Lift Off – CWEB, Cresco and Trulieve Rocket Ahead with Q1 2019 Results

It was a huge week for the hemp industry, as the market share leader in whole-plant hemp extract products, Charlotte's Web Holdings, Inc (CSE:CWEB, OTCQX:CWBHF) reported financial results for the first quarter ending March 31, 2019.

The first quarter concluded with significant retail expansion for Charlotte's Web as shipments commenced to three national brand supermarket/grocery and drugstore retailers in select states.

Subsequent to the quarter, shipments commenced to a fourth national retailer and Charlotte's Web has surpassed 6,000 retail locations now receiving shipments of the company's leading hemp CBD products. More than 2,300 new retail doors were added since the start of the year—more than all of 2018—significantly expanding the company's physical brick and mortar retail reach.

"With the passing of the 2018 Farm Bill, we experienced a rapid increase in the major retail category as hemp became federally legal. This momentum is continuing as consumer awareness and retailer interest surrounding hemp and CBD increases."

 – President and CEO of Charlotte's Web, Deanie Elsner

To support the growing product portfolio and retailer demand, Charlotte's Web is more than doubling the number of acres planted for 2019 to over 700 acres. The company planted 300 acres of hemp in 2018 and harvested 675,000 pounds of raw hemp compared to 63,000 pounds in 2017.

Charlotte's Web was also granted conditional approval this week for the listing of the company's common shares on the Toronto Stock Exchange (TSX).

The company believes that the TSX listing will increase its exposure to a wider capital markets audience, increase trading liquidity, and expand access to international institutional investors and capital.

The move from the CSE to the TSX comes just nine months after the company's successful IPO in August 2018, and is a reflection of both its' continued growth and the improving regulatory environment for hemp in Canada and the United States.

Trulieve Cannabis Corp (CSE: TRUL) also drew significant attention after it announced its financial results for the first quarter of this year, which saw revenue increase by 192%, from $15.2 million in Q1 2018 to $44.5 million in Q1 2019

The company successfully settled with the Florida Department of Health, increasing the potential number of Trulieve dispensaries to 14 above the state cap, while its' adjusted EBITDA increased from $6.1 million to $19.0 million when compared to the same period in 2018.

Trulieve also increased the number of U.S. states it operates in to four, following acquisition of Connecticut-based dispensary The Healing Corner, and signed agreement with Blue Rive Extracts & Terpenes to bring their products to the Florida market, recently launching their dry-sift rosin product.

A leading cannabis branded products company in the US, Plus Products Inc (CSE: PLUS), also had plenty of investors buzzing this week after it saw revenues climb to $3.2 million in Q1 2019, a 274% year-over-year growth over Q1 2018 revenues of $0.9 million.

The company successfully raised $17.9 million in capital—net of share issuance costs—from the private placement offering of convertible debentures in February 2019. The gross margin grew to 21% in Q1 2019, compared to 8% in Q1 2018, while Plus Product's cash balance rose to $35.6 million as of March 31, 2019, up from the $22.4 million recorded on December 31, 2018.

The company's net working capital was $37.3 million in Q1 2019, while it's current liabilities were only $2.8 million. Shareholder equity reached $30.3 million on March 31, 2019, up from $25.7 million in December last year.

"Our Q1 results represent continued strong revenue performance and gains in market share. As we progress further into 2019, we hope for an increase in the enforcement and regulatory clarity in the illegal cannabis market. Our involvement and leadership in the National Cannabis Round table aligns with our goals in helping to structure the laws that will one day serve to make cannabis safe and approachable for everyone."

– Co-founder & CEO of PLUS Products, Jake Heimark

Acreage Holdings Inc (CSE: ACRG.U) (OTCQX: ACRGF) (FSE: 0VZ), had a standout week, reporting Q1 2019 results which showed a revenue increase of 487%.

The company's pro forma revenue was $33.1 million, while its pro forma adjusted net loss—which excludes certain non-cash charges and non-recurring items—was $15.5 million.

Six The Botanist branded dispensaries opened in New York, North Dakota, and Ohio during Q1 2019, while one dispensary was acquired on pro forma basis in Nevada. Acreage also deployed more than $100 million in capital through acquisitions and capital expenditures during the quarter.

TerrAscend Corp (CSE: TER;OTCQX: TRSSF) also reported financial results for Q1 2019, recording $14.6 million in revenue for the three months ending March 31, 2019.

The company also closed out the quarter with an adjusted EBITDA loss (non-GAAP measure) of $7.2 million, compared with a loss of $7.1 million in the fourth quarter of 2018 and a loss $1.6 million in the comparable first quarter of 2018.

On May 15, 2019, the company closed the first tranche of its previously announced private placement with total proceeds in excess of $40.2 million. The final tranche is expected to close on or around May 27. As of March 31, 2019, the Company held $8.6 million in cash and cash equivalents.

"Our sales in Canada continue to be strong, driven by demand from provincial distributors and consumers. We are building industry-leading cultivation and processing capabilities. Our Mississauga facility was recently GMP certified by the German authorities – the only such certification granted in the last year – and exports to the EU will commence this quarter. We will be fully operational and ready to begin sales of edibles and concentrates into the Canadian market in the fourth quarter."

– Founder and CEO of TerrAscend, Dr Michael Nashat

Meanwhile, Curaleaf Holdings, Inc (CSE: CURA) (OTC: CURLF), a leading vertically integrated cannabis operator in the U.S., reported its financial and operating results for the first quarter of 2019, securing Reported Pro Forma Revenue of $75.1 million.

The company also opened seven new dispensaries at a rapid pace in key markets such as Florida, Maryland and New York—building on existing licenses and prior acquisitions—and qualified to list on OTC Markets Group's OTCQX® Best Market under the symbol "CURLF". Curaleaf also announced the acquisition of Eureka in California, and Select, the leading cannabis wholesale brand in the U.S.

Managed Revenue for the first quarter was $40.7 million an increase of 260% over the prior year and 17% over the prior quarter. Pro Forma Revenue was $75.1 million. Total Revenue for the first quarter of 2019 increased 288% year-over-year to $35.3 million, compared to $9.1 million in the first quarter of 2018. Revenue for the first quarter of 2019 increased 10% over the prior quarter.

Retail and wholesale revenue saw a nearly five-fold increase to $27.8 million during the quarter, compared to $5.7 million in the first quarter of 2018. The increase in cannabis revenue was primarily due to the contribution from acquisitions made throughout 2018 as well as from new dispensaries that opened during the quarter in Florida and New York.

Gross profit before impact of biological assets for the first quarter of 2019 was $18.1 million, resulting in gross margin of 51%, compared to $4.2 million for the first quarter of 2018. The increase over the prior year was due to improved operating capacity of the Company's cannabis business.

Green Thumb Industries Inc (CSE: GTII), a leading national cannabis consumer packaged goods company and owner of the retail chain Rise™, published financial results for Q1 2019, recording quarter over quarter growth.

The company's first quarter revenue for 2019 increased 155% year-over-year to $27.9 million, while quarter-over-quarter revenue increased 34%, a record sequential growth for GTI. Green Thumb Industries EBITDA saw a loss of $4.0 million, while the company's Adjusted EBITDA ended the quarter with a gain of $4.9 million, and its Adjusted Operating EBITDA a loss of $0.4 million.

The company's net loss for the first quarter 2019 was $9.7 million, as compared to net loss of $3.3 million in the fourth quarter 2018, primarily due to the decrease in value from a variable note receivable in other income. Current assets totalled $151.1 million and included cash and cash equivalents of $117.1 million. Total debt outstanding was $6.7 million.

"Our performance led to the successful closing of our $105 million debt financing. GTI continues to be a first mover—this time in the capital markets. Importantly, this financing allows us to continue building a capital-efficient business that is well positioned for scalable, long-term sustainable growth. We look forward to strong performance in 2019 as we see our investments in people, infrastructure, and branding gain momentum."

– GTI Founder and Chief Executive Officer Ben Kovler

VIVO Cannabis Inc. (TSX-V: VIVO, OTCQX: VVCIF) also released its Q1 2019 financial and operating results this week.

VIVO's revenue decreased in the first quarter of 2019 as compared to the fourth quarter of 2018, as expected, as Q4 2018 sales benefited from initial product stocking for the adult-use market by provincial distributors.

VIVO's net income of $5.0 million (basic and diluted income of $0.02 per share) for the first quarter of 2019, as compared to its net loss of $8.0 million for the fourth quarter of 2018, was primarily attributable to an unrealized gain on financial assets of $8.9 million related to an increase in the market value of certain equity investments held by the Company, which is anticipated to be reversed in Q2 2019.

As of March 31, 2019, the company's cash, cash equivalents and short-term investments were $68.4 million, as compared to $74.8 million on December 31, 2018.

Cresco Labs Inc (CSE: CL) (OTCQX: CRLBF)—one of the largest vertically integrated multistate cannabis operators in the United States—also finished off the week strongly, after it released its unaudited financial results for Q1 2019, showing a revenue increase of 313% when compared to previous years.

The company saw first quarter revenue of $21.1 million, up 313% year-over-year and 24% quarter-over-quarter, and first quarter pro forma revenue of $33.9 million, which includes the impact of pending acquisitions in New York, Massachusetts, Florida, and in California with Origin House.

Cresco Labs also had an adjusted EBITDA of $0.8 million for Q1 2019, compared to $1.0 million in the prior-year period. As of fiscal year-end, total assets of $364.0 million, including cash and cash equivalents of $106.1 million and a working capital position of $146.3 million with zero debt on the balance sheet.

"We have continued to execute well from an operational standpoint, generate higher levels of revenue in our existing markets, and deliver strong profit margins. Through our pending acquisitions of Origin House and VidaCann, we have also put a foundation in place that we believe will enable us to capture a leading share in the North American cannabis market."

– Co-founder and CEO of Cresco Labs, Charles Bachtell

Watch this space for future weekly updates.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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