PRESS RELEASE
LOS ANGELES–(BUSINESS WIRE)–MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) (“MedMen” or the “Company”), a leading cannabis retailer with operations across the U.S., today announced a strategic plan (the “Plan”) to achieve its target of positive EBITDA by the end of calendar year 2020. The 90-day plan will focus on five key objectives: 1) focusing on core markets, while divesting non-core assets; 2) reducing corporate SG&A; 3) driving asset-level EBITDA; 4) limiting cash outlays for the next 12 months; and 5) reinvesting in the Company’s employees and culture. MedMen believes the Company can execute this plan while still growing its retail presence and maintaining a best-in-class retail experience.
“We have a clear plan to increase our market share, while at the same time enhancing our margins and reducing our corporate overhead,” said Adam Bierman, MedMen co-founder and chief executive officer. “We must unlock our operating leverage and bring the Company to positive EBITDA. Given market conditions, capital allocation is more critical than ever. As such, we announced a layoff of over 190 MedMen employees. This layoff includes many hard working, mission-based people whose presence will be sorely missed. While it is never easy to let employees go from the MedMen Family, we believe this decision is in the best interest of our Company as we position ourselves for growth in the years ahead. We thank everyone for their hard work and dedication to MedMen, and we will now set our sights on achieving positive EBITDA by the end of calendar year 2020.”
Strategic Plan Details:
1) Focusing on Core Business / Divesting Non-Core Assets As with other consumer retail industries, certain markets such as Los Angeles, Las Vegas, New York City, Miami and Chicago present outsized potential benefits in brand creation and market demand. As such, the Company will continue to focus its growth in these core markets where it already has operating leverage. The reprioritization efforts include the following:
2) Reduce Corporate SG&A As of its December 2018 quarter, the Company’s corporate SG&A was $154 million (adjusted for local taxes to be consistent with subsequent quarters) on an annualized run-rate basis. Assuming full and successful implementation of today’s cost-cutting plans, the Company expects to achieve a $85 million corporate SG&A annualized run-rate by the end of fiscal third quarter 2020. This will be achieved through a number of near-term initiatives including:
3) Drive Asset-Level EBITDA Through further retail store optimization, increases in private label penetration and growth in its delivery platform, the Company expects to drive improvements in EBITDA from its operating assets and will be focused on the following:
4) Limit Cash Outlays Given the current capital market environment, the Company intends to limit significant cash outlays over the next 12 months and has begun its efforts through the following initiatives:
5) Invest in Employees and Culture As part of its reduction in corporate SG&A, the Company will continue investing in its employees and building on its corporate culture of collaboration.
Overall Intended Results and Achievements to Date:
Through a right-sizing of the organization and a focus on generating cash flow, the Company expects to enter calendar 2020 as a leaner and more flexible organization to execute on its mission, while still building on its leadership position in the industry and its many accomplishments, including:
Fiscal First Quarter 2020 Earnings Call:
MedMen plans to release its financial results for the first quarter of fiscal 2020 ended September 28, 2019 after market close on Tuesday, November 26, 2019. During the call, management will further discuss these new plans for achieving positive EBITDA.
Following the release of these financial results, at 5:00 PM Eastern that same day, MedMen Enterprises will host a conference call and audio webcast with Chief Executive Officer and Co-Founder, Adam Bierman, and Chief Financial Officer, Zeeshan Hyder, to discuss the results in further detail.
Dial-in Information:
Toll Free Dial-In Number: (844) 559-7829 International Dial-In Number: (647) 689-5387 Conference ID: 7253627
About MedMen:
MedMen is a cannabis retailer with operations across the U.S. and flagship stores in Los Angeles, Las Vegas and New York. MedMen’s mission is to provide an unparalleled experience that invites the world to discover the remarkable benefits of cannabis because a world where cannabis is legal and regulated is a safer, healthier and happier world. Learn more at www.medmen.com.
Cautionary Note Regarding Forward-Looking Information and Statements:
This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only MedMen’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of MedMen’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “target of”, “objectives”, “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but are not limited to, expectations regarding the timing and results of the Company’s ongoing corporate SG&A optimization efforts, the target of being EBITDA positive by the end of calendar year 2020, expectations to achieve an $85 million corporate SG&A annualized run-rate by the end of fiscal third quarter 2020, expectations to continue to eliminate layers in the organization, expected increases in gross margins, implementing a cost rationalization program, consolidating corporate offices to reduce rent expense, other considerations that could impact achieving positive EBITDA, and the production capacity of cultivation and manufacturing factories.
This forward-looking information is based on certain assumptions made by management and other factors used by management in developing such information. These include the following:
By identifying such information and statements in this manner, MedMen is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of MedMen to be materially different from those expressed or implied by such information and statements, including the following risks:
Although MedMen believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and MedMen does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to MedMen or persons acting on its behalf are expressly qualified in its entirety by this notice.
Non-IFRS Measures
This press release uses certain non-IFRS measures. Management uses non-IFRS financial measures, in addition to IFRS financial measures, to understand and compare operating results across accounting periods, for financial and operational decision-making, for planning and forecasting purposes and to evaluate the Company’s financial performance. These measures include EBITDA, which is defined as net income or loss adjusted for net interest and other financing costs, provision for income taxes, and amortization and depreciation.
Management believes that these non-IFRS financial measures assess the Company’s ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial results across accounting periods and to those of peer companies. Management also believes that these non-IFRS financial measures enable investors to evaluate the Company’s operating results and future prospects in the same manner as management. These non-IFRS financial measures may also exclude expenses and gains that may be unusual in nature, infrequent or not reflective of the Company’s ongoing operating results.
As there are no standardized methods of calculating these non-IFRS financial measures, the Company’s methods may differ from those used by others, and accordingly, the use of these measures may not be directly comparable to similarly titled measures used by others. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
OFFICER: Adam Bierman, 855-292-8399 Chief Executive Officer [email protected]
MEDIA CONTACT: Christian Langbein, 424-320-2367 VP of Communications [email protected]
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