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- 💸 Earnings, Earnings, And More Earnings💸
💸 Earnings, Earnings, And More Earnings💸
Anthony Varrell
November 07, 2024
GM Everyone,
Yesterday felt like a gut punch when we looked at the tape—a day we'd all prefer to forget. To top it off, the earnings prints we've seen thus far are showing signs of softness and deterioration in some key financial metrics. This is hardly the plot twist we wanted, especially with the growth narrative being snatched away as the Florida adult-use market now seems years from materializing. But don't reach for the stress ball just yet; Boris Jordan and Jason Wild will both be joining us on the stream this afternoon to break down their latest numbers.
See you then.
A little longer than a 9 minute read.
💸 The Tape
Curaleaf Reports Q3 Numbers
Curaleaf Holdings, reported its Q3 2024 financials, and it's a mixed bag—like that stash you forgot in the back of your drawer.
Revenue came in at $330.5 million, down a modest 1% from last year's $333.2 million. Sequentially, that's a 3% slide. But before you start thinking the market's gone to pot, consider this: the adjusted gross margin improved by a robust 312 basis points to 49%. It's like finding out your slightly smaller brownie is actually more potent.
Adjusted EBITDA held steady at $75 million, maintaining a 23% margin, consistent with last year. CEO Boris Jordan, now pulling double duty as Chairman, emphasized a focus on "sustainable, profitable organic growth." In an industry facing regulatory haze, stiff competition, unpredictable weather, and some "irrational pricing strategies" (looking at you, bargain basement bud), Curaleaf is playing the long game.
The real high note? Their international business lit up, growing a whopping 82% year-over-year and 17% quarter-over-quarter to hit $30 million. Diversification seems to be Curaleaf's secret stash, mitigating concentration risk and offering a buffer against domestic challenges.
However, not everything is groovy. The company reported a net loss of $44 million, or $0.07 per share from continuing operations. Cash reserves also took a hit, totaling $90 million at quarter's end. Operating cash flow stood at $42.3 million, with free cash flow from continuing operations at $14.5 million.
In summary, Curaleaf's Q3 results show a company navigating a cloudy market with strategic moves abroad, bolstering margins, and holding steady on EBITDA. While revenues took a slight puff downwards, the company's international growth and improved margins suggest that Curaleaf isn't just blowing smoke—they're setting the groundwork for a greener future.
TerrAscend's Third Quarter: High Hopes and Strategic Moves
Ladies and gentlemen, gather 'round for the latest episode of "As the Cannabis World Turns," featuring none other than TerrAscend Corp.—the North American cannabis company that's been making waves and, apparently, some cash. They've just dropped their third-quarter results for 2024, and it's time to sift through the greenery.
First off, net revenue came in at $74.2 million, down from $77.5 million in Q2. Now, before you clutch your pearls, remember that the cannabis industry isn't exactly a straight path to the moon. It's more like a winding trail through a forest of regulations and market fluctuations. Despite the slight dip, TerrAscend managed to keep their gross profit margin virtually steady at 48.8%, up a smidge from 48.6% last quarter.
But let's address the elephant in the dispensary: the GAAP net loss from continuing operations was $21.4 million, a noticeable increase from the $6.2 million loss in Q2. EBITDA from continuing operations also took a hit, dropping to $6.6 million from $18.6 million. Adjusted EBITDA followed suit, sliding to $13.7 million from $15.6 million. Adjusted EBITDA margin dipped slightly to 18.5% from 20.2%. It's as if the company took a puff and didn't quite hold it in long enough.
Yet, amidst these numbers, there's a silver lining—or perhaps a green one. The company generated $1.8 million in net cash from continuing operations and achieved positive free cash flow of $1.5 million. This marks their ninth consecutive quarter of positive cash flow from continuing operations and the fifth straight quarter of positive free cash flow.
Executive Chairman Jason Wild remains optimistic, highlighting that TerrAscend maintained leading positions in key markets, including holding the #1 market share in New Jersey. "Our consistent positive cash flow generation supports our ability to execute our growth strategy, which includes aggressive pursuit of M&A," Wild stated. Translation: They're ready to go shopping, and they've got the cash to back it up.
In fact, they've already started. The company announced the signing of a definitive agreement to enter the Ohio market through the acquisition of a "well-situated and profitable dispensary." Wild mentioned their intention to assemble a leading retail footprint in Ohio by acquiring high-quality stores, much like they did in Maryland. It's a strategy that says, "Why grow slowly when you can buy your way to the top?"
From a regulatory standpoint, TerrAscend is keeping a close eye on the upcoming DEA hearing on the proposed rescheduling of cannabis. They're also participating in the David Boies lawsuit against U.S. Attorney General Garland, which seeks equal treatment for legal, state-regulated cannabis businesses. In other words, they're hoping for some federal love that could make operating across state lines less like navigating a legal minefield.
📈 Dog Walkers
MariMed Reports Q3
MariMed Inc. is lighting up the financial scene, reporting year-over-year and sequential revenue growth for Q3 ending September 30, 2024. CEO Jon Levine seems to be in high spirits, highlighting that the company's wholesale business is outpacing the industry with at least 20% growth. Even with U.S. consumers tightening their belts—a trend that would make most CEOs reach for something stronger than coffee—MariMed's retail transactions grew. Credit goes to same-store sales growth and new dispensaries popping up like, well, weeds.
The heavy investment phase? That's old news, along with those pesky pre-opening expenses that hung around like unwanted guests. With new assets ready to bloom, Levine is confidently eyeing long-term revenue and profit growth.
In July, adult-use sales kicked off at Panacea Wellness in Quincy, Massachusetts, and a provisional dual-license was secured in Tiffin, Ohio. Maryland saw the expansion of the Hagerstown cultivation facility, doubling flower yield and making MariMed one of the state's top suppliers. A new CFO, Mario Pinho—fresh from Rakuten—joined in August, perhaps to help count all that green.
Not stopping there, MariMed opened new dispensaries in Maryland and Ohio, and started growing operations in Illinois with first harvests expected on shelves by Q1 2025. Manufacturing in Missouri is set to roll out by the end of November 2024. In short, MariMed is planting seeds across the Midwest and East Coast, and the harvest looks promising.
Verano Comes In A Little Light
Ladies and gentlemen, grab your calculators—it's time to dissect this company's Q3 2024 financials. Revenue slipped to $217 million, down from $240 million the same quarter last year and a notch below the $222 million from Q2 2024. The blame game points to Florida, where a temporary shift in cultivation output dampened retail sales. Illinois and New Jersey didn't help either, as new dispensaries continue to sprout like weeds, intensifying competition.
Gross profit didn't dodge the downturn, falling to $109 million or 50% of revenue, from $133 million or 55% last year. It appears that less revenue makes for leaner profits—who would've thought? Meanwhile, SG&A expenses are climbing like a vine, reaching $92 million or 43% of revenue, up from $86 million or 36%. The culprit? Increased salaries and benefits tied to a hiring spree for new store openings. It seems growth isn't cheap.
Net loss widened to $43 million, a significant stretch from the $18 million loss in Q3 2023. Declining income from operations is the uninvited guest at this financial party. On a brighter note, Adjusted EBITDA held steady at $64 million or 30% of revenue, offering a glimmer of hope amid the clouds.
Year-to-date net cash from operating activities is $69 million, down from $77 million last year. While the financials might not be all sunshine and rainbows, the company's investment in expansion could pay off—assuming those new stores start pulling their weight sooner rather than later.
👾 Number Of The Day
$112.8M Total sales in Arizona in the month of October.
Data provided by:
🗞️ The News
📺 YouTube
What Trump Presidency Will Mean For Cannabis Industry | Trade to Black
What we covered:
✅ On our latest Trade To Black Podcast, we dive into the election results from yesterday, and what a Donald Trump presidency will mean for the cannabis industry moving forward.
Cannabis lobbyist Don Murphy will join us to shed light on what happened last night in Florida and why Amendment 3 did not pass.
Plus, with Republicans regaining control of the Senate, Murphy will explain on what's next for Rescheduling and SAFE Banking, and whether or not it has a chance of passing during lame duck session.