Ayr Strategies Reports Record Third Quarter 2019 Financial Results; Reiterates 2019 Revenue Guidance and Updates 2020 Forecasts

Continues to Produce Strong Organic Growth with Record Third Quarter Revenue of $32.1 Million and Adjusted EBITDA of $8.7 Million

2019 & 2020 Expansion Goals Remain Fully Funded with $14.7 Million Cash on Balance Sheet and More than $4 Million of Quarterly Cash Flow from OperationsRecently Added Key Talent with Appointment of New Chief Financial Officer and Chief Integration OfficerTORONTO, Nov. 18, 2019 (GLOBE NEWSWIRE) — Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., is reporting financial results for the three and nine months ended September 30, 2019.Unless otherwise noted, all results are presented in U.S. dollars.Q3 2019 Financial Summary (vs. Normalized Q2 2019ⁱ)Total revenue increased 19% to $32.1 million compared to $26.9 million.Gross profit before fair value adjustments increased 17% to $17.2 million compared to $14.7 million.Adjusted EBITDA increased 16% to $8.7 million compared to $7.5 million.Loss from operations was $10.7 million compared to $20.1 million.Management Commentary“We are extremely pleased with how well our business is executing after just four months of combined operations,” said Jonathan Sandelman, CEO of Ayr. “In that brief time, we have made considerable progress on key initiatives in both the Western and Eastern U.S. – organic growth has exceeded our expectations, our retail stores are among the most productive in the industry, and our wholesale business has become a substantial contributor to the top and bottom line.“In Nevada, we continued to generate margin improvements from vertical integration of the four companies we acquired. In fact, our dispensaries are now sourcing even more products internally than they were just a few months ago, and our cultivation expansion in Nevada remains on track for completion in the first half of 2020.  In Massachusetts, our wholesale business continued to gain momentum during the quarter as our monthly revenue has nearly tripled since closing our qualifying transaction in May.“As cannabis investors are likely aware, in late September, Massachusetts implemented a four-month ban on all vape sales, after which we quickly developed substitute products and pivoted our production, reflecting the flexibility of our operating platform.  Even without the sale of vape cartridges in Q4, we believe we will meet our 2019 revenue guidance, which called for approximately $120 to $130 million of annualized revenue. Given that some of the substitute products generate lower margins than vapes, we may come slightly short on our 2019 annualized adjusted EBITDA forecast of $35 to $40 million – although we believe margins will normalize when the vape ban lifts, which is currently slated for January 25, 2020. “For 2020, a key growth driver has been our cultivation expansion in Massachusetts, and I’m pleased to announce that we have completed our new construction, which expands our capacity by more than 150% to 32,000 square feet under canopy. While the construction is complete, the facility has been inspected and is ready to receive flower, we are still awaiting regulatory approval from the state. As such, we now expect a delay in the timing of our increase in wholesale capacity. “While we can’t predict the exact timing of Massachusetts regulatory approval and the increase in wholesale supply, we estimate that each month of delay in approval will result in delays of approximately $6 million of revenue and $4 million in adjusted EBITDA from our prior 2020 forecasts, which called for revenue of $225 to $245 million and adjusted EBITDA of $105 to $115 million. At this stage, we believe there may be a two to three-month delay from our prior expectation of receiving Massachusetts regulatory approval this month.“Despite these delays, demand for wholesale cannabis in Massachusetts is stronger than ever. Once we have approval, we are highly confident in our run rate revenue and adjusted EBITDA targets given the earnings power of our assets. The opportunity set for recreational cannabis in Massachusetts continues to be one of the strongest in the country. Our wholesale demand is robust – we continue to sell every gram that we produce each month – and overall consumer demand is far outpacing supply given the limited number of recreational cannabis dispensaries in operation.“As a reminder, other key drivers of growth in 2020 include the expansion of our Nevada cultivation facility to capture greater margin, new product development, and the transition to recreational dispensary sales in Massachusetts. We will also continue to diligently target business combinations that can expand our initial portfolio and footprint, which is not included in our current 2020 growth projections. The market environment for consolidation continues to favor our strengths of financial discipline, execution, and a fully funded operating strategy that will have us more than doubling adjusted EBITDA in 2020.”Conference CallAyr CEO Jonathan Sandelman, CFO Brad Asher and COO Jennifer Drake will host a conference call tomorrow, November 19, 2019 at 8:30 a.m. Eastern time, followed by a question and answer period.Conference Call Date: Tuesday, November 19, 2019
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (877) 282-0546
International dial-in number: (270) 215-9898
Conference ID: 1157988Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.The conference call will be broadcast live and available for replay here.A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through November 26, 2019.Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 1157988Interim Financial StatementsCertain financial information reported in this news release is extracted from Ayr’s financial statements as at and for the three and nine month periods ended September 30, 2019. Ayr will file such interim financial statements on SEDAR shortly. All such financial information contained in this news release is qualified in its entirety by reference to such financial statements.Definition and Reconciliation of Non-IFRS MeasuresThe Company reports certain non-IFRS measures that are used to evaluate the performance of such businesses and the performance of their respective segments, as well as to manage their capital structure. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined and reconciled with their most directly comparable IFRS measure.The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Target Businesses include “Adjusted EBITDA”.The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the IFRS measures.Adjusted EBITDA
“Adjusted EBITDA” represents income (loss) from operations, as reported, before interest, tax, and adjusted to exclude extraordinary items, non-recurring items, other non-cash items, including stock based compensation expense, depreciation, and the non-cash effects of accounting for biological assets and inventories, and further adjusted to remove acquisition related costs.A reconciliation of how Ayr calculates Adjusted EBITDA and reconciles it to IFRS figures is provided in our MD&A for September 30, 2019.  As well, we remind you that Adjusted EBITDA is a non-IFRS measure. We refer you to the reconciliation to IFRS measures and other disclosure concerning non-IFRS measures contained in our MD&A for September 30, 2019.Forward-Looking StatementsCertain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “intend”, “plan”, “seek”, “will”, “may” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: anticipated strategic, operational and competitive benefits may not be realized; events or series of events may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames.2019 and 2020 targets, and the related assumptions, involve known and unknown risks and uncertainties that may cause actual results to differ materially. While Ayr believes there is a reasonable basis for these targets, such targets may not be met. These targets represent forward-looking information. Actual results may vary and differ materially from the targets.AssumptionsForward-looking information in this subject to the assumptions and risks as described in our MD&A for Sept. 30, 2019. Please see our MD&A for September 30, 2019 for a summary of assumptions underlying our revised targets for 2019 and 2020 revenues and Adjusted EBITDA. As well, we remind you that Adjusted EBITDA is a non-IFRS measure. We refer you to the reconciliation to IFRS measures and other disclosure concerning non-IFRS measures contained in our MD&A for Sept. 30, 2019About Ayr Strategies Inc.Ayr is a vertically integrated multi-state operator in the U.S. cannabis sector, with an initial anchor portfolio in Massachusetts and Nevada. Through its operating companies, Ayr is a leading cultivator, manufacturer and retailer of cannabis products and branded cannabis packaged goods.  Ayr seeks to create regional clusters in core geographies for future expansion, while pursuing strong organic growth within its existing portfolio. For more information, please visit www.ayrstrategies.com.Investor Relations Contact:Sean Mansouri, CFA or Cody Slach
Gateway Investor Relations
T: (949) 574-3860
Email: ayr@gatewayir.com 

Ayr Strategies Inc. (formerly, Cannabis Strategies Acquisition Corp.)
Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in United States Dollars)
Ayr Strategies Inc. (formerly, Cannabis Strategies Acquisition Corp.)
Unaudited Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States Dollars)

Ayr Strategies Inc. (formerly, Cannabis Strategies Acquisition Corp.)
Unaudited Condensed Interim Consolidated Adjusted EBITDA Reconciliation
(Expressed in United States Dollars)______________________ⁱ Due to the qualifying transaction (QT) completed on May 24, 2019, the previously reported financial results for the second quarter ended June 30, 2019 included consolidated results from May 25, 2019 to June 30, 2019. For comparative purposes, the Q2 figures below have been normalized by taking the 37-day period and extrapolating a full quarter of results.