Transcript: C-suite at The Open, Interview with Daniel Petrov and Eleanor Lynch
Arne Gulstene: Welcome to the C-suite of open video series with TMX group. I'm Arne Gulstene, Head of Company Services based out of Vancouver and joining me today are Eleanor Lynch, the Chief Operating Officer and Daniel Petrov, the CEO of Kiaro Holdings [Corp], our new listing on the Venture Exchange trading under the ticker “KO”. Eleanor, Daniel, welcome. It's a pleasure to have you here today.
Eleanor and Daniel: Thanks Arne.
Arne: So Daniel, tell me or summarize for me, the top three things you'd like to highlight and you want investors to know about Kiaro right now.
Daniel: Top three things, first would have to be Kiaro's focus on operational excellence and profitability. Those have been pillars for the company founded on those pillars and really the same pillars today.
Second, it would be our multiple revenue streams. We've been granted a retail operator license in Ontario. In 2020 alone, the team opened four locations in B.C. and if anyone knows, B.C. has a really high barrier to entry so that's huge in the midst of a pandemic. Seeing our stores turn four-wall profitable within three to six months which is impressive by any retail standard. And currently, we're entering Ontario with the same profit-first approach. We're looking for those locations that will turn profitable within that three to six-month period. And if you look at our revenues generated per store we're amongst the top of the industry, if not the top if you're comparing apples-to-apples. So going back down to multiple revenue streams we talked about the omni channel retailer. You know at Kiaro you can reserve online and pick up in store. In Saskatchewan, you can get delivered through e-commerce. And also in Saskatchewan, you can actually do last-mile delivery so you know UberEats, DoorDash, Amazon. We're perfecting that and delivering that right now. So compare that to our wholesale business now. In wholesale, National Cannabis Distribution in Saskatchewan, we are servicing over 60 percent of the private retailers and I think that's huge. 60 percent of the retailers in Saskatchewan are buying [cannabis] products from Kiaro through our wholesale business that supports our [core] business and the industry as a whole. And it really gives us that competency to go into other markets when those open up so you can see the growth.
So the third thing is pace of growth. [In] Q2, we experienced 50 percent increase in revenues
quarter over quarter, 73 percent increase in adjusted EBITDA. You know these are really big numbers that we're putting up and what the public listing allows Kiaro to showcase is that operational result; that strong balance sheet in the public market now.
Arne: That's a great summary. Eleanor, how would you sum up the investment proposition then?
Eleanor: Yeah, the industry has been around now for two years and it's maturing. And as part of that maturing process is certainly the fundamentals of operational retail success and for us
that starts with a senior management team with over 40 years of retail experience, which has really lent itself to a sophisticated approach to supply chain management and certainly the channels of access that Daniel pointed to whether it's omni-channel or wholesale division. And
all of these fundamentals have really led to a balance sheet with minimal debt.
And so, for when you think about the industry itself and you layer in the barriers to entry that you see in cannabis retail, municipal [and] provincial, it's a challenge. And you've got a team here at Kiaro that's been managing through that over the last two years quite successfully. And it's a great opportunity to take a look at the fundamentals of retail operators.
Arne: Excellent. What are some near-term catalysts that investors or potential investors should be looking for, Eleanor?
Eleanor: Yeah, well I think the big one Arne is certainly market share, 25 percent of the regulated channel right now and we want that to expand and what do we see from an expansion opportunity against the unregulated market is certainly price parity. So we see that already happening, the unregulated and regulated markets are definitely coming closer together in
terms of prices. And then of course quality. Quality has improved; come on into a Kiaro store
you can see that there's lots of licensed producers to choose from. Quality has improved as has selection whether it's format, price, different qualities that you can choose. There's a lot going on in regulated cannabis. Beyond just those catalysts, I would say regulation is interesting in Canada. We expect to see some positive regulatory changes that will come through soon. And then in the U.S. you see Biden Harris talking about decriminalization of cannabis and certainly the market responded well to that. So when you look at catalysts and you think about fundamentals look for Kiaro, who really has done a great job of taking advantage of that.
Arne: Fantastic. Daniel, just to wrap up, tell me what does
being listed on the Venture Exchange mean for your company and your stakeholders?
Daniel: Well for the company and stakeholders, number one, this means ability to grow the
Kiaro community outside the four walls here. You know and share the story with a much
broader audience. You know currently we have an amazing customer base and shareholder base and moving forward with listing, everyone can become a stakeholder and you no longer have to be accredited. Everyone can own a share, everyone who can be part of the Kiaro
story that'd be number one.
Number two, the listing again publicly showcases Kiaro's operational performance and
strong balance sheet in a way on the exchange that just supports stakeholder
confidence in the way that has to be displayed now. so that that'd be number two.
And third, definitely most importantly being listed on the TSXV means continuous growth,
better access to capital, more creative opportunities and really that sets the stage for
increased shareholder value. You know for employees especially, that means
performance incentives, sharing the benefit of team success through our stock option plan. As a public company, that alone increases our ability to attract and retain top talent to bring them into the company.
And for this call you know especially and finally, the most important stakeholder for the
call, Kiaro shareholders. For them, it means fluidity. The ability to move in and out
of the investment. Liquidity - get liquid on their investment if they choose fit and after that you know to manage the pace of their investment and who is going to come in and out the story. I think that that would be what it means to us. So for the company and the stakeholders, it's a major milestone.
Arne: Excellent. Exactly. You know, I really look forward to watching your story and I encourage people to go to your website, check us out on TMX money and you're trading under the ticker
KO. Welcome to the family.
Daniel and Eleanor: Thanks Arne.