Phoenix-based 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) reported its second-quarter financial results ending June 30, showing a slight rise in revenue and headway in the Windy City as the company packs its bags in California.
The company posted a systemwide pro forma revenue of $35.2 million for the second quarter, marking a minor surge from the $34.8 million reported in the same period last year. Meanwhile, the company’s GAAP revenue showed an 8% year-over-year climb, reaching $30.7 million.
However, it wasn’t all green for 4Front. Net loss came out to $11.46 million, up from last year’s $6.5 million. Its adjusted EBITDA stood at $2 million for the period, a dip from the $3.5 million reported in the preceding quarter.
Despite the mixed numbers, CEO Leo Gontmakher in a statement remained optimistic.
“I am pleased with the progress we have made furthering our strategy of driving profitable growth as we continue to prudently optimize our business model,” Gontmakher said. He emphasized the company’s cost-cutting endeavors, slashing the annualized cost structure by about $9 million.
4Front is notably retracting from California operations after setting a break-even goal in May. Gontmakher cited profitability concerns in California and announced aggressive scaling back. Instead, the company has been placing its chips on Illinois, a state they deem “one of the nation’s most promising markets.”
“As mentioned last quarter, we are not willing to sustain prolonged profitless revenue in any market in which we operate,” he added. “Our incremental capital is now focused on executing our growth plans in Illinois.”
In line with that, 4Front is gearing up to launch cannabis cultivation and production facility in Matteson, Illinois. Once operational, this facility will hold the title of the state’s largest cannabis grow. The company says its retail operations in Illinois already outpace the market average retail store by approximately 11%.
“With our Matteson Facility anticipated to come online in the second half of the year and our strategy to establish eight more retail dispensaries in the state, we are positioned to effectively double the size of our company within the next 12 to 18 months while expanding margins and generating cash flow,” the CEO said.
4Front has also welcomed Mark Maze as the new Vice President of Operations. The company expects Maze, an industry veteran, to enhance the company’s footprint in the state.
In Massachusetts, 4Front has introduced a comprehensive suite of products across its flagship brands, including Island, Crystal Clear, and Marmas. The expanded product offerings will look to capture a more meaningful market share in the state.
The company anticipates improvements in its EBITDA, with profitability set to get a boost from the ongoing cost-savings and optimization efforts.
4Front’s coffers hold cash reserves of $5.4 million. It is also grappling with a related party long-term debt of $50.1 million, not due until May 2026.