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Disciplined Capital Allocation Continues to Drive Strategy to Distribute Brands at Scale in 2019
CHICAGO and VANCOUVER, British Columbia, April 09, 2019 (GLOBE NEWSWIRE) -- Green Thumb Industries Inc. (“GTI” or the “Company”) (CSE: GTII) (OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner-operator of the high growth national retail chain Rise™, today reported its financial results for the fourth quarter and full year ended December 31, 2018. All currency is in U.S. dollars.
Fourth Quarter and Full Year 2018 Highlights
“2018 was a momentous year for GTI. In just six months following our RTO in June and in the beginning of 2019, we have expanded the infrastructure for our consumer products and retail businesses to now include 13 production facilities and the ability to open 88 retail locations across 12 states including pending acquisitions. At the same time, we have built an incredible team that is over 500 strong to support our strategy to distribute brands at scale. With the growth of our branded product distribution, new store openings and adult-use markets coming on line, we are very pleased to have more than tripled our revenues from one year ago both year-over-year and quarter-over-quarter,” said GTI Founder and Chief Executive Officer Ben Kovler.
“Discipline continues to drive how we allocate capital to create long-term shareholder value,” Kovler continued. “We continue to execute against our strategic priorities for 2019: 1) establish a leading brand portfolio through innovation, standardization, and distribution; 2) accelerate retail growth through new store openings and consumer loyalty, and 3) bolster infrastructure with people, process, and technology to deliver sustainable profitable growth.”
Consumer Packaged Goods Business Develo
Retail Business Development
Business Infrastructure Development
During and subsequent to the fourth quarter, through business development and acquisition-related activities, GTI executed on its ‘Enter, Open, Scale’ strategy to expand market presence and scale operations. The Company made significant progress in the following areas:
Capital Markets and Financing Activities
Fourth Quarter and Full Year 2018 Financial Overview (Unaudited)
Total revenue for the fourth quarter of 2018 was $20.8 million, up 237% from $6.2 million for the fourth quarter of 2017 and up 21% from $17.2 million for the third quarter of 2018. For the year, total revenue was $62.5 million, up 278% from $16.5 million in 2017. Fourth quarter and full year revenue growth were driven by both the consumer products and retail businesses, including the expansion of branded product distribution, new store openings, and increased consumer demand.
On a pro forma basis, revenue for the fourth quarter exceeded $44 million. This included revenue from the M&A transactions that closed in first quarter 2019 and those that are currently pending.
In the fourth quarter, GTI generated operating revenue in five markets: Nevada, Illinois, Pennsylvania, Massachusetts, and Maryland. The Company made capital investments related to the build out of new markets in Florida, Nevada, Ohio and New York in anticipation of revenue generation in the first half of 2019. Subsequent to year end, consumer products revenue began in Nevada and retail revenue in Florida.
Gross profit before biological asset adjustment for the fourth quarter and full year 2018 was $9.7 million or 47%, and $28.5 million or 46%, respectively, as compared to $1.0 million or 17%, and $6.1 million or 37% for the same periods last year. Gross profit after net gains on biological asset transformation for the fourth quarter and full year 2018 was $12.5 million or 60%, and $32.7 million or 52%, respectively, as compared to 26% and 44% for the same periods last year, driven by additional operating scale achieved from revenue growth.
Total operating expenses for the fourth quarter and full year 2018 were $28.0 million and $60.3 million, respectively, as compared to $3.9 million and $11.5 million for the same periods last year. Total operating expenses include general and administrative (“G&A”) expenses, which totaled $26.5 million and $56.4 million for the fourth quarter and for the year. G&A expenses were driven by investments in headcount to support the Company’s growing consumer products and retail businesses, as well as non-cash expenses related to stock-based compensation of $12.6 million for the fourth quarter and $16.2 million for the year.
Total other income was $8.7 million for the fourth quarter and $51.6 million for the year. This non-operating income reflected the net increase in asset value of the Company’s strategic investment portfolio as well as noncontrolling interests.
Net loss attributable to GTI for the fourth quarter of 2018 was $3.1 million, as compared to a net loss of $2.4 million for the fourth quarter of 2017. For the full year 2018, net loss was $7.7 million.
EBITDA1 was a loss of $4.8 million for the fourth quarter of 2018, as compared to EBITDA loss of $2.0 million for the fourth quarter of 2017. Excluding fair value adjustments attributable to noncontrolling interest and non-cash stock compensation expenses, GTI generated Adjusted EBITDA1 of $12.4 million for the fourth quarter of 2018. For the year, EBITDA was $27.7 million, as compared to EBITDA loss of $3.0 million in 2017. Excluding fair value adjustments attributable to noncontrolling interests, non-cash stock compensation expenses, and one-time listing fee related to the Company’s RTO, Adjusted EBITDA was $21.5 million for the year. These results included the gains of net asset value from strategic investments. Please refer to the Supplemental Information (Unaudited) Regarding Non-IFRS Financial Measures at the end of this press release for additional information.
Balance Sheet and Liquidity
As of December 31, 2018, total assets were $416.1 million, including cash and cash equivalents of $146.0 million and long-term liabilities of $17.1 million. The Company had $7.2 million of total debt, $1.5 million of which is due within 12 months.
Total equity shares, on an as converted basis, were 157,360,623 at December 31, 2018.
The financial information reported in this news release is based on unaudited management prepared financial statements for the year ended December 31, 2018. Accordingly, such financial information may be subject to change. The audit process is nearly complete and fully-audited financial statements for the period will be released and filed under the Company’s profiles on SEDAR at www.SEDAR.com by April 30, 2019. All financial information contained in this news release is qualified in its entirety with reference to such audited financial statements. While the Company does not expect there to be any material changes, to the extent that the financial information contained in this news release is inconsistent with the information contained in the Company’s audited financial statements, the financial information contained in this news release shall be deemed to be modified or superseded by the Company’s audited financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws.
GTI refers to certain non-IFRS financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and adjusted EBITDA earnings defined as earnings before interest, other income, taxes, depreciation, amortization, less certain non-cash equity compensation expense, including one-time transaction fees and all other non-cash items. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers.
Conference Call and Webcast
GTI will host a conference call on Tuesday, April 9, 2019 at 5:00 pm ET to discuss its financial results for the fourth quarter and full year ended December 31, 2018. The conference call may be accessed by dialing 877-273-8145 (Toll-Free) or 647-689-5400 (International) with conference ID: 8565998. A live audio webcast of the call will also be available on the Investor Relations section of GTI’s website at https://www.gtigrows.com/investors and will be archived for replay.
About Green Thumb Industries:
Green Thumb Industries (GTI), a national cannabis consumer packaged goods company and retailer, is dedicated to providing dignified access to safe and effective cannabis while giving back to the communities in which they serve. As a vertically integrated company, GTI manufactures and sells a well-rounded suite of branded cannabis products including flower, concentrates, edibles, and topicals. The company also owns and operates a rapidly growing national chain of retail cannabis stores called Rise™. Headquartered in Chicago, Illinois, GTI has 11 manufacturing facilities, licenses for 77 retail locations and operations across 12 U.S. markets. Established in 2014, GTI employs approximately 600 people and serves thousands of patients and customers each year. GTI was named a Best Workplace 2018 by Crain’s Chicago Business. More information is available at GTIgrows.com.
Cautionary Note Regarding Forward-Looking Information
This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of GTI with respect to future business activities. Forward-looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect,” or similar expressions and include information regarding: (i) statements regarding the future direction of GTI, (ii) the ability of the Company to successfully achieve its business objectives, (iii) plans for expansion of GTI, (iv) expectations for other economic, business and/or competitive factors, and (v) information concerning the proposed acquisitions, expectations regarding whether the proposed acquisitions will be consummated, including whether conditions to the consummation of the proposed acquisitions will be satisfied and whether the proposed acquisitions will be completed on the current terms, the timing for completing the proposed acquisitions and expectations for the effects of the proposed acquisitions.
Investors are cautioned that forward-looking information is not based on historical facts but instead reflect GTI management’s expectations, estimates or projections concerning the business of GTI future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although GTI believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. The acquisition of Integral Associates is subject to certain conditions of closing, including receipt of all necessary regulatory approvals, completion of the Cannabiotix acquisition by Integral Associates and other customary conditions of closing.
In connection with the forward-looking information and statements contained in this press release, GTI has made certain assumptions, including assumptions related to: the ability to obtain regulatory approval in the ordinary course of business, the availability of real estate on market terms, the ability to obtain local zoning variances and approvals. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the ability to consummate the proposed acquisitions; the ability to obtain requisite regulatory approvals and third party consents and the satisfaction of other conditions to the consummation of the proposed acquisitions on the proposed terms and schedule; the potential impact of the announcement or consummation of the proposed acquisitions on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws; compliance with extensive government regulation; changes in federal or state regulatory or law enforcement programs and priorities, including with respect to CBD products; and the diversion of management time on the proposed acquisitions, together with the risk factors outlined by the company in its annual information form dated July 10, 2018 along with the risk factors outlined in the most recently filed MD&A of the company filed on SEDAR from time to time. This forward-looking information may be affected by risks and uncertainties in the business of GTI and market conditions.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although GTI has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. GTI does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
No securities regulatory authority has in any way passed upon the merits of the proposed transactions described in this news release or has approved or disapproved of the contents of this news release.
|Investor Contact:||Media Contact:|
|Jennifer Dooley||Linda Marsicano|
|Chief Strategy Officer||VP, Corporate Communications|
Source: Green Thumb Industries
|Highlights from Consolidated Statements of Operations (Unaudited)|
|(Amounts Expressed in United States Dollars)|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|Revenues, net of discounts||$||20,771,414||$||6,163,165||$||62,493,680||$||16,528,779|
|Cost of Goods Sold, net||(11,104,247||)||(5,113,492||)||(33,991,355||)||(10,446,801||)|
|Gross Profit before Biological Asset Adjustment||9,667,167||1,049,673||28,502,325||6,081,978|
|Net Effect of Changes in Fair Value of Biological Assets||2,782,039||571,917||4,204,084||1,146,087|
|General and Administrative||26,462,623||3,670,139||56,365,669||11,039,124|
|Sales and Marketing||530,575||81,635||1,494,239||190,384|
|Depreciation and Amortization||1,031,436||154,439||2,421,925||261,264|
|Loss From Operations||(15,575,428||)||(2,284,623||)||(27,575,424||)||(4,262,707||)|
|Other Income (Expense):|
|Other Income (Expense), net||8,745,198||(23,007||)||51,565,241||544,399|
|Total Other Income (Expense)||7,595,989||(428,207||)||50,686,560||111,951|
|Income (Loss) Before Provision for Income Taxes And Non-Controlling|
|Provision For Income Taxes||947,595||55,000||5,245,595||214,000|
|Net Income (Loss) Before Non-Controlling Interest||(8,927,034||)||(2,767,830||)||17,865,541||(4,364,756||)|
|Net Income (Loss) Attributable To Non-Controlling Interest||(5,784,546||)||(370,625||)||25,535,684||(622,042||)|
|Net Income (Loss) Attributable To Green Thumb Industries Inc.||$||(3,142,488||)||$||(2,397,205||)||$||(7,670,143||)||$||(3,742,714||)|
|Net Income (Loss) per share - basic and diluted||$||(0.02||)||$||(0.05||)|
|Weighted average number of shares outstanding - basic and diluted||154,111,314||148,318,518|
|Highlights from Consolidated Statements of Financial Position (Unaudited)|
|(Amounts Expressed in United States Dollars)|
|December 31,||December 31,|
|Cash and cash equivalents||$||145,986,072||$||29,565,497|
|Other current assets||41,302,968||10,224,339|
|Property and equipment, net||65,324,080||31,558,357|
|Intangible assets, net||92,992,831||14,161,995|
|Other long-term assets||41,165,427||1,458,833|
|Total current liabilities||$||17,960,802||$||14,280,657|
|Notes payable, net of current portion||5,733,797||7,206,673|
|Other long-term liabilities||11,390,377||301,105|
|Total liabilities and equity||$||416,095,738||$||87,157,281|
|Supplemental Information (Unaudited) Regar ding Non-IFRS Financial Measures|
|EBITDA, Adjusted Operating EBITDA, and Adjusted EBITDA are non-IFRS measures and do not have standardized definitions under IFRS. The following information provides reconciliations of the supplemental non-IFRS financial measures, presented in this press release to the most directly comparable financial measures calculated and presented in accordance with International Financial Reporting Standards. The Company has provided the non-IFRS financial measures in the press release, which are not calculated or presented in accordance with IFRS, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS. These supplemental non-IFRS financial measures are presented because management has evaluated the Company’s financial results both including and excluding the adjusted items and believe that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the Company’s business. These supplemental non-IFRS financial measures should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the IFRS financial measures presented in the press release.|
|(Amounts Expressed in United States Dollars)|
|Q4 2018||Q4 2017||FY2018||FY2017|
|Net income (loss) (IFRS)||$||(8,927,034||)||$||(2,767,830||)||$||17,865,541||$||(4,364,756||)|
|Depreciation and amortization||2,042,988||260,424||3,756,827||689,988|
|Earnings before interest, taxes, depreciation and amortization|
|(EBITDA) (non-IFRS measure)||$||(4,787,242||)||$||(2,047,206||)||$||27,746,644||$||(3,028,320||)|
|Share-based compensation, non-cash||12,579,361||-||16,198,024||-|
|Adjusted Operating EBITDA (non-IFRS mea sure)||$||(953,079||)||$||(2,024,199||)||$||(4,617,939||)||$||(3,572,719||)|
|Adjustment for investment fair value adjustments attributable to Green|
|Thumb Industries Inc.||13,382,421||-||26,117,157||-|
|Adjusted EBITDA (non-IFRS measure)||$||12,429,342||$||(2,024,199||)||$||21,499,218||$||(3,572,719||)|