Cresco Labs Reports First Quarter Financial Results

Cresco Labs generated substantial revenue growth

Cresco Labs Inc. (CSE: CL) one of the largest vertically integrated multistate cannabis operators in the United States, today released its unaudited financial results for the first quarter ended March 31, 2020. All financial information presented in this release is in U.S. dollars, unless otherwise noted.

We generated another sequential quarter of substantial revenue growth from the same asset base as Pro-forma Q4 and our fourth consecutive quarter of positive adjusted EBITDA.Charles Batchell Co-founder and CEO

Charles Bachtell, Co-founder and CEO of Cresco Labs stated, "I couldn't be more proud of what our team has achieved year to date – we have become an even better-operating company since the beginning of the year. I'm equally proud of the expansion of our operations during this quarter. In Q1 we built, staffed, integrated, and refined our operations in the largest and most important cannabis markets in the U.S. This positions us incredibly well to see the fruits of that labor in the coming quarters. We continue with our very clear focus, having the most strategic geographic footprint possible and gaining meaningful, material positions in those markets. With our major CapEx investments behind us, our outstanding transactions substantially completed, increased capacity coming online, and additional dispensaries opening, Cresco expects to deliver substantial growth in 2020."

First Quarter 2020 Financial Highlights

Operating Results

  • Revenue for the first quarter of 2020 was $66.4 million, an increase of 60% over Q4'19 revenue and 26% over Q4'19 net Pro-forma revenue1 on the same asset base. Revenue growth was driven by increased cultivation and retail efficiency in Illinois and Pennsylvania, along with operational improvements in California.
  • Operational Gross Profit3 as a Percentage of Revenue was 48% in the quarter as compared to 51% the prior quarter. Operational Gross Profit margin was lower as lower margin revenue in California made up a higher portion of total revenue, offset by increased efficiency in Illinois and Pennsylvania.
  • SG&A was $46.7million. SG&A included $11.8 million in non-core costs associated with the close of three transactions and $1.4 million in share-based compensation. Excluding these non-core and non-cash items, SG&A would have been $33.4 million or 50% of revenue.
  • Net loss4was $13.4 million, which includes unrealized gains on mark-to-market instruments that fluctuate until obligations are settled, changes in fair value of biological assets, interest expense and tax expense.
  • Adjusted EBITDA5was $3.2million, an increase of 11%. This was achieved while consolidating Origin House during the quarter and was driven primarily from higher revenues and increased operational gross profit in Illinois and Pennsylvania.

Balance Sheet

Numbers in millions unless otherwise notedQ1 2020Q4 2019Δ
Cash and Cash Equivalents$68.6$49.140%
Net Working Capital6$75.1$9.2719%
Total Assets$1,157.0$616.688%
Total Liabilities$417.3$293.942%

Shares Outstanding

Total shares on a fully converted basis were 373,139,010 as of March 31, 2020.

Progress on Strategic Priorities

Cresco Labs outlined the following 2020 strategic goals on the April 27, 2020, fourth quarter 2019 earnings conference call: Expand Cresco's market-leading position in Illinois and Pennsylvania; Integrate Origin House and turn California into a center of profitable growth; Lay the foundation for future growth in other states.

Illinois & Pennsylvania

Recent Announcements

  • On April 16, 2020, Cresco Labs announced the completion of its cultivation facility in Lincoln, IL, the largest in the state, and the first phase of expansion at its Kankakee facility – adding almost 180,000 square feet of additional indoor and greenhouse cultivation space, bringing the total cultivation space to 215,000 square feet across all three of its Illinois facilities. The additional capacity is expected to begin to contribute on a rolling basis throughout the rest of the year.
  • On May 7, 2020, Cresco Labs announced the completion of an additional 66,000 square feet of cultivation space in Pennsylvania, a 4x increase in capacity. The additional capacity is expected to begin to contribute on a rolling basis throughout the rest of the year.
  • On May 27, 2020, Cresco Labs announced the opening of Sunnyside* Danville, IL.
  • On May 28, 2020, Cresco Labs announced the opening of the first adult-use dispensary in downtown Chicago – Sunnyside* River North.

California

Recent Announcements

  • On January 8, 2020, Cresco Labs announced the closing of its acquisition of Origin House.
  • On February 4, 2020, Cresco Labs announced the launch of Mindy's Edibles in California.

Other States

Recent Announcements

  • On February 7, 2020, Cresco Labs announced the legal close and funding of its acquisition of Hope Heal Health in Massachusetts.
  • On February 27, 2020, Cresco Labs announced the opening of four Sunnyside* dispensaries in New York.
  • On May 26, 2020, Cresco Labs announced its agreement to acquire four additional operating dispensaries in Ohio.

Capital Markets

Recent Announcements

  • On January 28, 2020, Cresco Labs announced the closing of a sale-and-leaseback agreement for its Yellow Springs, Ohio property for total non-dilutive funding of $12 million.
  • On February 2, 2020, Cresco Labs announced the closing of a $100 million senior secured credit facility.
  • On April 23, 2020, Cresco Labs announced the closing of a sale-and-leaseback agreement for its Marshall, Michigan property for total non-dilutive funding of $16 million.

To learn more about Cresco Labs, visit the company HQ here.

Disclaimer: Past performance is not an indicator of future performance.

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Casey Peternell
Casey Peternell

Casey is a media and content creator with a keen eye for creativity. Casey is currently in the process of obtaining a double bachelors degree in Media & Communications and Business from Swinburne University in Melbourne.

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