Cresco Labs Demonstrates Success of Cash Flow Focused Strategy with Third Quarter 2024 Financial Results
Record quarterly operating cash flow of
Third Quarter 2024 Highlights
-
Third quarter revenue of
.$180 million -
Gross profit of
. Adjusted gross profit1 of$93 million ; and an Adjusted gross margin1 of$95 million 53% of revenue, a 250 bps improvement year-over-year. -
SG&A of
. Reduced Adjusted SG&A1 by$57 million 6% year-over-year to , or$53 million 30% of revenue. -
Net loss of
.$8 million -
Third quarter Adjusted EBITDA1 of
, up$51 million 5% year-over-year; and Adjusted EBITDA margin1 of29% , a 280 bps improvement year-over-year. -
Record third quarter operating cash flow of
and Free Cash Flow1 of$49 million .$43 million -
Retained the No. 1 share position in
Illinois ,Pennsylvania andMassachusetts and improved to a top 3 position inOhio 2.
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 According to BDSA. |
Management Commentary
“Our focus remains the same, win in strategic markets with a brand portfolio consumers love, provide best-in-class retail operations and maintain a relentless pursuit of financial strength. Our Q3 results underline the success of this strategy with
“So far this year, we’ve generated
“While we’re disappointed that the
Balance Sheet, Liquidity and Other Financial Information
-
As of September 30, 2024, current assets were
, including cash, cash equivalents and restricted cash of$312 million . The Company had senior secured term loan debt, net of discount and issuance costs, of$157 million and a mortgage loan, net of discount and issuance costs of$390 million .$18 million -
On October 25, 2024, the Company repurchased
principal amount of our Senior Loan and paid$40 million of accrued Interest. There were no prepayment penalties or exit fees due on this repurchase.$0.3 million - Total shares on a fully converted basis to Subordinate Voting Shares were 474,731,040 as of September 30, 2024.
Conference Call and Webcast
The Company will host a conference call and webcast to discuss its financial results on Friday, November 8, 2024, at 8:30am Eastern Time (7:30am Central Time). The conference call may be accessed via webcast or by dialing 1-833-470-1428 (US Toll Free) or 1-404-975-4839 (US Local), providing access code 435112. Archived access to the webcast will be available for one year on Cresco Labs’ investor website.
Consolidated Financial Statements
The financial information reported in this press release is based on unaudited management prepared financial statements for the quarter ended September 30, 2024. These financial statements have been prepared in accordance with
Cresco Labs references certain non-GAAP financial measures throughout this press release, which may not be comparable to similar measures presented by other issuers. Please see the “Non-GAAP Financial Measures” section below for more detailed information.
Non-GAAP Financial Measures
This release reports its financial results in accordance with
About Cresco Labs Inc.
Cresco Labs’ mission is to normalize and professionalize the cannabis industry through a CPG approach to building national brands and a customer-focused retail experience, while acting as a steward for the industry on legislative and regulatory-focused initiatives. As a leader in cultivation, production and branded product distribution, the Company is leveraging its scale and agility to grow its portfolio of brands that include Cresco, High Supply, FloraCal, Good News, Wonder Wellness Co., Mindy’s and Remedi, on a national level. The Company also operates highly productive dispensaries nationally under the Sunnyside brand that focus on building patient and consumer trust and delivering ongoing education and convenience in a wonderfully traditional retail experience. Through year-round policy, community outreach and SEED initiative efforts, Cresco Labs embraces the responsibility to support communities through authentic engagement, economic opportunity, investment, workforce development and legislative initiatives designed to create the most responsible, respectable and robust cannabis industry possible. Learn more about Cresco Labs’ journey by visiting www.crescolabs.com or following the Company on Facebook, X or LinkedIn.
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 December 31, 2023, filed on SEDAR+ and EDGAR, other documents filed by the Company with Canadian securities regulatory authorities; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Because of these uncertainties, you should not place undue reliance on the Company’s forward-looking statements. No assurances are given as to the future trading price or trading volumes of Cresco Labs’ shares, nor as to the Company’s financial performance in future financial periods. The Company does not intend to update any of these factors or to publicly announce the result of any revisions to any of the Company’s forward-looking statements contained herein, whether as a result of new information, any future event or otherwise. Except as otherwise indicated, this press release speaks as of the date hereof. The distribution of this press release does not imply that there has been no change in the affairs of the Company after the date hereof or create any duty or commitment to update or supplement any information provided in this press release or otherwise.
Cresco Labs Inc. |
||||||||||||
Financial Information and Non-GAAP Reconciliations |
||||||||||||
(All amounts expressed in thousands of |
||||||||||||
|
|
|
|
|
|
|
||||||
Unaudited Consolidated Statements of Operations |
||||||||||||
For the Three Months Ended September 30, 2024, June 30, 2024 and September 30, 2023 |
||||||||||||
|
|
|
||||||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
September 30,
|
|
June 30,
|
|
September 30,
|
||||||
Revenues, net |
|
$ |
179,783 |
|
|
$ |
184,356 |
|
|
$ |
190,559 |
|
Cost of goods sold |
|
|
86,345 |
|
|
|
89,578 |
|
|
|
96,919 |
|
Gross profit |
|
|
93,438 |
|
|
|
94,778 |
|
|
|
93,640 |
|
Gross profit % |
|
|
52.0 |
% |
|
|
51.4 |
% |
|
|
49.1 |
% |
Operating expenses: |
|
|
|
|
|
|
||||||
Selling, general and administrative |
|
|
56,871 |
|
|
|
54,355 |
|
|
|
62,484 |
|
Share-based compensation |
|
|
2,202 |
|
|
|
2,854 |
|
|
|
3,479 |
|
Depreciation and amortization |
|
|
5,702 |
|
|
|
5,189 |
|
|
|
5,942 |
|
Impairment loss |
|
|
2,320 |
|
|
|
— |
|
|
|
129,491 |
|
Total operating expenses |
|
|
67,095 |
|
|
|
62,398 |
|
|
|
201,396 |
|
Income (loss) from operations |
|
|
26,343 |
|
|
|
32,380 |
|
|
|
(107,756 |
) |
|
|
|
|
|
|
|
||||||
Other (expense) income, net: |
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
(15,016 |
) |
|
|
(13,813 |
) |
|
|
(11,764 |
) |
Other (expense) income, net |
|
|
(5 |
) |
|
|
(59,508 |
) |
|
|
329 |
|
Total other expense, net |
|
|
(15,021 |
) |
|
|
(73,321 |
) |
|
|
(11,435 |
) |
Income (loss) before income taxes |
|
|
11,322 |
|
|
|
(40,941 |
) |
|
|
(119,191 |
) |
Income tax (expense) benefit |
|
|
(19,016 |
) |
|
|
(10,238 |
) |
|
|
5,746 |
|
Net loss1 |
|
$ |
(7,694 |
) |
|
$ |
(51,179 |
) |
|
$ |
(113,445 |
) |
1 Net loss includes amounts attributable to non-controlling interests. |
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of Gross Profit to Adjusted Gross Profit (Non-GAAP) |
||||||||||||
For the Three Months Ended September 30, 2024, June 30, 2024 and September 30, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
September 30,
|
|
June 30,
|
|
September 30,
|
||||||
Revenues, net |
|
$ |
179,783 |
|
|
$ |
184,356 |
|
|
$ |
190,559 |
|
Cost of goods sold1 |
|
|
86,345 |
|
|
|
89,578 |
|
|
|
96,919 |
|
Gross profit |
|
$ |
93,438 |
|
|
$ |
94,778 |
|
|
$ |
93,640 |
|
Fair value mark-up for acquired inventory |
|
|
123 |
|
|
|
— |
|
|
|
— |
|
Cost of goods sold adjustments for acquisition and other non-core costs |
|
|
1,783 |
|
|
|
1,881 |
|
|
|
2,602 |
|
Adjusted gross profit (Non-GAAP) |
|
$ |
95,344 |
|
|
$ |
96,659 |
|
|
$ |
96,242 |
|
Adjusted gross profit % (Non-GAAP) |
|
|
53.0 |
% |
|
|
52.4 |
% |
|
|
50.5 |
% |
1 Production (cultivation, manufacturing and processing) costs related to products sold during the period. |
Cresco Labs Inc. |
||||||
Summarized Consolidated Statements of Financial Position |
||||||
As of September 30, 2024 and December 31, 2023 |
||||||
|
|
|
|
|
||
($ in thousands) |
|
September 30, 2024 |
|
December 31, 2023 |
||
|
|
(unaudited) |
|
|
||
Cash, cash equivalents and restricted cash (current) |
|
$ |
156,555 |
|
$ |
108,520 |
Other current assets |
|
|
155,363 |
|
|
169,567 |
Property and equipment, net |
|
|
352,327 |
|
|
368,308 |
Intangible assets, net |
|
|
295,646 |
|
|
296,966 |
Goodwill |
|
|
283,634 |
|
|
279,697 |
Other non-current assets |
|
|
139,407 |
|
|
135,409 |
Total assets |
|
$ |
1,382,932 |
|
$ |
1,358,467 |
|
|
|
|
|
||
Total current liabilities |
|
$ |
158,569 |
|
$ |
200,242 |
Total non-current liabilities |
|
|
858,996 |
|
|
730,158 |
Total shareholders’ equity |
|
|
365,367 |
|
|
428,067 |
Total liabilities and shareholders’ equity |
|
$ |
1,382,932 |
|
$ |
1,358,467 |
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of SG&A to Adjusted SG&A (Non-GAAP) |
||||||||||||
For the Three Months Ended September 30, 2024, June 30, 2024 and September 30, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
September 30,
|
|
June 30,
|
|
September 30,
|
||||||
Selling, general and administrative |
|
$ |
56,871 |
|
|
$ |
54,355 |
|
|
$ |
62,484 |
|
Adjustments for acquisition and other non-core costs |
|
|
3,427 |
|
|
|
1,633 |
|
|
|
5,457 |
|
Adjusted SG&A (Non-GAAP) |
|
$ |
53,444 |
|
|
$ |
52,722 |
|
|
$ |
57,027 |
|
Adjusted SG&A % (Non-GAAP) |
|
|
29.7 |
% |
|
|
28.6 |
% |
|
|
29.9 |
% |
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of Net Income to Adjusted EBITDA (Non-GAAP) |
||||||||||||
For the Three Months Ended September 30, 2024, June 30, 2024 and September 30, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
September 30,
|
|
June 30,
|
|
September 30,
|
||||||
Net loss1 |
|
$ |
(7,694 |
) |
|
$ |
(51,179 |
) |
|
$ |
(113,445 |
) |
Depreciation and amortization |
|
|
14,932 |
|
|
|
14,930 |
|
|
|
15,297 |
|
Interest expense, net |
|
|
15,016 |
|
|
|
13,813 |
|
|
|
11,764 |
|
Income tax expense (benefit) |
|
|
19,016 |
|
|
|
10,238 |
|
|
|
(5,746 |
) |
EBITDA (Non-GAAP) |
|
$ |
41,270 |
|
|
$ |
(12,198 |
) |
|
$ |
(92,130 |
) |
|
|
|
|
|
|
|
||||||
Other expense (income), net |
|
|
5 |
|
|
|
59,508 |
|
|
|
(329 |
) |
Fair value mark-up for acquired inventory |
|
|
123 |
|
|
|
— |
|
|
|
— |
|
Adjustments for acquisition and other non-core costs |
|
|
4,759 |
|
|
|
3,129 |
|
|
|
7,942 |
|
Impairment loss |
|
|
2,320 |
|
|
|
— |
|
|
|
129,491 |
|
Share-based compensation |
|
|
2,791 |
|
|
|
3,471 |
|
|
|
4,072 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
51,268 |
|
|
$ |
53,910 |
|
|
$ |
49,046 |
|
Adjusted EBITDA % (Non-GAAP) |
|
|
28.5 |
% |
|
|
29.2 |
% |
|
|
25.7 |
% |
1 Net loss includes amounts attributable to non-controlling interests. |
Cresco Labs Inc. |
||||||||||||
Unaudited Summarized Consolidated Statements of Cash Flows |
||||||||||||
For the Three Months Ended September 30, 2024, June 30, 2024 and September 30, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
For the Three Months Ended |
|||||||||||
($ in thousands) |
|
September 30,
|
|
June 30,
|
|
September 30,
|
||||||
Net cash provided by operating activities |
|
$ |
49,363 |
|
|
$ |
17,160 |
|
|
$ |
40,622 |
|
Net cash used in investing activities |
|
|
(6,269 |
) |
|
|
(10,270 |
) |
|
|
(12,476 |
) |
Net cash (used in) provided by financing activities |
|
|
(2,464 |
) |
|
|
(15,831 |
) |
|
|
10,052 |
|
Effect of foreign currency exchange rate changes on cash and cash equivalents |
|
|
(25 |
) |
|
|
(10 |
) |
|
|
7 |
|
Net change in cash and cash equivalents and restricted cash |
|
$ |
40,605 |
|
|
$ |
(8,951 |
) |
|
$ |
38,205 |
|
Cash and cash equivalents and restricted cash, beginning of period |
|
|
119,201 |
|
|
|
128,152 |
|
|
|
74,811 |
|
Cash and cash equivalents and restricted cash, end of period |
|
$ |
159,806 |
|
|
$ |
119,201 |
|
|
$ |
113,016 |
|
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of Operating Cash Flow to Free Cash Flow (Non-GAAP) |
||||||||||||
For the Three Months Ended September 30, 2024, June 30, 2024 and September 30, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
September 30,
|
|
June 30,
|
|
September 30,
|
||||||
Net cash provided by operating activities |
|
$ |
49,363 |
|
|
$ |
17,160 |
|
|
$ |
40,622 |
|
Purchases of property and equipment |
|
|
(6,072 |
) |
|
|
(6,434 |
) |
|
|
(12,452 |
) |
Proceeds from tenant improvement allowances |
|
|
32 |
|
|
|
106 |
|
|
|
733 |
|
Free Cash Flow (Non-GAAP) |
|
$ |
43,323 |
|
|
$ |
10,832 |
|
|
$ |
28,903 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20241108779763/en/
Media
Jason Erkes, Cresco Labs
Chief Communications Officer
press@crescolabs.com
312-953-2767
Investors
TJ Cole, Cresco Labs
SVP, Corporate Development & Investor Relations
investors@crescolabs.com
For general Cresco Labs inquiries:
312-929-0993
info@crescolabs.com
Source: Cresco Labs