Ms. Marcie Kiziak reports

NOVA ANNOUNCES FOURTH QUARTER AND YEAR END 2023 RESULTS

Nova Cannabis Inc. has released its annual consolidated financial statements and management's discussion and analysis for the year ended Dec. 31, 2023. All financial information in this press release is reported in-millions of dollars and represents results from continuing operations, unless otherwise indicated.

"Nova has achieved significant milestones this year, marked by sequential gross profit growth and positive net earnings for three consecutive quarters," said Marcie Kiziak, chief executive officer of Nova Cannabis. "Our success in the current market is a direct result of our sharp focus on inventory management and the strategic enhancement of our proprietary data agreements, which has contributed to our positive cash flow position this past year. Amidst a competitive and fluctuating market, our expansion will continue to be measured, focusing on tactical opportunities in the key markets of British Columbia and Ontario in 2024. Our achievements through 2023 further highlight the success of the Value Buds banner, which has proven adaptable and well positioned to endure success in Canada's dynamic cannabis retail sector."

Fourth quarter financial and operating highlights:

• Revenue of $67.4-million for the fourth quarter of 2023, which was consistent with the third quarter of 2023 and a 10-per-cent increase from the fourth quarter of 2022;
• For locations operational throughout the fourth fiscal quarter of 2023 and 2022, same-store sales increased 2 per cent year over year;
• Gross profit of $17.1-million (25 per cent of revenue), a 34-per-cent increase from the fourth quarter of 2022 of $12.8-million (21 per cent of revenue); gross profit improvement was driven by price stabilization in the Alberta market, the company's development of private label initiatives and an increased number of proprietary data licensing agreements being entered into by the company; these factors have contributed to nine consecutive quarters of gross profit improvement;
• Net earnings of $400,000 (one-cent earnings per share) in the fourth quarter of 2023 compared with a net loss of $4.8-million (eight-cent loss per share) in the fourth quarter of 2022; net earnings increased by $5.2-million or 109 per cent from the fourth quarter of 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter of 2023 of $6.4-million (9 per cent of revenue) compared with $3.2-million for the fourth quarter of 2022, an improvement of 100 per cent;
• The data licensing program generated revenue of $4.2-million for the fourth quarter of 2023, compared with $1.6-million in the fourth quarter of 2022, representing growth of $2.6-million, or 163 per cent;
• 96 stores operating as of March 25, 2024, an increase of eight stores since the beginning of 2023;
• Nova Cannabis's management team estimates that its market share was approximately 19 per cent in Alberta and 4 per cent in Ontario for the fourth quarter of 2023, based on available industry data from Statistics Canada;
• Cash provided by operating activities in the fourth quarter of 2023 of $5.0-million, a $2.2-million increase from the $2.8-million cash provided by operating activities in the fourth quarter of 2022;
• Cash and cash equivalents of $13.8-million as at Dec. 31, 2023.

Fiscal year 2023 financial and operating highlights:

• Record revenue of $259.3-million, an increase of $32.9-million or 15 per cent, from $226.4-million in 2022;
• Record gross profit of $61.6-million, or 24 per cent of sales, a 40-per-cent increase from $43.9-million, or 19 per cent of sales, in 2022;
• Revenue from Nova Cannabis's proprietary data licensing arrangements was $12.4-million for 2023, an increase of 125 per cent from $5.5-million in 2022;
• Net earnings of $3.0-million in 2023, compared with a loss of $11.2-million in 2022, an increase of 127 per cent;
• Adjusted EBITDA for 2023 was $21.8-million compared with $9.2-million in 2022, an improvement of 137 per cent;
• Cash provided by operating activities improved to $11.7-million in 2023, an $11.8-million increase from ($100,000) in 2022;
• Nova Cannabis expanded its private label collaboration with SNDL Inc. through 2023, introducing large-format flower SKUs in the Ontario market in the first half of the year; in September, the collaboration expanded further with the introduction of the large format vape.

Revolving credit facility

Nova Cannabis has an uncommitted revolving credit facility with SNDL in an aggregate principal amount not to exceed $15.0-million. On Nov. 17, 2023, the term of the revolving credit facility was extended to March 31, 2024. The company is in discussions with the lender to further extend the maturity of the revolving credit facility.

As at March 25, 2024, the revolving credit facility is fully drawn.

Strategic outlook

Nova Cannabis aims to disrupt and solidify the cannabis retail market by promoting a wide range of cannabis products at everyday best-value prices while encouraging greater migration from the illicit cannabis market. The company's strategy is rooted in the quality of its store footprint and locations, the sales efficiency of Nova Cannabis stores, and the appeal of the Value Buds brand. Nova Cannabis remains disciplined and customer focused by choosing the best real estate to execute its strategy -- whether through acquiring stores or building its own.

• The company is focused on expanding its store footprint in the Prairie provinces and in the key markets of British Columbia and Ontario, following regulatory updates increasing the cap on stores in the Ontario market, and proposed updates to the eight-store cap in British Columbia. Nova Cannabis continues to pursue opportunities based on the quality of the real estate and the potential of attractive economic returns while avoiding unsustainable valuations.
• Nova Cannabis optimized its data licensing program to increase mutually beneficial results for both its retail operations and licensed producers while increasing the scale and sustainability of the program. Leveraging Value Buds volume and the company's access to high-quality analytics, the company is well equipped to deliver continued margin and revenue expansion through program optimizations and its ability to provide market-driven solutions.
• To build on the success of the Value Buds brand and provide a service to both consumers and industry partners, the company introduced its pilot concept, Firesale Cannabis, in 2023. The company's cannabis liquidation pop-up helps licensed producers sell aged inventory at deeply discounted prices, intending to provide the most affordable cannabis products in Canada. As at March 25, 2024, the company operates one Firesale Cannabis store in Alberta.
• The company is dedicated to enhancing retail fundamentals with a keen focus on delivering a seamless end-to-end customer experience across both physical and digital platforms. This approach aims to bolster conversion rates and drive incremental margin expansion. Nova Cannabis is committed to implementing top-tier retail strategies, which involve reshaping in-store dynamics and optimizing the purchasing journey to effectively capitalize on basket growth opportunities.
• Through its relationship with SNDL, Value Buds' private label strategy has been launched in Alberta and Ontario with four large-format flower offerings and a large-format vape. The company is exploring further product extensions in the coming quarters to offer large-format prerolls and edibles. The private label strategy enables Nova Cannabis to develop higher gross margin offerings, build customer loyalty and create long-term brand awareness. The private label strategy focuses on keystone segments, specifically large format, uniquely curated for the Value Buds consumer, and drives meaningful differentiation through the retail network.

Conference call

Nova Cannabis will host a conference call and webcast at 10 a.m. EDT (8 a.m. MDT) on Tuesday, March 26, 2024.

Call access

Canada/United States toll-free:  1-800-319-4610

International toll:  1-604-638-5340

Webcast access

A live webcast of the call will be available at the Chorus Call website.

Replay

The webcast archive will be available for three months.

A telephone replay will be available for one month. To listen to the replay, dial the following.

Canada/United States toll-free:  1-800-319-6413

International toll:  1-604-638-9010

When prompted, enter replay access code 0754.

For further information, refer to the company's financial statements and management's discussion and analysis for the three and nine months ended Sept. 30, 2023, which are available from the company's profile on SEDAR+ or on the company's website.

About Nova Cannabis Inc.

Nova Cannabis (Toronto Stock Exchange: NOVC) is one of Canada's largest and fastest-growing cannabis retailers with a goal of disrupting the cannabis retail market by offering a wide range of high-quality cannabis products at everyday best value prices. The company currently owns and/or operates 96 locations across Alberta, Ontario and Saskatchewan, primarily under its Value Buds and Firesale Cannabis banners.

We seek Safe Harbor.