Sign in

You're signed outSign in or to get full access.

CH

CLS Holdings USA, Inc. (CLSH)·Q1 2020 Earnings Summary

Executive Summary

  • Q1 2020 delivered record consolidated revenue of $2.86M (+142% year-over-year) and gross profit of $1.45M, with gross margin expanding to 50.6% from 35.3% a year ago .
  • Net loss narrowed dramatically to $1.38M ($0.01/share) from $16.66M ($0.23/share) in Q1 2019, reflecting lower one-time charges and operating scale benefits .
  • Oasis dispensary and City Trees each posted record performance; customers nearly doubled and revenue per square foot rose 93.6% year-over-year .
  • Near-term catalysts include Oasis floor-space expansion (to ~2,000 sf in mid-November) and extraction facility ramp (target ~300,000 grams/month; annualized revenue ~$18M at current prices) .

What Went Well and What Went Wrong

  • What Went Well
    • Oasis dispensary revenue reached a record $2.09M (+169% YoY), and City Trees revenue hit $0.77M (+92% YoY), underpinning consolidated margin expansion to 50.6% .
    • “Outpacing the annual growth of the Nevada cannabis industry, despite a significant decline in tourism traffic…illustrates how hard our team has worked” — Andrew Glashow, President & COO .
    • “Oasis Cannabis and City Trees subsidiaries are profitable on a stand-alone basis” — Jeff Binder, Chairman & CEO, highlighting operational efficiency at the subsidiary level .
  • What Went Wrong
    • Consolidated operations still posted a net loss of $1.38M; corporate costs and public company overhead remain a drag despite unit-level profitability .
    • Interest expense remained elevated ($800,629) due to outstanding debentures, partially offset by reduced discount amortization vs prior-year one-offs .
    • Working capital decreased sequentially to $4.12M on capex and Oasis prepayment activity, tightening near-term liquidity flexibility .

Financial Results

  • Period: Fiscal Q1 2020 (three months ended August 31, 2019)
  • Comparisons: vs Q1 2019 (prior year) and trend vs Q3 2019, Q4 2019 (prior quarters)

Key income statement metrics:

MetricQ1 2019Q1 2020
Revenue ($USD)$1,179,353 $2,859,015
Gross Profit ($USD)$419,409 $1,447,443
Gross Margin %35.3% 50.6%
Operating Loss ($USD)$(14,972,721) $(850,871)
Net Income (Loss) ($USD)$(16,656,940) $(1,376,500)
Diluted EPS ($USD)$(0.23) $(0.01)

Trend vs prior quarters (Revenue):

MetricQ3 2019Q4 2019Q1 2020
Revenue ($USD)$2,372,790 $2,900,000 $2,859,015

Segment revenue breakdown (Q1 periods):

SegmentQ1 2019Q1 2020
Cannabis Dispensary Revenue ($USD)$776,708 $2,085,900
Cannabis Production Revenue ($USD)$402,645 $773,115

Key KPIs:

KPIQ1 2019Q1 2020
Oasis Customers (count)26,438 52,448
Avg Customers/Day294 583
Revenue per SF ($)$205 $397
Oasis Gross Margin %35.9% 48.3%
City Trees Gross Margin %34.1% 56.2%

Notes:

  • Wall Street consensus estimates (EPS, revenue) via S&P Global were not available for CLSH due to missing CIQ mapping; therefore no estimate comparison is shown.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Extraction output (finished oil)Early calendar 2020None disclosed~300,000 grams/month Raised
Annualized revenue from extractionEarly calendar 2020None disclosed~$18.00M at current prices Raised
Oasis retail floor spaceMid-November 2019 (Q2 FY2020)~1,750 sf~2,000 sf expected Raised

Earnings Call Themes & Trends

Note: A Q1 2020 earnings call transcript was not available through our document catalog or standard sources. The thematic tracking below synthesizes Q3 2019 MD&A, Q4 FY2019 press release, and the Q1 2020 press release.

TopicPrevious Mentions (Q3 FY2019)Previous Quarter (Q4 FY2019)Current Period (Q1 FY2020)Trend
Macro/Tourism impactNo Nevada tourism commentary; focus on financing and Oasis integration Growth at Oasis; customer-first culture and delivery program planned Outpacing NV industry despite “significant decline in tourism” Positive execution vs headwinds
Product performance (City Trees)Building distribution; revenue contribution Record FY2019 City Trees revenue $3.0M; re-branding plan Record Q1 City Trees margin 56.2% and revenue growth Strengthening brand metrics
Technology/ExtractionUnder development; capex underway Facility launch targeted early 2020; ~300k grams/month; ~$18M annual revenue Margin gains tied to better processes and inventory purchasing Execution & margin leverage
Regulatory/Legal (MA)IGH option and loan; steps toward acquisition IGH anticipated to close in Q1 calendar 2020; Sandwich HCA for second dispensary IGH granted final recreational license 9/13/2019 (Brockton, MA) De-risking of MA growth path
Retail expansionOasis redesign and strong traffic Plan to add floor space and registers Expansion to ~2,000 sf; customers/day nearly doubled Scaling throughput

Management Commentary

  • “We’re honored to have the support of our local community that made this summer such a success… despite a significant decline in tourism traffic” — Andrew Glashow, President & COO .
  • “Oasis Cannabis and City Trees subsidiaries are profitable on a stand-alone basis while our consolidated net loss stems primarily from…publicly traded company [costs] and parent holding company [costs].” — Jeff Binder, Chairman & CEO .
  • Strategy pillars reiterated: customer-first culture, delivery program launch, rebranding of City Trees, and extraction facility ramp to drive throughput and margin .

Q&A Highlights

  • No Q1 2020 earnings call transcript was available; therefore, Q&A themes and any guidance clarifications could not be assessed from a live discussion or transcript (searched but not found in the document catalog and common transcript sources) [ListDocuments result on earnings-call-transcript: 0 documents] .

Estimates Context

  • We attempted to retrieve S&P Global consensus estimates for Q1 2020 EPS and revenue, but CLSH was not mapped in the SPGI CIQ dataset at the time of query. As a result, Wall Street consensus data were unavailable for this quarter and are not included in comparisons (GetEstimates error: missing CIQ mapping for CLSH).

Key Takeaways for Investors

  • Unit-level profitability at Oasis and City Trees, coupled with consolidated margin expansion to 50.6%, signals improving operating leverage as corporate overhead is absorbed .
  • Customer traffic and throughput are scaling rapidly; revenue per square foot nearly doubled, with further capacity coming from retail floor-space expansion .
  • Extraction facility ramp (target ~300k grams/month; ~$18M annualized revenue) is a near-term inflection point for volumes and vertically integrated margin support .
  • Liquidity moderated sequentially as the company invested in buildout and prepayments; monitor capex cadence and debt servicing costs given interest expense profile .
  • MA optionality improved as IGH secured its recreational license; acquisition timing remains subject to financing and closing conditions—potential multi-state expansion lever .
  • Trading implication: Positive fundamental momentum without consensus benchmarks; near-term stock catalysts include confirmation of extraction ramp milestones, Oasis expansion completion, and MA transaction progress .

Sources: Q1 2020 10-Q (period ended Aug 31, 2019) ; Q4 FY2019 press release (Aug 29, 2019) ; Q1 FY2020 press release (Oct 15, 2019) .