, Q3, the company reported annual growth of 241% as it posted revenue of $16.7 million. The prior period was based on sales from its prior location. Q4, at $15.94 million, which is below the consensus of $17.67 million (2 analysts), would represent growth of 93%, which demonstrates the slowing growth theme.

In Q3, the company reported a gross margin of 59%, which is impressive. Note, though, that full year guidance, revealed in January at 57%, suggests that the Q4 margins were lower than Q3 and likely just below 57%. For January, it reported it to be in a range of 56-59%.

Operating income in Q3 was $462K and $2.08 million year-to-date. The company includes some non-operating expenses, and, after taxes, reported a net loss of $1.7 million in Q3 and $3.86 million year-to-date.

Due to substantial expansion in income tax payable by $5.5 million, operating cash flow for the first three quarters was an impressive $7.6 million, but this should wash out as the company makes the tax payments. The company spent $12.7 million in the first three quarters on capital expenditures.

The balance sheet had $18.1 million cash at the end of Q3, a function of a capital raise in 2018. Current assets o $28.9 million are almost twice the value of the current liabilities, suggesting good liquidity.Balance sheet equity was $41.1 million, all tangible. There is debt of less than $1 million.

Note that the company has changed auditors recently, moving from MNP to Davidson & Company.


VALUATION

At 11/25, the company had 136.75 million shares outstanding, including 81.5 million common shares and 55.2 million Class A shares, which can be converted into common one-for-one under certain conditions. It also had 753K options at a weighted average of C$1.17 and 15.9 million warrants, including 10.7 million at or below C$1.40, 524K at C$3.00 and 4.79 million at C$3.75. Finally, the total share-count should include 4.45 million RSUs.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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