NLC today released its financial and operational results for the fourth quarter of fiscal year 2022 ended April 2, 2022. All information is unaudited.
NLC reported net earnings for the quarter of $34.5 million, a decrease of $4.5 million, or 11.6%, compared with Q4 of fiscal year 2021. Net earnings for the year-to-date total $200.9 million, an increase of $0.3 million or 0.1% from prior year. The dividend paid by NLC to the Government of Newfoundland and Labrador totaled $38.2 million for the quarter, $0.3 million lower than Q4 of the prior year. This brings the dividend remitted for the fiscal year to $210.0 million, $15.0 million higher than the same period one year ago – the highest dividend paid to Government in NLC’s history.
“I’m extremely proud of the NLC team for their continued commitment to serving Newfoundlanders and Labradorians in all parts of the Province,” said Bruce Keating, NLC President and CEO. “This fiscal year, we saw great success thanks to our dedicated team who continued to drive the business forward despite the challenges faced. We’re very proud to have contributed a record of $210.0 million to fund valuable programs and services in communities across the Province. As importantly, we’ve continued to take important steps with respect to our regulatory mandate; corporate governance; corporate responsibility; diversity, inclusion and belonging; and as an employer to more than 600 NLC team members as we work to earn trust in everything we do and strive to become the kind of organizations we believe NLC can be.”
Beverage Alcohol sales for Q4 were $54.5 million, down 2.2%, mainly due to lower spirits, wine and ready-to-drink (RTD) sales. Compared with Q4 of 2021, spirits sales were down 5.8%, wine sales were down 2.0% and RTD decreased 2.4%. Sales of beer sold through NLC corporate stores increased 12.6%.
Sales overall were up 3.2% in fiscal year 2022 over fiscal year 2021, to $293.4 million, with an increase in wine, RTD and beer categories. Wine sales were up 4.4%, RTD increased 8.7% and beer increased by 11.5% compared with the prior year.
Sales through NLC’s corporate stores were up 6.7%, while Liquor Express outlets across the Province experienced a decrease of 19.9% over Q4 of the prior year. Sales through NLC’s corporate stores were up 8.8% for fiscal year 2022 vs. 2021, while Liquor Express outlets across the Province experienced a decrease of 11.5%.
NLC also earns commissions on the sale of beer through Brewers’ Agents. These commissions for the quarter totaled $12.1 million – down 24.7% over the fourth quarter of fiscal year 2021, and down 2.9% for the year, for a total of $68.2 million in fiscal year 2022.
In addition to overall sales increases in 2022, the increases in sales through corporate stores and the decreases in sales through Liquor Express outlets and Brewer’s Agents were also due to COVID-19 restrictions during Q1 and Q4 of 2021 which prevented customers from shopping in person at NLC corporate stores. This increased customer traffic at both Liquor Express stores and Brewers’ Agents in 2021.
Cannabis sales through Licensed Cannabis Retailers (LCRs) totaled $15.2 million in Q4, an increase of 8.5% over Q4 of the prior year. Total retail cannabis sales in Q4, including online sales, were $15.3 million.
Total retail cannabis sales for fiscal year 2022 increased by 17.2% vs. the prior year to $61.0 million. NLC also incurred an increase of $6.8 million in cannabis operating and administrative expenses through the fiscal year. This is primarily due to an increase in commissions paid to Tier 1 LCRs as a result of higher sales volumes and an increase in the commission rate paid to these Tier 1 LCRs. It is important to note that in fiscal 2021 Canopy Growth Inc. repaid $1.9 million in premiums to NLC due to the termination of its supply agreement with the Province and NLC, which contributed to lower than anticipated expenses in 2021.
NLC now lists over 800 products from 27 suppliers, and continues to work with its partners to provide additional options to meet customer demand. NLC added an additional two LCRs in Q4, bringing the total number throughout the Province to 39.
Rock Spirits produced 95,000 cases of spirits and 3,000 cases of RTDs during Q4, an increase of 9.2% in spirits and a decrease of 40.0% in RTDs over the same period the previous year. During the 2022 fiscal year, Rock Spirits produced a total of 350,000 cases of spirits and 12,000 cases of RTDs, an increase of 22.4% and 33.9% over fiscal year 2021. This increase was driven primarily by significant growth across export sales of its partner brands as well as new canning projects for RTDs. Rock Spirits continued to collaborate with partners during the fiscal year, working with the Newfoundland Distillery Company and the Hounds Vodka Company on the production of new RTDs as well as Dildo Brewing Company on the release of its new vodka. During the fiscal year, it also added another RTD to its own portfolio, with the introduction of Shiver Lime Vodka. Rock Spirits will continue to seek out local and international partnership opportunities.
NLC conducted 1,043 inspections on liquor establishments and cannabis retailers in Q4, as it continues to work closely with the licensee community. This represents a 6.0% decrease compared with the number of inspections conducted during the same period in fiscal year 2021. This decrease is due to the elevated number of inspections required during the height of the pandemic in the previous year. NLC also amended 76 licenses during the quarter, helping operators navigate through the challenges of the pandemic.
During the fiscal year, NLC conducted a total of 4,457 inspections on liquor establishments and cannabis retailers, down slightly vs. the prior year by 3.8%. In fiscal year 2022, NLC worked with its partners in local law enforcement and Canada Post Inspectors to investigate 22 files resulting in seizures of 100 kg of cannabis products with a market value of $1.0 million. Since legalization in October 2018, NLC’s Regulatory Compliance and Enforcement team has seized $5.8 million in illegal cannabis products. NLC is committed to providing systematic and thorough regulatory oversight that helps ensure public safety and provides a safe and secure supply of cannabis to the Province.
NLC continues to follow through on its social responsibility commitment through various initiatives. In Q4 of 2022, it partnered with both the School of Pharmacy and the Student Wellness and Counselling Centre at Memorial University to promote safe drinking habits and to promote awareness of the dangers of driving high. NLC will continue to seek out strategic partnerships with law enforcement and in the broader community to ensure its messages related to responsible choices continue to be delivered.
In the fourth quarter of fiscal year 2022, NLC redeveloped its social responsibility messaging in-store to “Drive Sober. Make sure everyone makes it home.” This message will be promoted via NLC and Cannabis NL’s social media channels in the weeks to follow.
Also in the fourth quarter, NLC supported the position taken by our provincial and federal governments with respect to Russia’s attack on Ukraine by removing Russian products in our stores.
To further its commitment to the health and well-being of its employees, as well as its efforts in Diversity, Inclusion and Belonging, NLC completed the following initiatives in Q4 in addition to numerous diversity-related activities throughout the fiscal year:
NLC is a Crown Corporation of the Government of Newfoundland and Labrador with responsibility through the Liquor Corporation Act and the Liquor Control Act for importation, sale, distribution and regulation of beverage alcohol and cannabis, and for the delivery of programs that promote safe, responsible consumption of alcohol and cannabis.
NLC is one of the largest retailers in the Province. Through 29 corporate retail locations, catalogues, private order services, more than 140 agency stores, over 600 Brewers’ Agents outlets, and more than 1,400 restaurants, lounges and other licensees, NLC offers 4,000 to 5,000 products per year to consumers and its retail partners from more than 20 countries. It also regulates 39 Licensed Cannabis Retailers across the Province, offers customers a secure, legal online environment for cannabis purchases via ShopCannabisNL.com; and operates a 77,000 square foot Distribution Centre, employing 600 people in all parts of the business.
NLC operates with the expectation that it will generate revenue for the Government of Newfoundland and Labrador that will be reinvested for the benefit of people of the Province, and returns 100% of its profits to Government to help fund key public services. NLC aspires to earn trust in everything it does – with customers, employees, retailers, commercial partners and communities in which it operates and with Government as it works together to build a stronger Newfoundland and Labrador.