Acreage Holdings Reports Second Quarter 2021 Results
Acreage Holdings reported strong financial results for Q2 2021, revealing a 63% revenue increase year-over-year, totaling $44.2 million. The company achieved a 54% gross margin and $8.1 million in positive adjusted EBITDA, marking its second consecutive quarter of positive performance. Net loss was reduced to $2.6 million, significantly improved from $37.2 million in Q2 2020. Retail and wholesale revenues reached $28.4 million and $15.5 million, respectively. The company also strengthened its balance sheet by repaying $44.1 million in debt after selling its Florida operations for $60 million.
- Revenue increased by 63% year-over-year to $44.2 million.
- Achieved a gross margin of 54%, up 12.6 percentage points from the previous year.
- Reported positive adjusted EBITDA of $8.1 million, a significant improvement from a loss of $6.5 million in Q2 2020.
- Net loss improved to $2.6 million from $37.2 million in Q2 2020.
- Retail revenue grew to $28.4 million, a 43% increase from the prior year.
- Wholesale revenue surged 117% year-over-year to $15.5 million.
- Total gross profit for the quarter was $23.9 million, up 113% from the previous year.
- Operating expenses decreased by 39% to $30.6 million compared to Q2 2020.
- Successfully sold Florida operations for $60 million and repaid $44.1 million in debt.
- Net loss remained at $2.6 million despite improvements.
- Adjusted EBITDA from core operations was $9.8 million, still negatively impacted by non-core operations.
Revenue Growth of
NEW YORK, Aug. 09, 2021 (GLOBE NEWSWIRE) -- Acreage Holdings, Inc. (“Acreage”) (CSE: ACRG.A.U, ACRG.B.U), (OTC: ACRHF, ACRDF) a vertically integrated, multi-state operator of cannabis cultivation and retailing facilities in the U.S., today reported its financial results for the second quarter of 2021 ending June 30, 2021.
SECOND QUARTER RESULTS (UNAUDITED)
During the second quarter of 2021, Acreage continued to improve its financial performance and made progress towards its strategic initiatives. Highlights for the quarter are summarized below.
- Consolidated revenue was
$44.2 million , a63% increase compared to the same period in 2020 and a sequential increase of15% compared to the first quarter of 2020. - Gross margin was
54.0% , an increase of 12.6 percentage points compared to the same period in 2020. - Net loss attributable to Acreage in the second quarter of 2021 was
$2.6 million , an improvement from the net loss attributable to Acreage of$37.2 million for the same period in 2020. - Adjusted EBITDA* in the second quarter of 2021 was
$8.1 million compared to a loss of$6.5 million in the same period in 2020. Adjusted EBITDA* as a percentage of consolidated revenue was18.3% for the second quarter of 2021. This marks the second consecutive quarter of positive adjusted EBITDA* for the company and validates management's refocused strategic plan.
“I am once again pleased with our financial performance in the second quarter as we reported our second consecutive quarter of positive Adjusted EBITDA*," said Peter Caldini, Chief Executive Officer of Acreage. "Additionally, our revenue growth accelerated to
Retail revenue for the second quarter of 2021 was
Wholesale revenue for the second quarter of 2021 was
Total gross profit for the second quarter of 2021 was
Total operating expenses for the second quarter of 2021 were
Consolidated EBITDA* for the second quarter of 2021 was
Net loss for the second quarter of 2021 was
SECOND QUARTER YEAR-TO-DATE RESULTS (UNAUDITED)
Total revenue for the six months ended June 30, 2021, increased by
Gross margin for the six months ended June 30, 2021 was
Consolidated EBITDA* for the six months ended June 30, 2021 was
MANAGED SERVICES AGREEMENTS (MSA) PERFORMANCE
In addition to operating corporately owned production and cultivation facilities and retail dispensaries, Acreage manages operations on behalf of several third parties. During the second quarter of 2021, these managed entities generated net sales of
Managed entities generated EBITDA of
BALANCE SHEET AND LIQUIDITY
The company ended the quarter with
The company has worked to ensure that sufficient capital is available and is consistently monitoring for advantageous opportunities.
STRATEGIC DISCUSSION
The Company continues to believe its refocused strategy is the key to continued improvements in its financial results and shareholder value. The Company remains focused on three key strategic objectives - driving profitability, strengthening the balance sheet, and accelerating growth in its core markets.
In addition to the Company’s strong financial performance, several key initiatives were completed in the second quarter of 2021 in accordance with these strategic objectives:
- The Company completed the sale of Florida operations for an aggregate
$60.0 million during the quarter. - The Company utilized the proceeds from the sale of its Florida operations, including the proceeds from the subsequent sale of notes receivable received from the buyer of the Florida operations as consideration, to repay
$44.1 million in debt during the quarter. - In Pennsylvania, the recent completion of the expansion of the existing facility allowed the Company to increase production capacity by
20% in the quarter. - In Illinois, the Company completed construction of its cultivation and processing facility during the second quarter of 2021, ahead of schedule, bringing on-line over 80K square feet of additional capacity and processing capabilities to service the state.
- In Connecticut, the Company launched an enhanced loyalty program to increase customer retention and drive profitability.
- In Maine, the Company converted to adult use and consolidated two dispensary locations, bringing the total for the state to 3 consolidated, adult use locations.
EARNINGS CALL DETAILS
Acreage will host a conference call with management on Tuesday, August 10th at 9:00A.M. Eastern Daylight Time. The call will be webcast and can be accessed at investors.acreageholdings.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software.
ABOUT ACREAGE HOLDINGS, INC.
With its principal address in New York City, Acreage is a multi-state operator of cannabis cultivation and retailing facilities in the U.S., including the company’s national retail store brand, The Botanist. Acreage’s wide range of national and regionally available cannabis products include the award-winning The Botanist brand, the highly recognizable Tweed brand, the Prime medical brand in Pennsylvania, the Innocent edibles brand in Illinois and others. Acreage also owns Universal Hemp, LLC, a hemp subsidiary dedicated to the distribution, marketing and sale of CBD products throughout the U.S. Since its founding in 2011, Acreage has focused on building and scaling operations to create a seamless, consumer-focused, branded experience. More information is available at www.acreageholdings.com.
On June 27, 2019, Acreage implemented an arrangement under section 288 of the Business Corporations Act (British Columbia) with Canopy Growth Corporation (“Canopy Growth”), which was subsequently amended on September 23, 2020 (the “Amended Arrangement”). Pursuant to the Amended Arrangement, upon the occurrence (or waiver by Canopy Growth) of changes in federal laws in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation) or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event”), Canopy Growth will, subject to the satisfaction or waiver of certain closing conditions, acquire all of the issued and outstanding Class E subordinate voting shares (the “Fixed Shares”) on the basis of 0.3048 of a Canopy Growth share per Fixed Share (following the automatic conversion of the Class F multiple voting shares and subject to adjustment in accordance with the terms of the arrangement agreement entered into between Acreage and Canopy Growth on April 18, 2019, as amended on May 15, 2019 and on September 23, 2020).
In addition, Canopy Growth holds an option, exercisable at the discretion of Canopy Growth, to acquire all of the issued and outstanding Class D subordinate voting shares (the “Floating Shares”) at the time that Canopy Growth acquires the Fixed Shares, for cash or Canopy Growth shares, as Canopy Growth may determine, at a price per Floating Share based upon the 30-day volume-weighted average trading price of the Floating Shares on the CSE relative to the trading price of the Canopy Growth shares at the time of the occurrence or waiver of the Triggering Event, subject to a minimum price of US
For more information about the Amended Arrangement please see the Acreage proxy statement and management information circular dated August 17, 2020 (the “Circular”) and the respective information circulars of each of Acreage and Canopy Growth dated May 17, 2019, which are available on Acreage’s and Canopy Growth’s respective profiles on SEDAR at www.sedar.com and filed with the SEC on the EDGAR website at www.sec.gov. For additional information regarding Canopy Growth, please see Canopy Growth’s profile on SEDAR at www.sedar.com.
FORWARD LOOKING STATEMENTS AND NON-GAAP MEASURES
This news release and each of the documents referred to herein contains “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States securities legislation, respectively. All statements, other than statements of historical fact, included herein are forward-looking information, including, for greater certainty, statements regarding the Amended Arrangement, including the likelihood of completion thereof, the occurrence or waiver of the Triggering Event, the satisfaction or waiver of the closing conditions set out in the Arrangement Agreement and other statements with respect to the proposed transactions with Canopy Growth. Often, but not always, forward-looking statements and information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “estimates”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
Forward-looking statements or information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Acreage or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements or information contained in this news release. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including, but not limited to financing and liquidity risks, the risks disclosed in the proxy statement and management information circular dated and filed on August 17, 2020, the Company’s management information circular dated May 17, 2019, filed on May 23, 2019, the risks disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, dated March 25, 2021 and the Company’s other public filings, in each case filed with the SEC on the EDGAR website at www.sec.gov and with Canadian securities regulators and available on the issuer profile of Acreage on SEDAR at www.sedar.com. Although Acreage has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.
Although Acreage believes that the assumptions and factors used in preparing the forward-looking information or forward-looking statements in this news release are reasonable, undue reliance should not be placed on such information and no assurance can be given that such events will occur in the disclosed time frames or at all. The forward-looking information and forward-looking statements included in this news release are made as of the date of this news release and Acreage does not undertake any obligation to publicly update such forward-looking information or forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities laws.
This release contains tables that reconcile our results of operations reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”) to adjusted results that exclude the impact of certain items identified as affecting comparability (non-GAAP). We use EBITDA, adjusted EBITDA, adjusted EBITDA from core operations, adjusted net loss attributable to Acreage, same store sales trends, among other measures, to evaluate our actual operating performance and for planning and forecasting future periods. We believe the adjusted results presented provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies and allow investors to review performance in the same way as our management. Since these measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies. The tables below reconcile our results of operations in accordance with GAAP to the adjusted results mentioned above:
Neither the Canadian Securities Exchange nor its Regulation Service Provider has reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.
For further information contact:
Steve Goertz
Chief Financial Officer
investors@acreageholdings.com
646-600-9181
US GAAP FINANCIAL HIGHLIGHTS (UNAUDITED)
| US GAAP Statements of Financial Position | |||||||
| June 30, 2021 | December 31, 2020 | ||||||
| US$ (thousands) | (unaudited) | (audited) | |||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 36,736 | $ | 32,542 | |||
| Restricted cash | 1,098 | 22,097 | |||||
| Inventory | 29,681 | 23,715 | |||||
| Notes receivable, current | 2,362 | 2,032 | |||||
| Assets held-for-sale | 18,790 | 62,971 | |||||
| Other current assets | 9,289 | 4,663 | |||||
| Total current assets | 97,956 | 148,020 | |||||
| Long-term investments | 39,068 | 34,126 | |||||
| Notes receivable, non-current | 80,637 | 97,901 | |||||
| Capital assets, net | 106,807 | 89,136 | |||||
| Operating lease right-of-use assets | 17,976 | 17,247 | |||||
| Intangible assets, net | 127,651 | 138,983 | |||||
| Goodwill | 37,604 | 31,922 | |||||
| Other non-current assets | 2,179 | 4,718 | |||||
| Total non-current assets | 411,922 | 414,033 | |||||
| TOTAL ASSETS | $ | 509,878 | $ | 562,053 | |||
| LIABILITIES AND MEMBERS’ EQUITY | |||||||
| Accounts payable and accrued liabilities | $ | 22,572 | $ | 18,913 | |||
| Taxes payable | 21,177 | 14,780 | |||||
| Interest payable | 3,790 | 3,504 | |||||
| Operating lease liability, current | 1,532 | 1,492 | |||||
| Debt, current | 7,373 | 27,139 | |||||
| Non-refundable deposits on sale | 1,500 | 750 | |||||
| Liabilities related to assets held-for-sale | 3,253 | 18,154 | |||||
| Other current liabilities | 9,942 | 13,010 | |||||
| Total current liabilities | 71,139 | 97,742 | |||||
| Debt, non-current | 135,118 | 153,318 | |||||
| Operating lease liability, non-current | 17,343 | 16,609 | |||||
| Deferred tax liability | 27,940 | 34,673 | |||||
| Other liabilities | — | 2 | |||||
| Total non-current liabilities | 180,401 | 204,602 | |||||
| TOTAL LIABILITIES | 251,540 | 302,344 | |||||
| Members' equity | 242,975 | 241,031 | |||||
| Non-controlling interests | 15,363 | 18,678 | |||||
| TOTAL MEMBERS’ EQUITY | 258,338 | 259,709 | |||||
| TOTAL LIABILITIES AND MEMBERS' EQUITY | $ | 509,878 | $ | 562,053 | |||
| US GAAP Statements of Operations | ||||||||||||||||||||
| US$ (thousands) | Q2'21 | Q2'20 | FY'21 | FY'20 | ||||||||||||||||
| Retail revenue, net | $ | 28,396 | $ | 19,875 | $ | 54,243 | $ | 37,448 | ||||||||||||
| Wholesale revenue, net | 15,541 | 7,167 | 25,557 | 13,715 | ||||||||||||||||
| Other revenue, net | 280 | 30 | 2,810 | 134 | ||||||||||||||||
| Total revenues, net | 44,217 | 27,072 | 82,610 | 51,297 | ||||||||||||||||
| Cost of goods sold, retail | (14,051 | ) | (11,981 | ) | (27,133 | ) | (22,870 | ) | ||||||||||||
| Cost of goods sold, wholesale | (6,291 | ) | (3,880 | ) | (10,980 | ) | (7,262 | ) | ||||||||||||
| Total cost of goods sold | (20,342 | ) | (15,861 | ) | (38,113 | ) | (30,132 | ) | ||||||||||||
| Gross profit | 23,875 | 11,211 | 44,497 | 21,165 | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||
| General and administrative | 5,385 | 12,386 | 14,602 | 25,418 | ||||||||||||||||
| Compensation expense | 11,174 | 7,957 | 21,537 | 22,434 | ||||||||||||||||
| Equity-based compensation expense | 6,981 | 20,187 | 13,023 | 54,924 | ||||||||||||||||
| Marketing | 397 | 481 | 409 | 1,468 | ||||||||||||||||
| Impairments, net | — | — | 818 | 187,775 | ||||||||||||||||
| Loss on notes receivable | 1,726 | — | 1,726 | 8,161 | ||||||||||||||||
| Write down (recovery) of assets held-for-sale | — | 8,110 | (8,616 | ) | 8,110 | |||||||||||||||
| Legal settlements, net | 312 | — | 322 | — | ||||||||||||||||
| Depreciation and amortization | 4,657 | 1,425 | 5,626 | 3,492 | ||||||||||||||||
| Total operating expenses | 30,632 | 50,546 | 49,447 | 311,782 | ||||||||||||||||
| Net operating income (loss) | (6,757 | ) | (39,335 | ) | (4,950 | ) | (290,617 | ) | ||||||||||||
| OTHER INCOME (LOSS) | ||||||||||||||||||||
| (Loss) income from investments, net | (1,122 | ) | 4 | (1,266 | ) | 238 | ||||||||||||||
| Interest income from loans receivable | 1,593 | 1,830 | 3,058 | 3,477 | ||||||||||||||||
| Interest expense | (5,595 | ) | (3,733 | ) | (10,452 | ) | (4,959 | ) | ||||||||||||
| Other income (loss), net | 9,311 | (23 | ) | 7,745 | (197 | ) | ||||||||||||||
| Total other (loss) income | 4,187 | (1,922 | ) | (915 | ) | (1,441 | ) | |||||||||||||
| Loss before income taxes | (2,570 | ) | (41,257 | ) | (5,865 | ) | (292,058 | ) | ||||||||||||
| Income tax (expense) benefit | (736 | ) | (3,113 | ) | (6,082 | ) | 25,459 | |||||||||||||
| Net loss | (3,306 | ) | (44,370 | ) | (11,947 | ) | (266,599 | ) | ||||||||||||
| Less: net loss attributable to non-controlling interests | (753 | ) | (7,178 | ) | (1,586 | ) | (57,453 | ) | ||||||||||||
| Net loss attributable to Acreage Holdings, Inc. | $ | (2,553 | ) | $ | (37,192 | ) | $ | (10,361 | ) | $ | (209,146 | ) | ||||||||
*NON-GAAP MEASURES, RECONCILIATION AND DISCUSSION (UNAUDITED)
This release contains tables that reconcile our results of operations reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”) to adjusted results that exclude the impact of certain items identified as affecting comparability (non-GAAP). We use EBITDA, adjusted EBITDA, adjusted EBITDA from core operations, adjusted net loss attributable to Acreage, same store sales trends, among other measures, to evaluate our actual operating performance and for planning and forecasting future periods. We believe the adjusted results presented provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies and allow investors to review performance in the same way as our management. Since these measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies. The tables below reconcile our results of operations in accordance with GAAP to the adjusted results mentioned above:
| Reconciliation of GAAP to Non-GAAP Measures | ||||||||||||||||||||
| US$ (thousands, except per share amounts) | Q2'21 | Q2'20 | FY'21 | FY'20 | ||||||||||||||||
| Net loss (GAAP) | $ | (3,306 | ) | $ | (44,370 | ) | $ | (11,947 | ) | $ | (266,599 | ) | ||||||||
| Income tax expense (benefit) | 736 | 3,113 | 6,082 | (25,459 | ) | |||||||||||||||
| Interest expense (income), net | 4,002 | 1,903 | 7,394 | 1,482 | ||||||||||||||||
| Depreciation and amortization | 5,273 | 1,581 | 6,794 | 3,976 | ||||||||||||||||
| EBITDA (non-GAAP)* | $ | 6,705 | $ | (37,773 | ) | $ | 8,323 | $ | (286,600 | ) | ||||||||||
| Adjusting items: | ||||||||||||||||||||
| Loss (income) from investments, net | 1,122 | (4 | ) | 1,266 | (238 | ) | ||||||||||||||
| Impairments, net | — | — | 818 | 187,775 | ||||||||||||||||
| Loss on notes receivable | 1,726 | — | 1,726 | 8,161 | ||||||||||||||||
| Write down (recovery) of assets held-for-sale | — | 8,110 | (8,616 | ) | 8,110 | |||||||||||||||
| Equity-based compensation expense | 6,981 | 20,187 | 13,023 | 54,924 | ||||||||||||||||
| Legal settlements, net | 312 | — | 322 | — | ||||||||||||||||
| Gain on business divestiture | (11,682 | ) | — | (11,682 | ) | — | ||||||||||||||
| Other non-recurring expenses | 2,922 | 2,940 | 4,501 | 9,250 | ||||||||||||||||
| Adjusted EBITDA (non-GAAP)* | $ | 8,086 | $ | (6,540 | ) | $ | 9,681 | $ | (18,618 | ) | ||||||||||
| EBITDA from beverage and CBD | 967 | — | 1,475 | — | ||||||||||||||||
| EBITDA from businesses under definitive agreements to exit | 703 | — | 1,694 | — | ||||||||||||||||
| Adjusted EBITDA from core operations (non-GAAP)* | $ | 9,756 | $ | (6,540 | ) | $ | 12,850 | $ | (18,618 | ) | ||||||||||
| Reconciliation of GAAP to Non-GAAP Measures | |||||||||||||||||||||
| US$ (thousands, except per share amounts) | Q2'21 | Q2'20 | FY'21 | FY'20 | |||||||||||||||||
| Net loss attributable to Acreage Holdings, Inc. (GAAP) | $ | (2,553 | ) | $ | (37,192 | ) | $ | (10,361 | ) | $ | (209,146 | ) | |||||||||
| Net loss per share attributable to Acreage Holdings, Inc. (GAAP) | $ | (0.02 | ) | $ | (0.38 | ) | $ | (0.10 | ) | $ | (2.19 | ) | |||||||||
| Adjusting items:(1) | |||||||||||||||||||||
| Loss (income) from investments, net | $ | 923 | $ | (3 | ) | $ | 1,037 | $ | (189 | ) | |||||||||||
| Impairments, net | — | — | 670 | 149,187 | |||||||||||||||||
| Loss on notes receivable | 1,420 | — | 1,414 | 6,484 | |||||||||||||||||
| Write down (recovery) of assets held-for-sale | — | 6,717 | (7,060 | ) | 6,443 | ||||||||||||||||
| Equity-based compensation expense | 5,745 | 16,718 | 10,671 | 43,637 | |||||||||||||||||
| Legal settlements, net | 257 | — | 264 | — | |||||||||||||||||
| Gain on business divestiture | (9,614 | ) | — | (9,572 | ) | — | |||||||||||||||
| Other non-recurring expenses | 2,405 | 2,435 | 3,688 | 7,349 | |||||||||||||||||
| Tax impact of adjustments above | (5,775 | ) | 243 | (5,516 | ) | (24,602 | ) | ||||||||||||||
| Total adjustments | $ | (4,639 | ) | $ | 26,110 | $ | (4,404 | ) | $ | 188,309 | |||||||||||
| Adjusted net loss attributable to Acreage Holdings, Inc. (non-GAAP)* | $ | (7,192 | ) | $ | (11,082 | ) | $ | (14,765 | ) | $ | (20,837 | ) | |||||||||
| Adjusted net loss per share attributable to Acreage Holdings, Inc. (non-GAAP)* | $ | (0.07 | ) | $ | (0.11 | ) | $ | (0.14 | ) | $ | (0.22 | ) | |||||||||
| Weighted average shares outstanding - basic and diluted | 108,714 | 98,444 | 107,466 | 95,688 | |||||||||||||||||
| Weighted average NCI ownership % | 17.71 | % | 17.18 | % | 18.06 | % | 20.55 | % | |||||||||||||
(1) Adjusting items have been reduced by the respective non-controlling interest percentage for the period.
FAQ
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