Cresco Labs Announces First Quarter 2022 Results
Cresco Labs reports a robust 20% year-over-year revenue growth for Q1 2022, reaching $214 million. The company also achieved a 45% increase in adjusted EBITDA, totaling $51 million. Their gross profit was $113 million (53% margin), up 29% year-over-year. Retail sales surged 44% to $119 million, averaging $2.5 million per store. Cresco maintains its market leadership in branded cannabis, despite a challenging environment. They passed the HSR review for the Columbia Care acquisition, marking a significant milestone.
- 20% revenue growth year-over-year, reaching $214 million.
- Adjusted EBITDA increased by 45% to $51 million.
- Gross profit of $113 million, representing a 53% margin.
- Retail revenue rose 44% year-over-year to $119 million.
- Market leader in branded cannabis with wholesale revenue of $95 million.
- Successful launch of multiple branded products in Florida.
- Cumulative sequential contraction of 4.5% in the 10-state footprint.
Company reports
Clears first milestone in proposed Columbia Care transaction with expiration of 30-day HSR2 review period
First Quarter 2022 Financial Highlights
-
First quarter revenue of
, up$214 million 20% year-over-year -
Gross profit excluding fair value mark-up for acquired inventory of
, or$113 million 53% of revenue, an increase of29% year-over-year -
First quarter adjusted EBITDA1 of
, or$51 million 24% of revenue, an increase of45% year-over-year -
Wholesale revenue of
, maintained position as #1 seller of branded cannabis products in$95 million U.S. with leading share in the flower, concentrates, and vape categories -
Retail revenue increased
44% year-over-year, to , or$119 million per average store open in the quarter and same-store-sales increased$2.5 million 9% year-over-year -
Ended the quarter with
of cash on hand$179 million -
Opened four new retail stores, three in
Florida and one inPennsylvania , bringing the Company’s total retail footprint to 50 -
Launched branded product portfolio in
Florida , including High Supply®, Good News®, Remedi™ and Sunnyside* Chews
1 See "Non-GAAP Financial Measures" at the end of this press release for more information regarding the Company’s use of non-GAAP financial measures.
2 Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR")
Management Commentary
"Q1 was a solid quarter for the
“The first quarter showed the resilience and strength of the business we have built over the past few years. We remain focused on playing the long game and building a business that will be a lasting leader in the cannabis industry under any regulatory outcome. The compliance-focused foundation of both
Balance Sheet, Liquidity, and Other Financial Information
-
As of
March 31, 2022 , current assets were , including cash and cash equivalents of$400 million . The Company had working capital of$179 million and senior secured term loan debt, net of discount and issuance costs, of$69 million .$378 million -
Total shares on a fully converted basis were 439,870,970 as of
March 31, 2022 .
Social Equity and Education Development Program
-
Over the past few months, The Sentence of
Michael Thompson documentary has been accepted into eight film festivals and has won a Clio Award, Audience Choice Award at the South bySouthwest Film Festival , and Best DocumentaryShort Film Award at theRiverRun International Film Festival . The short film was produced by the Company’s Cresco® brand and aims to help people truly understand the gravity of the impact of injustice on the lives of people adversely impacted by the War on Drugs. This is all in furtherance of the Company’s mission to leverage its platform to drive awareness and action toward cannabis legalization and criminal justice reform.
Capital Markets and M&A Activity
-
On
March 23, 2022 , the Company announced a definitive arrangement agreement whereby Cresco will acquire Columbia Care in an all-stock transaction. Please click here for additional details. -
On
May 16, 2022 , the Company announced the expiration of the 30-day waiting period under the HSR in connection with the proposed Columbia Care transaction.
Conference Call and Webcast
The Company will host a conference call and webcast to discuss its financial results on
Consolidated Financial Statements
The financial information reported in this press release is based on unaudited management prepared financial statements for the three months ended
Non-GAAP Financial Measures
Earnings before interest, taxes, depreciation, and amortization (“EBITDA”), Adjusted EBITDA, and Adjusted gross profit are non-GAAP financial measures and do not have standardized definitions under
About
Forward Looking Statements
This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). Such forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking statements can be identified by the use of forward-looking terminology such as, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’ ‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the negative of those forms or other comparable terms. The Company’s forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to those risks discussed under “Risk Factors” in the Company’s Annual Information Form for the year ended
|
||||||||||||
Financial Information and Non-GAAP Reconciliations |
||||||||||||
(All amounts expressed in thousands of |
||||||||||||
|
|
|
|
|
|
|
||||||
Unaudited Consolidated Statements of Operations |
||||||||||||
For the Three Months Ended |
||||||||||||
|
|
|
||||||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
|
|
|
|
|
||||||
Revenue |
|
$ |
214,391 |
|
|
$ |
217,787 |
|
|
$ |
178,437 |
|
Cost of goods sold |
|
|
107,018 |
|
|
|
107,765 |
|
|
|
91,414 |
|
Gross profit |
|
|
107,373 |
|
|
|
110,022 |
|
|
|
87,023 |
|
Gross profit % |
|
|
50.1 |
% |
|
|
50.5 |
% |
|
|
48.8 |
% |
Operating expenses: |
|
|
|
|
|
|
||||||
Selling, general and administrative |
|
|
76,048 |
|
|
|
70,540 |
|
|
|
59,549 |
|
Share-based compensation |
|
|
6,506 |
|
|
|
4,496 |
|
|
|
5,595 |
|
Depreciation and amortization |
|
|
4,552 |
|
|
|
4,484 |
|
|
|
5,641 |
|
Impairment loss |
|
|
— |
|
|
|
14,945 |
|
|
|
— |
|
Total operating expenses |
|
|
87,106 |
|
|
|
94,465 |
|
|
|
70,785 |
|
Income from operations |
|
|
20,267 |
|
|
|
15,557 |
|
|
|
16,238 |
|
|
|
|
|
|
|
|
||||||
Other expense: |
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
(14,363 |
) |
|
|
(14,851 |
) |
|
|
(11,302 |
) |
Other (expense) income, net |
|
|
(6,772 |
) |
|
|
10,911 |
|
|
|
(12,340 |
) |
Loss from equity method investments |
|
|
— |
|
|
|
— |
|
|
|
(1,196 |
) |
Total other expense, net |
|
|
(21,135 |
) |
|
|
(3,940 |
) |
|
|
(24,838 |
) |
(Loss) income before income taxes |
|
|
(868 |
) |
|
|
11,617 |
|
|
|
(8,600 |
) |
Income tax expense |
|
|
(22,807 |
) |
|
|
(23,528 |
) |
|
|
(15,524 |
) |
Net loss 1 |
|
$ |
(23,675 |
) |
|
$ |
(11,911 |
) |
|
$ |
(24,124 |
) |
1 Net loss includes amounts attributable to non-controlling interests. |
|
||||||||||||
Unaudited Reconciliation of Gross Profit to Adjusted Gross Profit (Non-GAAP) |
||||||||||||
For the Three Months Ended |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
|
|
|
|
|
||||||
Revenue |
|
$ |
214,391 |
|
|
$ |
217,787 |
|
|
$ |
178,437 |
|
Cost of goods sold1 |
|
|
107,018 |
|
|
|
107,765 |
|
|
|
91,414 |
|
Gross profit |
|
$ |
107,373 |
|
|
$ |
110,022 |
|
|
$ |
87,023 |
|
Fair value mark-up for acquired inventory |
|
|
5,322 |
|
|
|
8,407 |
|
|
|
585 |
|
Adjusted gross profit (Non-GAAP) |
|
$ |
112,695 |
|
|
$ |
118,429 |
|
|
$ |
87,608 |
|
Adjusted gross profit % |
|
|
52.6 |
% |
|
|
54.4 |
% |
|
|
49.1 |
% |
1 Production (cultivation, manufacturing, and processing) costs related to products sold during the period. |
|
||||||
Summarized Unaudited Consolidated Statements of Financial Position |
||||||
As of |
||||||
|
|
|
|
|
||
($ in thousands) |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
179,320 |
|
$ |
223,543 |
Other current assets |
|
|
220,480 |
|
|
198,212 |
Property and equipment, net |
|
|
394,994 |
|
|
369,092 |
Intangible assets, net |
|
|
435,930 |
|
|
437,644 |
|
|
|
448,336 |
|
|
446,767 |
Other non-current assets |
|
|
105,877 |
|
|
105,205 |
Total assets |
|
$ |
1,784,937 |
|
$ |
1,780,463 |
|
|
|
|
|
||
Total current liabilities |
|
|
331,194 |
|
|
288,394 |
Total long-term liabilities |
|
|
689,998 |
|
|
694,333 |
Total shareholders' equity |
|
|
763,745 |
|
|
797,736 |
Total liabilities and shareholders' equity |
|
$ |
1,784,937 |
|
$ |
1,780,463 |
|
||||||||||||
Unaudited Reconciliation of Net Income to Adjusted EBITDA (Non-GAAP) |
||||||||||||
For the Three Months Ended |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
|
|
|
|
|
||||||
Net loss1 |
|
$ |
(23,675 |
) |
|
$ |
(11,911 |
) |
|
$ |
(24,124 |
) |
Depreciation and amortization |
|
|
10,960 |
|
|
|
8,197 |
|
|
|
10,151 |
|
Interest expense, net |
|
|
14,363 |
|
|
|
14,851 |
|
|
|
11,302 |
|
Income tax expense |
|
|
22,807 |
|
|
|
23,528 |
|
|
|
15,524 |
|
Earnings before interest, taxes, depreciation, and amortization (EBITDA) (Non-GAAP) |
|
$ |
24,455 |
|
|
$ |
34,665 |
|
|
$ |
12,853 |
|
|
|
|
|
|
|
|
||||||
Other expense (income), net |
|
|
6,772 |
|
|
|
(10,911 |
) |
|
|
12,340 |
|
Loss from equity method investments |
|
|
— |
|
|
|
— |
|
|
|
1,196 |
|
Fair value mark-up for acquired inventory |
|
|
5,322 |
|
|
|
8,407 |
|
|
|
585 |
|
Adjustments for acquisition and other non-core costs |
|
|
6,694 |
|
|
|
4,954 |
|
|
|
1,738 |
|
Impairment loss |
|
|
— |
|
|
|
14,945 |
|
|
|
— |
|
Share-based compensation |
|
|
7,506 |
|
|
|
4,933 |
|
|
|
6,280 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
50,749 |
|
|
$ |
56,993 |
|
|
$ |
34,992 |
|
1 Net (loss) includes amounts attributable to non-controlling interests. |
|
||||||||||||
Unaudited Summarized Consolidated Statements of Cash Flows |
||||||||||||
For the Three Months Ended |
||||||||||||
|
|
|
|
|
|
|
||||||
|
For the Three Months Ended |
|||||||||||
($ in thousands) |
|
|
|
|
|
|
||||||
Net cash (used in) provided by operating activities |
|
$ |
(3,418 |
) |
|
$ |
37,653 |
|
|
$ |
12,950 |
|
Net cash (used in) investing activities |
|
|
(34,219 |
) |
|
|
(64,107 |
) |
|
|
(26,790 |
) |
Net cash (used in) provided by financing activities |
|
|
(6,365 |
) |
|
|
(2,375 |
) |
|
|
132,206 |
|
Effect of foreign currency exchange rate changes on cash |
|
|
(180 |
) |
|
|
134 |
|
|
|
(169 |
) |
Net (decrease) increase in cash and cash equivalents |
|
$ |
(44,182 |
) |
|
$ |
(28,695 |
) |
|
$ |
118,197 |
|
Cash and cash equivalents and restricted cash, beginning of period |
|
|
226,102 |
|
|
|
254,797 |
|
|
|
140,774 |
|
Cash and cash equivalents and restricted cash, end of period |
|
$ |
181,920 |
|
|
$ |
226,102 |
|
|
$ |
258,971 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220518005197/en/
Media
Chief Communications Officer
press@crescolabs.com
312-953-2767
Investors
SVP, Investor Relations
investors@crescolabs.com
For general
312-929-0993
info@crescolabs.com
Source:
FAQ
What are Cresco Labs' Q1 2022 financial results?
How did Cresco Labs perform in retail sales during Q1 2022?
What milestone did Cresco Labs achieve regarding the Columbia Care acquisition?
What challenges did Cresco Labs face in Q1 2022?