The Cannabist Company Holdings Inc. (Cboe CA: CBST) (OTCQX:
CBSTF) (FSE: 3LP) (“The Cannabist Company” or the “Company”), one
of the most experienced cultivators, manufacturers and retailers of
cannabis products in the U.S., today reported its financial and
operating results for the third quarter ended September 30, 2024.
All financial information presented in this release is in U.S. GAAP
and in thousands of U.S. dollars, unless otherwise noted.
Third Quarter 2024 Financial Highlights (in $ thousands,
excl. margin items):
For the Three Months Ended September 30, 2024 June
30, 2024 September 30, 2023 Revenue
$
114,783
$
125,190
$
129,183
Gross Profit
$
43,810
$
48,052
$
37,142
Adj. Gross Profit[1,2]
$
43,810
$
48,214
$
50,275
Adj. Gross Margin[1,2]
38.2%
38.5%
38.9%
Income (Loss) from Operations
$
(5,626)
$
8,006
$
(19,330)
Adj. EBITDA[1,2]
$
14,815
$
17,537
$
20,493
Adj. EBITDA Margin[1,2]
12.9%
14.0%
15.9%
Net Income (Loss)
$
(1,763)
$
(13,643)
$
(36,180)
[1] Denotes a Non-GAAP measure. See
“Non-GAAP Financial Measures” in this press release for more
information regarding the Company’s use of non-GAAP financial
measures, as well as Table 4 for reconciliation, where
applicable.
[2] Both Adj. Gross Profit and Adj. EBITDA
exclude $0.16 million in Q2 2024 and $13.1 million in Q3 2023; see
the Company’s Quarterly Report on Form 10-Q for the period ended
September 30, 2024 for additional disclosure.
“The results in the third quarter are indicative of the
continued transformation that is underway at The Cannabist Company
as we strive to build a better business by strategically reshaping
our footprint, streamlining operations, and derisking the balance
sheet. In the third quarter, we closed on significant transactions
with the sale of Arizona and Eastern Virginia assets for total
consideration of approximately $105 million, bringing a significant
capital infusion into the business and strengthening our balance
sheet. We have exited, or are in the process of exiting,
unprofitable and underperforming locations in Florida; Washington,
D.C.; and Boston. We achieved continued improvement in wholesale
and will continue to lean into markets where we have additional
capacity and opportunity to grow. In addition, we were extremely
well prepared for the transition to adult use in Ohio, which drove
an outstanding performance in the quarter,” said David Hart, CEO of
The Cannabist Company.
He continued, “Our optimization work is not yet done. Moving
ahead into the fourth quarter and next year, we are continuing on
our path to enhanced profitability. Our Adjusted EBITDA margin
target during 2025 remains above 20%. We will have a smaller,
leaner operating footprint and scaled corporate overhead to match.
We have exciting growth catalysts in 2025, including Adult Use in
Delaware and additional retail locations in top markets such as New
Jersey, Virginia, and Ohio.”
Top 5 Markets by Revenue in Q3[3]: Colorado, Maryland,
New Jersey, Ohio, Virginia
Top 5 Markets by Adjusted EBITDA in Q3[3]: Colorado,
Maryland, New Jersey, Ohio, Virginia
[3] Markets are listed alphabetically
Financial Highlights for Third Quarter 2024
- Third quarter revenue of $114.8 million, a decrease of 8% from
the second quarter, primarily as a result of the sale of Eastern
Virginia and Arizona businesses in August; excluding divested
assets for both Q2 and Q3, revenue would have been flat quarter
over quarter.
- Adjusted EBITDA in Q3 was $14.8 million, down from $17.5
million in Q2, Adjusted EBITDA margin of 13%, compared to 14% in
the second quarter; sequential contraction in Adjusted EBITDA and
Adjusted EBITDA margin is a result of sale of businesses in
Virginia and Arizona.
- The Company ended the second quarter with $31.5 million in
cash, up from $22 million at the end of Q2.
- On August 22, Company closed on the sale of assets and
operations in Eastern Virginia and Arizona for total consideration
of $105 million, with net cash proceeds in the quarter of $31
million.
- On August 23, Company announced definitive agreements for the
sale of all 14 Cannabist dispensaries and 3 cultivation facilities
in Florida for a total consideration of $16.4 million; as part of
the transactions, Company will retain an MMTC license that it
intends to sell for additional consideration.
- In Q3 2024, cash from operations was negative $18 million,
compared to negative $3 million in Q2 and negative $6 million in
Q1.
- Capital expenditures in the third quarter were $1.5 million;
capital expenditures are expected to average $2 to $3 million per
quarter over the medium-term, largely for new store openings and
manufacturing upgrades.
- Subsequent to quarter close, Company submitted an amended tax
return and refund claim for $5 million associated with 280E for the
2020 tax year.
Operational Highlights for Third Quarter 2024
- Wholesale revenue increased 2% in Q3 and represented 17% of
total revenue, up from 15% of total revenue in Q2.
- Company participated in day one of adult use sales in Ohio,
with volume nearly doubling for the 5 active retail locations; Ohio
demonstrated largest increase in revenue and Adjusted EBITDA
quarter over quarter.
- As a result of the sale of retail locations in Arizona (2) and
Eastern Virginia (6), the quarter-end active retail count was 74;
subsequent to quarter close, the Company closed one location in
Boston and closed on the sale of 14 locations in Florida, as
previously announced.
- Company has additional retail locations in development,
including in New Jersey (1), Virginia (1) and Ohio (3).
Conference Call and Webcast Details
The Company will host a conference call on Thursday, November 7,
2024 at 8:00 a.m. ET to discuss financial and operating results for
the third quarter of 2024.
To access the live conference call via telephone, participants
must pre-register at
https://register.vevent.com/register/BI449b84a9c5524f96aad44285a361646f.
After registering, instructions will be shared on how to join the
call for those who wish to dial in. A live audio webcast of the
call will also be available in the Investor Relations section of
the Company's website at https://investors.cannabistcompany.com/ or
at https://edge.media-server.com/mmc/p/xvrryett.
A replay of the audio webcast will be available in the Investor
Relations section of the Company’s website approximately 2 hours
after completion of the call and will be archived for 30 days.
About The Cannabist Company (f/k/a Columbia Care)
The Cannabist Company, formerly known as Columbia Care, is one
of the most experienced cultivators, manufacturers and providers of
cannabis products and related services, with licenses in 14 U.S.
jurisdictions. The Company operates 91 facilities including 71
dispensaries and 20 cultivation and manufacturing facilities,
including those under development. Columbia Care, now The Cannabist
Company, is one of the original multi-state providers of cannabis
in the U.S. and now delivers industry-leading products and services
to both the medical and adult-use markets. In 2021, the Company
launched Cannabist, its retail brand, creating a national
dispensary network that leverages proprietary technology platforms.
The company offers products spanning flower, edibles, oils and
tablets, and manufactures popular brands including Seed &
Strain, Triple Seven, Hedy, gLeaf, Classix, Press, and Amber. For
more information, please visit www.cannabistcompany.com.
Non-GAAP Financial Measures
In this press release, the Company refers to certain non-GAAP
financial measures, including Adjusted EBITDA, Adjusted EBITDA
Margin, Adjusted Gross Profit and Adjusted Gross Margin. The
Company considers certain non-GAAP measures to be meaningful
indicators of the performance of its business. These measures are
not recognized measures under GAAP, do not have a standardized
meaning prescribed by GAAP and may not be comparable to (and may be
calculated differently by) other companies that present similar
measures. Accordingly, these measures should not be considered in
isolation from nor as a substitute for our financial information
reported under GAAP. These non-GAAP measures are used to provide
investors with supplemental measures of our operating performance
and thus highlight trends in our business that may not otherwise be
apparent when relying solely on GAAP measures. These supplemental
non-GAAP financial measures should not be considered superior to,
as a substitute for, or as an alternative to, and should be
considered in conjunction with, the GAAP financial measures
presented. We also recognize that securities analysts, investors
and other interested parties frequently use non-GAAP measures in
the evaluation of companies within our industry.
With respect to non-GAAP financial measures, the Company defines
EBITDA as net income (loss) before (i) depreciation and
amortization; (ii) income taxes; and (iii) interest expense and
debt amortization. Adjusted EBITDA is defined as EBITDA before (i)
share-based compensation expense; (ii) goodwill and intangible
impairment, (iii) adjustments for acquisition and other non-core
costs; (iv) gain on remeasurement of contingent consideration, net,
(v) fair value changes on derivative liabilities; and (vi) fair
value mark-up for acquired inventory. Adjusted EBITDA Margin is
defined as Adjusted EBITDA divided by Revenue. Adjusted Gross
Profit is defined as gross profit before the fair mark-up for
acquired inventory. Adjusted Gross Margin is defined as gross
margin before the fair mark-up for acquired inventory.
The Company views these non-GAAP financial measures as a means
to facilitate management’s financial and operational
decision-making, including evaluation of the Company’s historical
operating results and comparison to competitors’ operating results.
These non-GAAP financial measures reflect an additional way of
viewing aspects of the Company’s operations that, when viewed with
GAAP results and the reconciliations to the corresponding GAAP
financial measure, may provide a more complete understanding of
factors and trends affecting the Company’s business. The
determination of the amounts that are excluded from these non-GAAP
financial measures are a matter of management judgment and depend
upon, among other factors, the nature of the underlying expense or
income amounts. Because non-GAAP financial measures exclude the
effect of items that will increase or decrease the Company’s
reported results of operations, management strongly encourages
investors to review the Company’s consolidated financial statements
and publicly filed reports in their entirety.
Reconciliations of non-GAAP financial measures to their nearest
comparable GAAP measures are included in this press release and a
further discussion of some of these items are contained in our
annual report on Form 10-K and in our quarterly report on Form
10-Q.
Caution Concerning Forward-Looking Statements
This press release contains certain statements that constitute
forward-looking information or forward looking statements within
the meaning of applicable securities laws and reflect the Company’s
current expectations regarding future events. Statements concerning
the Company’s objectives, goals, strategies, priorities,
intentions, plans, beliefs, expectations and estimates, and the
business, operations, financial performance and condition of the
Company are forward-looking statements. The words “believe”,
“expect”, “anticipate”, “estimate”, “intend”, “may”, “will”,
“would”, “could”, “should”, “continue”, “plan”, “goal”,
“objective”, and similar expressions and the negative of such
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. Forward looking statements in this press release
include, among others, statements related to: the Company’s
corporate restructuring and related expected savings; the
divestiture of the Company’s Arizona and Eastern Virginia assets
and expected impacts thereof; the expected adult use sales in Ohio
and Delaware; expectations related to growth, cost management and
financial numbers including free cash flow and capital
expenditures; our ability to continue to reduce corporate SG&A,
reduce leverage, enhance cash flow from operations and drive
innovation through technology and product/brand development; the
planned opening of additional Cannabist locations; the Company’s
ability to reduce debt and reduce interest expense of its
outstanding debt; our ability to execute on divestiture
transactions; and ongoing business expectations.
The Company has made assumptions with regard to its ability to
execute on initiatives, which although considered reasonable by the
Company, may prove to be incorrect and are subject to known and
unknown risks and uncertainties that may cause actual results,
performance or achievements of the Company to be materially
different from those expressed or implied by any forward-looking
information. Forward-looking information involves numerous
assumptions, including the fact that cannabis remains illegal under
federal law; the application of anti-money laundering laws and
regulations to the Company; legal, regulatory or political change
to the cannabis industry; access to the services of banks; access
to public and private capital for the Company; unfavorable
publicity or consumer perception of the cannabis industry;
expansion into the adult-use markets; the impact of laws,
regulations and guidelines; the impact of Section 280E of the
Internal Revenue Code; the impact of state laws pertaining to the
cannabis industry; the Company’s reliance on key inputs, suppliers
and skilled labor; the difficulty of forecasting the Company’s
sales; constraints on marketing products; potential cyber-attacks
and security breaches; net operating loss and other tax attribute
limitations; the impact of changes in tax laws; the volatility of
the market price of the common shares of the Company; reliance on
management; litigation including existing claims and those which
may surface from time to time; future results and financial
projections; the impact of global financial conditions and disease
outbreaks; projected revenue and expected gross margins, capital
allocation, EBITDA break even targets and other financial results;
growth of the Company’s operations via expansion; statements
relating to the business and future activities of, and developments
related to, the Company after the date of this press release,
including such things as future business strategy, competitive
strengths, goals, expansion and growth of the Company’s business,
operations and plans; expectations that planned transactions will
be completed as previously announced; expectations regarding
cultivation and manufacturing capacity; expectations regarding
receipt of regulatory approvals; expectations that licenses applied
for will be obtained; potential future legalization of adult-use
and/or medical cannabis under U.S. federal law; expectations of
market size and growth in the U.S. and the states in which the
Company operates; expectations for other economic, business,
regulatory and/or competitive factors related to the Company or the
cannabis industry generally; the impact of the Company’s plans to
reduce debt and interest expense of its outstanding debt; and other
events or conditions that may occur in the future.
Forward-looking statements may relate to future financial
conditions, results of operations, plans, objectives, performance
or business developments. These statements speak only as at the
date they are made and are based on information currently available
and on the then current expectations. Holders of securities of the
Company are cautioned that forward-looking statements are not based
on historical facts but instead are based on reasonable assumptions
and estimates of management of the Company at the time they were
provided or made and involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance
or achievements of the Company, as applicable, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
Securityholders should review the risk factors discussed under
“Risk Factors” in the Company’s Form 10-K for the year ended
December 31, 2023, as filed with the applicable securities
regulatory authorities and as also described from time to time in
other documents filed by the Company with U.S. and Canadian
securities regulatory authorities.
The purpose of forward-looking statements is to provide the
reader with a description of management’s expectations, and such
forward-looking statements may not be appropriate for any other
purpose. In particular, but without limiting the foregoing,
disclosure in this press release as well as statements regarding
the Company’s objectives, plans and goals, including future
operating results and economic performance may make reference to or
involve forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations
will prove to have been correct. A number of factors could cause
actual events, performance or results to differ materially from
what is projected in the forward-looking statements. No undue
reliance should be placed on forward-looking statements contained
in this press release. Such forward-looking statements are made as
of the date of this press release.
The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable law.
The Company’s forward-looking statements are expressly qualified in
their entirety by this cautionary statement.
TABLE 1 - CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in US $ thousands, except share and per share
figures, unaudited)
Three Months Ended September
30, 2024 June 30, 2024 March 31, 2024
September 30, 2023 Revenue
$
114,783
$
125,190
$
122,611
$
129,183
Cost of sales
(70,973
)
(77,138
)
(80,074
)
(92,041
)
Gross profit
43,810
48,052
42,537
37,142
Selling, general and administrative expenses
(49,436
)
(40,046
)
(53,273
)
(56,472
)
Profit (loss) from operations
(5,626
)
8,006
(10,736
)
(19,330
)
Other income (expense), net
25,701
(12,007
)
(14,964
)
(14,553
)
Income tax benefit (expense)
(21,838
)
(9,642
)
(8,868
)
(2,297
)
Net income (loss)
(1,763
)
(13,643
)
(34,568
)
(36,180
)
Net income (loss) attributable to non-controlling interests
97
698
505
545
Net income (loss) attributable to Cannabist Company shareholders
$
(1,860
)
$
(14,341
)
$
(35,073
)
$
(36,725
)
Weighted average common shares outstanding - basic and diluted
470,552,039
460,653,957
445,633,865
409,113,721
Earnings per common share attributable to Cannabist Company
shareholders - basic and diluted
$
(0.00
)
$
(0.03
)
$
(0.08
)
$
(0.09
)
TABLE 2 - CONDENSED CONSOLIDATED BALANCE SHEET (SELECT
ITEMS) (in US $ thousands, unaudited)
Three Months Ended
September 30, 2024 June 30, 2024 March 31,
2024 September 30, 2023 Cash
$
31,497
$
22,332
$
44,473
$
60,273
Total current assets
234,977
167,258
189,887
230,829
Property and equipment, net
232,305
284,434
291,125
326,725
Right of use assets
152,540
209,294
213,668
222,351
Total assets
770,702
777,115
812,831
948,394
Total current liabilities
255,532
209,845
165,979
197,268
Total liabilities
746,699
753,731
769,923
797,608
Total equity
24,003
23,384
42,908
150,786
Total liabilities and equity
$
770,702
$
777,115
$
812,831
$
948,394
TABLE 3 - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in US $ thousands, unaudited)
Three Months Ended
September 30, 2024 June 30, 2024 March 31,
2024 September 30, 2023 Net cash provided by (used in)
operating activities
$
(18,015
)
$
(3,448
)
$
(6,211
)
$
1,809
Net cash provided by (used in) investing activities
29,429
(1,547
)
2,403
24,253
Net cash provided by (used in) financing activities
$
(2,249
)
$
(17,146
)
$
12,517
$
(804
)
TABLE 4 - RECONCILIATION OF US GAAP TO NON-GAAP MEASURES (in
US $ thousands, unaudited)
Three Months Ended
September 30, 2024 June 30, 2024 March 31,
2024 September 30, 2023 Net income (loss)
$
(1,763
)
$
(13,643
)
$
(34,568
)
$
(36,180
)
Income tax (benefit) expense
21,838
9,642
8,868
2,297
Depreciation and amortization
11,767
13,583
13,964
17,929
Net interest and debt amortization
13,127
13,121
12,480
14,500
EBITDA (Non-GAAP)
$
44,969
$
22,703
$
744
$
(1,454
)
Share-based compensation
$
2,374
$
(8,144
)
$
3,182
$
8,321
Goodwill and intangible impairment
-
-
-
-
Adjustments for other acquisition and non-core costs
(36,723
)
2,996
9,032
13,601
Gain on remeasurement of contingent consideration, net
-
-
-
-
Fair value changes on investments and derivative liabilities
4,195
(18
)
2,346
25
Fair value mark-up for acquired inventory
-
-
-
-
Adjusted EBITDA (Non-GAAP)
$
14,815
$
17,537
$
15,304
$
20,493
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241107030014/en/
Investor Lee Ann Evans SVP, Capital Markets
investor@cannabistcompany.com
Media Lindsay Wilson SVP, Communications
media@cannabistcompany.com
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