Harborside Reports Q3 Earnings
Vertically-integrated cannabis company, Harborside Inc., reported strong third quarter results. The company reported total gross revenues of $19,572,620 for Q3 of this year, up from $16,148,582 in the second quarter. This is a 21% sequential increase quarter over quarter, and a 42% increase year-over-year.
Harborside did see a slight dip in retail revenue this quarter, but it is very slight. Q2 saw $10,940,143 in retail revenue, while Q3 totaled $10,681 – so just a 2.3% decrease. This could potentially be attributed to COVID-19. Many cannabis retail locations saw a spike at the beginning of the second quarter, in preparation for mass lockdowns around the country. New Frontier Data reported this that average consumer monthly spending reached record highs in April and May, reaching $290 and $296 respectively. The report also shows that consumer spending dipped after May, so Harborside’s decrease in retail revenue is on trend with market data. In addition to this, the company reported inventory loss during the civil unrest in the Bay Area, as well as needing to increase their spending on safety and staffing during COVID-19.
Wholesale revenue increased by roughly $3 million, with the company reporting $8,890,723 in Q3. This represents a 70.7% sequential growth compared to Q2 2020. The second quarter of 2020 saw $5,208,439 in wholesale revenue. The company attributes the surge in wholesale growth to “improved harvest yields and production of premium flower, higher sales volumes, and higher prices per pound.”
Harborside reported a total gross profit of $10,714,193 for the third quarter. This is a pretty decent jump from Q2, which saw a gross profit of $8,037,517. Retail revenue dropped a bit from the second quarter, totaling $5,353,429. The second quarter raked in $5,208,439. Wholesale revenues again saw a roughly $3 million jump, totaling $5,360,764, with the second quarter tapping out at $2,435,952.
The company’s gross margin increased from the second quarter, reporting a 54.70% total gross margin for Q3. Q2’s gross margin totaled 49.80%. One of the largest increases for the company was their wholesale gross margin, which was reported to be 60.30% for Q3. The second quarter reported a wholesale gross margin of 46.80%.
Harborside’s adjusted EBITDA for Q3 was reported at $4,473,06. This is a huge jump from the second quarter, which reported an adjusted EBITDA of $642,05. Aside from the gross margin on retail revenue, all of the aforementioned categories saw a consistent increase throughout 2020 as each quarter passed.
“We’ve implemented strong operational improvements that have continued our progress towards long term profitability and sustained growth. Harborside continues to be one of the leaders in the Northern California market,” said Peter Bilodeau, Chairman, and interim Chief Executive Officer. “As our production capacity is expected to ramp up in early 2021, following the completion of the planned upgrades at our Salinas greenhouse facility, we expect to be well-positioned to accelerate our growth and continue to gain wholesale market share. I’m thrilled with how far Harborside has come this year and look forward to further growth in 2021.”
In addition to a strong third quarter, Harborside recently announced their plans to upgrade one of their cultivation facilities, the Salinas Facility. Upon the completion of these renovations, the company anticipates a 50% increase in production, approximately 10% increase in bulk wholesale revenue capacity, and a roughly 7% increase in total productive capacity. The company expects to be finished with the upgrades within the first quarter of 2021.