Strong second quarter with 195% year-on-year increase in revenue and addition of 20 new leases
LOS ANGELES, CA / ACCESSWIRE / August 25, 2022 / XS Financial Inc. (“XS Financial”, “XSF” or the “Company”) (CSE:XSF) (OTCQB:XSHLF), a specialty finance company providing CAPEX and equipment finance solutions to cannabis companies in the United States, today announced its financial results for the second quarter ended June 30, 2022 (“Q2/22”). All amounts are in US dollars unless otherwise specified.
Q2/22 Financial Highlights
- 195% increase in revenue year-on-year at $1.7 million in Q2/22 vs. $0.6 million in Q2/21 ;
- 198% YoY increase in recurring monthly payments at $1.7 million in Q2/22 versus $0.6 million in Q2/21;
- 216% YoY increase in closed leases since inception at $67.3 million in Q2/22 versus $21.3 million in Q2/21;
- 176% year-on-year increase in gross rental receivables at $71.6 million in Q2/22 versus $25.9 million in Q2/21;
- 39% Q/Q improvement in distributable net profit at ($267,000) in Q2/22 versus ($438,000) in Q1/22;
- 0% default rate on portfolio; and
- 14 new lease annexes with Ayr Wellness, Columbia Care, PharmaCann, Temescal Wellness and others, resulting in closed lease transactions totaling $19.2 million.
Post Quarter End Portfolio and Company Highlights as of August 15e2022:
|Q3/21||Q4/21||Q1/22||Q2/22||As of 08/15/2022|
|# of customers||8||8||ten||11||13|
|Number of active leases||51||62||76||96||115|
|Leases closed since inception||$34.2 million||$41.3 million||$48.0 million||$67.3 million||$76.3 million|
|Average size of leases per customer||$4.3 million||$5.2 million||$4.8 million||$6.1 million||$5.9 million|
|Recurring monthly payments||$1.1 million||$1.2 million||$1.4 million||$1.7 million||$1.9 million|
|Gross rental receivables||$38.5 million||$43.6 million||$48.1 million||$71.6 million||$79.7 million|
- $24 million bank credit facility concluded in August at the prime rate + 1% APY to support growth and reduce the cost of capital for the company;
- 19 new lease annexes with Ascend Wellness, Ayr Wellness, Columbia Care, Green Dragon, PharmaCann and Skymint, resulting in leases of $9.0 million; and
- Appointment of Stephen Christoffersen to the CFO in August.
David Kivitz, CEO of XS Financial commented: “During the second quarter, we achieved significant operational milestones, including record revenues, increased monthly recurring payments to over $1.7 million, and achieved record gross lease receivables. The closing of our $24.0 million Prime + 1% credit facility has transformed our capital base, which will drive financial results for our shareholders. Additionally, the integration of Stephen Christoffersen as Chief Financial Officer has strengthened our leadership team and positioned us well for our next phase of growth. We look forward to delivering positive results related to our key metrics and building our portfolio and pipeline with market-leading operators.”
Summary of financial results – Three months ended June 30, 2022
The following table sets forth selected financial information for the periods indicated which has been derived from our audited financial statements.
|For the three months ended|
Operating profit (loss)
Other expenses (income)
Net income (loss)
Earnings (loss) per share – basic
Weighted average number of shares outstanding – basic
|103 885 041||103 500 701|
Revenue for the quarter increased 195% to $1,657,771 from $561,579 for the same period a year earlier. The increase of $1,096,192 is attributable to revenue recognized from finance revenue associated with 58 new finance leases from Q2 2021 to Q2 2022.
Operating expenses for the quarter increased 16.6% to $891,828 from $764,561 for the same period a year earlier. The increase is mainly the result of the increase in personnel costs due to an increase in operations, offset by a decrease in professional fees.
Other expenses for the quarter increased to $4,335,529 from $277,596 for the same period last year. The increase in other expenses of $4,057,933 is mainly due to an increase of $1,385,000 in the change in fair value of liabilities, an increase of $990,604 in foreign exchange losses related to the financing of convertible notes issued Canada, an increase of $936,488 in interest expense due to portfolio growth and $753,048 in non-cash accretion expense associated with new debt agreements entered into in 2021.
Net loss for the quarter was $3,569,586, compared to a net loss of $480,578 for the second quarter of 2021.
Earnings per share (“EPS”)
Comparative table illustrating the evolution of EPS for the period ending June 30, 2021 (“ Q2/21 “), the period ending September 30, 2021 (“ Q3/21 “), the period ending December 31, 2021 (“ Q4/21 “), and the period ending March 31, 2022 (“ Q1/22 “), and Q1/22 .
Earnings (loss) per share
The Company realized a loss of $3,569,586 for Q2/22 compared to a loss of $480,578 for Q2/21.
Summary of Net Distributable Income – Second Quarter 2022 vs. First Quarter 2022
|Q2 2022||Q1 2022|
Add: Depreciation expenses
Add: Non-cash share compensation
Less: Interest expense
Distributable net profit
Distributable net profit
After adjusting for non-cash items, including unrealized loss in change in fair value of investments, accretion expense and change in fair value of derivative liabilities and stock-based compensation, the Company has reported distributable net income of ($266,632) in Q2 2022 compared to ($437,754) in the first quarter of 2022, a 39% quarter-over-quarter improvement.
Complete annual financial statements and MD&A of XS Financials for the first quarter ended June 30e2022, will be filed under the Company’s profile at www.sedar.com, and will also be available on XS Financial’s corporate website at www.xsfinancial.com.
About XS Financial
XS Financial provides the US cannabis industry with access to non-dilutive CAPEX financing solutions at competitive prices. Founded in 2017, the company specializes in financing equipment and other qualifying capital expenditures for growing cannabis businesses, including growers, processors, manufacturers and testing labs. Additionally, XSF has partnered with more than 200 original equipment manufacturers (OEMs) through its network of preferred supplier partnerships. This powerful dynamic provides an end-to-end solution for customers, resulting in recurring revenue and a proven business model for XSF stakeholders. The subordinate voting shares of the Company are traded on the Canadian Securities Exchange under the symbol “XSF” and in the United States on the OTCQB under the symbol “XSHLF”. For more information, visit: www.xsfinancial.com.
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Non-IFRS Financial Measures
This press release includes references to certain non-IFRS financial measures. These non-IFRS measures do not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and therefore are unlikely to be comparable to similar measures presented. by other companies. Accordingly, they should not be considered in isolation from, as a supplement to, or as a substitute for, or superior to measures of financial performance prepared in accordance with IFRS.
This press release contains “forward-looking information” and may also contain statements that may constitute “forward-looking statements”, collectively “forward-looking information”, within the meaning of applicable Canadian securities laws. This forward-looking information is not representative of historical facts or information or of the current situation, but rather represents beliefs and expectations regarding future events with respect to the business, industry and markets in which XS Financial operates, as well as that the plans or objectives of management, many of which, by their nature, are inherently uncertain. Generally, such forward-looking information can be identified by the use of terms such as “plans”, “expects” or “does not expect”, “is planned”, “budget”, “expected” , “estimates”, “plans”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of these words and phrases or may contain statements that certain actions , events or results “could”, “could”, “would”, “could” or “will”, “continue”, “occur” or “will be realized”. The forward-looking information contained herein may include, but without limitation, any additional leasing opportunity and the ability to capitalize thereon and the timing thereof. Forward-looking information is not a guarantee of future performance and involves risks, uncertainties and difficult assumptions. to be expected. Accordingly, readers should not rely r unduly to forward-looking information, which is qualified in its entirety by this warning. XS Financial Inc. undertakes no obligation to publicly release revisions to update voluntary forward-looking information, except as required by applicable securities law.
Neither the Canadian Securities Exchange nor its regulation services provider accepts responsibility for the adequacy or accuracy of this release.
THE SOURCE: XS Financial
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