The Tinley Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) ("Tinley's" or the "Company") is pleased to provide a corporate update on various initiatives now underway and intended to advance the Company's business and create sustainable shareholder value.
Update on Relocation to Canoga Park
The Company previously announced that it expected to complete its relocation from its Long Beach Facility to the Blaze Life Holdings' ("BLH") facility in Canoga Park, California at the end of Q2 or beginning of Q3 of 2023, but confirms that it now expects the relocation to be completed closer to the end of Q3 or the beginning of Q4. The updated timeframe is primarily a result of delays relating to BLH's receipt of certain municipal licenses and approvals which it requires to operate its state-of-the-art cannabis processing, bottling, canning, and storage/distribution facility in Canoga Park, California (the "BLH Facility"). Final interior renovations and capital improvements to the BLH Facility required to satisfy the municipal licencing inspections and approvals are now underway in order to allow the BLH Facility to become fully operational. The completion of Tinley's relocation to the BLH Facility is expected to coincide with BLH's receipt of such outstanding municipal licenses and approvals.
As previously announced, once Tinley's bottling operations are moved from Long Beach to the BLH Facility, management expects the Company to save approximately USD$1 million annually in overhead operating expenses. Based on these anticipated costs and overhead savings, along with management's revenue targets for cannabis-infused and non-infused products over the next 18-24 months, management now expects that the Company may be in a position to earn positive cash flow by or during the second half of 2024. However, there are many factors that could impact these expectations, including, but not limited to, achieving management's revenue projections and unknown and unexpected future Company expenses.
Update on Current Operations at Long Beach Facility and Lease Extension
Pursuant to the terms of Tinley's existing lease for its the Long Beach Facility, Tinley's was required to vacate the premises by May 31, 2023; however, the Company was able to negotiate a lease extension at a substantially discounted rent in order to allow it to continue to use premises at the Long Beach Facility until July 15, 2023. As at the date of this news release, Tinley's continues to operate its bottling and canning lines at the Long Beach Facility, servicing both Tinley's ongoing clients and new BLH co-packing clients and intends to work with the landlord of the Long Beach Facility to further extend its lease so that it may continue to service its and BLH's clients until such time as it can complete its relocation to the BLH Facility. Additional details relating to the status of the Company's lease of its Long Beach Facility will be announced when more information is available.
Beckett's Non-Infused/Non-Alcoholic Beverages
The sober-curious no-alcohol beverage market in the United States continues to grow. No-alcohol ready-to-drink single serve beverages and no-alcohol multi-serve spirits are both expected to post substantial volume growth, according to credible industry research estimates. The Company continues to be on the cutting edge of this new and growing market segment with its premium-tasting non-infused Beckett's line of non-alcoholic ready-to-drink mocktails and non-alcoholic multi-serve spirits and liqueurs. Tinley's is currently staging ingredients and packaging materials for Q3 2023 production to satisfy new Total Wine & More purchase orders and to build its inventory to more easily satisfy future purchase orders from Total Wine & More and to build on-demand stock for other retail and on-premises customers.
Introducing Beckett's-branded Cannabis-Infused Beverages
Following the move to Canoga Park, Tinley's plans to re-launch its line of cannabis-infused beverages under the brand names Beckett's Tonics and Beckett's '27. This rebrand will include current micro-dosed cannabis-infused beverage products, as well as new higher-potency products and new container formats targeted at higher-dose seeking consumers while maintaining current micro-dose products for the direct-to-consumer home delivery channel. Management believes that the goodwill the Company has built in the Beckett's brand will help its cannabis-infused products gain new momentum in the growing cannabis beverage market in California. "We are a completely different Company today than we were under the previous management team, and it's time to re-brand under one name to position us as market leaders in cannabis-infused and non-infused beverage sectors. We have a great partner in BLH and its state-wide distribution division, Sulo. It's time to show a fresh face and blow wind into Sulo's sails with a strategic relaunch, while leaving the anchors of the past behind," said Tinley's CEO, Teddy Zittell. "We will seek shareholder approval to pass a special resolution changing the Company's name to Beckett's at the Company's next AGM, which we expect to call and hold before year-end."
Update on Executive Salary Deferral
Previously, Tinley's announced that due to cash restrictions and other financial restraints, both the CEO and CFO agreed to defer their salary until such time as the Company was in a position to pay its executive salaries. Tinley is pleased to announce that as a result of considerable costs savings, along with solid co-packing revenues and revenue from the sale of Beckett's non-infused products, the Company is now in a position where it has been able to pay salary to its CFO. The Company's CEO, Teddy Zittell, is continuing to defer his salary for the time being.
Grant of Stock Options
Tinley's also announces the grant of stock options to purchase up to 9,000,000 common shares in the capital of the Company to certain directors, officers and consultants of the Company in accordance with the terms of the Company's stock option plan. The stock options will be exercisable at a price of $0.05 per common share for a period of ten years from the date of grant.
Forward-Looking Statements
This news release contains forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates, statements regarding plans, goals, objectives and intentions, statements regarding the Company's expectations with respect to its future business and operations, management's expectations regarding growth and phrases containing words such as "ongoing", "estimates", "expects", "anticipates", or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions "will", "may", "could", or "should" occur or be achieved, or comparable terminology referring to future events or results. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, the timing of BLH's receipt of certain licenses and approvals necessary to operate at the BLH Facility, the timing of the BLH Facility becoming fully operational, potential delays or unanticipated problems related to the relocation of Tinley's bottling assets to the BLH Facility, risks associated with Tinley's existing bottling customers continuing production at the BLH Facility and Tinley's existing can customers agreeing to move their production to the BLH Facility, Tinley's being sufficiently capitalized to meet its financial obligations related to the move to BLH Facility, potential delays in obtaining, or failures to obtain, necessary governmental approvals required to operate the BLH Facility, risks underlying management's expectations relating to the proposed benefits of relocating to the BLH Facility, political risks, uncertainties relating to the availability, and costs, of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in input costs, changes in consumer tastes and preferences, and the ability of BLH and the Company to achieve certain expected synergies as a result of the entering into of their management services agreement Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law. Products, formulations, and timelines outlined herein are subject to change at any time.
For further information, please contact:
The Tinley Beverage Company Inc.
Teddy Zittell
(310) 507-9146
relations@drinktinley.comCSE: TNY; OTCQB: TNYBF
Twitter: @drinktinleys and @drinkbecketts
Instagram: @drinktinleys and @drinkbecketts
www.drinktinley.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/169950
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The Tinley Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) (the "Company") announced today that it will be filing its annual financial statements, management's discussion and analysis and related officer certifications for the financial year ended December 31, 2022 (collectively, the "Annual Filings") beyond the required filing deadline under Parts 4 and 5 of National Instrument 51-102 Continuous Disclosure Obligations and pursuant to National Instrument 52-109 Certification of Disclosure in Issuer's Annual and Interim Filings and is now subject to a cease trade order dated May 5, 2023 (the "CTO"). In order to remove the CTO, among other things, the Company will need to complete the audit and file the Annual Filings on SEDAR.
The Corporation is working closely with its auditor and expects to file the Annual Filings as soon as possible. The Corporation does not anticipate any delay in filing its interim financial statements, management's discussion and analysis, and the related officer certifications for the financial period ended March 31, 2023.
About The Tinley's Beverage Company
The Tinley's Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) develops and has licensed the production through its Long Beach, CA state-licensed manufacturing facility of terpene and cannabis-infused non-alcoholic Tinley's '27TMand Tinley's TonicsTM products which are distributed to licensed dispensaries and to home delivery channels in California. The Beckett's Classics® and Beckett's '27® lines are the non-alcoholic, non-cannabis versions of the Tinley's formulations and are available in select mainstream food, beverage, and specialty in the United States.
Forward-Looking Statements
This news release contains forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates, statements regarding plans, goals, objectives and intentions, statements regarding the Company's expectations with respect to its future business and operations, and the timing of the completion, approval and filing of its 2022 annual financial statements, management's discussion and analysis, and related officer certifications. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to defer materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law. Products, formulations, and timelines outlined herein are subject to change at any time.
For further information, please contact:
The Tinley Beverage Company Inc.
Teddy Zittell (310) 507-9146 relations@drinktinley.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/165256
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The Tinley Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) ("Tinley's" or the "Company") provides update on the status of the previously announced decommissioning of its Long Beach manufacturing facility and relocation of its bottling and related assets to the new Blaze Life Holdings, LLC ("BLH") 45,000 square foot cannabis manufacturing and distribution facility located in Canoga Park, California, and on related measures being immediately implemented to facilitate the relocation including, but not limited to, substantive cost cutting initiatives and changes to the board and management teams.
Corporate Updates
Relocation to Canoga Park Facility and Long Beach Production Schedule
Tinley's confirms that it will decommission its Long Beach bottling assets before the end of the second quarter of this year, and currently expects installation and commissioning of bottling lines at strategic partner BLH's Canoga Park facility to take place at the beginning of the third quarter of this year. To help client brands ensure sufficient inventory for testing and release of products to distribution through the transition, the Company is collaborating with Long Beach contract manufacturing clients to complete service requests by the end of the week of March 20, 2023 to confirm added production dates prior to the decommissioning of the Long Beach facility. A detailed press release outlining the Company's strategy and movement to the Canoga Park facility, including anticipated overhead savings of the Company, was issued on January 23, 2023.
Recent Long Beach Production
Working through the end of 2022 and into January 2023 with co-pack client Green Monké, the Company successfully completed production of newly formulated infused iced tea and lemonade varieties developed by Green Monké under contract for the well-known "Cookies" brand.
Production in Long Beach includes both repeat and new client SKU's as well as inventory-building orders from high-volume recurring clients booked across the Company's three manufacturing lines. The Company has also recently run Tinley's own brand batches, as well as the first of several production runs scheduled in Q2 2023 for our strategic partner BLH's Illa-Canna LLC's new infused drinks. Additionally, certain established and innovating brands, introduced to the Company by BLH, have booked production for their products this quarter in Long Beach on an interim basis prior to the planned move to the Canoga Park facility.
Beckett's USA - Reorder in Progress
Following receipt of new purchase orders from Total Wine & More to replenish inventory, production of Beckett's Tonics RTD and Beckett's '27 multi-serve spirits and liqueur is now underway at the Company's chosen contract manufacturers. Delivery to Total Wine & More is expected at or around the end of the current quarter.
Substantive Cost Cutting Initiatives
To ensure a successful transition from Long Beach to Canoga Park, and to ensure that adequate financial resources are available to the Company in a market where access to capital is severely limited, Tinley's has immediately implemented substantive cost cutting measures to aggressively preserve capital and accelerate expense reduction. These steps recognize recent challenges in capital markets, growing costs in the California cannabis sector and the need for superior manufacturing and distribution scale, benefits of which are expected to materialize following the move.
Canadian Business - Pause on Expansion
In Canada, market complexities including high entry costs and ongoing challenges to profitability based on market structure continue to present challenges. As a Canadian company with a wide base of Canadian retail shareholders, Tinley's board and management acknowledge the natural interest in participating profitably in Canadian markets. We also recognize our need to prioritize our responsibility to the Company to manage cash flow and profitably, and will propose to invest overhead dollars saved as a result of the move, and revenues from Tinley's California and Beckett's USA, into initiatives with higher probability potential of return. Based on a current analysis of reintroduction of reformulated infused products to the Ontario Cannabis Store and the complexities of relaunching Beckett's into Canada at this time, to reflect the need to preserve capital and reduce expenses to focus future investment on high return initiatives, the Company has decided to pause its plan to re-enter Canada indefinitely.
Staff and Management Changes
In addition to reducing staff at the Long Beach facility in anticipation of the move to BLH's Canoga Park facility, the Company also regrets to announce that effective immediately, Rick Gillis has agreed to step down from his role as President, Tinley's Brands USA, a decision primarily driven in support of the Company's initiatives for preserving capital and cost cutting, and his concurrent appointment to the Company's advisory board. "We thank Mr. Gillis for his contributions as a Tinley officer to date," said Ted Zittell, Tinley's director and CEO. "We welcome Rick's ongoing commitment to support the Company and our Tinley's and Beckett's brands in his new role on the Company's Advisory Board," he added. In order to contribute to the preservation of cash, the Company's CEO, CFO and certain remaining employees and consultants have temporarily agreed to defer their respective salaries for a limited period of time.
Advance from BLH
On or about March 16, 2023, the Company received an advance of $200,000 from the remaining funds available to the Company under the BLH lending facility, with the final $300,000 from BLH currently expected to be expended by the Company during the move to BLH's Canoga Park facility. The $200,000 will be applied by the Company for general corporate purposes to provide the Company, together with the Company's ordinary course collection of client receivables, with sufficient capital to undertake its ordinary course operations until the Company is able to move to BLH's Canoga Park facility and realize on anticipated synergies of that move.
Board Changes
The Company regrets to announce that effective immediately, Kirsten Chapman has resigned from the Company's Board of Directors for personal reasons and to pursue other commitments. We thank Kirsten for her service and wish her continued success in the future.
About The Tinley's Beverage Company and Beckett's Tonics
The Tinley's Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) develops and has licensed the production through its Long Beach, CA state-licensed manufacturing facility of terpene and cannabis-infused non-alcoholic Tinley's™ '27 and Tinley's™ Tonics products which are distributed to licensed dispensaries and home delivery channels in California. Expansion of these products, adapted for manufacturing and sale in Canada, is currently underway. The Beckett's Classics® and Beckett's '27® lines of non-alcoholic, terpene-infused non-cannabis versions of these formulations are available in select mainstream food, beverage, and specialty retailers, as well as online, in the United States as well as having appeared in select grocery and specialty stores in Canada. The Long Beach Facility contains versatile and technologically advanced cannabis-licensed beverage bottling equipment, and provides manufacturing and first-mile distribution services under one roof for third-party brands in addition to the Company-owned brands. Please visit www.drinktinley.com, and www.drinkbecketts.com Twitter and Instagram (@drinktinleys and @drinkbecketts) for recipes, product information and home delivery options.
Forward-Looking Statements
This news release contains forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates, statements regarding plans, goals, objectives and intentions, statements regarding the Company's expectations with respect to its future business and operations, the timing of the completion of the transfer of the Company's operations from the Long Beach facility to the BLH facility, management's expectations regarding growth and phrases containing words such as "ongoing", "estimates", "expects", "anticipates", or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions "will", "may", "could", or "should" occur or be achieved, or comparable terminology referring to future events or results. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, the timing of BLH's receipt of certain licences necessary to operate at the Canoga Park facility, the timing of the Canoga Park facility becoming fully operational, potential delays or unanticipated problems related to the relocation of Tinley's bottling assets to the Canoga Park facility, risks associated with Tinley's existing bottling customers continuing production at the Canoga Park facility and Tinley's existing can customers agreeing to move their production to the Canoga Park facility, Tinley's being sufficiently capitalized to meet its financial obligations related to the move to Canoga Park and otherwise continue to operate its business in the ordinary course, potential delays in obtaining, or failures to obtain, necessary governmental approvals required to operate the Canoga Park facility, political risks, uncertainties relating to the availability, and costs, of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in input costs, the ability to resume expansion to the Canadian market at a later date and the ability to collect receivables. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law. Products, formulations, and timelines outlined herein are subject to change at any time.
For further information, please contact:
The Tinley Beverage Company Inc.
Teddy Zittell
(310) 507-9146
relations@drinktinley.comCSE:TNY; OTC:TNYBF
Twitter: @drinktinleys and @drinkbecketts
Instagram: @drinktinleys and @drinkbecketts
www.drinktinley.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/159229
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Provides Corporate Updates
The Tinley Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) ("Tinley's" or the "Company") is pleased to provide updates on Company initiatives aimed to achieve revenue growth through the expansion of the Tinley's and Beckett's brands.
Tinley's product development team has commenced reformulation of select Tinley's products to include higher THC potency and new package formats. "In California, we see a preference in the dispensary channel for high THC potency beverages. By increasing the potency of our beverages in high-demand package formats, we plan to unlock revenue from this segment of the market," said Teddy Zittell, Tinley's CEO. Tinley's will also be officially re-launching home delivery of its beverages in California to address the largely untapped segment of California consumers who don't shop in dispensaries. The direct-to-consumer delivery of Tinley's cannabis beverages will be a collaboration between the Company and its cannabis brand distribution partner, Sulo Distro, and Grass Door, a leader in direct-to-consumer delivery of cannabis products.
"We believe home delivery customers, many of whom are new to the category, will respond favourably to our current lineup of Tinley's micro-dosed beverages, all of which are all low-calorie, low-carbohydrate and gluten-free," Mr. Zittell explained. "Through our management services agreement with Blaze Life Holding LLC ("BLH") and its subsidiary ILLA Canna LLC, we have locked in lower production costs for our own Tinley's brand and structured a continued revenue opportunity from current contract packing clients. We will now focus on driving increased revenue growth by building on our own brand," Mr. Zittell added.
Beckett's '27® & Beckett's Tonics® (USA)
The Beckett's relaunch at Total Wine & More, strategically timed with Dry January, has seen rapid and unprecedented sales across their more than 200 stores spanning 27 states. In response to Beckett's products being so well received by customers, Total Wine & More has reordered Beckett's products, and the Company has commenced production to satisfy this order. Additionally, the Company is actively pursuing expansion to other retail networks, distribution groups and channels, including on-premise. Store tests, which include product demonstrations and sampling, have been conducted at select H-E-B supermarket locations in Texas.
Becketts '27 & Becketts Classics (Canada)
The Company plans to relaunch Becketts brands in Canada starting in Ontario in Q2 2023. Based on consumer and retailer feedback for Becketts Classics (Beckett's Tonics® in the USA) ready-to-drink ("RTD") sparkling beverages, the products will now be packed in sleek 355ml aluminum cans. The Company has identified an Ontario based co-packer to produce these cans with the new recipes developed as part of the Company's overall product reformulation in 2022. This work was done by a leading international flavour company with experience in both non-alcoholic and alcoholic beverages. The RTD's are now intended to more accurately reflect the flavour profile of their beverage alcohol references.
For the Becketts '27® product line, the reformulation reduced the stevia aftertaste and more closely matches the target spirit or liqueur profile. The Company is in advanced stage negotiations with two potential Ontario-based co-packers who can produce in 375ml multi-serve cork-finish bottles. The Company is concurrently evaluating alternative routes to key markets across Canada with a range of distributor and broker options focused both on the mainstream and specialty grocery business and the beverage alcohol channel.
Tinley's Beverages (Canada)
In Canada, Tinley's product development team is continuing to evaluate new beverage options that are better suited for Canadian consumers and Canadian regulations. To this end, the Company is in the process of working on the re-introduction of new ready to serve beverages with a 10mg THC potency and infused with other novel cannabinoids, such as CBG. "We see the new Tinley's Classics ready-to-drink cannabis 'mocktails' as a product that will be well received by Canadian consumers," commented Mr. Zittell. "However, the long process in Canada of getting cannabis drinks from the development stage into the hands of consumers remains challenging for all cannabis beverage brands in Canada, including Tinley's," added Mr. Zittell.
Grant of Stock Options
Tinley's also announces the grant of stock options to purchase up to 1,800,000 common shares in the capital of the Company to certain directors and consultants of the Company in accordance with the terms of the Company's stock option plan. The stock options will be exercisable at a price of $0.10 per common share for a period of five years from the date of grant.
Forward-Looking Statements
This news release contains forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates, statements regarding plans, goals, objectives and intentions, statements regarding the Company's expectations with respect to its future business and operations, management's expectations regarding growth and phrases containing words such as "ongoing", "estimates", "expects", "anticipates", or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions "will", "may", "could", or "should" occur or be achieved, or comparable terminology referring to future events or results. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to variations in the Company's business plan and model in the future, the timing of the relaunch of the Company's home delivery operations in California and relaunch of the Becketts brand in Canada and impacts of the Company's management services agreement with BLH. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law. Products, formulations, and timelines outlined herein are subject to change at any time.
For further information, please contact:
The Tinley Beverage Company Inc.
Teddy Zittell - (310) 507-9146
CSE:TNY; OTC:TNYBF relations@drinktinley.com
Twitter: @drinktinleys and @drinkbecketts
Instagram: @drinktinleys and @drinkbecketts
www.drinktinley.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/153023
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Expected to Save Approximately USD $1 Million in Annual Operating Expenses
The Tinley Beverage Company Inc. (CSE: TNY) (OTCQB: TNYBF) ("Tinley's" or the "Company") is pleased to announce that it has entered into a management services agreement (the "MSA") with Blaze Life Holdings, LLC ("BLH") and its wholly-owned subsidiary, ILLA Canna LLC, effective January 23, 2023.
Under the terms of the MSA, Tinley's will relocate its bottling assets and related equipment to BLH's new 45,000 square foot cannabis manufacturing and distribution facility located in Canoga Park, California (the "Canoga Park Facility") and BLH and its licensed subsidiaries will provide certain management and operational services to Tinley's. Based upon management's current financial modelling, the provision of such services by BLH and relocation of Tinley's bottling assets to the Canoga Park Facility is expected to result in operating cost savings of approximately USD $1 million per year. Tinley's CEO, Teddy Zittell, said: "Since we began our collaborative partnership with BLH in June 2022, we've successfully delivered cost reductions and increased our operating capacity. When production begins at the Canoga Park Facility, we expect efficiencies to accelerate, with additional benefits anticipated from the on-site capacity for inventory storage and integrated first-mile and last-mile distribution services provided by SuLo Distro, a subsidiary of BLH".
As part of the relocation of the Company's bottling assets, the Company will decommission and vacate its current manufacturing facility in Long Beach, California. Tinley's plans to move its bottling assets to the Canoga Park Facility during the latter half of Q2 2023 and expects such assets to be fully operational at the Canoga Park Facility by mid to late Q3 2023. During the transition from Tinley's current Long Beach facility to the Canoga Park Facility, which is expected to take approximately 30-45 days to complete, Tinley's will not be able to provide co-packing bottling services to its customers. Tinley's intends to increase bottling production during Q1 and Q2 2023 prior to its relocation of its bottling assets to the Canoga Park Facility to fulfill planned production and support co-packing demand in order to compensate for bottling line outages over the course of the move.
"As a result of the anticipated increase in production activity, we expect revenue to be higher than previously anticipated in Q1 and Q2 of 2023", said Mr. Zittell. "This increase is over and above the quarter-on-quarter revenue growth we previously expected in 2023. We have seen material revenue gains in the first three quarters of 2022, and our 2022 year-end financial results are expected to show increased revenue in Q4 2022. We have no reason to believe that this trend will not continue through 2023", Mr. Zittell added.
Until the Canoga Park Facility is fully operational, which is expected to happen in late Q2 or the beginning of Q3 2023, Tinley's will continue to produce cans at the Company's Long Beach facility for current co-pack customers, as well as for new customers introduced to Tinley's by BLH who require canned beverage manufacturing prior to the Canoga Park Facility becoming fully operational. Tinley's Long Beach can line will remain in production during the move of the Company's bottling assets to the Canoga Park Facility, and will continue to generate revenue until the Company fully exits the Long Beach facility, planned to occur at the end of Q2. Following the move to the Canoga Park Facility, BLH will produce beverages in cans for Tinley's existing can customers.
In consideration for the provision of services by BLH under the terms of the MSA, including manufacturing for Tinley's at the Canoga Park Facility, Tinley's has agreed to pay BLH a flat fee of USD $55,000 per month as well as a USD $70,000 annual fee specifically for the provision of certain prescribed accounting and administrative services by BLH set out in the MSA. Under the terms of the MSA, BLH has agreed to pay Tinley's certain referral fees for a period of two years based on revenue received by BLH in connection with the provision of co-packing canning services to Tinley's existing clients transferring production to BLH, and Tinley's will continue to receive 100% of the revenue generated from the use of Tinley's bottling assets at the Canoga Park Facility.
A copy of the MSA is available on the Company's profile at www.sedar.com.
About BLH
Blaze Life Holdings, LLC was founded in 2017 by two cannabis visionaries: Los Angeles real estate investor Scott Kim and Paul Burgis, former COO and CFO of Los Angeles-based Golden Road Brewing, which was acquired by Anheuser-Busch InBev in 2015. They saw the opportunity for a sophisticated, vertically integrated cannabis business that operationally parallels the craft brewing and brew pub scene, adapted to drive efficiency and growth in the rapidly expanding cannabis beverage industry. The BLH group comprises ILLA Canna LLC's existing licensed cultivation and manufacturing facilities, retail locations, SuLo Distro (full-service cannabis distributor built for beverage category growth), and Delta Bev (cannabis manufacturing), focused on providing clear and simple co-packing solutions for cannabis brands with an emphasis on beverages. BLH is helmed by professionals with a combined 80 years of experience in beer and beverage production, distribution, and brand-building, aligned to bring end-to-end solutions to brands and retailers to increase share and drive category growth.
About The Tinley's Beverage Company and Beckett's Tonics
The Tinley's Beverage Company Inc. (CSE: TNY) (OTCQB:TNYBF) develops and has licensed the production through its Long Beach, CA state-licensed manufacturing facility of terpene and cannabis-infused non-alcoholic Tinley's™ '27 and Tinley's™ Tonics products which are distributed to licensed dispensaries and home delivery channels in California. Expansion of these products, adapted for manufacturing and sale in Canada, is currently underway. The Beckett's Classics® and Beckett's '27® lines of non-alcoholic, terpene-infused non-cannabis versions of these formulations are available in select mainstream food, beverage, and specialty retailers, as well as online, in the United States as well as in select grocery and specialty stores in Canada. The Long Beach Facility contains versatile and technologically advanced cannabis-licensed beverage bottling equipment, and provides manufacturing and first-mile distribution services under one roof for third-party brands in addition to the Company-owned brands. Please visit www.drinktinley.com, and www.drinkbecketts.com Twitter and Instagram (@drinktinleys and @drinkbecketts) for recipes, product information and home delivery options.
Forward-Looking Statements
This news release contains forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are statements and information that are not historical facts but instead include financial projections and estimates, statements regarding plans, goals, objectives and intentions, statements regarding the Company's expectations with respect to its future business and operations, the impact and expected benefits of the MSA, including with respect to the ability of the parties to achieve any material business synergies, the timing of the completion of the transfer of the Company's operations from the Long Beach Facility to the BLH Facility, management's expectations regarding growth and phrases containing words such as "ongoing", "estimates", "expects", "anticipates", or the negative thereof or any other variations thereon or comparable terminology referring to future events or results, or that events or conditions "will", "may", "could", or "should" occur or be achieved, or comparable terminology referring to future events or results. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, the timing of BLH's receipt of certain licenses necessary to operate at the Canoga Park Facility, the timing of the Canoga Park Facility becoming fully operational, potential delays or unanticipated problems related to the relocation of Tinley's bottling assets to the Canoga Park Facility, risks associated with Tinley's existing bottling customers continuing production at the Canoga Park Facility and Tinley's existing can customers agreeing to move their production to the Canoga Park Facility, Tinley's being sufficiently capitalized to meet its financial obligations related to the move to Canoga Park, potential delays in obtaining, or failures to obtain, necessary governmental approvals required to operate the Canoga Park Facilities, political risks, uncertainties relating to the availability, and costs, of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in input costs, and the ability of BLH and the Company to achieve certain expected synergies as a result of the entering into of the MSA. Forward-looking statements are subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law. Products, formulations, and timelines outlined herein are subject to change at any time.
For further information, please contact:
The Tinley Beverage Company Inc.
Teddy Zittell
(310) 507-9146
relations@drinktinley.comCSE:TNY; OTC:TNYBF
Twitter: @drinktinleys and @drinkbecketts
Instagram: @drinktinleys and @drinkbecketts
www.drinktinley.com
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/152153
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Grand opening celebrations at both new locations Friday, November 22 nd
Trulieve Cannabis Corp. (CSE: TRUL ) (OTCQX: TCNNF ) ("Trulieve" or "the Company"), a leading and top-performing cannabis company in the U.S., today announced the opening of new medical cannabis dispensaries in Dania Beach and Spring Hill, Florida .
Grand opening celebrations will be held at both locations Friday, November 22 , beginning at 9 a.m. , featuring music, specials, discounts, and opportunities to register for upcoming patient education sessions.
"We are proud to expand access to medical cannabis in Broward and Hernando Counties," said Trulieve's Chief Executive Officer Kim Rivers . "Providing affordable, high-quality products is a core part of our mission, we look forward to serving patients and caregivers at these new locations."
Trulieve Dania Beach Federal Highway, located at 1121 South Federal Highway, and Trulieve Spring Hill, located at 404 Suzanne Drive, will be open 9 a.m. – 8:30 p.m. Monday through Saturday and 11 a.m. – 8 p.m. on Sundays , offering walk-in and express pickup service.
Both locations will carry a wide variety of popular products including Trulieve's portfolio of in-house brands such as Alchemy, Co2lors, Cultivar Collection, Modern Flower, Momenta, Muse, Roll One, Sweet Talk, and Trekkers. Customers will also have access to beloved partner brands such as Alien Labs, Bellamy Brothers , Binske, Black Tuna, Blue River , Connected Cannabis, DeLisioso, Khalifa Kush , Love's Oven, Miami Mango, O.pen, Seed Junky, and Sunshine Cannabis, all available exclusively at Trulieve in Florida .
Across Florida , Trulieve offers home delivery, convenient online ordering, and in-store pickup. Veterans receive 20% off every order when they show their military ID, and all first-time guests are eligible for a 60% new customer discount at any Florida Trulieve location. For more information, or to learn how to become a registered patient, please visit Trulieve.com and connect on Instagram or Facebook .
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
View original content to download multimedia: https://www.prnewswire.com/news-releases/trulieve-to-open-florida-medical-cannabis-dispensaries-in-dania-beach-and-spring-hill-302309239.html
SOURCE Trulieve Cannabis Corp.
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/November2024/19/c9835.html
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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
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:
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:
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
News Provided by GlobeNewswire via QuoteMedia
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.
Q3 2024 Financial and Operational Highlights*
*See "Non-GAAP Financial Measures" below for additional information and a reconciliation to GAAP for all Non-GAAP metrics.
Recent Developments
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 | September | September | % Better / | June 30, | % Better / | September | September | % Better / | |||||
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 | $ | (60) | $ | (23) | (163 %) | $ | (11) | NMF | $ | (94) | $ | (399) | 76 % |
Adjusted net (loss) income | $ | (12) | $ | (15) | 19 % | $ | 0 | NMF | $ | (22) | $ | (47) | 53 % |
Basic and diluted shares | 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, | December 31, | ||
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 | $ — | $ — | |
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 | Nine Months Ended | ||||||
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 | (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 | (1.4) | (0.5) | (2.8) | (3.8) | |||
Less: net loss attributable to redeemable non-controlling interest | (0.3) | — | (0.9) | — | |||
Less: net loss attributable to non-controlling interest from | — | — | — | (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 | |||||||
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 | 1.6 | 2.9 | 4.6 | 97.9 | |||
Adjustment of redeemable non-controlling interest to maximum | (2.1) | — | (9.0) | — | |||
Net loss from continuing operations available to common | $ (60.6) | $ (22.5) | $ (99.7) | $ (395.5) | |||
Trulieve Cannabis Corp. Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) | |||||||
Three Months Ended | Nine Months Ended | ||||||
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 | |||||||
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 | — | 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 | September | June 30, | September | September | ||||||
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 | $ | (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 | $ | 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 | September | June 30, | September | September | |||||
Net loss attributable to common shareholders | $ | (60.2) | $ | (25.4) | $ | (12.0) | $ | (95.3) | $ | (493.4) |
Net loss from discontinued operations, net of tax, | $ | 1.6 | $ | 2.9 | $ | 1.6 | $ | 4.6 | $ | 97.9 |
Adjustment of redeemable non-controlling interest to | $ | (2.1) | $ | — | $ | 1.9 | $ | (9.0) | $ | — |
Net loss from continuing operations available to common | $ | (60.6) | $ | (22.5) | $ | (8.5) | $ | (99.7) | $ | (395.5) |
Add (deduct) impact of: | ||||||||||
Adjustment of redeemable non-controlling interest to | $ | 2.1 | $ | — | $ | (1.9) | $ | 9.0 | $ | — |
Impairment of goodwill | $ | — | $ | — | $ | — | $ | — | $ | 307.6 |
Impairment and disposal of long-lived assets, net of | $ | (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 | September | September | June 30, | September | September | |||||
Net loss attributable to common shareholders | $ | (0.32) | $ | (0.13) | $ | (0.06) | $ | (0.50) | $ | (2.61) |
Net loss from discontinued operations, net of tax, | $ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.02 | $ | 0.52 |
Adjustment of redeemable non-controlling interest to | $ | (0.01) | $ | — | $ | 0.01 | $ | (0.05) | $ | — |
Net loss from continuing operations available to common | $ | (0.32) | $ | (0.12) | $ | (0.04) | $ | (0.52) | $ | (2.09) |
Add (deduct) impact of: | ||||||||||
Adjustment of redeemable non-controlling interest to | $ | 0.01 | $ | — | $ | (0.01) | $ | 0.05 | $ | — |
Impairment of goodwill | $ | — | $ | — | $ | — | $ | — | $ | 1.63 |
Impairment and disposal of long-lived assets, net of | $ | (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 | September | June 30, | September | September | |||||
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
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SOURCE Trulieve Cannabis Corp.
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Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) ("Cronos" or the "Company") will hold its 2024 third quarter earnings conference call on Tuesday, November 12, 2024 at 8:30 a.m. ET. Cronos' senior management team will discuss the Company's financial results and will be available for questions from the investment community after prepared remarks.
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.
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 may contain information that may constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable Canadian and U.S. securities laws and court decisions (collectively, "Forward-looking Statements"). All information contained herein 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 "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify Forward-looking Statements. Some of the Forward-looking Statements contained in this press release include statements about Cronos' intention to build an international iconic brand portfolio and develop disruptive intellectual property. Forward-looking Statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive risks, financial results, results, performance or achievements expressed or implied by those Forward-looking Statements and the Forward-looking Statements are not guarantees of future performance. A discussion of some of the material risks applicable to the Company can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024, each of which have been filed on SEDAR+ and EDGAR and can be accessed at www.sedarplus.ca and www.sec.gov/edgar, respectively. Any Forward-looking Statement included in this press release is made as of the date of this press release and, except as required by law, Cronos disclaims any obligation to update or revise any Forward-looking Statement. Readers are cautioned not to put undue reliance on any Forward-looking Statement.
Cronos Contact
Anna Shlimak
Investor Relations
Tel: (416) 504-0004
investor.relations@thecronosgroup.com
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