Cronos Group Reports 2024 Third Quarter Results

Net revenue in Q3 2024 increased by 38% year-over-year to   $34.3 million

Spinach ® Becomes the Number One Cannabis Brand in Canada 1

Industry-leading balance sheet with   $862 million   in cash and cash equivalents

Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) ("Cronos" or the "Company") today announced its 2024 third quarter business results.

"Our results this quarter demonstrate that our long-term strategy is working. With record net revenue and a disciplined approach to operating expenses, Cronos operates more efficiently and effectively than ever before, and we anticipate long-term margin improvement. Our consolidation of Cronos Growing Company has further strengthened our supply chain, which we anticipate will lead to improved margins and allow us to meet the increasing global demand for high-quality cannabis. With an industry-leading balance sheet, we are well-positioned to expand into new legal markets and drive future growth opportunities," said Mike Gorenstein, Chairman, President and CEO, Cronos.

"As international demand continues to rise, particularly in markets like Germany, the UK, and Australia, the investments we've made in our infrastructure and global partnerships are paying off," continued Mr. Gorenstein. "In the third quarter, our award-winning Spinach ® brand rose to become the best-selling cannabis brand in the Canadian adult-use market and our Peace Naturals ® brand held a top spot in the Israeli medical market. Our brands' market share out-performance represents our relentless commitment to quality, innovation, and bringing differentiated products to the global cannabis market. The progress we've made reinforces our leadership in key categories and markets, and we remain focused on continuing to innovate and bring premium products to consumers."

1 Hifyre Retail Analytics – National Retail Dollar Sales by Brand in Canada – August 2024.

Consolidated Financial Results
On June 20, 2024 the Company made an additional investment in Cronos Growing Company (" Cronos GrowCo") to fund the expansion of cultivation operations. Cronos also obtained majority control of the board of directors of Cronos GrowCo and began consolidating Cronos GrowCo's results as of July 1, 2024. Prior to this date, the Company's investment in Cronos GrowCo consisted of an investment accounted for under the equity method and loans receivable from Cronos GrowCo.

In the second quarter of 2023, the Company exited its U.S. hemp-derived CBD operations. The exit of the U.S. operations represented a strategic shift, and as such, qualifies for reporting as discontinued operations in the condensed consolidated statements of net income (loss) and comprehensive income (loss). Prior period amounts have been reclassified to reflect the discontinued operations classification of the U.S. operations.

The tables below set forth our condensed consolidated results of continuing operations, expressed in thousands of U.S. dollars for the periods presented. Our condensed consolidated financial results for these periods are not necessarily indicative of the consolidated financial results that we will achieve in future periods.

(in thousands of USD) Three months ended September 30, Change Nine months ended September 30, Change
2024 2023 $ % 2024 2023 $ %
Cronos net revenue, excluding Cronos GrowCo net revenue (i) $ 29,996 $ 24,810 $ 5,186 21 % $ 83,046 $ 63,326 $ 19,720 31 %
Cronos GrowCo net revenue ( i i ) 4,268 4,268 N/A 4,268 4,268 N/A
Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 87,314 $ 63,326 $ 23,988 38 %
Cost of sales 30,341 20,124 10,217 51 % 72,216 52,614 19,602 37 %
Inventory write-down 312 716 (404 ) (56 )% 707 716 (9 ) (1 )%
Gross profit $ 3,611 $ 3,970 $ (359 ) (9 )% $ 14,391 $ 9,996 $ 4,395 44 %
Gross margin (iii) 11 % 16 % N/A (5) pp 16 % 16 % N/A —pp
Inventory step-up recorded to cost of sales 7,116 7,116 N/A 7,116 7,116 N/A
Adjusted Gross Profit ( i v ) $ 10,727 $ 3,970 $ 6,757 170 % $ 21,507 $ 9,996 $ 11,511 115 %
Adjusted Gross Margin ( v ) 31 % 16 % N/A 15pp 25 % 16 % N/A 9pp
Net income (loss) $ 7,324 $ (1,590 ) $ 8,914 N/M $ (3,919 ) $ (25,288 ) $ 21,369 85 %
Adjusted EBITDA ( iv ) $ (6,019 ) $ (15,187 ) $ 9,168 60 % $ (27,739 ) $ (46,774 ) $ 19,035 41 %
Other Data
Cash and cash equivalents (vi) $ 862,034 $ 571,656 $ 290,378 51 %
Short-term investments (vi) 267,905 (267,905 ) (100 )%
Capital expenditures ( vii ) 6,536 325 6,211 1,911 % 9,446 1,631 7,815 479 %

(i)   Cronos net revenue, excluding Cronos GrowCo net revenue is Net revenue less Cronos GrowCo net revenue and is after intercompany eliminations.
(ii)   Cronos GrowCo net revenue is Cronos GrowCo's net revenue after intercompany eliminations.
(iii)   Gross margin is defined as gross profit divided by net revenue.
(iv)   See "Non-GAAP Measures" for more information, including a reconciliation of adjusted earnings (loss) before interest, taxes, depreciation and amortization ("Adjusted EBITDA") to net income (loss) and a reconciliation of Adjusted Gross Profit to gross profit.
(v)   Adjusted Gross Margin is defined as Adjusted Gross Profit divided by net revenue.
(vi)   Dollar amounts are as of the last day of the period indicated.
(vii)   Capital expenditures represent component information of investing activities and is defined as the sum of purchase of property, plant and equipment, and purchase of intangible assets.

Third Quarter   2024

  • Net revenue of $34.3 million in Q3 2024 increased by $9.5 million from Q3 2023. The increase was primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel, and sales to other international markets consisting of Australia, Germany and the United Kingdom (the "UK"). Cronos GrowCo contributed $4.3 million of cannabis flower sales in both the three and nine months ended September 30, 2024.
  • Gross profit of $3.6 million in Q3 2024 decreased by $0.4 million from Q3 2023. The decrease was primarily due to the impact on cost of sales from the inventory-related purchase accounting adjustments resulting from the Cronos GrowCo transaction on July 1, 2024, partially offset by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel, and higher cannabis flower sales in other countries.
  • Adjusted Gross Profit of $10.7 million in Q3 2024 increased by $6.8 million from Q3 2023. Adjusted Gross Profit and Adjusted Gross Margin provide insight into underlying business trends to facilitate comparisons of period-over-period results by removing the impacts of inventory-related purchase accounting adjustments resulting from the Cronos GrowCo transaction, which reflect a one-time event and do not reflect management's assessment of ongoing performance. The increase in Adjusted Gross Profit was driven by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel, and higher cannabis flower sales in other countries.
  • Adjusted EBITDA of $(6.0) million in Q3 2024 improved by $9.2 million from Q3 2023. The improvement year-over-year was primarily driven by higher net revenue, improved Adjusted Gross Profit and a decrease in general and administrative expenses.

Business Updates

Transaction with Cronos GrowCo
The global cannabis market continues to expand as international markets fuel an increasing demand for high-quality products. The investment in Cronos GrowCo's facility expansion enables Cronos to increase supply of Cronos' unique portfolio of genetics which has helped the Company win in the highly competitive Canadian market, as well as expand Cronos' international footprint with distribution to the growing markets in Australia, Germany, and the UK.

Key highlights of the transaction:

  • Increased Board Representation : As of July 1, 2024, the Cronos GrowCo board of directors expanded to five members, three of whom are appointed by Cronos.
  • Financial Consolidation : Cronos now consolidates Cronos GrowCo's results in its financial statements beginning in the third quarter of 2024.
  • Investment in Expansion : Cronos provided an approximately $51 million ($70 million CAD) secured non-revolving credit facility to Cronos GrowCo to fund the expansion of Cronos GrowCo's cultivation and processing facilities, enabling growth opportunities in the markets Cronos operates in today as well as enabling Cronos to take advantage of future growth into new markets that open.
  • New Supply Agreement : Prior to the commencement of sales from the expanded facility, Cronos will have the option to purchase up to 80% of Cronos GrowCo's total production. Thereafter, Cronos will have the option to purchase up to 70% of the total production from the expanded facility.

Brand and Product Portfolio

Spinach ®

In Q3 2024, Spinach ® was the top-selling cannabis brand in Canada according to Hifyre. This market share success highlights Cronos' unwavering dedication to quality, innovation, and delivering distinctive products to the competitive Canadian adult-use market.

Spinach ® has solidified itself as the go-to brand for a wide array of products featuring different cannabinoid combinations, potency ranges and flavor profiles. In the edibles category, the Spinach ® brand held the number one position with a 17.2% market share in Q3 2024, according to Hifyre.

In Q3 2024, the Spinach ® brand launched three new edible SKUs, which included the SOURZ by Spinach ® Strawberry Watermelon 4:1 CBG|THC gummies, SOURZ by Spinach ® Peach Passionfruit 1:1:1 CBN | CBD | THC gummies, and the brand's first limited edition SOURZ by Spinach ® Caramel Green Apple gummies.

Cronos' strong cannabis cultivar breeding program and portfolio of genetics continued to drive growth, propelling the Spinach ® brand to become the number one flower brand in Canada, with a 6.0% market share in Q3 2024, according to Hifyre.

The Spinach ® brand was ranked fourth in the vape category in Q3 2024, holding a 6.4% market share, according to Hifyre. This performance was driven by popular products such as Spinach HITZ™, which introduced new Pink Lemonade and Rocket Icicle flavors, alongside line extensions in Spinach ® 1.2g Vapes.

In Q3 2024, Spinach ® was ranked eighth in the pre-roll category with 2.7% market share, according to Hifyre. In the sub-category of infused pre-rolls, the Spinach ® Fully Charged infused pre-rolls have begun to make their mark and are trending towards becoming a top selling product. The infused pre-roll category is continuing to grow and we expect this category to be key to future growth for both Cronos and the industry, which is why we are committed to evolution and innovation of the pre-roll portfolio.

PEACE NATURALS ®

In Israel, PEACE NATURALS ® continues to be a top-performing brand with a record volume of sales in Q3 2024, powered by Cronos' advanced genetic breeding program and high-quality cultivation capabilities. Despite the conflict involving Israel, Hamas, Iran and other stakeholders in the region, an incredibly competitive market and declining patient counts due to regulatory market structure shifts, the brand continues to out-perform in the Israeli cannabis market.

In Germany and the UK, we are experiencing strong traction with Cronos' proprietary genetics, such as GMO and Wedding Cake, under the PEACE NATURALS ® brand. The expansion of Cronos GrowCo will help enable Cronos to execute on these growth opportunities and others as they become available.

Guidance and Outlook

The Company reiterates its previously announced operating expense savings target of $5 to $10 million on a standalone basis in 2024 primarily driven by savings in general and administrative, sales and marketing and research and development ("R&D"). The organizational and cost savings initiatives are intended to position the Company to drive profitable and sustainable growth over time. The operating expense savings target excludes the impact of the consolidation of Cronos GrowCo's results into the Company's financial statements.

These statements are forward-looking and actual results may differ materially. Refer to "Forward-Looking Statements" below for information on the factors that could cause actual results to differ materially from these forward-looking statements.

Conference Call
The Company will host a conference call and live audio webcast on Tuesday, November 12, 2024, at 8:30 a.m. ET to discuss 2024 Third Quarter business results. An audio replay of the call will be archived on the Company's website for replay. Instructions for the live audio webcast are provided on the Company's website at https://ir.thecronosgroup.com/events-presentations.

About Cronos

Cronos is an innovative global cannabinoid company committed to building disruptive intellectual property by advancing cannabis research, technology and product development. With a passion to responsibly elevate the consumer experience, Cronos is building an iconic brand portfolio. Cronos' diverse international brand portfolio includes Spinach ® , PEACE NATURALS ® and Lord Jones ® . For more information about Cronos and its brands, please visit: thecronosgroup.com.

Forward-Looking Statements

This press release contains information that constitutes forward-looking information and forward-looking statements within the meaning of applicable securities laws and court decisions (collectively, "Forward-Looking Statements"), which are based upon our current internal expectations, estimates, projections, assumptions and beliefs. All information that is not clearly historical in nature may constitute Forward-Looking Statements. In some cases, Forward-Looking Statements can be identified by the use of forward-looking terminology, such as "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, expressions and phrases, including negative and grammatical variations thereof, or statements that certain events or conditions "may" or "will" happen, or by discussion of strategy. Forward-Looking Statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance or other statements that are not statements of historical fact.

Forward-Looking Statements include, but are not limited to, statements with respect to:

  • the ongoing impact of the public investigation into Canadian licensed producers of alleged dumping of medical cannabis imports from Canada into Israel by the Israel Trade Levies Commissioner of the Israel Ministry of Economy and Industry (the "Anti-Dumping Investigation");
  • expectations related to the conflict involving Israel, Hamas, Iran and other stakeholders in the region (the "Middle East Conflict") and its impact on our operations in Israel, the supply of product in the market and the demand for product by medical patients in Israel, as well as any regional or global escalations and their impact to global commerce and stability;
  • expectations related to the German, Australian and UK markets, including our strategic partnerships with Cansativa GmbH ("Cansativa"), Vitura Health Limited ("Vitura") and GROW ® Pharma, respectively, and our ability to successfully distribute the PEACE NATURALS ® brand in Germany and the UK;
  • expectations related to our announcement of cost-cutting measures, including our decision to wind-down operations at our Winnipeg, Manitoba facility (the "Cronos Fermentation Facility") and list the facility for sale, the expected costs and benefits from the wind-down of production activities at the facility, challenges and effects related thereto as well as changes in strategy, metrics, investments, costs, operating expenses, employee turnover and other changes with respect thereto;
  • expectations related to the impact of our decision to exit our U.S. hemp-derived cannabinoid product operations, including the costs, expenses and write-offs associated therewith, the impact on our operations and our financial statements and any future plans to re-enter the U.S. market;
  • expectations related to our announced realignment (the "Realignment") and any progress, challenges and effects related thereto as well as changes in strategy, metrics, investments, reporting structure, costs, operating expenses, employee turnover and other changes with respect thereto;
  • our expectations as to the use of our facility in Stayner, Ontario (the "Peace Naturals Campus");
  • our ability to acquire raw materials from suppliers, including Cronos GrowCo, and the costs and timing associated therewith;
  • expectations regarding the potential success of, and the costs and benefits associated with, our joint ventures, strategic alliances and equity investments;
  • expectations related to the expansion of Cronos GrowCo's purpose-built cannabis facility;
  • expectations related to the Cronos GrowCo transaction and the expansion of its cultivation and processing facilities;
  • our ability or plans to identify, develop, commercialize or expand our technology and R&D initiatives in cannabinoids, or the success thereof;
  • expectations regarding revenues, expenses, gross margins and capital expenditures;
  • expectations regarding our future production and manufacturing strategy and operations, the costs and timing associated therewith and the receipt of applicable production and sale licenses;
  • the ongoing impact of the legalization of additional cannabis product types and forms for adult-use in Canada, including federal, provincial, territorial and municipal regulations pertaining thereto, the related timing and impact thereof and our intentions to participate in such markets;
  • the legalization of the use of cannabis for medical or adult-use in jurisdictions outside of Canada, including the U.S. and Germany, the related timing and impact thereof and our intentions to participate in such markets, if and when such use is legalized;
  • the grant, renewal, withdrawal, suspension, delay and impact of any license or supplemental license to conduct activities with cannabis or any amendments thereof;
  • our ability to successfully create and launch brands and cannabis products;
  • expectations related to the differentiation of our products, including through the utilization of rare cannabinoids;
  • the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis, including CBD and other cannabinoids;
  • laws and regulations and any amendments thereto applicable to our business and the impact thereof, including uncertainty regarding the application of U.S. state and federal law to cannabis and U.S. hemp (including CBD and other U.S. hemp-derived cannabinoids) products and the scope of any regulations by the U.S. Food and Drug Administration, the U.S. Drug Enforcement Administration, the U.S. Federal Trade Commission, the U.S. Patent and Trademark Office and any state equivalent regulatory agencies over cannabis and U.S. hemp (including CBD and other U.S. hemp-derived cannabinoids) products, including the possibility marijuana is moved from Schedule I to Schedule III under the U.S. Controlled Substances Act;
  • the anticipated benefits and impact of Altria Group Inc.'s investment in the Company (the "Altria Investment"), pursuant to a subscription agreement dated December 7, 2018;
  • uncertainties as to our ability to exercise our option (the "PharmaCann Option") in PharmaCann Inc. ("PharmaCann"), in the near term or the future, in full or in part, including the uncertainties as to the status and future development of federal legalization of cannabis in the U.S. and our ability to realize the anticipated benefits of the transaction with PharmaCann;
  • expectations regarding the implementation and effectiveness of key personnel changes;
  • expectations regarding acquisitions and dispositions and the anticipated benefits therefrom;
  • expectations of the amount or frequency of impairment losses, including as a result of the write-down of intangible assets, including goodwill;
  • the impact of the ongoing military conflict between Russia and Ukraine (and resulting sanctions) on our business, financial condition and results of operations or cash flows;
  • our compliance with the terms of the settlement (the "Settlement Order") with the Securities and Exchange Commission (the "SEC") and the settlement agreement (the "Settlement Agreement") with the Ontario Securities Commission (the "OSC"); and
  • the impact of the loss of our ability to rely on private offering exemptions under Regulation D of the Securities Act of 1933, as amended (the "Securities Act"), and the loss of our status as a well-known seasoned issuer, each as a result of the Settlement Order.

Certain of the Forward-Looking Statements contained herein concerning the industries in which we conduct our business are based on estimates prepared by us using data from publicly available governmental sources, market research, industry analysis and on assumptions based on data and knowledge of these industries, which we believe to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. The industries in which we conduct our business involve risks and uncertainties that are subject to change based on various factors, which are described further below.

The Forward-Looking Statements contained herein are based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including: (i) our ability to effectively navigate developments related to the Anti-Dumping Investigation and its impact on our operations in Israel; (ii) our ability to effectively navigate developments related to the Middle East Conflict and its impact on our employees and operations in Israel, the supply of product in the market and demand for product by medical patients in Israel; (iii) our ability to efficiently and effectively distribute our PEACE NATURALS ® brand in Germany with our strategic partner Cansativa and in the UK with our strategic partner GROW ® Pharma and our ability to efficiently and effectively distribute products in Australia with our strategic partner Vitura; (iv) our ability to realize the expected cost-savings and other benefits related to the wind-down of our operations at the Cronos Fermentation facility, (v) expectations related to the impact of our decision to exit our U.S. hemp-derived cannabinoid product operations; (vi) our ability to realize the expected cost-savings, efficiencies and other benefits of our Realignment and other announced cost-cutting measures and employee turnover related thereto; (vii) our ability to efficiently and effectively change the nature of our operations at our Peace Naturals Campus and receive the benefits thereof and acquire raw materials on a timely and cost-effective basis from third parties or Cronos GrowCo; (viii) the timely completion of the expansion of Cronos GrowCo's purpose-built cannabis facility and the ability of Cronos GrowCo to repay the credit facility provided by Cronos; (ix) our ability to realize anticipated benefits, synergies or generate revenue, profits or value from our acquisitions and strategic investments; (x) the production and manufacturing capabilities and output from our facilities and our joint ventures, strategic alliances and equity investments; (xi) government regulation of our activities and products including, but not limited to, the areas of cannabis taxation and environmental protection; (xii) the timely receipt of any required regulatory authorizations, approvals, consents, permits and/or licenses; (xiii) consumer interest in our products; (xiv) our ability to differentiate our products, including through the utilization of rare cannabinoids; (xv) competition; (xvi) anticipated and unanticipated costs; (xvii) our ability to generate cash flow from operations; (xviii) our ability to conduct operations in a safe, efficient and effective manner; (xix) our ability to hire and retain qualified staff, and acquire equipment and services in a timely and cost-efficient manner; (xx) our ability to exercise the PharmaCann Option and realize the anticipated benefits of the transaction with PharmaCann; (xxi) our ability to complete planned dispositions, and, if completed, obtain our anticipated sales price; (xxii) general economic, financial market, regulatory and political conditions in which we operate; (xxiii) management's perceptions of historical trends, current conditions and expected future developments; and (xxiv) other considerations that management believes to be appropriate in the circumstances. While our management considers these assumptions to be reasonable based on information currently available to management, there is no assurance that such expectations will prove to be correct.

By their nature, Forward-Looking Statements are subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct, and that objectives, strategic goals and priorities will not be achieved. A variety of factors, including known and unknown risks, many of which are beyond our control, could cause actual results to differ materially from the Forward-Looking Statements in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf. Such factors include, without limitation, negative impacts on our business and operations in Israel due to the Anti-Dumping Investigation, including that we may not be able to produce, import or sell our products in Israel as a result thereof; negative impacts on our employees, business and operations in Israel due to the Middle East Conflict, including that we may not be able to produce, import or sell our products or protect our people or facilities in Israel during the Middle East Conflict, the supply of product in the market and the demand for product by medical patients in Israel; that we may not be able to successfully continue to distribute our products in Germany, Australia and the UK or generate material revenue from sales in those markets; that we may not be able to achieve the anticipated benefits of the wind-down of our operations at the Cronos Fermentation facility; that we may be unable to further streamline our operations and reduce expenses; that we may not be able to effectively and efficiently re-enter the U.S. market in the future; that we may not be able to access raw materials on a timely and cost-effective basis from third-parties or Cronos GrowCo; that Cronos GrowCo may not be able to complete the expansion of its purpose-built cannabis facility within a reasonable time or repay its borrowings under the credit facility provided by Cronos; the military conflict between Russia and Ukraine may disrupt our operations and those of our suppliers and distribution channels and negatively impact the demand for and use of our products; the risk that cost savings and any other synergies from the Altria Investment may not be fully realized or may take longer to realize than expected; failure to execute key personnel changes; the risks that our Realignment, the change in the nature of our operations at the Peace Naturals Campus and our further leveraging of our strategic partnerships will not result in the expected cost-savings, efficiencies and other benefits or will result in greater than anticipated turnover in personnel; lower levels of revenues; the lack of consumer demand for our products; our inability to manage disruptions in credit markets; unanticipated future levels of capital, environmental or maintenance expenditures, general and administrative and other expenses; growth opportunities not turning out as expected; the lack of cash flow necessary to execute our business plan (either within the expected timeframe or at all); difficulty raising capital; the potential adverse effects of judicial, regulatory or other proceedings, or threatened litigation or proceedings, on our business, financial condition, results of operations and cash flows; volatility in and/or degradation of general economic, market, industry or business conditions; compliance with applicable environmental, economic, health and safety, energy and other policies and regulations and in particular health concerns with respect to vaping and the use of cannabis and U.S. hemp products in vaping devices; the unexpected effects of actions of third parties such as competitors, activist investors or federal (including U.S. federal), state, provincial, territorial or local regulatory authorities or self-regulatory organizations; adverse changes in regulatory requirements in relation to our business and products; legal or regulatory obstacles that could prevent us from being able to exercise the PharmaCann Option and thereby realize the anticipated benefits of the transaction with PharmaCann; dilution of our fully diluted ownership of PharmaCann and the loss of our rights as a result of that dilution; our failure to improve our internal control environment and our systems, processes and procedures; and the factors discussed under Part I, Item 1A "Risk Factors" of the Annual Report on Form 10-K for the year ended December 31, 2023 and under Part II, Item 1A "Risk Factors" in our Quarterly Reports. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully and not to put undue reliance on Forward-Looking Statements.

Forward-Looking Statements are provided for the purposes of assisting the reader in understanding our financial performance, financial position and cash flows as of and for periods ended on certain dates and to present information about management's current expectations and plans relating to the future, and the reader is cautioned not to place undue reliance on these Forward-Looking Statements because of their inherent uncertainty and to appreciate the limited purposes for which they are being used by management. While we believe that the assumptions and expectations reflected in the Forward-Looking Statements are reasonable based on information currently available to management, there is no assurance that such assumptions and expectations will prove to have been correct. Forward-Looking Statements are made as of the date they are made and are based on the beliefs, estimates, expectations and opinions of management on that date. We undertake no obligation to update or revise any Forward-Looking Statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such Forward-Looking Statements. The Forward-Looking Statements contained in this press release and other reports we file with, or furnish to, the SEC and other regulatory agencies and made by our directors, officers, other employees and other persons authorized to speak on our behalf are expressly qualified in their entirety by these cautionary statements.

As used in this press release, "CBD" means cannabidiol and "U.S. hemp" has the meaning given to the term "hemp" in the U.S. Agricultural Improvement Act of 2018, including hemp-derived CBD.

Cronos Group Inc.
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share amounts, unaudited)


As of September 30, 2024 As of December 31, 2023
Assets
Current assets
Cash and cash equivalents $ 862,034 $ 669,291
Short-term investments 192,237
Accounts receivable, net 20,480 13,984
Interest receivable 7,190 10,012
Other receivables 5,690 6,341
Current portion of loans receivable, net 233 5,541
Inventory, net 47,250 30,495
Prepaids and other current assets 7,326 5,405
Held-for-sale assets 8,971
Total current assets 959,174 933,306
Equity method investments, net 19,488
Other investments 2,900 35,251
Non-current portion of loans receivable, net 16,086 69,036
Property, plant and equipment, net 162,516 59,468
Right-of-use assets 1,052 1,356
Goodwill 38,028 1,057
Intangible assets, net 4,247 21,078
Other assets 130 45
Total assets $ 1,184,133 $ 1,140,085
Liabilities
Current liabilities
Accounts payable $ 6,532 $ 12,130
Income taxes payable 94 64
Accrued liabilities 31,766 27,736
Current portion of lease obligation 980 994
Derivative liabilities 192 102
Current portion due to non-controlling interests 373
Total current liabilities 39,564 41,399
Non-current portion due to non-controlling interests 1,243 1,003
Non-current portion of lease obligation 872 1,559
Deferred tax liability 11,143
Total liabilities 52,822 43,961
Shareholders' equity
Share capital 616,403 613,725
Additional paid-in capital 51,523 48,449
Retained earnings 413,995 416,719
Accumulated other comprehensive gain (loss) (361 ) 20,678
Total equity attributable to shareholders of Cronos Group 1,081,560 1,099,571
Non-controlling interests 49,751 (3,447 )
Total shareholders' equity 1,131,311 1,096,124
Total liabilities and shareholders' equity $ 1,184,133 $ 1,140,085


Cronos Group Inc.
Condensed Consolidated Statements of Net Income (Loss) and Comprehensive Income (Loss)


Three months ended September 30, Nine months ended September 30,
(In thousands of U.S. dollars, except share and per share amounts, unaudited) 2024 2023 2024 2023
Net revenue, before excise taxes $ 46,594 $ 33,912 $ 120,639 $ 86,264
Excise taxes (12,330 ) (9,102 ) (33,325 ) (22,938 )
Net revenue 34,264 24,810 87,314 63,326
Cost of sales 30,341 20,124 72,216 52,614
Inventory write-down 312 716 707 716
Gross profit 3,611 3,970 14,391 9,996
Operating expenses
Sales and marketing 5,528 5,296 15,190 16,334
Research and development 1,242 1,246 3,201 4,392
General and administrative 12,760 14,366 34,434 39,673
Restructuring costs 1,423 630 1,423
Share-based compensation 2,262 1,957 6,513 6,823
Depreciation and amortization 1,098 1,457 3,237 4,515
Impairment loss on long-lived assets 14,376 16,350
Total operating expenses 37,266 25,745 79,555 73,160
Operating loss (33,655 ) (21,775 ) (65,164 ) (63,164 )
Other income
Interest income, net 12,460 13,375 40,156 37,021
Share of income from equity method investments 1,057 2,365 831
Gain on revaluation of loan receivable 11,804 11,804
Gain on revaluation of equity method investment 32,469 32,469
Loss on revaluation of financial instruments (293 ) (5,291 ) (6,550 ) (7,856 )
Impairment loss on other investments (25,650 )
Foreign currency transaction gain (loss) (7,432 ) 8,816 12,370 3,999
Loss on held-for-sale assets (10,422 ) (10,422 )
Other, net (315 ) 974 (737 ) 1,011
Total other income 38,271 18,931 55,805 35,006
Income (loss) before income taxes 4,616 (2,844 ) (9,359 ) (28,158 )
Income tax benefit (2,708 ) (1,254 ) (5,440 ) (2,870 )
Income (loss) from continuing operations 7,324 (1,590 ) (3,919 ) (25,288 )
Loss from discontinued operations (182 ) (4,238 )
Net income (loss) 7,324 (1,772 ) (3,919 ) (29,526 )
Net loss attributable to non-controlling interest (1,025 ) (128 ) (1,270 ) (353 )
Net income (loss) attributable to Cronos Group $ 8,349 $ (1,644 ) $ (2,649 ) $ (29,173 )
Comprehensive income (loss)
Net income (loss) $ 7,324 $ (1,772 ) $ (3,919 ) $ (29,526 )
Other comprehensive income (loss)
Foreign exchange gain (loss) on translation 12,408 (20,090 ) (20,113 ) (1,096 )
Comprehensive income (loss) 19,732 (21,862 ) (24,032 ) (30,622 )
Comprehensive loss attributable to non-controlling interests (269 ) (41 ) (344 ) (136 )
Comprehensive income (loss) attributable to Cronos Group $ 20,001 $ (21,821 ) $ (23,688 ) $ (30,486 )
Net income (loss) per share
Basic - continuing operations $ 0.02 $ $ (0.01 ) $ (0.07 )
Basic - discontinued operations (0.01 )
Basic net income (loss) per share attributable to Cronos Group $ 0.02 $ $ (0.01 ) $ (0.08 )
Diluted - continuing operations $ 0.02 $ $ (0.01 ) $ (0.07 )
Diluted - discontinued operations (0.01 )
Diluted net income (loss) per share attributable to Cronos Group $ 0.02 $ $ (0.01 ) $ (0.08 )


Cronos Group Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands of U.S. dollars, except share amounts, unaudited)


Nine months ended September 30,
2024 2023
Operating activities
Net loss $ (3,919 ) $ (29,526 )
Adjustments to reconcile net loss to cash used in operating activities:
Share-based compensation 6,513 6,840
Depreciation and amortization 6,811 6,933
Impairment loss on long-lived assets 16,350 205
Impairment loss on other investments 25,650
Loss from investments 4,103 7,103
Changes in expected credit losses on long-term financial assets 1,026 (1,339 )
Revaluation of equity method investment (32,469 )
Revaluation of loan receivable (11,804 )
Loss on held-for-sale assets 10,422
Inventory step-up recorded to cost of sales 7,116
Foreign currency transaction (gain) loss (12,370 ) (3,999 )
Other non-cash operating activities, net (11 ) (1,904 )
Changes in operating assets and liabilities:
Accounts receivable, net (5,402 ) 6,976
Interest receivable (1,018 ) (14,601 )
Other receivables 1,658 25
Prepaids and other current assets (1,217 ) 1,074
Inventory 7,162 976
Accounts payable (9,102 ) (7,595 )
Income taxes payable (9 ) (32,728 )
Accrued liabilities 1,633 1,910
Cash flows provided by (used in) operating activities 11,123 (59,650 )
Investing activities
Purchase of short-term investments (537,186 )
Proceeds from short-term investments 187,166 380,765
Cash acquired in business combinations 5,993
Dividends received from equity method investment 1,301
Dividend proceeds 346
Advances on loans receivable (8,822 )
Proceeds from repayment on loans receivable 5,290 14,151
Purchase of property, plant and equipment (8,868 ) (1,287 )
Purchase of intangible assets (578 ) (344 )
Other investing activities 862
Cash flows provided by (used in) investing activities 180,181 (141,392 )
Financing activities
Withholding taxes paid on share-based awards (918 ) (812 )
Cash flows used in financing activities (918 ) (812 )
Effect of foreign currency translation on cash and cash equivalents 2,357 8,866
Net change in cash and cash equivalents 192,743 (192,988 )
Cash and cash equivalents, beginning of period 669,291 764,644
Cash and cash equivalents, end of period $ 862,034 $ 571,656
Supplemental cash flow information
Interest paid $ $
Interest received $ 38,965 $ 22,203
Income taxes paid $ 621 $ 33,013


Non-GAAP Measures

Cronos Group reports its financial results in accordance with Generally Accepted Accounting Principles in the United States ("U.S. GAAP"). This press release refers to measures not recognized under U.S. GAAP ("non-GAAP measures"). These non-GAAP measures do not have a standardized meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these non-GAAP measures are provided as a supplement to corresponding U.S. GAAP measures to provide additional information regarding the results of operations from management's perspective. Accordingly, non-GAAP measures should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. All non-GAAP measures presented in this press release are reconciled to their closest reported U.S. GAAP measure. Reconciliations of historical adjusted financial measures to corresponding U.S. GAAP measures are provided below.

Adjusted EBITDA

Management reviews Adjusted EBITDA, a non-GAAP measure, which excludes non-cash items and items that do not reflect management's assessment of ongoing business performance. Management defines Adjusted EBITDA as net income (loss) before interest, tax expense (benefit), depreciation and amortization adjusted for: share of (income) loss from equity method investments; impairment loss on goodwill and intangible assets; impairment loss on long-lived assets; (gain) loss on revaluation of derivative liabilities; (gain) loss on revaluation of financial instruments; gain on revaluation of loan receivable; gain on revaluation of equity method investment; transaction costs related to strategic projects; loss on held-for-sale assets; impairment loss on other investments; foreign currency transaction loss; other, net; loss from discontinued operations; restructuring costs; inventory write-downs resulting from restructuring actions; share-based compensation; purchase accounting adjustment-related inventory step-up adjustments recorded through cost of sales; and financial statement review costs and reserves related to the restatements of our 2019 and 2021 interim financial statements (the "Restatements"), including the costs related to the settlement of the SEC's and the OSC's investigations of the Restatements and legal costs of defending shareholder class action complaints brought against us as a result of the 2019 restatement (see Part II, Item 1 "Legal Proceedings" of our Quarterly Report on Form 10-Q for the period ended September 30, 2024 for a discussion of the shareholder class action complaints relating to the restatement of the 2019 interim financial statements and the settlement of the SEC's and the OSC's investigations of the Restatements). Results are reported as total consolidated results, reflecting our reporting structure of one reportable segment.

Management believes that Adjusted EBITDA provides the most useful insight into underlying business trends and results and provides a more meaningful comparison of period-over-period results. Management uses Adjusted EBITDA for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets.

The following tables set forth a reconciliation of Net income (loss) as determined in accordance with U.S. GAAP to Adjusted EBITDA for the periods indicated:

Three months ended September 30, 2024
Continuing Operations Discontinued Operations Total
Net income $ 7,324 $ $ 7,324
Interest income, net (12,460 ) (12,460 )
Income tax benefit (2,708 ) (2,708 )
Depreciation and amortization 3,567 3,567
EBITDA (4,277 ) (4,277 )
Impairment loss on long-lived assets (i) 14,376 14,376
Revaluation gain on loan receivable (ii) (11,804 ) (11,804 )
Gain on revaluation of equity method investment (iii) (32,469 ) (32,469 )
Loss on revaluation of financial instruments (iv) 293 293
Foreign currency transaction loss 7,432 7,432
Transaction costs (vi) 334 334
Loss on held-for-sale assets (vii) 10,422 10,422
Other, net (viii) 315 315
Share-based compensation (ix) 2,262 2,262
Financial statement review costs (xi) (19 ) (19 )
Inventory step-up recorded to cost of sales (xiii) 7,116 7,116
Adjusted EBITDA $ (6,019 ) $ $ (6,019 )


Three months ended September 30, 2023
Continuing Operations Discontinued Operations Total
Net loss $ (1,590 ) $ (182 ) $ (1,772 )
Interest income, net (13,375 ) (1 ) (13,376 )
Income tax benefit (1,254 ) (1,254 )
Depreciation and amortization 2,148 2,148
EBITDA (14,071 ) (183 ) (14,254 )
Share of income from equity method investments (1,057 ) (1,057 )
Loss on revaluation of financial instruments (iv) 5,291 5,291
Foreign currency transaction gain (8,816 ) (8,816 )
Other, net (viii) (974 ) (31 ) (1,005 )
Restructuring costs (ix) 1,423 28 1,451
Share-based compensation (x) 1,957 (4 ) 1,953
Financial statement review costs (xi) 344 344
Inventory write-down (xii) 716 716
Adjusted EBITDA $ (15,187 ) $ (190 ) $ (15,377 )


Nine months ended September 30, 2024
Continuing Operations Discontinued Operations Total
Net loss $ (3,919 ) $ $ (3,919 )
Interest income, net (40,156 ) (40,156 )
Income tax benefit (5,440 ) (5,440 )
Depreciation and amortization 6,811 6,811
EBITDA (42,704 ) (42,704 )
Share of income from equity method investments (2,365 ) (2,365 )
Impairment loss on long-lived assets (i) 16,350 16,350
Revaluation gain on loan receivable (ii) (11,804 ) (11,804 )
Gain on revaluation of equity method investment (iii) (32,469 ) (32,469 )
Loss on revaluation of financial instruments (iv) 6,550 6,550
Impairment loss on other investments (v) 25,650 25,650
Foreign currency transaction gain (12,370 ) (12,370 )
Transaction costs (vi) 530 530
Loss on held-for-sale assets (vii) 10,422 10,422
Other, net (viii) 737 737
Restructuring costs (ix) 630 630
Share-based compensation (x) 6,513 6,513
Financial statement review costs (xi) (525 ) (525 )
Inventory step-up recorded to cost of sales (xiii) 7,116 7,116
Adjusted EBITDA $ (27,739 ) $ $ (27,739 )


Nine months ended September 30, 2023
Continuing Operations Discontinued Operations Total
Net loss $ (25,288 ) $ (4,238 ) $ (29,526 )
Interest income, net (37,021 ) (9 ) (37,030 )
Income tax benefit (2,870 ) (2,870 )
Depreciation and amortization 6,689 244 6,933
EBITDA (58,490 ) (4,003 ) (62,493 )
Share of income from equity method investments (831 ) (831 )
Impairment loss on long-lived assets (i) 205 205
Loss on revaluation of financial instruments (iv) 7,856 7,856
Foreign currency transaction gain (3,999 ) (3,999 )
Other, net (viii) (1,011 ) 132 (879 )
Restructuring costs (ix) 1,423 562 1,985
Share-based compensation (x) 6,823 17 6,840
Financial statement review costs (xi) 739 739
Inventory write-down (xii) 716 839 1,555
Adjusted EBITDA $ (46,774 ) $ (2,248 ) $ (49,022 )

(i) For the three and nine months ended September 30, 2024, impairment loss on long-lived assets included $14,258 related to the write-down of our Ginkgo exclusive licenses. For the nine months ended September 30, 2024, impairment loss on long-lived assets included $1,631 related to the winding down of operations at the Cronos Fermentation Facility. For the nine months ended September 30, 2023, impairment loss on long-lived assets related to certain leased properties associated with the Company's U.S. operations.

(ii) For the three and nine months ended September 30, 2024, a revaluation gain on loan receivable was recognized as a result of the Cronos GrowCo transaction on July 1, 2024.

(iii) For the three and nine months ended September 30, 2024, the gain on revaluation of equity method investment was recognized as a result of the Cronos GrowCo transaction on July 1, 2024.

(iv) For the three and nine months ended September 30, 2024 and 2023, loss on revaluation of financial instruments related primarily to the Company's equity securities in Vitura.

(v) For the nine months ended September 30, 2024, impairment loss on other investments represents the fair value change on the PharmaCann Option.

(vi) For the three and nine months ended September 30, 2024, transaction costs represent professional fees associated with the Cronos GrowCo transaction.

(vii) For the three and nine months ended September 30, 2024, a loss on held-for-sale assets was recognized as a result of the change in the Company's sales strategy for the Cronos Fermentation Facility to market the assets to a broader buyer pool.

(viii) For the three and nine months ended September 30, 2024 and 2023, other, net related to (gain) loss on disposal of assets and (gain) loss on revaluation of derivative liabilities.

(ix) For the nine months ended September 30, 2024, restructuring costs from continuing operations related to shutdown costs at the Cronos Fermentation Facility, as well as employee-related severance costs associated with the Realignment. For the three and nine months ended September 30, 2023, restructuring costs related to employee-related severance costs and other restructuring costs associated with our U.S. operations.

(x) For the three and nine months ended September 30, 2024 and 2023, share-based compensation related to the non-cash expenses of share-based compensation awarded to employees under the Company's share-based award plans.

(xi) For the three and nine months ended September 30, 2024 and 2023, financial statement review costs include costs and reserves taken related to the Restatements, costs related to the Company's responses to requests for information from various regulatory authorities relating to the Restatements and legal costs incurred defending shareholder class action complaints brought against the Company as a result of the 2019 restatement. For the three and nine months ended September 30, 2024, a credit balance is presented due to an insurance recovery.

(xii) For the three and nine months ended September 30, 2023, inventory write-downs relate to product destruction and obsolescence associated with the exit of our U.S. operations.

(xiii) For the three and nine months ended September 30, 2024, inventory step-up recorded to cost of sales represents the portion of the inventory step-up from the Cronos GrowCo transaction that was recorded through the condensed consolidated statements of income (loss) and comprehensive income (loss) in both periods.

Adjusted Gross Profit and Adjusted Gross Margin

To supplement the consolidated financial statements presented in accordance with U.S. GAAP, we have presented Adjusted Gross Profit and Adjusted Gross Margin, non-GAAP measures that exclude the impacts of inventory-related purchase accounting adjustments from the calculations of gross profit and gross margin, which resulted from the Cronos GrowCo transaction. Results are reported as total consolidated results, reflecting our reporting structure of one reportable segment.

Management believes that Adjusted Gross Profit and Adjusted Gross Margin provide useful insight into underlying business trends to facilitate comparisons of period-over-period results by removing the impacts of inventory-related purchase accounting adjustments resulting from the Cronos GrowCo transaction, which reflect a one-time event and do not reflect management's assessment of ongoing business performance.

(in thousands of USD) Three months ended September 30, Change Nine months ended September 30, Change
2024 2023 $ % 2024 2023 $ %
Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 87,314 $ 63,326 $ 23,988 38 %
Gross profit $ 3,611 $ 3,970 $ (359 ) (9 )% $ 14,391 $ 9,996 $ 4,395 44 %
Inventory step-up recorded to cost of sales 7,116 7,116 N/M 7,116 7,116 N/M
Adjusted Gross Profit $ 10,727 $ 3,970 $ 6,757 170 % $ 21,507 $ 9,996 $ 11,511 115 %
Gross margin (i) 11 % 16 % N/A (5)pp 16 % 16 % N/A —pp
Adjusted Gross Margin (ii) 31 % 16 % N/A 15pp 25 % 16 % N/A 9pp

(i) Gross margin is defined as gross profit divided by net revenue.

(ii) Adjusted Gross Margin is defined as Adjusted Gross Profit divided by net revenue.

Constant Currency

To supplement the consolidated financial statements presented in accordance with U.S. GAAP, we have presented constant currency adjusted financial measures for net revenue, gross profit, gross profit margin, operating expenses, net income (loss) and Adjusted EBITDA for the three and nine months ended September 30, 2024, as well as cash and cash equivalents and short-term investment balances as of September 30, 2024 compared to December 31, 2023, which are considered non-GAAP financial measures. We present constant currency information to provide a framework for assessing how our underlying operations performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period income statement results in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates from the three and nine months comparative periods in 2023 rather than the actual average exchange rates in effect during the respective current periods; constant currency current and prior comparative balance sheet information is translated at the prior year-end spot rate rather than the current period spot rate. All growth comparisons relate to the corresponding period in 2023. We have provided this non-GAAP financial information to aid investors in better understanding the performance of our operations. The non-GAAP financial measures presented in this press release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP.

The table below sets forth certain measures of consolidated results from continuing operations on a constant currency basis for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 as well as cash and cash equivalents and short-term investments as of September 30, 2024 and December 31, 2023, both on an as-reported and constant currency basis (in thousands):

As Reported As Adjusted for Constant Currency
Three months ended September 30, As Reported Change Three months ended September 30, Constant Currency Change
2024 2023 $ % 2024 $ %
Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 34,661 $ 9,851 40 %
Gross profit 3,611 3,970 (359 ) (9 )% 3,608 (362 ) (9 )%
Gross margin 11 % 16 % N/A (5)pp 10 % N/A (6)pp
Operating expenses 37,266 25,745 11,521 45 % 38,079 12,334 48 %
Net income (loss) from continuing operations 7,324 (1,590 ) 8,914 N/M 8,219 9,809 N/M
Adjusted EBITDA (6,019 ) (15,187 ) 9,168 60 % (6,514 ) 8,673 57 %
Nine months ended September 30, As Reported Change Nine months ended September 30, Constant Currency Change
2024 2023 $ % 2024 $ %
Net revenue $ 87,314 $ 63,326 $ 23,988 38 % $ 88,456 $ 25,130 40 %
Gross profit 14,391 9,996 4,395 44 % 14,591 4,595 46 %
Gross margin 16 % 16 % N/A —pp 16 % N/A —pp
Operating expenses 79,555 73,160 6,395 9 % 80,415 7,255 10 %
Net loss from continuing operations (3,919 ) (25,288 ) 21,369 85 % (2,424 ) 22,864 90 %
Adjusted EBITDA (27,739 ) (46,774 ) 19,035 41 % (28,022 ) 18,752 40 %
As of September 30, As of December 31, As Reported Change As of September 30, Constant Currency Change
2024 2023 $ % 2024 $ %
Cash and cash equivalents $ 862,034 $ 669,291 $ 192,743 29 % $ 865,277 $ 195,986 29 %
Short-term investments 192,237 (192,237 ) (100 )% (192,237 ) (100 )%
Total cash and cash equivalents and short-term investments $ 862,034 $ 861,528 $ 506 % $ 865,277 $ 3,749 %


Net revenue

As Reported As Adjusted for Constant Currency
Three months ended September 30, As Reported Change Three months ended September 30, Constant Currency Change
2024 2023 $ % 2024 $ %
Cannabis flower $ 26,328 $ 17,414 $ 8,914 51 % $ 26,601 $ 9,187 53 %
Cannabis extracts 7,789 7,268 521 7 % 7,914 646 9 %
Other 147 128 19 15 % 146 18 14 %
Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 34,661 $ 9,851 40 %


As Reported As Adjusted for Constant Currency
Nine months ended September 30, As Reported Change Nine months ended September 30, Constant Currency Change
2024 2023 $ % 2024 $ %
Cannabis flower $ 64,514 $ 44,556 $ 19,958 45 % $ 65,413 $ 20,857 47 %
Cannabis extracts 22,580 18,495 4,085 22 % 22,823 4,328 23 %
Other 220 275 (55 ) (20 )% 220 (55 ) (20 )%
Net revenue $ 87,314 $ 63,326 $ 23,988 38 % $ 88,456 $ 25,130 40 %


As Reported As Adjusted for Constant Currency
Three months ended September 30, As Reported Change Three months ended September 30, Constant Currency Change
2024 2023 $ % 2024 $ %
Canada $ 24,067 $ 18,738 $ 5,329 28 % $ 24,509 $ 5,771 31 %
Israel 7,259 5,673 1,586 28 % 7,201 1,528 27 %
Other countries 2,938 399 2,539 636 % 2,951 2,552 640 %
Net revenue $ 34,264 $ 24,810 $ 9,454 38 % $ 34,661 $ 9,851 40 %


As Reported As Adjusted for Constant Currency
Nine months ended September 30, As Reported Change Nine months ended September 30, Constant Currency Change
2024 2023 $ % 2024 $ %
Canada $ 62,781 $ 46,767 $ 16,014 34 % $ 63,553 $ 16,786 36 %
Israel 20,565 16,160 4,405 27 % 20,908 4,748 29 %
Other countries 3,968 399 3,569 894 % 3,995 3,596 901 %
Net revenue $ 87,314 $ 63,326 $ 23,988 38 % $ 88,456 $ 25,130 40 %


For the three months ended September 30, 2024, net revenue on a constant currency basis was $34.7 million, representing a 40% increase from the three months ended September 30, 2023. For the nine months ended September 30, 2024, net revenue on a constant currency basis was $88.5 million, representing a 40% increase from the nine months ended September 30, 2023. On a constant currency basis, net revenue increased for the three and nine months ended September 30, 2024, primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries, partially offset by an adverse price/mix in the Canadian adult-use cannabis flower category driving increased excise tax payments as a percentage of net revenue. On a constant currency basis, the Cronos GrowCo transaction contributed $4.3 million of cannabis flower sales in both the three and nine months ended September 30, 2024. No such sales were recognized for the three and nine months ended September 30, 2023.

Gross profit

For the three months ended September 30, 2024, gross profit on a constant currency basis was $3.6 million, representing a 9% decrease from the three months ended September 30, 2023. For the nine months ended September 30, 2024, gross profit on a constant currency basis was $14.6 million, representing a 46% increase from the nine months ended September 30, 2023. On a constant currency basis, gross profit decreased for the three-month comparative periods primarily due to the impact on cost of sales from the inventory step-up from the Cronos GrowCo transaction, partially offset by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries. For the nine month comparative period, the increase was primarily due to higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and higher cannabis flower sales in other countries, partially offset by the impact on cost of sales from the inventory step-up from the Cronos GrowCo transaction. On a constant currency basis, for both the three and nine months ended September 30, 2024, we recognized $7.2 million of inventory step-up from the Cronos GrowCo transaction in cost of sales. No such costs were recognized for the three and nine months ended September 30, 2023.

Operating expenses

For the three months ended September 30, 2024, operating expenses on a constant currency basis were $38.1 million, representing a 48% increase from the three months ended September 30, 2023. For the nine months ended September 30, 2024, operating expenses on a constant currency basis were $80.4 million, representing a 10% increase from the nine months ended September 30, 2023. On a constant currency basis, operating expenses increased for the three and nine months ended September 30, 2024, primarily due to the impairment of the Ginkgo exclusive licenses, partially offset by lower salaries and benefits, professional fees and restructuring costs.

Net income (loss) from continuing operations

For the three months ended September 30, 2024, net income from continuing operations on a constant currency basis was $8.2 million, representing an improvement of $9.8 million from the three months ended September 30, 2023. For the nine months ended September 30, 2024, net loss from continuing operations on a constant currency basis was $2.4 million, representing an improvement of $22.9 million from the nine months ended September 30, 2023.

Adjusted EBITDA

For the three months ended September 30, 2024, Adjusted EBITDA on a constant currency basis was $(6.5) million, representing a 57% improvement from the three months ended September 30, 2023. For the nine months ended September 30, 2024, Adjusted EBITDA on a constant currency basis was $(28.0) million, representing a 40% improvement from the nine months ended September 30, 2023. The improvement in Adjusted EBITDA for the three and nine months ended September 30, 2024 on a constant currency basis was driven by higher cannabis flower and extract sales in the Canadian market, higher cannabis flower sales in Israel and decreases in general and administrative expenses, partially offset by an adverse price/mix in Canada in the cannabis flower category driving increased excise tax payments as a percentage of net revenue.

Cash and cash equivalents & short-term investments

Cash and cash equivalents and short-term investments on a constant currency basis was essentially unchanged at $865.3 million as of September 30, 2024, compared to December 31, 2023.

Foreign currency exchange rates

All currency amounts in this press release are stated in U.S. dollars, which is our reporting currency, unless otherwise noted. All references to "dollars" or "$" are to U.S. dollars. The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of September 30, 2024, September 30, 2023, and December 31, 2023. Transactions affecting the shareholders' equity (deficit) are translated at historical foreign exchange rates. The condensed consolidated statements of net income (loss) and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period as reported on Bloomberg. The exchange rates used to translate from USD to Canadian dollars ("C$") and Israeli New Shekels ("ILS") are shown below:

(Exchange rates are shown as C$ per $) As of
September 30, 2024 September 30, 2023 December 31, 2023
Spot rate 1.3525 1.3577 1.3243
Year-to-date average rate 1.3601 1.3455 N/A


(Exchange rates are shown as ILS per $) As of
September 30, 2024 September 30, 2023 December 31, 2023
Spot rate 3.7269 3.8138 3.6163
Year-to-date average rate 3.6994 3.6385 N/A

For further information, please contact:
Anna Shlimak
Investor Relations
Tel: (416) 504-0004
investor.relations@thecronosgroup.com


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  • Gross margin of 61%, compared to 52% during the third quarter of 2023
  • Year to date cash flow from operations of $241 million and free cash flow of $162 million *
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Trulieve Cannabis Corp . (CSE: TRUL ) (OTCQX: TCNNF ) ("Trulieve" or "the Company"), a leading and top-performing cannabis company in the U.S., today announced its results for the quarter ended September 30, 2024. Results are reported in U.S. dollars and in accordance with U.S. Generally Accepted Accounting Principles unless otherwise indicated. Numbers may not sum perfectly due to rounding.

Trulieve logo (PRNewsfoto/Trulieve Cannabis Corp.)

Q3   2024 Financial and Operational Highlights*

  • Revenue of $284 million increased 3% year over year, with 95% of revenue from retail sales.
  • Achieved gross margin of 61%, with GAAP gross profit of $173 million .
  • Reported net loss attributable to common shareholders of $60 million . Adjusted net loss of $12 million * excludes $48 million in campaign support and other non-recurring charges, asset impairments, disposals and discontinued operations.
  • Achieved adjusted EBITDA of $96 million *, or 34% of revenue, up 24% year over year.
  • Generated cash flow from operations of $30 million and free cash flow of $(7) million *, both of which were impacted by $48 million in campaign support.
  • Cash and short term investments at quarter end totaled $319 million .
  • Launched adult use sales at three Ohio locations: Beavercreek, Columbus , and Westerville .
  • Rolled out #YesOn3 product line to support Smart and Safe Florida adult-use campaign.
  • Entered partnership with Professional Pickleball Association and Major League Pickleball to sponsor events in Arizona , Florida , and Georgia .
  • Opened 15 new dispensaries in Florida and Pennsylvania .
  • Ended the quarter with 30% of retail locations outside of the state of Florida .

*See "Non-GAAP Financial Measures" below for additional information and a reconciliation to GAAP for all Non-GAAP metrics.

Recent Developments

  • Opened five new retail locations in Bonita Springs , Hallandale , Lake Placid , Orlando , and St. Augustine, Florida .
  • Currently operate 220 retail dispensaries and over four million square feet of cultivation and processing capacity in the United States .

Management Commentary

"As voters in Florida cast their ballots across the state today, there is an opportunity to make history by approving cannabis legalization for personal use," said Kim Rivers , Trulieve CEO. "With 156 stores in Florida , scaled production capacity, and sufficient capital to support further investment, if approved, Trulieve is best positioned to fully prepare for the launch of recreational sales next Spring."

Financial Highlights*

Results of Operations

For the Three Months Ended

For the Nine Months Ended

(Figures in millions except per
share data)

September
30, 2024

September
30, 2023

% Better /
(Worse)

June 30,
2024

% Better /
(Worse)

September
30, 2024

September
30, 2023

% Better /
(Worse)

Revenue

$

284

$

275

3 %

$

303

(6 %)

$

885

$

842

5 %

Gross profit

$

173

$

143

21 %

$

182

(5 %)

$

529

$

435

22 %

Gross margin %


61 %


52 %



60 %



60 %


52 %


Operating expenses

$

173

$

120

(44 %)

$

132

(31 %)

$

432

$

686

37 %

Operating expenses %


61 %


43 %



43 %



49 %


81 %


Net loss**

$

(60)

$

(25)

(137 %)

$

(12)

NMF

$

(95)

$

(493)

81 %

Net loss continuing
operations

$

(60)

$

(23)

(163 %)

$

(11)

NMF

$

(94)

$

(399)

76 %

Adjusted net (loss) income

$

(12)

$

(15)

19 %

$

0

NMF

$

(22)

$

(47)

53 %

Basic and diluted shares
outstanding


190


189



190



190


189


EPS continuing operations

$

(0.32)

$

(0.12)

(168 %)

$

(0.04)

NMF

$

(0.52)

$

(2.09)

75 %

Adjusted EPS

$

(0.06)

$

(0.08)

20 %

$

0.00

NMF

$

(0.12)

$

(0.25)

54 %

Adjusted EBITDA

$

96

$

78

24 %

$

107

(10 %)

$

309

$

235

32 %

Adjusted EBITDA Margin %


34 %


28 %



35 %



35 %


28 %



NMF - No Meaningful Figure

*See "Non-GAAP Financial Measures" below for additional information and a reconciliation to GAAP for all Non-GAAP metrics.

**Net loss attributable to common shareholders which excludes non-controlling interest.

Conference Call

The Company will host a conference call and live audio webcast on November 5, 2024, at 8:30 A.M. Eastern time , to discuss its third quarter 2024 financial results. Interested parties can join the conference call by dialing in as directed below. Please dial in 15 minutes prior to the call.

North American toll free: 1-844-824-3830


Passcode: 3735709




International: 1-412-542-4136


Passcode: 3735709

A live audio webcast of the conference call will be available at:
Trulieve Cannabis Corp Q3 2024 Earnings

A powerpoint presentation and archived replay of the webcast will be available at:
https: //investors.trulieve.com/events

The Company's Form 10-Q for the quarter ended September 30, 2024, will be available on the SEC's website or at https://investors.trulieve.com/quarterly-results . The Company's Management Discussion and Analysis for the period and the accompanying financial statements and notes will be available under the Company's profile on https://www.sedarplus.ca/landingpage/ and on its website at https://investors.trulieve.com/quarterly-results . This news release is not in any way a substitute for reading those financial statements, including the notes to the financial statements.

Trulieve Cannabis Corp.

Condensed Consolidated Balance Sheets (Unaudited)

(in millions, except for share data)



September 30,  
2024


December 31,  
2023

ASSETS




Current Assets:




Cash and cash equivalents

$                237.7


$                201.4

Short-term investments

80.2


Restricted cash

0.9


6.6

Accounts receivable, net

9.0


6.7

Inventories

220.9


213.1

Income tax receivable

5.8


Prepaid expenses

19.2


17.6

Other current assets

26.6


23.7

Notes receivable - current portion, net

1.8


6.2

Assets associated with discontinued operations

0.9


2.0

Total current assets

603.0


477.3

Property and equipment, net

701.6


676.4

Right of use assets - operating, net

116.1


95.9

Right of use assets - finance, net

65.6


58.5

Intangible assets, net

873.3


917.2

Goodwill

483.9


483.9

Notes receivable, net

5.8


7.4

Other assets

23.0


10.4

Long-term assets associated with discontinued operations

2.0


2.0

TOTAL ASSETS

$            2,874.2


$             2,729.1

LIABILITIES




Current Liabilities:




Accounts payable and accrued liabilities

$                  96.1


$                  83.2

Deferred revenue

6.7


1.3

Notes payable - current portion

3.3


3.8

Operating lease liabilities - current portion

11.6


10.1

Finance lease liabilities - current portion

9.1


7.6

Construction finance liabilities - current portion

1.8


1.5

Contingencies

4.6


4.4

Liabilities associated with discontinued operations

3.5


3.0

Total current liabilities

136.7


114.8

Long-Term Liabilities:




Private placement notes, net

364.4


363.2

Notes payable, net

112.8


115.9

Operating lease liabilities

113.4


92.2

Finance lease liabilities

68.4


61.7

Construction finance liabilities

135.9


136.7

Deferred tax liabilities

204.2


207.0

Uncertain tax position liabilities

384.1


180.4

Other long-term liabilities

6.5


7.1

Long-term liabilities associated with discontinued operations

39.4


41.6

TOTAL LIABILITIES

$            1,565.8


$             1,320.4

MEZZANINE EQUITY




Redeemable non-controlling interest

$                    7.1


$                      —

SHAREHOLDERS' EQUITY




Common stock, no par value; unlimited shares authorized. 189,154,228 and
186,235,818 shares issued and outstanding as of September 30,
2024 and December 31, 2023, respectively.

$                      —


$                      —

Additional paid-in-capital

2,048.0


2,055.1

Accumulated deficit

(736.0)


(640.6)

Non-controlling interest

(10.7)


(5.9)

TOTAL SHAREHOLDERS' EQUITY

1,301.3


1,408.6

TOTAL LIABILITIES, MEZZANINE EQUITY, AND SHAREHOLDERS' EQUITY

$            2,874.2


$             2,729.1

Trulieve Cannabis Corp.

Condensed Consolidated Statements of Operations (Unaudited)

(in millions, except for share data)



Three Months Ended  
September 30,


Nine Months Ended  
September 30,


2024


2023


2024


2023

Revenue

$       284.3


$       275.2


$       885.3


$       842.2

Cost of goods sold

111.0


132.3


356.6


407.4

Gross profit

173.3


142.9


528.7


434.8

Expenses:








Sales and marketing

66.7


59.4


191.0


181.2

General and administrative

81.9


34.5


161.5


108.7

Depreciation and amortization

28.3


27.0


84.2


82.6

Impairment and disposal of long-lived assets, net of (recoveries)

(4.3)


(1.2)


(4.4)


5.5

Impairment of goodwill




307.6

Total expenses

172.7


119.6


432.3


685.6

Income (loss) from operations

0.6


23.3


96.5


(250.8)

Other income (expense):








Interest expense, net

(17.5)


(20.8)


(47.6)


(60.9)

Interest income

4.2


1.9


11.5


4.3

Gain on debt extinguishment


8.2



8.2

Other (expense) income, net

(0.2)


1.1


(4.8)


5.9

Total other expense, net

(13.5)


(9.6)


(40.9)


(42.6)

(Loss) income before provision for income taxes

(12.8)


13.7


55.6


(293.4)

Provision for income taxes

47.4


36.6


150.0


105.9

Net loss from continuing operations

(60.2)


(22.9)


(94.4)


(399.3)

Net loss from discontinued operations, net of tax benefit
(provision) of zero, zero, zero, and $(0.6), respectively

(1.6)


(2.9)


(4.6)


(99.1)

Net loss

(61.9)


(25.8)


(99.0)


(498.3)

Less: net loss attributable to non-controlling interest
from continuing operations

(1.4)


(0.5)


(2.8)


(3.8)

Less: net loss attributable to redeemable non-controlling interest
from continuing operations

(0.3)



(0.9)


Less: net loss attributable to non-controlling interest from
discontinued operations




(1.2)

Net loss attributable to common shareholders

$        (60.2)


$        (25.4)


$        (95.3)


$     (493.4)









Earnings Per Share (see numerator reconciliation below)








Net loss per share - Continuing operations:








Basic and diluted

$        (0.32)


$        (0.12)


$        (0.52)


$        (2.09)

Net loss per share - Discontinued operations:








Basic and diluted

$        (0.01)


$        (0.02)


$        (0.02)


$        (0.52)

Weighted average number of common shares used in computing net
loss per share:








Basic and diluted

190.2


188.9


190.0


189.0









EPS Numerator Reconciliation








Net loss attributable to common shareholders (from above)

$        (60.2)


$        (25.4)


$        (95.3)


$     (493.4)

Net loss from discontinued operations, net of tax, attributable to
common shareholders

1.6


2.9


4.6


97.9

Adjustment of redeemable non-controlling interest to maximum
redemption value

(2.1)



(9.0)


Net loss from continuing operations available to common
shareholders

$        (60.6)


$        (22.5)


$        (99.7)


$     (395.5)

Trulieve Cannabis Corp.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in millions)



Three Months Ended  
September 30,


Nine Months Ended  
September 30,


2024


2023


2024


2023

Cash flows from operating activities








Net loss

$            (61.9)


$            (25.8)


$            (99.0)


$          (498.3)

Adjustments to reconcile net loss to net cash provided by operating
activities:








Depreciation and amortization

28.3


27.0


84.2


83.6

Depreciation included in cost of goods sold

13.3


14.5


40.1


45.4

Gain on debt extinguishment


(8.2)



(8.2)

Impairment and disposal of long-lived assets, net of (recoveries)

(4.3)


(1.2)


(4.4)


5.5

Impairment of goodwill




307.6

Amortization of operating lease right of use assets

3.0


2.5


8.3


7.8

Share-based compensation

5.5


4.5


15.6


7.4

Allowance for credit losses

0.5


0.5


4.9


0.9

Deferred income taxes

(6.2)


(6.5)


(2.7)


(18.7)

Loss from disposal of discontinued operations


0.6



69.8

Other non-cash changes

(0.3)


1.7


0.9


5.0

Changes in operating assets and liabilities:








Inventories

(13.3)


26.2


(8.3)


66.5

Accounts receivable

(1.5)


(1.2)


(0.7)


(1.9)

Prepaid expenses and other current assets

4.9


4.3


(0.9)


9.3

Other assets

(1.1)


0.3


(6.1)


2.0

Accounts payable and accrued liabilities

4.9


8.9


4.6


4.5

Income tax receivable / payable

0.5


(0.1)


(4.3)


(49.9)

Other liabilities


0.9


0.2


(14.4)

Operating lease liabilities

(1.6)


(2.1)


(6.0)


(6.9)

Deferred revenue

2.3


(2.2)


5.3


(6.0)

Uncertain tax position liabilities

51.0


50.7


203.8


61.8

Other long-term liabilities

1.8


(1.8)


(0.7)


(2.6)

Proceeds received from insurance for operating expenses

4.4



5.9


Net cash provided by operating activities

30.3


93.4


240.8


70.4

Cash flows from investing activities








Purchases of property and equipment

(36.9)


(6.3)


(79.0)


(31.0)

Capitalized interest

(1.2)


0.9


(0.9)


0.1

Purchases of internal use software

(6.8)


(3.4)


(18.3)


(7.7)

Purchases of short-term investments

(80.0)



(80.0)


Cash paid for licenses

(6.5)



(7.0)


(4.0)

Payment for initial direct costs on finance leases

(0.6)



(0.6)


Proceeds from disposal activities

0.3


3.5


1.0


11.7

Proceeds from notes receivable repayments

0.3


0.2


0.9


0.6

Proceeds received from insurance recoveries on property and equipment



0.5


Net cash used in investing activities

(131.5)


(5.0)


(183.4)


(30.3)

Cash flows from financing activities








Payments for taxes related to net share settlement of equity awards

(12.2)



(12.3)


Payments on finance lease obligations

(1.9)


(1.8)


(5.5)


(5.7)

Payments on notes payable

(1.4)


(0.7)


(3.8)


(5.5)

Payments on construction finance liabilities

(0.9)


(0.7)


(2.5)


(1.3)

Payments and costs related to consolidated VIE settlement transaction



(5.1)


Distributions to subsidiary non-controlling interest



(1.1)


(0.1)

Payments on private placement notes


(47.6)



(47.6)

Payments for debt issuance costs


(0.4)



(0.4)

Proceeds from non-controlling interest holders' subscription



3.0


Proceeds from equity exercises



0.2


Net cash used in financing activities

(16.4)


(51.3)


(27.1)


(60.6)

Net (decrease) increase in cash, and cash equivalents

(117.5)


37.2


30.3


(20.5)

Cash, cash equivalents, and restricted cash, beginning of period

356.1


159.9


208.0


213.8

Cash and cash equivalents of discontinued operations, beginning of
period


1.8


0.3


5.7

Less: cash and cash equivalents of discontinued operations, end of period


(0.1)



(0.1)

Cash, cash equivalents, and restricted cash, end of period

$            238.6


$            198.9


$            238.6


$            198.9


The consolidated statements of cash flows include continuing operations and discontinued operations for the periods presented.

Non-GAAP Financial Measures (Unaudited)

In addition to our results determined in accordance with GAAP, we supplement our results with non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted EBITDA margin %, adjusted net (loss) income, adjusted net (loss) income per diluted share, and free cash flow. The Company calculates EBITDA as net income (loss) before net interest expense, income tax expense, depreciation and amortization; adjusted EBITDA as net income (loss) before net interest expense, interest income, income tax expense, depreciation and amortization and also excludes certain extraordinary items; adjusted EBITDA margin as adjusted EBITDA as % of revenue, adjusted net (loss) income as net income (loss) less certain extraordinary items; adjusted EPS as adjusted net (loss) income divided by basic and diluted shares outstanding; and free cash flow as cash flow from operations less capital expenditures. Our management uses these non-GAAP financial measures in conjunction with GAAP financial measures to evaluate our operating results and financial performance. We believe these measures are useful to investors as they are widely used measures of performance and can facilitate comparison to other companies. These non-GAAP financial measures are not, and should not be considered as, measures of liquidity. These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with GAAP financial performance measures. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found below. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP.

Reconciliation of Non-GAAP EBITDA and Adjusted EBITDA (Unaudited)
The following table presents a reconciliation of GAAP net loss attributable to common shareholders to non-GAAP EBITDA and Adjusted EBITDA for each of the periods presented:

(Amounts expressed in millions of United States dollars)

Three Months Ended

For the Nine Months Ended

September
30, 2024

September
30, 2023

June 30,
2024

September
30, 2024

September
30, 2023

Net loss attributable to common shareholders

$

(60.2)

$

(25.4)

$

(12.0)

$

(95.3)

$

(493.4)

Add (deduct) impact of:











Interest expense, net

$

17.5

$

20.8

$

15.4

$

47.6

$

60.9

Interest income

$

(4.2)

$

(1.9)

$

(4.0)

$

(11.5)

$

(4.3)

Provision for income taxes

$

47.4

$

36.6

$

47.2

$

150.0

$

105.9

Depreciation and amortization

$

28.3

$

27.0

$

28.1

$

84.2

$

82.6

Depreciation included in cost of goods sold

$

13.3

$

14.6

$

13.3

$

40.1

$

42.7

EBITDA (Non-GAAP)

$

42.1

$

71.8

$

88.0

$

215.0

$

(205.5)

EBITDA Margin (Non-GAAP)


15 %


26 %


29 %


24 %


(24 %)












Impairment of goodwill

$

$

$

$

$

307.6

Impairment and disposal of long-lived assets, net of
(recoveries)

$

(4.3)

$

(1.2)

$

1.2

$

(4.4)

$

5.5

Legislative campaign contributions

$

48.4

$

0.5

$

5.0

$

62.7

$

19.6

Acquisition, transaction, and other non-recurring costs

$

2.6

$

8.5

$

4.3

$

10.6

$

16.1

Share-based compensation

$

5.5

$

4.5

$

5.0

$

15.6

$

7.4

Gain on debt extinguishment

$

$

(8.2)

$

$

$

(8.2)

Other (expense) income, net

$

0.2

$

(1.1)

$

1.8

$

4.8

$

(5.9)

Discontinued operations, net of tax, attributable to
common shareholders

$

1.6

$

2.9

$

1.6

$

4.6

$

97.9

Adjusted EBITDA (Non-GAAP)

$

96.1

$

77.7

$

107.0

$

308.8

$

234.5

Adjusted EBITDA Margin (Non-GAAP)


34 %


28 %


35 %


35 %


28 %

Reconciliation of Non-GAAP Adjusted Net (Loss) Income (Unaudited)
The following table presents a reconciliation of GAAP net loss attributable to common shareholders to non-GAAP adjusted net (loss) income, for each of the periods presented:


For the Three Months Ended

For the Nine Months Ended

(Amounts expressed in millions of United States dollars)

September
30, 2024

September
30, 2023

June 30,
2024

September
30, 2024

September
30, 2023

Net loss attributable to common shareholders

$

(60.2)

$

(25.4)

$

(12.0)

$

(95.3)

$

(493.4)

Net loss from discontinued operations, net of tax,
attributable to common shareholders

$

1.6

$

2.9

$

1.6

$

4.6

$

97.9

Adjustment of redeemable non-controlling interest to
maximum redemption value

$

(2.1)

$

$

1.9

$

(9.0)

$

Net loss from continuing operations available to common
shareholders

$

(60.6)

$

(22.5)

$

(8.5)

$

(99.7)

$

(395.5)

Add (deduct) impact of:


Adjustment of redeemable non-controlling interest to
maximum redemption value

$

2.1

$

$

(1.9)

$

9.0

$

Impairment of goodwill

$

$

$

$

$

307.6

Impairment and disposal of long-lived assets, net of
(recoveries)

$

(4.3)

$

(1.2)

$

1.2

$

(4.4)

$

5.5

Legislative campaign contributions

$

48.4

$

0.5

$

5.0

$

62.7

$

19.6

Acquisition, transaction, and other non-recurring costs

$

2.6

$

8.5

$

4.3

$

10.6

$

16.1

Fair value of derivative liabilities - warrants

$

$

$

$

$

(0.3)

Adjusted net (loss) income (Non-GAAP)

$

(11.9)

$

(14.7)

$

0.2

$

(21.9)

$

(47.0)

Reconciliation of Non-GAAP Adjusted Net (Loss) Income Per Diluted Share (Unaudited)
The following table presents a reconciliation of GAAP net loss attributable to common shareholders per share to non-GAAP adjusted net (loss) income per diluted share, for each of the periods presented:


For the Three Months Ended

For the Nine Months Ended

(Amounts expressed are per share except for shares
which are in millions)

September
30, 2024

September
30, 2023

June 30,
2024

September
30, 2024

September
30, 2023

Net loss attributable to common shareholders

$

(0.32)

$

(0.13)

$

(0.06)

$

(0.50)

$

(2.61)

Net loss from discontinued operations, net of tax,
attributable to common shareholders

$

0.01

$

0.02

$

0.01

$

0.02

$

0.52

Adjustment of redeemable non-controlling interest to
maximum redemption value

$

(0.01)

$

$

0.01

$

(0.05)

$

Net loss from continuing operations available to common
shareholders

$

(0.32)

$

(0.12)

$

(0.04)

$

(0.52)

$

(2.09)

Add (deduct) impact of:


Adjustment of redeemable non-controlling interest to
maximum redemption value

$

0.01

$

$

(0.01)

$

0.05

$

Impairment of goodwill

$

$

$

$

$

1.63

Impairment and disposal of long-lived assets, net of
(recoveries)

$

(0.02)

$

(0.01)

$

0.01

$

(0.02)

$

0.03

Legislative campaign contributions

$

0.25

$

0.00

$

0.03

$

0.33

$

0.10

Acquisition, transaction, and other non-recurring costs

$

0.01

$

0.05

$

0.02

$

0.06

$

0.09

Fair value of derivative liabilities - warrants

$

$

$

$

$

0.00

Adjusted net (loss) income (Non-GAAP)

$

(0.06)

$

(0.08)

$

0.00

$

(0.12)

$

(0.25)

Basic and diluted shares outstanding


190.2


188.9


190.3


190.0


189.0

Reconciliation of Non-GAAP Free Cash Flow (Unaudited)
The following table presents a reconciliation of GAAP cash flow from operating activities to non-GAAP free cash flow, for each of the periods presented:


For the Three Months Ended

For the Nine Months Ended

(Amounts expressed in millions of United States dollars)

September
30, 2024

September
30, 2023

June 30,
2024

September
30, 2024

September
30, 2023

Cash flow from operating activities

$

30.3

$

93.4

$

71.3

$

240.8

$

70.4

Payments for property and equipment

$

(36.9)

$

(6.3)

$

(26.5)

$

(79.0)

$

(31.0)

Free cash flow (Non-GAAP)

$

(6.6)

$

87.2

$

44.8

$

161.8

$

39.4

Forward-Looking Statements

This news release includes forward-looking information and statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to the Company's expectations or forecasts of business, operations, financial performance, cash flows, prospects, and other plans, intentions, expectations, estimates, and beliefs and include statements regarding the potential approval of cannabis legalization for personal use in Florida , the Company's growth opportunities and the Company's positioning for the future. Words such as "expects", "continue", "will", "anticipates" and "intends" or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on the Company's current projections and expectations about future events and financial trends that management believes might affect its financial condition, results of operations, business strategy and financial needs, and on certain assumptions and analysis made by the Company in light of the experience 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, including, without limitation, the risks discussed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 and in our periodic reports subsequently filed with the United Sates Securities and Exchange Commission and in the Company's filings on https://www.sedarplus.ca/landingpage/ . 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 and 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.

About Trulieve

Trulieve is an industry leading, vertically integrated cannabis company and multi-state operator in the U.S., with leading market positions in Arizona , Florida , and Pennsylvania . Trulieve is poised for accelerated growth and expansion, building scale in retail and distribution in new and existing markets through its hub strategy. By providing innovative, high-quality products across its brand portfolio, Trulieve delivers optimal customer experiences and increases access to cannabis, helping patients and customers to live without limits. Trulieve is listed on the CSE under the symbol TRUL and trades on the OTCQX market under the symbol TCNNF. For more information, please visit Trulieve.com .

Facebook: @Trulieve
Instagram: @Trulieve_
X: @Trulieve

Investor Contact
Christine Hersey , Vice President of Investor Relations
+1 (424) 202-0210
Christine.Hersey@Trulieve.com

Media Contact
Phil Buck , APR, Corporate Communications Manager
+1 (406) 370-6226
Philip.Buck@Trulieve.com

Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/trulieve-reports-third-quarter-2024-results-ahead-of-florida-adult-use-vote-302296068.html

SOURCE Trulieve Cannabis Corp.

Cision View original content to download multimedia: http://www.newswire.ca/en/releases/archive/November2024/05/c9112.html

News Provided by Canada Newswire via QuoteMedia

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To attend the conference call or webcast, participants should register online at https://ir.thecronosgroup.com/events-presentations . To avoid delays, we encourage participants to dial into the conference call fifteen minutes ahead of the scheduled start time. The webcast of the call will be archived for replay on the Company's website.

News Provided by GlobeNewswire via QuoteMedia

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