Columbia Care Reports Third Quarter 2022 Results
Quarterly Revenue of
Gross Profit of
Adjusted Gross Margin1 of 43%, an increase of 33bps QoQ
Adjusted EBITDA1 of
“Our third quarter results are a testament to the embedded growth in our strategic footprint and the operational excellence we have developed over time. We achieved solid sequential topline growth and standout profitability improvements in another challenging quarter, with revenue increasing 2.4% sequentially to
Vita continued, “We have made strategic operational decisions to prioritize quality production and efficiency, and redoubled efforts to manage costs as we face persistent macroeconomic headwinds that directly and materially impact the consumer wallet. Although we continue to anticipate a more challenging operating environment over the next 12-18 months, we are encouraged by the ongoing resilience we’ve seen throughout our markets and by the enthusiasm of the cannabis community. Furthermore, the difficult decisions we made 12-18 months ago are beginning to pay dividends as the efficiencies in cultivation and manufacturing positively impact our wholesale ramp while continued rationalization of SG&A amplifies the EBITDA improvements. The diversity of our footprint, including meaningful operations in the markets that are transitioning to adult use, is key to our growth. As we near the end of 2022, we are excited about the journey ahead where, together with Cresco Labs, we will create the leading company in cannabis.”
|
Third Quarter 2022 U.S. GAAP Financial Highlights (in $ thousands, excl. margin items): |
||||||||
| Q3 2022 | Q2 2022 | Q3 2021[3] | % QoQ | % YoY | ||||
| Revenue |
$ |
132,733 |
$ |
129,571 |
$ |
132,322 |
2.4% |
0.3% |
| Gross Profit |
$ |
52,135 |
$ |
50,848 |
$ |
61,367 |
2.5% |
-15.0% |
| Adj. Gross Profit[1,2] |
$ |
56,895 |
$ |
55,118 |
$ |
62,797 |
3.2% |
-9.4% |
| Adj. Gross Margin[1,2] |
|
42.86% |
|
42.54% |
|
47.46% |
33 bps |
-459 bps |
| EBITDA[1] |
$ |
4,419 |
$ |
(3,996) |
$ |
(33,236) |
N/A |
N/A |
| Adj. EBITDA[1] |
$ |
20,993 |
$ |
12,029 |
$ |
24,777 |
74.5% |
-15.3% |
|
[1] See “Non-GAAP Financial Measures” in this press release for more information regarding the Company’s use of non-GAAP financial measures. |
|
[2] Excludes |
|
[3] Figures for Q3 2021 are Combined, including dispensary and manufacturing operations in |
Top 5 Markets by Revenue in Q3[4]:
Top 5 Markets by Adjusted EBITDA in Q3[4]:
|
[4] Markets are listed alphabetically |
Operational Highlights for Third Quarter 2022
Enhancing and implementing scale with continued retail and wholesale growth:
- Retail revenue increased modestly, 2.3% over Q2 2022, while wholesale revenue increased 3.3% sequentially – meaningful contributor to EBITDA
New Jersey retail locations expanded to full adult use hours inJune 2022 , market revenue increased more than 75% sequentially, with growth in wholesale of nearly five times the prior quarter, driven by the ramping scale in the newVineland facility- No additional retail locations opened in Q3. Subsequent to quarter end, opened Carytown, Virginia Cannabist location, the Company’s fifth retail location in
Virginia , bringing total dispensaries to 85 - Additional dispensaries in development include 7 in
Virginia , 1 inWest Virginia , and 1 inNew Jersey - Sixteen of seventeen markets produced positive EBITDA in the third quarter
Proven cultivation expertise and execution:
- In Q3, completed first harvest out of the second cultivation facility in
Vineland, New Jersey , which added approximately 270,000 square feet of cultivation and production capacity to theNew Jersey footprint, as well as post-harvest automation equipment to support retail and wholesale growth - Cultivation efficiency and standardization across markets continued to improve, with focus on optimizing production planning, genetics selection, environmental controls, and plant management leading to improved potency and productivity; flower production costs declined approximately 5% sequentially across the national portfolio
- In
Ohio , theMt. Orab cultivation facility expansion contributed to sequential improvement in Gross Margin - In
Virginia , the expansion ofPortsmouth facility led to a 4X increase in harvested plants; there is additional capacity to expand the current garden as demand increases in market
Sustained momentum on branding initiatives at retail and product levels:
- Owned brands made up over 60% of all flower sales at
Columbia Care locations in Q3 - In Q3, launched a new loyalty program and mobile application,
Stash Cash , in 14 markets - In August, launched the first pre-rolls in the
New York market, marking Seed & Strain’s 14th market - Triple Seven, an award-winning premium brand, launched in
Pennsylvania in August, bringing the footprint to ten markets - In October, launched Hedy, a new cannabis-infused edibles brand in six markets and a variety of form factors and flavors; Hedy is now available in
Arizona ,Colorado ,Delaware ,Massachusetts ,Missouri andVirginia - With the opening of Carytown, Virginia Cannabist in October, there are now 32 Cannabist locations in the
U.S.
Update on Cresco Transaction & Milestones Achieved
- Cleared federal
Hart Scott Rodino antitrust review in May - Received overwhelming approval from our shareholders, with over 98% of the votes cast in July in favor of the transaction
- Final order granted by the
Supreme Court of British Columbia in July - Announced execution of agreement relating to first asset divestiture on
November 4 , withIllinois ,Massachusetts , andNew York assets being sold to Sean “Diddy” Combs, viaCombs Enterprises - The remainder of the asset divestiture process is continuing to move forward with additional announcement expected soon
- Closing of Cresco transaction anticipated to be around the end of the first quarter of 2023
2022 Outlook
At this time, Columbia Care’s 2022 outlook does not assume any additional changes in the regulatory environment in markets where
Conference Call and Webcast Details
The Company will host a conference call on
To access the live conference call via telephone, participants must pre-register at https://register.vevent.com/register/BIc703b752599546a7a28197c8bf33e7ad. After registering, instructions will be shared on how to join the call for those who wish to dial in. A live audio webcast of the call will also be available in the Investor Relations section of the Company's website at https://investors.columbia.care/ or at https://edge.media-server.com/mmc/p/j9ac4cjf.
A replay of the audio webcast will be available in the Investor Relations section of the Company’s website approximately 2 hours after completion of the call and will be archived for 30 days.
About
Non-GAAP Financial Measures
In this press release,
With respect to non-GAAP financial measures, the Company defines EBITDA as net income (loss) before (i) depreciation and amortization; (ii) income taxes; and (iii) interest expense and debt amortization. Adjusted EBITDA is defined as EBITDA before (i) share-based compensation expense; (ii) adjustments for acquisition and other non-core costs; (iii) fair value changes on derivative liabilities; (iv) fair value mark-up for acquired inventory; and (v) other one-time of non-recurring items. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue. Adjusted Gross Profit is defined as gross profit before the fair mark-up for acquired inventory. Adjusted Gross Margin is defined as gross margin before the fair mark-up for acquired inventory.
The Company views these non-GAAP financial measures as a means to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results and comparison to competitors’ operating results. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to the corresponding GAAP financial measure may provide a more complete understanding of factors and trends affecting the Company’s business. The determination of the amounts that are excluded from these non-GAAP financial measures are a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety.
Reconciliations of non-GAAP financial measures to their nearest comparable GAAP measures are included in this press release and a further discussion of some of these items will be contained in our quarterly report on Form 10-Q.
Caution Concerning Forward-Looking Statements
This press release contains certain statements that constitute forward-looking information or forward looking statements within the meaning of applicable securities laws and reflect the Company’s current expectations regarding future events. Statements concerning Columbia Care’s objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of the Company are forward-looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “may”, “will”, “would”, “could”, “should”, “continue”, “plan”, “goal”, “objective”, and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward looking statements in this press release include, among others, statements related to: the timing for closing of the Cresco transaction and the related divestiture transactions, expectations related to growth and financial numbers including EBITDA, benefits of the Cresco transaction, ongoing business expectations, and timing for signing divestiture agreements.
The Company has made assumptions with regard to its ability to execute on initiatives, which although considered reasonable by the Company, may prove to be incorrect and are subject to known and unknown risks and uncertainties that may cause actual results, performance or achievements of the Company to be materially different from those expressed or implied by any forward-looking information. Forward-looking information involves numerous assumptions, including assumptions on the satisfaction of the conditions precedent to the closing of the Cresco transaction; the receipt of any necessary regulatory approvals in connection with the Cresco transaction; the impact of the Cresco transaction on the Company’s current and future operations, financial condition and prospects; the value of the Cresco shares; the costs of the Cresco transaction and potential payment of a termination fee in connection with the Cresco transaction; the ability to successfully integrate with the operations of Cresco and realize the expected benefits of the Cresco transaction; the ability to sign and close divestiture transactions related to the Cresco transaction; access to public and private capital for buyers of assets being divested in relation to the Cresco transaction; the fact that marijuana remains illegal under federal law; the application of anti-money laundering laws and regulations to the Company; legal, regulatory or political change to the cannabis industry; access to the services of banks; access to public and private capital for the Company or for Cresco; unfavorable publicity or consumer perception of the cannabis industry; expansion into the adult-use markets; the impact of laws, regulations and guidelines; the impact of Section 280E of the Internal Revenue Code; the impact of state laws pertaining to the cannabis industry; the Company’s reliance on key inputs, suppliers and skilled labor; the difficulty of forecasting the Company’s sales; constraints on marketing products; potential cyber-attacks and security breaches; net operating loss and other tax attribute limitations; the impact of changes in tax laws; the volatility of the market price of the Common Shares; reliance on management; litigation; future results and financial projections; the impact of global financial conditions and disease outbreaks; projected revenue and expected gross margins, capital allocation, EBITDA break even targets and other financial results; growth of the Company’s operations via expansion; expectations for the potential benefits of any transactions including the acquisition of Green Leaf Medical and Medicine Man; statements relating to the business and future activities of, and developments related to, the Company after the date of this press release, including such things as future business strategy, competitive strengths, goals, expansion and growth of the Company’s business, operations and plans; expectations that planned transactions (including the Cresco transaction) will be completed as previously announced; expectations regarding cultivation and manufacturing capacity; expectations regarding receipt of regulatory approvals; expectations that licenses applied for will be obtained; potential future legalization of adult-use and/or medical cannabis under
Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations. Holders of securities of the Company are cautioned that forward-looking statements are not based on historical facts but instead are based on reasonable assumptions and estimates of management of the Company at the time they were provided or made and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Securityholders should review the risk factors discussed under “Risk Factors” in Columbia Care’s Form 10 dated
The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose. In particular, but without limiting the foregoing, disclosure in this press release as well as statements regarding the Company’s objectives, plans and goals, including future operating results and economic performance may make reference to or involve forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. No undue reliance should be placed on forward-looking statements contained in this press release. Such forward-looking statements are made as of the date of this press release.
Certain information in this press release, including the section entitled “2022 Outlook” may be considered as “financial outlook” within the meaning of applicable securities legislation including the revenue and Adjusted EBITDA margin guidance. The purpose of this financial outlook is to provide readers with disclosure regarding Columbia Care’s reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.
| TABLE 1 - CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
| (in US $ thousands, except share and per share figures, unaudited) | |||||||||||||
| Three Months Ended | |||||||||||||
| Revenue |
$ |
132,733 |
|
$ |
129,571 |
|
$ |
123,087 |
|
$ |
132,322 |
|
|
| Cost of sales |
|
(80,462 |
) |
|
(78,723 |
) |
|
(66,460 |
) |
|
(69,525 |
) |
|
| Cost of sales related to business combination fair value adjustments to inventory |
|
(136 |
) |
|
- |
|
|
- |
|
|
(1,430 |
) |
|
| Gross profit |
|
52,135 |
|
|
50,848 |
|
|
56,627 |
|
|
61,367 |
|
|
| Selling, general and administrative expenses |
|
(70,845 |
) |
|
(72,956 |
) |
|
(71,292 |
) |
|
(61,745 |
) |
|
| Loss from operations |
|
(18,710 |
) |
|
(22,108 |
) |
|
(14,665 |
) |
|
(378 |
) |
|
| Other income (expense), net |
|
(13,018 |
) |
|
(13,445 |
) |
|
(12,609 |
) |
|
(56,991 |
) |
|
| Income tax benefit (expense) |
|
(6,575 |
) |
|
(18,702 |
) |
|
(632 |
) |
|
12,999 |
|
|
| Net loss |
|
(38,303 |
) |
|
(54,255 |
) |
|
(27,906 |
) |
|
(44,370 |
) |
|
| Net loss attributable to non-controlling interests |
|
(2,872 |
) |
|
(427 |
) |
|
(1,270 |
) |
|
(1,474 |
) |
|
| Net loss attributable to |
|
(35,431 |
) |
|
(53,828 |
) |
|
(26,636 |
) |
|
(42,896 |
) |
|
| Weighted average common shares outstanding - basic and diluted |
|
399,227,935 |
|
|
394,023,144 |
|
|
376,397,260 |
|
|
325,416,684 |
|
|
| Earnings per common share attributable to |
$ |
(0.09 |
) |
$ |
(0.14 |
) |
$ |
(0.07 |
) |
$ |
(0.13 |
) |
|
| TABLE 2 - RECONCILIATION OF US GAAP TO NON-GAAP MEASURES | |||||||||||||
| (in US $ thousands, unaudited) | |||||||||||||
| Three Months Ended | |||||||||||||
| Net loss |
$ |
(38,303 |
) |
$ |
(54,255 |
) |
$ |
(27,906 |
) |
$ |
(44,370 |
) |
|
| Income tax expense |
|
6,575 |
|
|
18,702 |
|
|
632 |
|
|
(12,999 |
) |
|
| Depreciation and amortization |
|
21,808 |
|
|
20,058 |
|
|
21,210 |
|
|
16,076 |
|
|
| Net interest and debt amortization |
|
14,339 |
|
|
11,499 |
|
|
12,670 |
|
|
8,057 |
|
|
| EBITDA (Non-GAAP) |
$ |
4,419 |
|
$ |
(3,996 |
) |
$ |
6,606 |
|
$ |
(33,236 |
) |
|
| Share-based compensation |
$ |
6,597 |
|
$ |
7,678 |
|
$ |
6,374 |
|
$ |
4,695 |
|
|
| Adjustments for acquisition and other non-core costs |
|
10,084 |
|
|
14,727 |
|
|
3,169 |
|
|
56,735 |
|
|
| Fair value changes on derivative liabilities |
|
(243 |
) |
|
(6,380 |
) |
|
683 |
|
|
(4,847 |
) |
|
| Fair value mark-up for acquired inventory |
|
136 |
|
|
- |
|
|
1,430 |
|
||||
| Adjusted EBITDA (Non-GAAP) |
$ |
20,993 |
|
$ |
12,029 |
|
$ |
16,832 |
|
$ |
24,777 |
|
|
| TABLE 3 - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | |||||||||||||
| (in US $ thousands, unaudited) | |||||||||||||
| Three Months Ended | |||||||||||||
| Net cash provided by (used in) operating activities |
$ |
(16,770 |
) |
$ |
(71,961 |
) |
$ |
(27,822 |
) |
$ |
16,148 |
|
|
| Net cash (used in) investment activities |
$ |
(14,276 |
) |
|
(28,127 |
) |
|
(29,555 |
) |
$ |
(51,028 |
) |
|
| Net cash provided by (used in) financing activities |
$ |
(371 |
) |
|
13,454 |
|
|
144,253 |
|
$ |
(6,965 |
) |
|
| TABLE 4 - CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (SELECT ITEMS) | |||||||||||||
| (in US $ thousands, unaudited) | |||||||||||||
| Three Months Ended | |||||||||||||
| Cash |
$ |
50,023 |
|
$ |
81,440 |
|
$ |
168,424 |
|
$ |
116,931 |
|
|
| Total current assets |
|
208,515 |
|
|
256,110 |
|
|
323,883 |
|
|
255,940 |
|
|
| Property and equipment, net |
|
370,820 |
|
|
373,877 |
|
|
355,968 |
|
|
258,730 |
|
|
| Right of use assets |
|
259,655 |
|
|
254,849 |
|
|
250,413 |
|
|
237,624 |
|
|
| Total assets |
|
1,371,578 |
|
|
1,420,465 |
|
|
1,482,443 |
|
|
1,381,120 |
|
|
| Total current liabilities |
|
178,015 |
|
|
138,499 |
|
|
222,835 |
|
|
279,476 |
|
|
| Total liabilities |
|
870,701 |
|
|
892,496 |
|
|
952,743 |
|
|
819,475 |
|
|
| Total equity |
|
500,877 |
|
|
527,969 |
|
|
529,700 |
|
|
561,645 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221114005427/en/
Investor
SVP, Capital Markets
ir@col-care.com
Media
VP, Communications
+1.978.662.2038
media@col-care.com
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