earnings Archives - Page 2 of 29 - Green Market Report

Debra BorchardtDebra BorchardtJune 15, 2020
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4min1910

MJardin Group, Inc.  (OTCQX: MJARF) reported results for its fourth quarter and fiscal year ending December 31, 2019, with revenue falling to $26.7 million versus $27.5 million in 2018. In addition to the drop in revenue, MJardin delivered a 2019 net loss of $267.5 million versus $81.4 million in 2018. This loss included a $207 million impairment related to  goodwill, intangibles, PP&E and a principal promissory note in 2019 and $21 million in 2018

“When I stepped into the role of CEO, MJardin was in a state of transition. Since I have endeavored to place this business on a strong footing to succeed going forward, by narrowing the focus of operations and doubling-down on our core competencies, namely, the cultivation of high-quality and high THC cannabis,” said Pat Witcher, CEO of MJardin Group, Inc. “With construction completed at the majority of the Canadian facilities and right-sized operations, we are well-positioned to focus on a strong entry to the Canadian recreational market in the second half of 2020 and turn the corner as a business.”

The company scaled back most of its U.S. commitments as it terminated the Cannabella acquisition and sold GreenMart of Nevada.  The company said that it still sees the United States as a desirable growth market and will continue to pursue strategic joint ventures, acquisitions, or consulting arrangements in select States on a case-by-case basis. The company has $146 million in total debt and the sale of the GreenMart business, also called Cheyenne, will contribute $30 million towards that debt. Harvest Health & Recreation purchased the business from MJardin.

“For the past six months, I have been focused on addressing and ultimately improving the Company’s internal processes and financial reporting. Now that the Company has unwound historically unprofitable commitments, I will continue to focus on increasing transparency to our investors while working with Pat to continue stabilizing our operations and positioning MJardin for growth as we push forward towards delivering on the promise and value of our current asset base,” said Edward Jonasson, CFO of MJardin Group Inc.

Looking Ahead

MJardin said it will focus on its high THC high yielding flower to position the company well for entry into the recreational market in Canada during the second half of 2020.  Construction has been completed on the Brampton Ontario (WILL) facility and 10 of the 12 flower rooms have now been licensed by Health Canada. The company said it expects to receive licenses for the remaining two flower rooms imminently. This expansion is expected to result in run-rate production of 3,000 KG per year at the WILL facility during the third quarter of 2020.

Phase 1 of the Cultivation Facility in Lower Sackville, Nova Scotia facility (AMI) operated through a three-way joint-venture between the Nova Scotia Mi’kmaq First Nations (51%), MJardin (39%) and the Halef Group (10%) is fully operational with a run rate production of 3,500 KG per year. During 2019, construction was completed on the Phase 2 expansion, bringing on an additional 2,800 KG per year of capacity with licensing and run-rate production expected by the fourth quarter of 2020.


Debra BorchardtDebra BorchardtJune 11, 2020
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4min1861

HEXO Corp. (NYSE: HEXO) reported that its revenue increased 30% sequentially to $30.9 million in the third quarter fiscal 2020 ending April 30, 2020. A big jump over Hexo’s last year’s revenue of $15 million for the same time period. The strong showing caused the shares to pop over 16% in early trading. All figures in Canadian dollars.

The net losses fell to $19.5 million from the second quarter’s kitchen sink net losses of $298 million. The earnings per share were ($0.07), which missed analyst expectations by two cents. The Zacks Consensus Estimate had the cannabis producer for a quarterly loss of $0.05 per share. The revenue beat estimates by $1.68 million.

The operating expenses also dropped to $26.8 million versus the second quarter’s $281 million and from $46.9 million in the 2019 fourth-quarter.  The company attributed the change to a decrease in legal and professional fees, travel, and share-based compensation, as it keeps working to cut previous spending levels in an attempt to become adjusted EBITDA positive.  The company also said in a statement that the significant reduction since its peak in Q4’19 is also due to a reduction and refocusing of marketing-related expenditures.

“I’d like to take this opportunity to thank the HEXO team who has worked tirelessly during the COVID 19 pandemic to keep the doors open and ensure the safety of our employees and our customers.  We could not do this without you, we recognize and appreciate your efforts.  It’s thanks to your hard work that we closed the third quarter delivering on our financial goals, even in the face of adversity,” said Sebastien St-Louis, CEO, and co-founder of HEXO.

Despite the strong showing, Hexo gave itself some wiggle with regards to hitting its targets in its quest to become profitable. The company said in a statement, “While we continue to operate during a pandemic, we continue to be cautious about future expectations.  Our plans to achieve Adj. EBITDA positive in the first half of fiscal 2021 will depend on the growth of retail stores in our two largest markets, Ontario and Quebec.  It is difficult to determine the timing of new licenses for new retails stores in Ontario and the build out of additional stores in Quebec.  We await additional information from the authorities of each Province and Territory.”

The company did mention that it recorded a “$3 million realization as the result of an onerous contract which is currently the subject of litigation in Q2’20, nil in Q3’20.”

In addition to the earnings, Hexo announced an initial closing of its previously announced early conversion option in respect of $29.86 million aggregate principal amount of its outstanding $70 million aggregate principal amount of 8% unsecured convertible debentures maturing December 5, 2022. Under the initial closing, $23.595 million aggregate principal amount of Debentures was converted into ‎29,493,750 units of the company at a price of $0.80 per Conversion Unit.

 


Debra BorchardtDebra BorchardtJune 10, 2020
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5min3500

Troubled cannabis company Namaste Technologies Inc. (OTCMKTS: NXTTF) continues its hard journey on the road to recovery as the company reported a 16% increase in net revenues to $5.3 million for the first quarter ending February 29, 2020. Namaste said it was its highest quarterly revenue in two years.

The company also reported that its net losses had been trimmed to $7.4 million from last year’s $10.3 million for the same time period. Namaste said that the improvement reflected the restructuring efforts in 2019 and general business improvements in 2020.

“The changes in strategy and corporate structure made during 2019 are starting to reflect a positive impact in our financial results,” said Meni Morim, CEO of Namaste. “Namaste’s revenues jumped this quarter to the highest level since the first quarter of 2018 with a significant contribution from CannMart, an impressive feat taking into account some exits from non-core businesses during 2019. We are gaining traction in the B2B segment with one early customer, with whom we passed the Proof of Concept stage, driving the majority of CannMart’s revenue growth. These are initial, yet strong signals of traction, as CannMart generated in this quarter alone, 164% of the revenue generated by CannMart in the entire year of 2019. CannMart is seeing significant growth in its operations as we enter new markets with new and well-known brands and a growing number of distribution channels.”

CannMart

The company’s ‘everything cannabis store’, CannMart.com, provides customers with a diverse selection of hand-picked products from a multitude of federally-licensed cultivators, all on one site. CannMart’s net segment revenue increased by approximately 798% to $1.3 million, excluding excise tax, over the comparable period in 2019. On a sequential basis, CannMart’s revenue increased 258% from Q4 2019 to Q1 2020.

The site also signed a new supply agreement with Alberta Gaming, Liquor & Cannabis (AGLC), representing the fifth provincial government customer for Namaste. According to the AGLC there are 465 retail locations in the province, more licensed retailers than in any other province. The company said that CannMart continues to increase the number and variety of products carried on the CannMart website and available through its B2B channels such as

    • Premium craft cannabis brand Kief, a pure craft cannabis company in which Namaste holds a minority position and certain product purchasing rights, and
    • Award winning Phyto Extractions, an established legacy brand in the Canadian marketplace offering unique products such as cannabis vaporizing pen cartridges and batteries; cannabis capsules; and cannabis tincture bottles and jars.

Revenue Shifting towards Cannabis (CNW Group/Namaste Technologies Inc.)

Morim added, “The Cannabis 2.0 market is still in its infancy.  However, we expect this market to gain momentum as new and innovative products and brands are introduced. This market features higher gross margins and a larger addressable customer base than leaf-based products and is an important addition to our product offerings. Major brands understand the value that we offer and trust us to represent them.”

Namaste has worked hard to overcome its struggles of 2019. The company parted ways with its founder Sean Dollinger and then embarked on a path that included selling non-core assets, investing in new business segments, settlement of outstanding class actions, replacement of executive-level positions with top talent, and restructuring legacy businesses to reposition the business.

 

 


Debra BorchardtDebra BorchardtJune 4, 2020
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4min4130

Smoking accessories e-commerce brand Greenlane Holdings, Inc. (GNLN) reported falling revenue for the first quarter ending March 31, 2020. Net sales fell 32% to $33.9 million in the first quarter of 2020 versus $49.9 million for the same time period in 2019.

Greenlane blamed the drop on the FDA’s restriction on the sale of certain products, primarily mint-flavored JUUL, and the execution of Greenlane’s plan to deliberately move away from low-margin JUUL sales, to focus on higher-margin products. The company also delivered a  first-quarter net loss of $16.8 million, slightly better than last year’s net loss of $17.7 million for the same period in 2019. The company also took a $9 million goodwill impairment charge in the quarter.

“We have made significant strides in the execution of our business transformation plan and are focused on pursuing higher-margin revenue opportunities while strategically right-sizing our operations to the current environment,” said Aaron LoCascio, Greenlane’s Chairman and Chief Executive Officer. “We’re beginning to see the positive impact of the investment we made to develop and launch our Greenlane Brands, which accounted for a record 18.5% of net sales and drove the sequential improvement in our gross margin.”

JUUL Drops

The popular candy-flavored vape product JUUL came under fire for its targeted approach to teens and young adults. The fallout was that sales decreased for Greenlane to roughly $4.4 million in the quarter, from approximately $21.0 million in the first quarter of 2019. The company has switched its focus to Greenlane Brands whose net sales grew to $6.3 million dollars or 18.5% of total revenue in the first quarter of 2020 versus $4.6 million in the first quarter of 2019.

The Greenlane Brands category is made up of child-resistant packaging innovator Pollen Gear; VIBES rolling papers; the Marley Natural accessory line; the Keith Haring Collection accessory line; Aerospaced & Groove grinders, and Higher Standards, which is both an upscale product line and an innovative retail experience with flagship stores at New York City’s Chelsea Market and in Malibu, California.

The company said that net sales of its third-party brands, including Firefly, Santa Cruz Shredder, and MJ Arsenal increased by approximately $1.2 million in Q1 2020 as compared to Q1 2019.

Company Shifts

Greenlane clearly saw the writing on the wall and moved quickly to adapt to the changing landscape with regards to losing its cash cow in JUUL. The company closed its brick-and-mortar retail store in Ponce City Market. In addition, Greenlane closed its Schenectady, NY, and Delta, Canada distribution centers on May 14, 2020, and May 15, 2020, respectively, and expects to close its Jacksonville, FL, Torrance, CA, and Visalia, CA distribution centers in June 2020. The company did enter into a new lease agreement for a new retail store located in Barcelona, Spain, which opened to the public on May 26, 202

Salaries, benefits, and payroll taxes in the quarter decreased to $1.5 million, or 18.2% due to a decrease in equity-based compensation expense of $2.5 million. The company also said it had a targeted reduction of approximately 50 employees which is expected to positively impact its results in future quarters

Cash and cash equivalents were $43.9 million and total debt was $8.3 million as of March 31, 2020, compared to $47.8 million and $8.3 million, respectively, as of December 31, 2019.


Debra BorchardtDebra BorchardtJune 3, 2020
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5min2830

Cannabis venture capital firm Canopy Rivers Inc. (OTC: CNPOF) reported its fourth quarter and fiscal year results for the period ending March 31, 2020. Revenue was flat at $2.5 million for the quarter in 2020, while the net losses ballooned to $30 million from 2019’s net income of $3.5 million.

For the full fiscal year, Canopy Rivers reported an operating income of $11.9 million versus 2019’s operating income of $4.8 million. The net loss for the year was $40 million versus last year’s net income of $3.9 million. The basic earnings per share were ($0.22) versus $0.03 for 2019.

“The global economic uncertainty brought on by COVID-19 capped off a volatile and challenging year for the cannabis sector. Despite these challenges, I am pleased with what our team achieved last year. However, we were not immune to this volatility, and following a strategic and operational review of our business, we recently announced a number of changes aimed at strengthening our financial discipline and positioning Canopy Rivers for sustained success moving forward,” said Narbé Alexandrian, President, and CEO of Canopy Rivers. “Reflecting on the past year, there were several significant achievements that make me optimistic for fiscal year 2021. First, our portfolio companies reached new milestones, including the licensing of PharmHouse, the expansion of TerrAscend’s U.S. operations, and ZeaKal’s successful trials of its PhotoSeed™ technology. Second, our graduation to the TSX and the launch of our Strategic Advisory Board signalled our company’s continued maturation. Finally, we made four new investments, including two in ag-tech, which we believe is a critical component of the value chain that is poised to disrupt the cannabis sector.”

Operating expenses were $3.5 million for the quarter, of which $1.2 million (or approximately 36% of the total) related to share-based compensation, a non-cash expense. Following the compensation boost,  the company announced a series of organizational changes focused on generating net positive cash flows from operations. This included layoffs, a cut in directors’ compensation, marketing expenses, and general corporate expenses.

“While headwinds persist, we remain positive as we evaluate new opportunities that we believe will ultimately create value for our shareholders and help build the cannabis industry of tomorrow,” added Alexandrian.

The company’s share of loss from equity method investees was $3.2 million for the quarter. This included equity interests in Canapar Corp.,  Herbert, High Beauty, Inc., LeafLink Services, PharmHouse, and Radicle. Canopy Rivers said it expects these investees to continue to generate net losses in the near term due to the early-stage nature of these businesses as they continue to ramp-up operationally.

Canopy Rivers also recognized impairment charges of $11.2 million for the quarter The charges were attributed to economic and regulatory uncertainty caused by COVID-19, a slowdown in retail distribution in both Canada and the United States, and a slower-than-expected ramp-up of commercial activities for certain entities.

The company also said it took a hit from the decline of share price for its investment in TerrAscend and James E Wagner Cultivation Corporation, the latter of which recently filed for protection under the Companies’ Creditors Arrangement Act.

“Looking back on FY 2020, it is clear that cannabis companies encountered challenging conditions in the capital markets over those 12 months, and the impact of this shows in our financial results for the fiscal year,” said Eddie Lucarelli, CFO of Canopy Rivers. “However, we believe that this is more of a function of the slower-than-expected pace of development of the cannabis economy, rather than its long-term potential, which we continue to believe is significant. Based on our available cash resources and deep sector insights, we believe we are well-positioned to capitalize on the current market conditions and strengthen our portfolio of cannabis disruptors.”


Debra BorchardtDebra BorchardtMay 29, 2020
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5min9200

Canopy Growth Corporation (NYSE: CGC) announced declining revenues and massive losses for the fourth quarter ending March 31, 2020. The net revenue in the quarter dropped by 13% sequentially to $107 million as the company blamed lower Canadian recreational revenue. Canopy Growth also delivered a staggering net loss of $1.3 billion in the quarter which was attributed to impairment and restructuring charges. All numbers are in Canadian dollars.

The stock was falling over 22% in early trading as the company’s GAAP EPS came in at -$3.72 and missed analyst estimates by $3.31.

“Through the COVID-19 pandemic, we have worked hard to ensure the health and well-being of our teams and customers and the continuity of our business.  During this time, our team has rolled out our exciting new cannabis-infused beverages and vape products in Canada and a portfolio of CBD products in the US,” shared CEO David Klein. “True to key priorities that I have outlined for Canopy, we have taken steps to align our capacity with the current market demand and focus our resources against the core markets with the largest and most tangible near-term profit opportunity.”

Guidance Pulled As Company Reboots

Canopy said it will no longer strive to be the first to every market, but strives to the best and become a leading consumer insight and product development company in select priority markets, that matches products and consumer preferences in the cannabis space. The company also said that it expects Fiscal 2021 to be a transition year as it resets its strategic focus, rolls out a new organizational design, and implements a comprehensive operational and supply chain productivity program. Canopy has withdrawn its previously communicated milestones for achieving positive Adjusted EBITDA and Net Income.

Fiscal 2020 Results

The company reported revenue of $398 million for the fiscal year 2020, an increase of 76% over 2019. Unfortunately, the total operating expenses for 2020 were $1.6 billion and the total operating loss for the year was $1.6 billion. The net loss for the year was $1.3 billion.

The basic and diluted loss per share was -$3.80 which was much higher than 2019’s net loss per share of -$2.76.

The company began the year with $2.4 billion in cash and cash equivalents. By the end of 2020, the cash was run down to $1.3 billion. During the last quarter, the company’s free cash flow was a negative $304,725.

New Strategy

The company outlined its new strategy in an earnings statement as follows:

  • Becoming a relentlessly consumer-centric organization by building world-class consumer insights and analytics, coupled with focused, leading-edge R&D and innovation to produce a differentiated product portfolio that will delight consumers. The Company will bring these products to the hands of consumers through best-in-class sales execution;
  • Markets and product categories with the highest and most tangible profit opportunities in the near term. Core markets will be Canada, the US, and Germany with a focus on recreational and medical. To capture future opportunities in emerging markets and categories outside the core, Canopy Growth will deploy an asset-light approach;
  • Driving quality in all aspects of our operation and be positioned to deliver the right product at the right time at the right price from the right facility; and
  • Continuing to lead the industry and set industry standards. This includes spearheading the next phase of the cannabis industry evolution and shaping how the industry evolves. The Company will continue to give back to neighbors and communities through its Grow Good Together initiatives.

Klein added, “I am excited to implement our strategy reset and organization redesign over the course of fiscal 2021.  We have a renewed strategic focus and a clear change agenda that is already underway. We are building what we believe is the best cannabis company in the world by putting the consumer at the heart of everything we do and are re-aligning our organization to be faster and more agile.”


Debra BorchardtDebra BorchardtMay 28, 2020
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5min3000

MedMen Enterprises Inc. (OTCQX: MMNFF) reported a fairly solid third-quarter 2020 but warned that COVID-19 has affected its sales.

On the company’s earnings conference call, interim CEO Tom Lynch said, “Unfortunately, COVID has impacted our sales since the end of March; we’re down in April overall, but have seen a steady increase since. While we’re still not back to our normal levels, pre-COVID, particularly in California, we’re optimistic about our ability to recapture traffic as soon as stay at home orders are lifted.”

MedMen also noted that its Nevada location had suffered saying, “We saw a decrease in overall sales in this market, particularly given the impact that the pandemic has had on tourism into Las Vegas, we’re encouraged about the recent decision to open up cannabis retail again, and have already begun to see a steady ramp-up in revenue.”

Third Quarter Results

MedMen reported that its third-quarter revenue of $45.9 million was up 41% over 2019 and up 4% sequentially. 64% of the company’s retail business is in California. CFO Zeeshan Hyder said on the call,Since the end of March, we did see a slowdown in sales into our California stores due to the shelter at home orders and reduced tourism. Accordingly, we modified certain store operations and reduced staff. However, over the past few weeks, we’ve seen a steady rebound of sales, with overall sales per week up over 20% versus the end of April.”

The net loss and comprehensive loss was $76.9 million for the quarter versus $96.4 million in the previous quarter. The net loss from continuing operations was $68.8 million versus $75.2 million in the previous quarter. Third-quarter 2020 net loss attributable to shareholders of MedMen enterprises was $39.9 million or $0.10 per basic and diluted share. Overall, adjusted EBITDA loss for the quarter was $20.7 million compared to $35.1 million in the previous quarter.

On a positive note, Hyder said, “We had a first full month in March of our retail stores being cash flow positive on an after-tax basis. While we expected to be here sooner, we now have a playbook for how to continue building off the progress being made to increase gross margins and reduce store-level expenses.”

Gross Margins Fall

The company reported that its retail gross margins for the third quarter were 47% versus 51% for the second quarter. “The decrease was related to a one-time inventory adjustment we took during the quarter. Without the adjustment, overall gross margins for the quarter was 51%, and if you look at the month of March alone, our gross margin was over 53%, reflecting the impact of our new vendor agreements.” Cowen & Co analyst Vivien Azer asked on the call, “Despite all your costs, cost savings, your OpEx is still running three times ahead of gross profit and now you’re not going to be vertically integrated, which means it seems like you’re probably getting up to margin there though you’re saving yourself some of the overhang on DNA.” Lynch said the company will become incredibly efficient in order to protect the margins.

Financial State

MedMen ended the third quarter of 2020 with $31.8 million of cash and cash equivalents. During the quarter, the company closed an equity financing transaction of $20 million of which $8 million was funded during the quarter, the remainder was funded in the second quarter. It also closed on $12.5 million of additional gross proceeds under Tranche 4 of its Gotham Green convertible notes facility.

Expansion Plans & Closings

MedMen said it temporarily closed five stores in Florida to redirect the limited product to the higher traffic locations but said it fully intends to open those backup. The company also said that it expects to open stores in San Francisco, Emeryville, Pasadena, Fenway area of Boston, Chicago, and Miami, all in the next 12 months; stores that could be at the top of the list in terms of performance in their opinion.

 


Debra BorchardtDebra BorchardtMay 27, 2020
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6min3480

Organic cannabis company The Green Organic Dutchman Holdings Ltd.  (OTC: TGODF) reported revenue of C$3.06 million for the first quarter of 2020 ended March 31, 2020. The company also delivered a net loss of $73.4 million – a staggering amount when the revenues are so small, but it was at least an improvement over the fourth quarter’s net loss of $144 million.

TGOD said that the revenue mostly consisted of hemp-derived product sales in Europe of $2.40 million and sales from cannabis products in Canada of $0.66 million. The meager Canadian sales were blamed on a limited product assortment while the company scaled up its Ancaster cultivation and processing capacity from the prior quarter.

The bulk of the net loss was attributed to a write-down on the book value of the company’s global assets by $55.8 million for impairment as of March 31, 2020. “This reflects the uncertainty created by the pandemic, including the evolution of market demand, the temporary cessation of operating activities in Valleyfield, Québec, and the reduction of activity in Jamaica. This non-cash impairment charge is in line with the announcement on May 14, 2020, and does not impact the Company’s operations or liquidity.”

“I am proud of the resilience demonstrated by everyone on the team in the face of the global pandemic. With safety as our top priority, we have quickly adapted our processes, allowing our operations to continue running smoothly and uninterrupted to ensure that we meet the needs of our patients and consumers,” commented Brian Athaide, CEO of TGOD. “I am also satisfied with the progress we have made on bringing innovative new products to market and expanding distribution. TGOD remains on track to becoming operational cash-flow positive later this year,” added Athaide.

Financing

The company’s total operating expenses for the quarter were $16.9 million, but with revenue of only $3 million the company will need to either cut expenses even further or find a way to bring in more revenue. Prior to the end of the first quarter, TGOD was in a very precarious situation. At the end of March, the company had negative working capital of $8,197 (December 31, 2019 – positive working capital of $14,939) and an accumulated deficit of $327,169.

The company says that through its various financing arrangements, that it has enough funds for operations at this time. These deals are as follows:

  • The Company entered into a definitive agreement for a second-lien revolving credit facility (“Revolver Loan”) with a commercial lender for gross proceeds of up to $30 million of which $10 million of the revolving credit facility was funded on April 22, 2020.
  • The Company executed an amendment with the lender under its senior secured credit facility. On April 27, 2020, the Company received an accordion advance of $5 million and issued 1,500,000 warrants exercisable at $0.39 per share exercisable for 36 months to the lender.
  • Also on April 27, 2020, the Company completed a bought deal equity financing of 20,536,700 units at $0.28 for gross proceeds of $5.75 million. Each unit consisted of one common share and one-half common share purchase warrant, with each whole warrant being exercisable at $0.38 for 36 months.

Valleyfield Closed

The company has postponed the startup of its Valleyfield Facility in order to centralize cultivation in Canada at its facility in Ancaster, Ontario. The company said it has temporarily laid off the majority of its employees in Valleyfield with the intention of beginning operations at the Valleyfield Facility later in 2020, should market conditions improve.

Looking Ahead

TGOD said that it expects that the net proceeds, together with cash on hand, amounts available under previously announced credit facilities, and positive cash flow generated from anticipated revenues, will be sufficient to fund operations going forward. TGOD expects revenue growth acceleration to be driven mainly by product innovation. Its first 2.0 product, the TGOD Infuser, launched during March 2020 and quickly became a top-selling SKU within the beverage category; new formats of the popular dissolvable powder will be launching in June 2020

 


Debra BorchardtDebra BorchardtMay 21, 2020
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5min3350

Ayr Strategies Inc. (OTCQX: AYRSF) reported that its revenue increased 4% sequentially in the first-quarter ending in March to $33.6 million. The company did note that sales began to decline in March due to the COVID-19 related closures. The company also reported a net income of $3.3 million after a foreign currency translation. The earnings per share were $0.06 basic and $0.05 diluted.

Ayr also made improvements on its loss from operations as it trimmed that number from a loss of $16.9 million in the fourth quarter to a loss of $4.9 million in the first quarter. The adjusted EBITDA was $8.4 million, which dropped from the fourth quarter’s $9.2 million due to the COVID closures.

Jonathan Sandelman, CEO of Ayr Strategies said,  “Although cannabis has been deemed an ‘essential business’, the regulators in Massachusetts and Nevada, where we currently operate, were among the few nationwide to place material restrictions on cannabis sales.  So unlike many cannabis companies in the U.S., our business faced headwinds.”

Ayr said in a statement that prior to the closures, sales through early March in Massachusetts and Nevada had been higher. In Massachusetts, the company redirected wholesale capacity into its retail stores, increased available inventory and average spend, promoted incentive programs to increase penetration of medical cards, and increased medical patient count. Nevada was subject to the disappearing tourist crowd. Ayr said it retooled its technology, rapidly implemented new software and an e-commerce oriented website, and launched digital marketing campaigns to support online sales in the state.

“Despite these limitations, in the first quarter we produced sequentially higher revenue and substantial adjusted EBITDA, and added material cash from operations to our balance sheet,” continued Sandelman.  “Since then, we have successfully accelerated our digital transformation initiatives, and we expect to exit the challenges presented by COVID a materially stronger business, as evidenced by the rebound in ticket size, transaction volume, and retail margins we are seeing thus far in May.”

At the end of the quarter, the company had cash and cash equivalents of $9.9 million, an 18% increase compared to $8.4 million of cash and cash equivalents on December 31, 2019.  However, the company does have total liabilities of $177 million and current liabilities of $40 million.

Looking Ahead

Massachusetts has said that recreational dispensaries can begin to resume sales on May 25. Ayr has said that its dispensary revenues are already tracking to over $1.8 million, 90% above January and February 2020 levels. The average daily revenues are currently over $59,000 and daily transaction volumes are over 300 with an average ticket size of $186 per transaction.

In Nevada, the average daily revenues are currently over $200k; daily transaction volumes over 2,400, with an average ticket of $84 per transaction; estimated gross margin levels just under 60%. May adjusted EBITDA in the state is tracking 3% above the record months of January and February 2020 despite lower revenues.

Guidance Removed

Sandelman did say that the company’s previous EBITDA guidance was no longer applicable due to the closures. The company had planned to begin recreational sales at its current medical dispensaries in Massachusetts, but the government closures meant they couldn’t get the approvals needed.

Sandelamn added, “While we are disappointed at the COVID-related delays in converting to adult-use sales in our dispensaries, we are confident that our high density, high traffic greater Boston locations will result in persistently strong retail sales opportunities when our stores convert to adult use.”

Canaccord Genuity analyst Bobby Burelson wrote recently, Given the company’s cash position and positive cash flows forecasted for this year despite headwinds, we continue to believe AYR is one of the best-positioned companies in the space to weather prolonged market headwinds. Additionally, as other operators in the space face capital challenges, we believe AYR will be positioned to complete strategic acquisitions at attractive multiples.” Burleson also pointed out that the company has completed three harvests from its expanded cultivation facility in Massachusetts and that the expansion should all for a fast ramp of additional wholesale activity once recreational sales come back on board.


Debra BorchardtDebra BorchardtMay 20, 2020
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4min2890

Trulieve Cannabis Corp. (OTCQX: TCNNF) reported that its revenue increased 21% sequentially to $96 million in its first quarter of 2020 ending  March 31, 2020, versus $79 million in the fourth quarter. This beat the Yahoo! Finance average estimate for revenue of $90 million for the quarter.

Revenue increased 116% over last year’s first-quarter revenue of $44 million. Trulieve also delivered a net income of $14 million in the first quarter.  The company has a strong cash position of $100.8 million at March 31, 2020.

The company delivered adjusted EBITDA of $49.4 million, or 51%, for the first quarter of 2020 and reported earnings per share (EPS) of $0.12. This beat the Yahoo! Finance average estimate of $0.11 but was down from last year’s earnings of $0.13 for the first quarter of 2019. The achieved GAAP adjusted margin was 77%.

“Trulieve posted exceptional operational results for the quarter, continuing to grow our market share in Florida as we saw our dedicated team along with our scale and supply chain efficiencies successfully meet the increased demand for our products,” said Kim Rivers, Trulieve CEO.  “Trulieve’s execution of key fundamentals and financial discipline coupled with market share growth this quarter contributed to positive free cash flow, further strengthening our balance sheet and validating our financial stewardship. Our financial position continues to differentiate us in the market by providing flexibility to support both organic and external growth initiatives which is increasingly important during these times.”

Trulieve stock has risen 122% over the past 60 days as investors are flocking to one of the few cannabis companies that isn’t reporting massive net losses.

Strong Outlook

Trulieve was also flexing when it came to jobs. The company has hired more than 500 employees since mid-March, and currently has nearly 300 positions that need filling. Trulieve expanded its delivery fleet by 200 vehicles during March in order to address COVID demands.

Trulieve also reiterated its guidance for revenue between $380 million and $400 million for the year. The adjusted EBITDA guidance is for $140-$160 million.

Canaccord Genuity analyst Derek Dley said, “While we do not anticipate Trulieve experiencing any material slowdowns in servicing it patient base due to CVID-19, we believe the strong balance sheet does afford the company the luxury of patience and could potentially allow it to capitalize on acquisition opportunities in the near term.”

Quarter Highlights

The company noted that it launched new products including TruPowder, TruTincture drops, and our ground flower product offering during the quarter. Plus, it opened three new stores in Florida, ending the first quarter with 47 stores nationwide.



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