4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF), a multistate cannabis operator and retailer reported steady year-over-year growth in its financial results for the first quarter ended March 31.
The company noted that systemwide pro forma revenue rose 7% from Q1 2022 to $34.8 million. This beat expectations by $3 million. The GAAP revenue saw an even more substantial growth of 17% year-over-year, reaching $30.4 million.
However, adjusted EBITDA fell to $3.5 million from the reported $7.4 million in Q1 2022. Net loss was $11.3 million, compared with the year-ago loss of $5.8 million.
In a statement, 4Front CEO Leo Gontmakher expressed satisfaction with the company’s performance, stating, “We ended the quarter with positive operational cash flow in all our core markets, with the exception of California.”
Despite the challenges in the California market, the company anticipates reaching cash flow breakeven in the state within 60 days.
Gontmakher also announced that the company significantly expanded its operational capabilities in Illinois with the complete of construction on the Matteson facility.
“With these enhanced capabilities in the state, we are well on our way to achieving a complete vertically integrated license portfolio in Illinois as we continue to pursue accretive M&A opportunities to grow our retail dispensary footprint,” he said.
In addition, 4Front has reached terms with its senior secured debt provider, LI Lending, to extend the maturity of its senior secured debt for an additional two years. The move is expected to raise over $30 million of strategic senior security-type financing and expand the company’s debt to sufficiently fund the expansion of its retail base in Illinois.
The company also highlighted several operational milestones in Q1 2023, including:
- Deepening its operational footprint in Illinois.
- Strengthening its position in Massachusetts.
- Diversifying its product portfolio in Illinois.
The company reported $4.6 million of cash and $50.1 million of related-party long-term debt not due until May 2024.
Looking ahead, 4Front expects its EBITDA margins to return to the mid-20% range toward the end of the year, with potential for further increases as operations in Illinois continue to expand in 2024.