A 5th Consecutive Year of Positive Free Cash Flow VANCOUVER, BC, May 7, 2024 /CNW/ - C21 Investments Inc. (CSE:CXXI) and (OTCQX:CXXIF) ("C21" or the "Company"), a vertically integrated cannabis company, today announced its unaudited financial results for the fiscal year ended January 31, 2024. The Company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). All currency is reported in U.S. dollars. Unaudited Fiscal Year Financial Highlights (February 1, 2023 to January 31, 2024): Revenue of $28.3 million, down 2% from last year – state of Nevada sales down 6% over the same period1 Gross Margin of 39.4%, down from 46.4% the previous year driven primarily by one-time items discussed below Adjusted EBITDA2 of $4.6 million Earnings (Loss) per Share of ($0.02) compared to $0.00 last year Cash Flow from Operations of $3.3 million; Free Cash Flow2 of $2.7 million inclusive of $1.3 million taxes paid in the year Total Liabilities reduced by $1.5 million for the year Q4 Financial Highlights (November 1, 2023 to January 31, 2024): Revenue of $6.5 million – a 1% increase in same store sales over the previous Q4, offset by a decline in wholesale revenue Gross Margin of 43.5%, up from 40.0% in Q3, and up significantly from 23.5% in Q4 last year Adjusted EBITDA of $1.1 million, an increase of 16% over Q3 and 17% over the prior Q4 Cash Flow from Operations of $0.5 million which includes a partial tax payment made in Q4 Fiscal Year and Q4 Management and Operational Commentary: "We are pleased our Company continues to outperform the state of Nevada in terms of retail sales and cash generation. C21 reported a small increase in same store sales2 over the previous Q4 despite sales in Nevada declining 12% over the same period1 - a testament to our strong brand and loyal customer base that has consistently generated 500,000 customer transactions annually." stated CEO and President, Sonny Newman. "Our Gross Margins in Q4 have rebounded now that we have completed improvements to our grow facilities. We have been actively adjusting our business mix as we scale back lower margin wholesale activities to better position the business for the recently announced addition of our new dispensary - an ideally located, purpose-built 6,500 square foot facility in Southern Reno. We expect to close the acquisition this month. This new dispensary will be launched under our Silver State Relief banner. Continued expansion of our retail footprint in Nevada remains a key priority." ___________________ 1 State of Nevada cannabis sales: https://www.headset.io/markets/nevada 2 "Free Cash Flow", "Adjusted EBITDA" and "same store sales" are non-GAAP financial measures. See "Non-GAAP Financial Measures" below for a discussion of such non-GAAP financial measures and a reconciliation to the closest comparable GAAP financial measures. C21 generated $28.3 million in revenue for the year, down 2% year-over-year, while Nevada sales decreased 6% over the same period1. Q4 revenue of $6.5 million was down 4.8% compared to Q3 sequentially despite a 12% decline in Nevada sales for the comparative period1. The decline in Q4 sales was due to decreased wholesale activity in response to lower prices in this industry segment, with retail same store sales remaining stable, up 1% over the previous Q4. Gross Margin for the year was 39.4%, down from 46.4% last year, resulting from a number of factors including curtailment of our cultivation operations to facilitate grow room improvements, implementation of an expanded customer loyalty program, inflation pressures and price compression in the industry. Q4 Gross Margins of 43.5%, up from 23.5% in the fourth quarter last year, and up 350 basis points from Q3, reflects the rebound in margins having completed the improvements to the facility. Margins, while continuing to improve throughout the year, remain compressed relative to historical levels due to continued pricing pressures in the state. Cash Flow from Operations was $3.3 million for the year, after $1.3 million of income taxes paid.  Including taxes payable for the period, Operating Cash Flow and Free Cash Flow2 were both positive for the year. C21 reported a Net Income Before Tax of $1.1 million and a Net Loss of $2.5 million, or $0.02 per share.  The Company generated $4.6 million of Adjusted EBITDA2 for the year, including $1.1 million in Q4, up 16% over Q3 and 17% over the previous fourth quarter. Cash at the end of Q4 was $2.4 million, up $0.5 million from Q3 due to positive Free Cash Flow2 generated. Income taxes of $0.3 million were paid in Q4 and $1.3 million for the fiscal year. Total Liabilities for the year have been reduced by $1.5 million compared to last year. As C21 operates in the cannabis industry, the Company is subject to the limitations of Internal Revenue Code ("IRC") Section 280E for US income tax purposes. Under 280E, the Company is only allowed to deduct expenses for tax purposes directly related to costs of goods sold. Given the recent announcement by the D.E.A. to reclassify cannabis as a Schedule III drug, C21 anticipates the elimination of the future applicability of IRC Section 280E on its business upon final rule. Many U.S. cannabis operators are currently challenging the historic applicability of 280E on state-legal operations. C21 is reviewing its tax stance regarding these matters. During the year, the Company appointed Aron Swan as its Chief Operating Officer ("COO")(see news release dated September 7, 2023). C21 has established the COO role to support the Company's long-term growth objectives. In addition, the Company completed construction of a drive-through facility at its flagship dispensary in Sparks, which commenced operations in September. Following the year-end, the Company announced an agreement to acquire a 6,500sqf dispensary in Reno, Nevada (see news release dated March 15, 2024). Non-GAAP Measures: C21 reports its financial results in accordance with GAAP and uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures and ratios are not calculated in accordance with GAAP. The Company refers to certain Non-GAAP financial measures such as "Free Cash Flow", "Adjusted EBITDA" and "same store sales". These measures do not have any standardized meanings prescribed by GAAP and may not be comparable to similar measures presented by other issuers. The Company considers these measures to be an important indicator of the financial strength and performance of its business. The Company believes the adjusted results presented provide relevant and useful information for investors because they clarify the Company's actual operating performance, make it easier to compare the Company's results with those of other companies and allow investors to review performance in the same way as the management of the Company. Since these measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, the Company's reported results as indicators of the Company's performance, and they may not be comparable to similarly named measures from other companies. The tables below provide reconciliations of Non-GAAP financial measures to the most directly comparable GAAP measures. "Free Cash Flow" is defined as Cash Provided by Operating Activities from Continuing Operations in a period minus capital expenses of property and equipment. Management believes that Free Cash Flow, which measures the Company's ability to generate additional cash from our continuing business operations, is an important financial measure for use in evaluating the Company's financial performance.  Free Cash Flow should be considered in addition to, rather than as a substitute for, consolidated net income as a measure of the Company's performance and net cash provided by operating activities as a measure of liquidity. Free Cash Flow: Quarter Ended January 31, 2024 October 31, 2023 July 31, 2023 April 30, 2023 January 31, 2023 Cash Provided by Operating Activities from Continuing Operations OCF Margin% $  506,477 $  (110,329)