Terra Tech Corporation (OTC:TRTC) fell by 6% and tumbled to 25 cents per share after the company reported that second quarter revenues fell to $7.8 million from $9.7 million. The drop was due to the expiration of a contract with Edible Gardens, however, it was partially offset by the company’s increased sales from the Blum dispensary in Oakland California.
“We saw a continued strengthening in demand for cannabis products as sales from both our wholesale IVXX brand and our Blüm dispensaries continued to gain traction,” said Derek Peterson, Chief Executive Officer of Terra Tech Corp. “Total cannabis segment revenues were $6.0 million in the second quarter of 2017, compared with $3.8 million in the comparable period in the prior year. The second quarter momentum is expected to accelerate in the second half of the year, boosted by adult-use cannabis sales in Nevada, which commenced in July 2017.”
The company made a conscious decision to exit the ornamental flower business, which accounted for $4.5 million in revenue. Gross margins did improve to 19% from the previous year’s 16%, mostly due to the expiration of the Edible Gardens contract. Margins in the cannabis sector fell as the Nevada dispensaries ran promotions to gain market share.
Peterson said on the earnings call that the company did $2.2 million in sales in July for four locations in Nevada. With regards to California, Peterson said, “We continue to see significant traffic as well through our Bloom locations across the state as well as our Bloom Oakland, which again is going through a cosmetic restructuring.”
Gross profits for the second quarter were $1.5 million, also lower than last year’s $1.6 million. The company also reported a net loss of $0.5 million, a marked improvement over last year’s second quarter net loss of $4.9 million.
“We are pleased with this quarter’s results and believe the market opportunity for dynamic and aggressive companies in the emerging legal cannabis market is evident. Maximizing value for shareholders remains our top priority as we lay the foundation for future growth at Terra Tech, and we are taking steps to improve the Company’s corporate governance to support this. We leave our revenue guidance of $38 – $40 million for 2017 unchanged,” concluded Mr. Peterson.