CHICAGO, Nov. 11, 2024 – PRESS RELEASE – Cresco Labs Inc., the industry leader in branded cannabis products with a portfolio of America’s most popular brands and the operator of Sunnyside dispensaries, released its financial and operating results for the third quarter ended Sept. 30, 2024. All financial information presented in this release is reported in accordance with U.S. generally accepted accounting principles (GAAP) and in U.S. dollars, unless otherwise indicated, and is available on the company’s investor website, here.
Third Quarter 2024 Highlights
- Third quarter revenue of $180 million.
- Gross profit of $93 million. Adjusted gross profit1 of $95 million; and an adjusted gross margin1 of 53% of revenue, a 250 basis points (bps) improvement year-over-year.
- Selling, general and administrative (SG&A) of $57 million. Reduced adjusted SG&A1 by 6% year-over-year to $53 million, or 30% of revenue.
- Net loss of $8 million.
- Third quarter adjusted EBITDA1 of $51 million, up 5% year-over-year; and adjusted EBITDA margin1 of 29%, a 280 bps improvement year-over-year.
- Record third-quarter operating cash flow of $49 million and free cash flow1 of $43 million.
- Retained the No. 1 share position in Illinois, Pennsylvania and Massachusetts and improved to a top three position in Ohio2.
1 See “Non-GAAP Financial Measures” at the end of this press release for more information regarding the Company’s use of non-GAAP financial measures.
2 According to BDSA.
Management Commentary
“Our focus remains the same: win in strategic markets with a brand portfolio consumers love, provide best-in-class retail operations and maintain a relentless pursuit of financial strength,” Cresco Labs CEO and co-founder Charlie Bachtell said. “Our Q3 results underline the success of this strategy with $180 million in revenue at 29% adjusted EBITDA margin1, and most importantly $49 million of operating cashflow, our highest ever. So far this year, we’ve generated $103 million in operating cashflow, enabling us to reinvest in our core, and to explore new markets and growth verticals, all while improving our balance sheet and paying down debt.
“While we’re disappointed that the Florida initiative didn’t reach the supermajority threshold it needed to pass, we still saw substantial bipartisan majority support at 56% for cannabis legalization. For the first time ever, we had two presidential candidates that both supported broad federal cannabis reform. We look forward to working with the incoming administration to follow through on its commitment to developing a commonsense approach to cannabis laws including the passage of SAFE banking, rescheduling, and the fact that no one should be arrested for personal cannabis use.”
Balance Sheet, Liquidity and Other Financial Information
- As of Sept. 30, 2024, current assets were $312 million, including cash, cash equivalents and restricted cash of $157 million. The company had senior secured term loan debt, net of discount and issuance costs, of $390 million and a mortgage loan, net of discount and issuance costs, of $18 million.
- On Oct. 25, 2024, the company repurchased $40 million principal amount of its senior loan and paid $0.3 million of accrued interest. There were no prepayment penalties or exit fees due on this repurchase.
- Total shares on a fully converted basis to subordinate voting shares were 474,731,040 as of Sept. 30, 2024.
Non-GAAP Financial Measures
This release reports its financial results in accordance with U.S. GAAP and includes certain non-GAAP financial measures that do not have standardized definitions under U.S. GAAP. The non-GAAP measures include: Earnings before interest, taxes, depreciation and amortization (“EBITDA”); Adjusted EBITDA; Adjusted EBITDA margin; Adjusted gross profit; Adjusted gross profit margin; Adjusted selling, general and administrative expenses (“Adjusted SG&A”), Adjusted SG&A margin; and Free Cash Flow are non-GAAP financial measures and do not have standardized definitions under U.S. GAAP. The Company defines these non-GAAP financial measures as follows: EBITDA as net loss (income) before interest, taxes, depreciation and amortization; Adjusted EBITDA as EBITDA less other (expense) income, net, fair value mark-up for acquired inventory, adjustments for acquisition and non-core costs, impairment and share-based compensation; Adjusted EBITDA Margin as Adjusted EBITDA divided by revenues, net; Adjusted gross profit as gross profit less fair value mark-up for acquired inventory and adjustments for acquisition and non-core costs; Adjusted gross profit margin as Adjusted gross profit divided by revenues, net; Adjusted SG&A as SG&A less adjustments for acquisition and non-core costs; Adjusted SG&A margin as Adjusted SG&A divided by revenues, net; and Free Cash Flow as Net cash provided by operating activities less purchases of property and equipment and proceeds from tenant improvement allowances. The Company has provided the non-GAAP financial measures, which are not calculated or presented in accordance with U.S. GAAP, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with U.S. GAAP and may not be comparable to similar measures presented by other issuers. These supplemental non-GAAP financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believe that the supplemental non-GAAP financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-GAAP financial measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the U.S. GAAP financial measures presented herein. Accordingly, the Company has included below reconciliations of the supplemental non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.
