First-quarter revenue of $102.6 million and adjusted operating EBITDA of $25.5 million.
Green Thumb Industries Inc. (CSE: GTII), a leading national cannabis consumer packaged goods company and owner of Rise™ and Essence retail stores, today reported its financial results for the first quarter ended March 31, 2020. Financial results are reported in accordance with U.S. generally accepted accounting principles and all currency is in U.S. dollars.
We achieved a major milestone by breaking $100 million in quarterly revenue along with substantial EBITDA growth.Ben Kovler, Chief Executive Officer
"Our business model continues to prove out and we delivered outstanding first-quarter results," said Green Thumb Founder and Chief Executive Officer Ben Kovler. " These factors helped contribute to our positive free cash flow from operations. We believe that our operational strength and resilience, supported by a strong balance sheet, continue to differentiate and position us for long-term success, especially during these challenging times."
- Revenue: Total revenue for the first quarter of 2020 increased 267.6% year-over-year and 35.4% quarter-over-quarter to $102.6 million. Quarterly revenue was driven by organic growth across the Company's consumer packaged goods and retail businesses.
- Gross Margin: Gross margin for the first quarter of 2020 was 51.6% as compared to 45.8% for the first quarter of 2019.
- Net Income (Loss) Attributable to Green Thumb: Net loss attributable to the Company for the first quarter 2020 was $4.2 million or ($0.02) per basic and diluted share, as compared to a net loss of $14.1 million or ($0.07) per basic and diluted share for the fourth quarter 2019.
- Adjusted Operating EBITDA: Adjusted Operating EBITDA(1), which is a non-GAAP financial measure as described below and in an accompanying financial table in this release, was $25.5 million for the first quarter 2020, representing an 85% increase from the prior quarter and a 13-fold increase from the first quarter 2019.
- Balance Sheet: As of March 31, 2020, current assets totalled $140.8 million and included cash and cash equivalents of $71.5 million. Total debt outstanding was $92.9 million, $0.2 million of which is due within 12 months.
- Capital Markets & Financing: In January and March 2020, respectively, Green Thumb completed the sale and leaseback transactions with Innovative Industrial Properties of its Toledo, Ohio processing facility and Oglesby, Illinois cultivation and processing facility. In total, these transactions provide the Company with $57.2 million of non-dilutive capital.
(1) EBITDA and Adjusted Operating EBITDA are non-GAAP financial measures. Please see the "Supplemental Information (Unaudited) Regarding Non-GAAP Financial Measures" at the end of this press release for a reconciliation of non-GAAP to GAAP measures.
Additional Management Commentary
"Green Thumb continues to execute as we launched adult-use sales in Illinois at the start of the year with great success. The positive feedback we have received from communities and regulators, coupled with strong consumer demand, even in the face of COVID-19, validates the essential reality of the cannabis industry," said Ben Kovler, Founder and Chief Executive Officer. "As COVID-19 persists, our top priorities continue to be the safety of our team, customers, and supply chain, while providing uninterrupted access to products that our customers use for their well-being. Our Leadership Response Team has implemented operational measures following CDC guidelines to support the safety of our teams and customers. We also accelerated the buildout of our omnichannel infrastructure to better serve our customers, including e-commerce, customer service, delivery and curbside pickup."
Kovler added, "I want to thank the entire Green Thumb team for their steadfast commitment to serving our customers, effectively pivoting as regulations evolve while operating at the highest standards every day. I am especially proud of our retail team members, who are working on the front lines to provide exceptional service to our customers. They are the true heroes."
Consumer Packaged Goods Business Development
- As of March 31, 2020, Green Thumb's family of consumer brands are produced, distributed, and available in retail locations in nine states: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada and Pennsylvania, supporting the execution of the Company's plan to distribute brands at scale.
- Branded product sales grew sequentially by approximately 21% gross (13% net) quarter-over-quarter, driven primarily by expanded product distribution. As of March 31, 2020, Green Thumb's branded products are sold in over 700 retail stores, including the Company's Rise™ and Essence retail stores.
- The Company's capacity expansion projects continue to progress according to plan in Illinois, New Jersey, Ohio, and Pennsylvania. Green Thumb's New Jersey and Ohio facilities are on track to contribute revenue from the production and distribution of Green Thumb's branded product portfolio in the third quarter of 2020.
- The Company launched sales of the Rythm brand's line of flower products in Maryland and resumed sales of the brand's vape products in Massachusetts following the lifting of the state's ban on vape sales in the prior quarter.
- In Maryland, Green Thumb launched Soft Lozenges under The Feel Collection brand and the Big Dog line extension under the Dogwalkers brand, known for its full-flower mini pre-rolls.
- In Florida, the Company launched a capsule product extension as part of Dr. Solomon's brand.
- Subsequent to quarter-end, the Company launched its first e-commerce site (https://shop.dogwalkersprerolls.com/) for the Dogwalkers brand to sell branded accessories and apparel.
Retail Business Development
- Green Thumb's first-quarter revenue included sales from 42 retail stores across ten states: Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio, and Pennsylvania.
- Comparable sales growth (stores opened at least 12 months) exceeded 75% on a base of 14 stores, driven primarily by increased transactions. Sequential quarter-over-quarter comparable sales were up approximately 24% off a base of 33 stores.
- Retail revenue increased sequentially by 45% quarter-over-quarter, primarily driven by new store openings and growth generated from increased transaction activity in the Company's retail stores, particularly in Illinois since the commencement of adult-use sales on January 1, 2020, and in Pennsylvania.
- During the quarter, Green Thumb opened three new stores:
- Illinois: Opened Rise™ Joliet and Quincy, the state's first 'adult-use only' stores, bringing total open stores in the state to seven.
- Pennsylvania: Opened Rise™ Cranberry, bringing total open stores in the state to ten.
- Subsequent to quarter-end, Green Thumb opened two new stores:
- Ohio: Opened Rise™ Lakewood (Detroit), bringing total open stores in the state to five.
- Nevada: Opened Essence South Rainbow in Las Vegas, bringing total open Essence stores in the Las Vegas area to four.
- The Company currently has 44 open stores nationwide and is licensed to open a total of 96 retail stores.
- During and subsequent to the quarter, Green Thumb accelerated the buildout of its omnichannel infrastructure, including e-commerce, customer service, delivery, and curbside pickup, to better serve patients and customers during the pandemic.
First Quarter 2020 Financial Overview
Total revenue for the first quarter of 2020 was $102.6 million, up 267.6% from $27.9 million for the first quarter of 2019 and up 35.4% from $75.8 million for the fourth quarter of 2019. Revenue growth was driven by the expanded distribution of Green Thumb's branded products, new store openings, and increased traffic to the Company's 42 open and operating retail stores.
In the first quarter 2020, Green Thumb generated revenue from all 12 of its markets: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio, and Pennsylvania. The Company continued to invest in the buildout of its cultivation and manufacturing capabilities in Illinois, New Jersey, Ohio, and Pennsylvania.
Gross profit for the first quarter of 2020 was $53.0 million or 51.6% of revenue, as compared to $12.8 million or 45.8% of revenue for the first quarter of 2019.
Total selling, general and administrative expenses for the first quarter were $45.4 million or 44.3% of revenue, an improvement from $46.7 million or 61.6% of revenue for the fourth quarter of 2019. Improved operating costs as a percentage of revenue was driven primarily by increased operating leverage achieved through scale.
Total other income was $1.8 million for the first quarter and included cash interest expense and other expenses.
EBITDA for the first quarter of 2020 was $20.3 million as compared to $7.8 million for the fourth quarter of 2019 and a loss of $10.4 million for the first quarter of 2019. Adjusted Operating EBITDA for the first quarter of 2020 was $25.5 million as compared to $13.8 million for the fourth quarter of 2019 and a loss of $2.1 million for the first quarter of 2019. The significant improvement in EBITDA and Adjusted Operating EBITDA over the trailing twelve months was driven primarily by revenue growth from both the consumer packaged goods and retail business segments.
Net loss attributable to Green Thumb for the first quarter was $4.2 million or ($0.02) per basic and diluted share, as compared to a net loss of $14.1 million or ($0.07) per basic and diluted share for the fourth quarter 2019.
Balance Sheet and Liquidity
As of March 31, 2020, current assets were $140.8 million, including cash and cash equivalents of $71.5 million. The Company had $92.9 million of total debt.
Total basic and diluted weighted average shares outstanding as of March 31, 2020 were 208,468,356.
Capital Markets & Financing
Green Thumb completed two sale and leaseback transactions with IIP for the following facilities: (1) January 31, 2020 – Toledo, Ohio processing facility for the total investment value of $7.2 million; and (2) March 6, 2020 – Oglesby, Illinois cultivation and processing facility for the total investment value of $50.0 million. Proceeds from the transactions will be used to support strategic expansion initiatives.
Transition from IFRS to U.S. GAAP Reporting
In February 2020, Green Thumb's registration with the U.S. Securities and Exchange Commission as a domestic issuer became effective. As a result, Green Thumb now reports its financial statements in conformity with U.S. GAAP. Additional information relating to the Company's first quarter 2020 results is available on the Investor Relations section of Green Thumb's website at https://investors.gtigrows.com, the SEC's website at www.sec.gov and Canada's System for Electronic Document Analysis and Retrieval at www.sedar.com.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial measures as defined by the SEC. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are included in the financial schedules attached to this press release. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP.
To learn more about Green Thumb Industries, visit the company HQ here.
Disclaimer: Past performance is not an indicator of future performance.
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