AWH ANNOUNCES Q2 2023 FINANCIAL RESULTS
Reported Record Quarterly Revenue
Achieved
Generates Positive Cash from Operations for Second Consecutive Quarter
Q2 2023 Financial Highlights
- Gross revenue increased
28.4% year-over-year and7.0% quarter-over-quarter to .$151.0 million - Net revenue, which excludes intercompany sales of wholesale products, increased
26.1% year-over-year and7.7% quarter-over-quarter to .$123.0 million - Retail revenue increased
18.9% year-over-year and8.6% quarter-over-quarter to .$89.9 million - Gross wholesale revenue increased
45.3% year-over-year and4.7% quarter-over-quarter to . Wholesale revenue, net of intercompany sales, increased$61.2 million 51.0% year-over-year and5.4% quarter-over-quarter to .$33.1 million - Net income of
during the quarter represented an improvement compared to a net loss of$0.8 million in Q2 2022 and$21.2 million in Q1 2023.$18.5 million - Adjusted EBITDA1 was
, representing a$21.3 million 17.3% margin. Adjusted EBITDA increased2% and margins declined 409 basis points year-over-year. Margins declined 308 basis points quarter-over-quarter. - As of June 30, 2023, cash and cash equivalents were
and net debt2 was$68.0 million .$241.8 million - Generated
of cash flows from operations, representing the second quarter in a row of positive operating cash flow. This included a benefit from the recognition of a$25.4 million employee retention tax credit ("ERTC"), of which$22.8 million was collected and then returned to a lender as debt repayment of an advance previously received. Excluding this inflow, cash flows from operations would have been nearly$17.5 million .$8 million
___________ | |
1 | Adjusted EBITDA/margin and Adjusted Gross Profit/margin are a non-GAAP financial measures. Please see the "GAAP Reconciliations" at the end of this release. |
2 | Total debt less cash and cash equivalents less unamortized deferred financing costs. |
Business Highlights
- During the quarter, the Company announced it appointed John Hartmann as permanent Chief Executive Officer of the Company effective May 15th, 2023.
- During the quarter, the Company opened its ninth dispensary in
Illinois , inTinley Park . This is the Company's first retail outlet store in the state ofIllinois . - During the quarter, the Company closed the acquisition of four dispensaries in
Maryland , marking AWH's expansion to a seventh state with a total of 31 operating dispensaries across all seven states. - Subsequent to the quarter, on July 1st, the Company commenced adult-use sales at four dispensaries in
Maryland .
Management Commentary
"I am proud of the Company for achieving another quarter of record revenue and cash generation, fueled by growth across both our retail and wholesale businesses," said Abner Kurtin, Executive Chairman. "We were able to deliver a meaningful
John Hartmann, Chief Executive Officer, commented, "With the team's strong performance in the quarter, we remain optimistic about the future of the business and continue to see substantial growth across all areas, particularly in our retail outlet model. As we expand our presence into
Dan Neville, Chief Financial Officer, added, "Our dedication to producing cash flow is evident as we generated nearly
Q2 2023 Financial Overview
Net revenue increased
Total retail revenue in the second quarter of 2023 was
Gross wholesale revenue was
Q2 2023 gross profit was
Total Q2 2023 general and administrative ("G&A") expenses were
Net income in the second quarter of 2023 was
Adjusted EBITDA1, which adjusts for tax, interest, depreciation, amortization, equity-based compensation, and other items deemed one-time or non-recurring in nature, was
Non-GAAP Financial Information
This press release includes certain non-GAAP financial measures as defined by the United States Securities and Exchange Commission ("SEC"), including Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Adjusted EBITDA Margin. 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.
Conference Call and Webcast
AWH will host a conference call on August 8, 2023 at 6:00 p.m. ET to discuss its financial results for the quarter ended June 30, 2023. The conference call may be accessed by dialing (888) 390-0605. A live audio webcast of the call will also be available on the Investor Relations section of AWH's website at https://www.awholdings.com/investors and will be archived for replay.
About Ascend Wellness Holdings, Inc.
AWH is a vertically integrated multi-state cannabis operator with licenses and assets in
Additional information relating to the Company's second quarter 2023 results is available on the Investor Relations section of AWH's website at https://awholdings.com/investors/, the SEC's Electronic Data Gathering, Analysis and Retrieval System ("EDGAR") at www.sec.gov and
Cautionary Note Regarding Forward-Looking Information
This news release includes forward-looking information and statements, which may include, but are not limited to, the plans, intentions, expectations, estimates, and beliefs of the Company. Words such as "expects", "continue", "will", "anticipates" and "intends" or similar expressions are intended to identify forward-looking information and statements. Without limiting the generality of the preceding statement, all statements in this press release relating to estimated and projected revenue, expectations regarding production capacity, anticipated capital expenditures, expansion, profit, product demand, margins, costs, cash flows, sources of capital, growth rates and future financial and operating results are forward-looking information and statements. We caution investors that any such forward-looking statements and information are based on the Company's current projections and expectations about future events and financial trends, the receipt of all required regulatory approvals, and on certain assumptions and analysis made by the Company in light of the experience of the Company and perception of historical trends, current conditions and expected future developments and other factors management believes are appropriate.
Forward-looking information and statements involve and are subject to assumptions and known and unknown risks, uncertainties, and other factors which may cause actual events, results, performance, or achievements of the Company to be materially different from future events, results, performance, and achievements expressed or implied by forward-looking information and statements herein. Such factors include, among others, the risks and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and in the Company's other reports and filings with the applicable Canadian securities regulators on its profile on SEDAR at www.sedarplus.ca and with the SEC on its profile on EDGAR at www.sec.gov. Although the Company believes that any forward-looking information and statements herein are reasonable, in light of the use of assumptions and the significant risks and uncertainties inherent in such information and statements, there can be no assurance that any such forward-looking information and statements will prove to be accurate, and accordingly readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance upon such forward-looking information and statements. Any forward-looking information and statements herein are made as of the date hereof, and except as required by applicable laws, the Company assumes no obligation and disclaims any intention to update or revise any forward-looking information or statements herein or to update the reasons that actual events or results could or do differ from those projected in any forward looking information and statements herein, whether as a result of new information, future events or results, or otherwise, except as required by applicable laws. The Canadian Securities Exchange has not reviewed, approved or disapproved the content of this news release.
ASCEND WELLNESS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
(in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||
Revenue, net | $ 122,988 | $ 97,499 | $ 237,164 | $ 182,589 | |||
Cost of goods sold | (94,669) | (64,531) | (173,141) | (126,174) | |||
Gross profit | 28,319 | 32,968 | 64,023 | 56,415 | |||
Operating expenses | |||||||
General and administrative expenses | 36,304 | 33,573 | 71,753 | 66,800 | |||
Settlement expense | — | — | — | 5,000 | |||
Total operating expenses | 36,304 | 33,573 | 71,753 | 71,800 | |||
Operating loss | (7,985) | (605) | (7,730) | (15,385) | |||
Other income (expense) | |||||||
Interest expense | (10,481) | (9,246) | (19,456) | (15,277) | |||
Other, net | 24,044 | 151 | 24,309 | 254 | |||
Total other income (expense) | 13,563 | (9,095) | 4,853 | (15,023) | |||
Income (loss) before income taxes | 5,578 | (9,700) | (2,877) | (30,408) | |||
Income tax expense | (4,737) | (11,472) | (14,754) | (18,579) | |||
Net income (loss) | $ 841 | $ (21,172) | $ (17,631) | $ (48,987) | |||
Net income (loss) per share attributable to | $ — | $ (0.11) | $ (0.09) | $ (0.27) | |||
Weighted-average common shares outstanding | 195,650 | 185,308 | 192,068 | 178,898 |
ASCEND WELLNESS HOLDINGS, INC.
SELECTED CONDENSED CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | |||
Net cash provided by (used in) operating activities | $ 25,397 | $ (10,260) | $ 31,175 | $ (20,505) | |||
Cash flows from investing activities | |||||||
Additions to capital assets | (8,157) | (22,228) | (4,715) | (32,442) | |||
Investments in notes receivable | (13,854) | (390) | (14,585) | (1,390) | |||
Collection of notes receivable | 82 | 82 | 164 | 164 | |||
Proceeds from sale of assets | 15,000 | 3,825 | 15,000 | 39,225 | |||
Acquisition of businesses, net of cash acquired | (11,857) | — | (19,857) | (24,890) | |||
Purchases of intangible assets | (471) | (29,009) | (943) | (29,009) | |||
Net cash used in investing activities | (19,257) | (47,720) | (24,936) | (48,342) | |||
Cash flows from financing activities | |||||||
Proceeds from issuance of common stock in private | 7,000 | — | 7,000 | — | |||
Proceeds from issuance of debt | — | 65,000 | — | 65,000 | |||
Repayments of debt | (18,306) | (669) | (19,092) | (1,455) | |||
Repayments under finance leases | (84) | — | (147) | — | |||
Debt issuance costs | — | (4,655) | — | (4,686) | |||
Taxes withheld under equity-based compensation plans, | — | (4,942) | (100) | (4,942) | |||
Net cash (used in) provided by financing activities | (11,390) | 54,734 | (12,339) | 53,917 | |||
Net decrease in cash, cash equivalents, and restricted | (5,250) | (3,246) | (6,100) | (14,930) | |||
Cash, cash equivalents, and restricted cash at | 73,296 | 143,797 | 74,146 | 155,481 | |||
Cash, cash equivalents, and restricted cash at | $ 68,046 | $ 140,551 | $ 68,046 | $ 140,551 |
ASCEND WELLNESS HOLDINGS, INC.
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
(in thousands) | June 30, 2023 | December 31, 2022 | |
Cash and cash equivalents | $ 68,046 | $ 74,146 | |
Inventory | 89,552 | 97,532 | |
Other current assets | 55,545 | 27,065 | |
Property and equipment, net | 267,117 | 279,860 | |
Operating lease right-of-use assets | 130,331 | 108,810 | |
Intangible assets, net | 220,730 | 221,093 | |
Goodwill | 48,288 | 44,370 | |
Other noncurrent assets | 19,951 | 19,284 | |
Total Assets | $ 899,560 | $ 872,160 | |
Total current liabilities | $ 124,653 | $ 110,949 | |
Long-term debt, net | 300,784 | 319,297 | |
Operating lease liabilities, noncurrent | 260,463 | 229,816 | |
Other noncurrent liabilities | 47,705 | 48,683 | |
Total stockholders' equity | 165,955 | 163,415 | |
Total Liabilities and Stockholders' Equity | $ 899,560 | $ 872,160 |
ASCEND WELLNESS HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
We define "Adjusted Gross Profit" as gross profit excluding non-cash inventory costs, which include depreciation and amortization included in cost of goods sold, equity-based compensation included in cost of goods sold, start-up costs included in cost of goods sold, and other non-cash inventory adjustments. We define "Adjusted Gross Margin" as Adjusted Gross Profit as a percentage of net revenue. Our "Adjusted EBITDA" is a non-GAAP measure used by management that is not defined by
The following table presents Adjusted Gross Profit for the three and six months ended June 30, 2023 and 2022:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
($ in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
Gross Profit | $ 28,319 | $ 32,968 | $ 64,023 | $ 56,415 | ||||
Depreciation and amortization included | 8,503 | 3,953 | 14,830 | 6,896 | ||||
Equity-based compensation included in | 1,931 | 3,167 | 1,981 | 7,162 | ||||
Start-up costs included in cost of goods | — | 4,248 | 1,570 | 8,171 | ||||
Non-cash inventory adjustments(2) | 6,172 | 112 | 10,114 | 2,316 | ||||
Adjusted Gross Profit | $ 44,925 | $ 44,448 | $ 92,518 | $ 80,960 | ||||
Adjusted Gross Margin | 36.5 % | 45.6 % | 39.0 % | 44.3 % |
(1) | Incremental expenses associated with the expansion of activities at our cultivation facilities that are not yet operating at scale, including excess overhead expenses resulting from delays in regulatory approvals at certain cultivation facilities. |
(2) | Consists of write-offs of expired products, obsolete packaging, and net realizable value adjustments related to certain inventory items. |
The following table presents Adjusted EBITDA for the three and six months ended June 30, 2023 and 2022:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
($ in thousands) | 2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) | $ 841 | $ (21,172) | $ (17,631) | $ (48,987) | ||||
Income tax expense | 4,737 | 11,472 | 14,754 | 18,579 | ||||
Other, net | (24,044) | (151) | (24,309) | (254) | ||||
Interest expense | 10,481 | 9,246 | 19,456 | 15,277 | ||||
Depreciation and amortization | 15,543 | 7,010 | 29,262 | 12,685 | ||||
Non-cash inventory adjustments(1) | 6,172 | 112 | 10,114 | 2,316 | ||||
Equity-based compensation | 4,129 | 7,055 | 7,134 | 13,554 | ||||
Start-up costs(2) | 278 | 5,364 | 2,805 | 10,124 | ||||
Transaction-related and other non- | 2,971 | 2,027 | 3,273 | 8,221 | ||||
Loss (gain) on sale of assets | 216 | (72) | (226) | 746 | ||||
Litigation settlement | — | — | — | 5,000 | ||||
Adjusted EBITDA | $ 21,324 | $ 20,891 | $ 44,632 | $ 37,261 | ||||
Adjusted EBITDA Margin | 17.3 % | 21.4 % | 18.8 % | 20.4 % |
(1) | Consists of write-offs of expired products, obsolete packaging, and net realizable value adjustments related to certain inventory items. |
(2) | One-time costs associated with acquiring real estate, obtaining licenses and permits, and other costs incurred before commencement of operations at certain locations, as well as incremental expenses associated with the expansion of activities at our cultivation facilities that are not yet operating at scale, including excess overhead expenses resulting from delays in regulatory approvals at certain cultivation facilities. Also includes other one-time or non-recurring expenses, as applicable. |
(3) | Legal and professional fees associated with litigation matters, potential acquisitions, and other regulatory matters and other non-recurring expenses. The three and six months ended June 30, 2023 includes a fair value adjustment related to an acquisition earn-out of |
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SOURCE Ascend Wellness Holdings, Inc.