Cresco Labs Archives - Green Market Report

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) announced its financial results for the third quarter ending September 30, 2021, with revenue growing 2.6% sequentially to $215.5 million, and an increase of 40.6% year-over-year. Still, Cresco recorded a non-cash impairment charge of $291 million in the quarter as a result of the strategic shift in California operations. That resulted in a net loss for the quarter of $263 million.

Cresco reported a record net wholesale revenue of $109.3 million and record retail revenue of $106.2 million from 37 stores.

“Q3 was another outstanding quarter at Cresco Labs and a very strong start to the second half of the year. During the quarter, we replenished our balance sheet with non-dilutive capital, we closed a transformative acquisition in Massachusetts creating our third top three market share in a billion-dollar market, we announced several new deals to drive market depth, and we made massive improvements in bottom-line profitability as infrastructure investments began to bear fruit,” said Charles Bachtell, Co-Founder and CEO of Cresco Labs. “We are very proud of the record performance during a challenging quarter and continue to find that our differentiated strategy, localized for each individual state market, positions us to out-compete in both the current environment and long term. With many more growth initiatives up ahead, 2022 is set to be another record year, and we couldn’t be more excited for what’s to come as we continue driving strategic breadth, depth and execution.”

The company though is sitting pretty comfortably with current assets at $449.0 million, including cash and cash equivalents of $252.8 million. Cresco had working capital of $239.8 million and Senior Loan debt, net of discount and issuance costs, of $376.6 million. Following the end of the quarter, Cresco said it was buying Laurel Harvest Labs, LLC, a Pennsylvania Clinical Registrant and vertically integrated operator.

Outlook

Cresco reaffirmed the previously provided guidance of gross profit margins in excess of 50.0% in the remainder of 2021, adjusted EBITDA margin of at least 30.0% by the end of 2021 and revenue in the fourth quarter between $235 million and $245 million.

Cresco Labs Inc. (CSE:CL) (OTCQX:CRLBF) is buying Bay, LLC better known as Cure Pennsylvania in a deal valued at $90 million. The cash and stock acquisition is expected to close in the fourth quarter. The acquisition includes three operational Cure Penn dispensaries in Lancaster, Phoenixville, and Philadelphia. Cresco noted that the three new stores would be incremental and complementary to Cresco Labs’ four existing Sunnyside dispensaries in Pennsylvania

“As we implement localization strategies tailored to state level dynamics, this Transaction with Cure Penn is expected to expand our retail footprint in Pennsylvania, increase profitability, and strengthen our wholesale leadership position in the state. We’re thrilled to continue executing our playbook of achieving depth in strategic markets via rigorous capital allocation,” said Charlie Bachtell, CEO, and Co-Founder of Cresco Labs. “The Cure Penn team has developed a high-performing retail platform across three dispensaries that sets up another immediately accretive acquisition for Cresco Labs. We’ve proven our ability to drive incremental top and bottom-line growth from the implementation of Sunnyside’s best-in-class operating model, and we look forward to growing our house of brands which are already among the most sought after by patients in Pennsylvania.”

Cure Cannabis also has locations in Colorado and Oklahoma, but the group originated in Colorado. It was also one of the early licensees in the state of Pennsylvania.

Expansion Moves

Just last month Cresco Labs closed on its acquisition of vertically integrated Cultivate which operates three cannabis dispensaries in Leicester, Worcester, and Framingham Massachusetts. the deal included approximately 42,000 square feet of active flowering canopy, bringing combined canopy in-state to approximately 64,000 square feet. The three dispensaries bring the combined retail storefronts in-state to four. Concurrent with closing, the company’s Fall River retail location transitioned to medical sales only.

“The closing today constitutes another important step for Cresco Labs as we deepen our presence in large, attractive states like Massachusetts and increasingly tailor and strengthen our state-level strategies to optimize growth and profitability. Expanding operations in the most strategic U.S. cannabis markets is at the heart of our growth strategy and we’re thrilled to have the opportunity to show what can be achieved through a maximized footprint in Massachusetts,” said Charlie Bachtell, CEO and Co-Founder of Cresco Labs. “We have been thoroughly impressed with the Cultivate team and the quality of their operations. We look forward to a productive and efficient integration process to carry their historical strong momentum into the fourth quarter and beyond.”

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) announced its financial results for the second quarter ended June 30, 2021 as revenue jumped 122.8% to $210.0 million over last year and had a sequential increase of 17.7%. Cresco’s revenue was split almost evenly between wholesale revenue of $108.7 million and retail revenue of $101.3 million from 33 stores, an increase of 22.3% quarter-over-quarter and 157.6% year-over-year. Cresco also delivered a net income of $2.7 million, an increase of $26.8 million quarter-over-quarter and $44.4 million year-over-year.

Reaffirmed Guidance

Cresco did reaffirm its previous revenue guidance for $1 billion by the end of 2021. The company also forecast gross profit margins in excess of 50% in the remaining two quarters of 2021. It is estimating an adjusted EBITDA  margin run rate of at least 30% by the end of 2021.

The company also burned through quite a bit of cash during the quarter. Cresco ended the first quarter with $258 million in cash and cash equivalents. The second quarter saw that figure drop to $135 million as cash dropped by $123 million.

“Q2 was a strong quarter of head-down execution at Cresco Labs and once again we are hitting our stride as we enter the next phase of growth. During the quarter we continued to invest in infrastructure, operationalized new assets, and deployed our proven playbook to build top positions in the most important U.S. cannabis markets,” said Charles Bachtell, Co-Founder and CEO of Cresco Labs. “We are very proud of the record performance this quarter, driven primarily by organic growth, and we’re even more excited about what lies ahead as we begin recognizing contributions from growth initiatives initiated over the last 18 months. We remain dedicated to our differentiated strategy and continue to lay the foundation for long-term leadership in the U.S. cannabis industry.”

Cresco also announced that it upsized its senior secured term loan to $400 million. The Senior Loan bears interest at a reduced rate of 9.5% per annum, with a maturity date of August 12, 2026. The company said it plans to use the money from the Senior Loan to retire its existing $200 million credit facility, fund capital expenditures, and pursue other targeted growth initiatives within the U.S. cannabis sector. The Senior Loan does not include any equity or convertible components and the total facility amount is being provided by a syndicate of five existing, institutional lenders.

Cresco Labs is the largest wholesaler of branded cannabis products in the U.S. Its brands are designed to meet the needs of all consumer segments and are made up of brands including Cresco, Cresco Reserve, High Supply, Mindy’s Edibles, Good News, Remedi, Wonder Wellness Co. and FloraCal Farms. Sunnyside, Cresco Labs’ national dispensary brand, is a wellness-focused retailer created to build trust, education, and convenience for both existing and new cannabis consumers.

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF)  announced its financial results for the first quarter ended March 31, 2021, with revenue rising 168% to $178.4 million over last year and an increase of 9.9% sequentially. This beat the Yahoo Finance average analyst estimate for revenues of $170 million. Cresco trimmed its net losses to $24 million from last year’s $35 million for the same time period. The company is sitting in a comfortable cash position with current assets at $381.7 million, including cash and cash equivalents of $255.5 million.

“In Q1, we delivered sequential growth from existing assets, demonstrated our ability to reach and sustain #1 market share positions in two of this industry’s top-five states, and we’re gearing up to repeat that success in more markets this year. We’re accelerating growth through a diverse set of initiatives including several organic expansions and M&A that will benefit the Company in subsequent quarters. In order to execute all of our pending growth initiatives, we invested in the operating platform to support the growth. We laid the groundwork in Q4 and Q1 and now our expertise with integrating new assets and producing operating leverage will kick in,” said Charles Bachtell, Co-Founder and CEO of Cresco Labs. “We’re also pleased to take this opportunity at the outset of the year to make the transition to U.S. GAAP, remove the break-out of certain one-time items, and provide investors with clarity on the transition. This represents another step to prepare Cresco Labs for the future opportunities that await in the U.S. capital markets. On a U.S. GAAP basis, we’re pleased with the growth in Q1 and excited about the steps we’ve taken so far this year to put Cresco Labs on the path to accelerate revenue, profitability, and shareholder value in 2021 and beyond.”

Breaking down the revenue, Cresco noted that its net wholesale revenue was $95.6 million, an increase of 5.7% quarter-over-quarter and 150.8% year-over-year. The retail revenue of $82.8 million from 24 stores, was an increase of 15.2% quarter-over-quarter and 193.2% year-over-year.

Outlook

Cresco is now estimating that its annualized revenue run-rate will be more than $1 billion by the end of 2021. The gross profit margins will be in excess of 50% in the remaining three quarters of 2021. The adjusted EBITDA  margin run-rate will be at least 30% by the end of 2021.