Cannabis
Trulieve Reports Third Quarter 2023 Results Delivering Significant Cash Generation
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, 2023. 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 2023 Financial and Operational Highlights*
- Revenue of $275 million, with 96% of revenue from retail sales.
- Achieved GAAP gross margin of 52%, with gross profit of $143 million.
- SG&A expenses lowered by $2 million sequentially to $94 million.
- Reported net loss of $25 million. Adjusted net loss of $15 million* excludes non-recurring charges, disposals and discontinued operations.
- Achieved EBITDA of $74 million*, or 27% of revenue and adjusted EBITDA of $78 million*, or 28% of revenue.
- Purchased $57 million face value senior secured 2026 notes for USD $47.6 million in September, which represents a 16.5% discount to par, plus accrued interest.
- Cash as of September 30, 2023 of approximately $200 million.
- Generated cash flow from operations of $93 million and free cash flow of $87 million in the third quarter. Anticipate 2023 cash flow from operations of at least $100 million and free cash flow generation of at least $70 million.
- Realized 235% increase in Maryland traffic in Q3 compared to Q2 following the launch of adult-use sales at our three dispensaries.
- Opened five new dispensaries in Pace and Sanford, FL, Evans and Pooler, GA, and Columbus, OH and relocated one dispensary in Kissimmee, FL.
- Ended the quarter with 32% of retail locations outside of the state of Florida.
*See “Non-GAAP Financial Measures” below for additional information and a reconciliation to GAAP for all Non-GAAP metrics.
Recent Developments
- Announced redemption of $130 million of senior secured notes due June 18, 2024 with redemption date of December 1, 2023.
- Filed amended federal tax returns for 2019, 2020, and 2021 claiming a $143 million refund from taxes paid.
- On November 8, 2023, the Florida Supreme Court heard oral arguments regarding the Smart and Safe Florida ballot initiative for adult use. The court is expected to rule prior to April 2024.
- Launched distribution through independent pharmacies in Georgia.
- Added retail locations in Apollo Beach and Marianna, FL and relocated one dispensary in Melbourne, FL.
- Currently operate 190 retail dispensaries and over 4 million square feet of cultivation and processing capacity in the United States.
Management Commentary
“This year our team has done a phenomenal job executing on our plan to generate cash while making investments to support future growth,” said Kim Rivers, Trulieve CEO. “As demonstrated this quarter, Trulieve remains aligned with our shareholders, and is committed to strengthening our balance sheet with non-dilutive measures. With significant scale and service, strong cash generation, and a clearly defined strategy, Trulieve is best positioned for the coming wave of meaningful growth catalysts.”
Financial Highlights*
|
Results of Operations |
For the Three Months Ended |
For the Nine Months Ended |
||||||||||||
|
(Figures in millions except |
September |
September |
change |
June 30, |
change |
September |
September |
change |
||||||
|
Revenue |
$ |
275 |
$ |
295 |
(7 %) |
$ |
282 |
(2 %) |
$ |
842 |
$ |
920 |
(8 %) |
|
|
Gross Profit |
$ |
143 |
$ |
169 |
(15 %) |
$ |
142 |
1 % |
$ |
435 |
$ |
532 |
(18 %) |
|
|
Gross Margin % |
52 % |
57 % |
50 % |
52 % |
58 % |
|||||||||
|
Operating Expenses |
$ |
120 |
$ |
196 |
(39 %) |
$ |
433 |
(72 %) |
$ |
686 |
$ |
487 |
41 % |
|
|
Operating Expenses % |
43 % |
66 % |
154 % |
81 % |
53 % |
|||||||||
|
Net Loss** |
$ |
(25) |
$ |
(115) |
— |
$ |
(404) |
— |
$ |
(493) |
$ |
(169) |
— |
|
|
Net Loss Continuing Ops |
$ |
(23) |
$ |
(73) |
— |
$ |
(342) |
— |
$ |
(399) |
$ |
(118) |
— |
|
|
Adjusted Net Income (Loss) |
$ |
(15) |
$ |
8 |
— |
$ |
(15) |
— |
$ |
(47) |
$ |
15 |
— |
|
|
Diluted Shares Outstanding |
189 |
189 |
189 |
189 |
188 |
|||||||||
|
EPS Continuing Ops |
$ |
(0.12) |
$ |
(0.38) |
— |
$ |
(1.80) |
— |
$ |
(2.09) |
$ |
(0.63) |
— |
|
|
Adjusted EPS |
$ |
(0.08) |
$ |
0.04 |
— |
$ |
(0.08) |
— |
$ |
(0.25) |
$ |
0.08 |
— |
|
|
Adjusted EBITDA |
$ |
78 |
$ |
100 |
(22 %) |
$ |
79 |
(1 %) |
$ |
235 |
$ |
316 |
(26 %) |
|
|
Adjusted EBITDA Margin % |
28 % |
34 % |
28 % |
28 % |
34 % |
|||||||||
|
*See “Non-GAAP Financial Measures” below for additional information and a reconciliation to GAAP for all Non-GAAP metrics. |
|
**Net loss and comprehensive loss attributable to common shareholders which Includes discontinued operations and excludes non-controlling interest. |
Conference Call
The Company will host a conference call and live audio webcast on November 9, 2023, at 8:30 A.M. Eastern time, to discuss its third quarter 2023 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: 1-888-317-6003 |
Passcode: 8045472 |
|
|
International: 1-412-317-6061 |
Passcode: 8045472 |
A live audio webcast of the conference call will be available at:
https://app.webinar.net/RXq1eDnkyL2
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, 2023, 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 SEDAR 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, expect per share data) |
|||
|
September 30, |
December 31, |
||
|
(Audited) |
|||
|
ASSETS |
|||
|
Current Assets: |
|||
|
Cash and cash equivalents |
$ 192.2 |
$ 207.2 |
|
|
Restricted cash |
6.7 |
6.6 |
|
|
Accounts receivable, net |
6.9 |
6.5 |
|
|
Inventories |
229.9 |
276.5 |
|
|
Prepaid expenses and other current assets |
43.7 |
62.3 |
|
|
Notes receivable – current portion |
1.1 |
0.7 |
|
|
Assets associated with discontinued operations |
6.2 |
33.7 |
|
|
Total current assets |
486.7 |
593.5 |
|
|
Property and equipment, net |
687.6 |
743.3 |
|
|
Right of use assets – operating, net |
96.3 |
98.9 |
|
|
Right of use assets – finance, net |
61.1 |
70.5 |
|
|
Intangible assets, net |
934.6 |
984.8 |
|
|
Goodwill |
483.9 |
791.5 |
|
|
Notes receivable, net |
12.0 |
12.0 |
|
|
Other assets |
11.1 |
12.8 |
|
|
Long-term assets associated with discontinued operations |
2.0 |
93.1 |
|
|
TOTAL ASSETS |
$ 2,775.2 |
$ 3,400.4 |
|
|
LIABILITIES |
|||
|
Current Liabilities: |
|||
|
Accounts payable and accrued liabilities |
$ 86.4 |
$ 82.0 |
|
|
Income tax payable |
— |
49.6 |
|
|
Deferred revenue |
3.6 |
9.5 |
|
|
Notes payable – current portion |
9.1 |
12.5 |
|
|
Private placement notes – current portion, net |
126.9 |
— |
|
|
Operating lease liabilities – current portion |
9.7 |
10.3 |
|
|
Finance lease liabilities – current portion |
7.5 |
8.3 |
|
|
Construction finance liabilities – current portion |
1.4 |
1.2 |
|
|
Contingencies |
3.8 |
34.7 |
|
|
Liabilities associated with discontinued operations |
3.3 |
2.3 |
|
|
Total current liabilities |
$ 251.8 |
$ 210.3 |
|
|
Long-term liabilities: |
|||
|
Notes payable, net |
92.3 |
94.2 |
|
|
Private placement notes, net |
362.8 |
541.7 |
|
|
Operating lease liabilities |
92.6 |
99.9 |
|
|
Finance lease liabilities |
63.6 |
69.9 |
|
|
Construction finance liabilities |
136.8 |
137.1 |
|
|
Deferred tax liabilities |
205.4 |
224.9 |
|
|
Other long-term liabilities |
86.4 |
26.3 |
|
|
Long-term liabilities associated with discontinued operations |
42.6 |
68.4 |
|
|
TOTAL LIABILITIES |
$ 1,334.5 |
$ 1,472.7 |
|
|
SHAREHOLDERS’ EQUITY |
|||
|
Common stock, no par value; unlimited shares authorized. 185,987,512 and issued |
$ — |
$ — |
|
|
Additional paid-in-capital |
2,052.4 |
2,045.0 |
|
|
Accumulated deficit |
(607.2) |
(113.8) |
|
|
Non-controlling interest |
(4.5) |
(3.5) |
|
|
TOTAL SHAREHOLDERS’ EQUITY |
1,440.7 |
1,927.7 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ 2,775.2 |
$ 3,400.4 |
|
|
Trulieve Cannabis Corp. |
|||||||
|
Condensed Consolidated Statements of Operations (Unaudited) |
|||||||
|
(in millions, except per share data) |
|||||||
|
Three Months Ended |
Nine Months Ended |
||||||
|
September |
September |
September |
September |
||||
|
Revenue |
$ 275.2 |
$ 295.4 |
$ 842.2 |
919.8 |
|||
|
Cost of goods sold |
132.3 |
126.6 |
407.4 |
387.7 |
|||
|
Gross profit |
142.9 |
168.7 |
434.8 |
532.0 |
|||
|
Expenses: |
|||||||
|
Sales and marketing |
59.4 |
74.3 |
181.2 |
219.7 |
|||
|
General and administrative |
34.5 |
37.6 |
108.7 |
104.6 |
|||
|
Depreciation and amortization |
27.0 |
29.5 |
82.6 |
86.6 |
|||
|
Impairments and disposals of long-lived assets, net |
(1.2) |
54.6 |
5.5 |
76.2 |
|||
|
Impairment of goodwill |
— |
— |
307.6 |
— |
|||
|
Total expenses |
119.6 |
196.1 |
685.6 |
487.1 |
|||
|
Income (loss) from operations |
23.3 |
(27.3) |
(250.8) |
44.9 |
|||
|
Other (expense) income: |
|||||||
|
Interest expense, net |
(20.8) |
(17.7) |
(60.9) |
(52.2) |
|||
|
Change in fair value of derivative liabilities – warrants |
— |
0.4 |
0.3 |
2.6 |
|||
|
Other income, net |
11.2 |
0.4 |
18.1 |
3.0 |
|||
|
Total other expense, net |
(9.6) |
(16.9) |
(42.6) |
(46.6) |
|||
|
Income (loss) before provision for income taxes |
13.7 |
(44.3) |
(293.4) |
(1.7) |
|||
|
Provision for income taxes |
36.6 |
28.4 |
105.9 |
116.8 |
|||
|
Net loss from continuing operations |
(22.9) |
(72.6) |
(399.3) |
(118.4) |
|||
|
Net loss from discontinued operations, net of tax |
(2.9) |
(42.4) |
(99.1) |
(53.2) |
|||
|
Net loss |
(25.8) |
(115.1) |
(498.3) |
(171.6) |
|||
|
Less: Net loss attributable to non-controlling interest |
(0.5) |
(0.5) |
(3.8) |
(2.6) |
|||
|
Less: Net loss attributable to non-controlling interest |
— |
— |
(1.2) |
— |
|||
|
Net loss attributable to common shareholders |
$ (25.4) |
$ (114.6) |
$ (493.4) |
$ (169.0) |
|||
|
Net loss per share – Continuing operations: |
|||||||
|
Basic and diluted |
$ (0.12) |
$ (0.38) |
$ (2.09) |
$ (0.63) |
|||
|
Net loss per share – Discontinued operations: |
|||||||
|
Basic and diluted |
$ (0.02) |
$ (0.23) |
$ (0.52) |
$ (0.28) |
|||
|
Weighted average number of common shares used in |
|||||||
|
Basic and diluted |
188.9 |
188.6 |
189.0 |
187.5 |
|||
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we supplement our results with non-GAAP financial measures, including adjusted EBITDA, adjusted net loss (income), adjusted net income (loss) per diluted share and free cash flow. 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 Adjusted EBITDA
The following table presents a reconciliation of GAAP net loss to non-GAAP Adjusted EBITDA, for each of the periods presented:
|
(Amounts expressed in millions of United States |
Three Months Ended |
Nine Months Ended |
||||||||
|
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
||||||
|
Net Loss GAAP |
$ |
(25.4) |
$ |
(114.6) |
$ |
(403.8) |
$ |
(493.4) |
$ |
(169.0) |
|
Add (Deduct) Impact of: |
||||||||||
|
Interest Expense |
$ |
20.8 |
$ |
17.7 |
$ |
18.9 |
$ |
60.9 |
$ |
52.2 |
|
Provision For Income Taxes |
$ |
36.6 |
$ |
28.4 |
$ |
34.0 |
$ |
105.9 |
$ |
116.8 |
|
Depreciation and Amortization |
$ |
27.0 |
$ |
29.5 |
$ |
26.1 |
$ |
82.6 |
$ |
86.6 |
|
Depreciation in COGS |
$ |
14.6 |
$ |
13.2 |
$ |
16.0 |
$ |
42.8 |
$ |
34.9 |
|
EBITDA |
$ |
73.7 |
$ |
(25.8) |
$ |
(308.9) |
$ |
(201.1) |
$ |
121.5 |
|
Impairment of Goodwill |
$ |
— |
$ |
— |
$ |
307.6 |
$ |
307.6 |
$ |
— |
|
Impairments and Disposals of Long-lived |
$ |
(1.2) |
$ |
54.6 |
$ |
3.3 |
$ |
5.5 |
$ |
76.2 |
|
Results of Discontinued Operations |
$ |
2.9 |
$ |
42.4 |
$ |
63.9 |
$ |
97.9 |
$ |
53.2 |
|
Acquisition and Transaction Costs |
$ |
— |
$ |
7.0 |
$ |
— |
$ |
— |
$ |
17.2 |
|
Integration and Transition Costs |
$ |
8.5 |
$ |
6.7 |
$ |
5.7 |
$ |
16.1 |
$ |
17.1 |
|
Other Non-Recurring Costs |
$ |
— |
$ |
1.9 |
$ |
— |
$ |
— |
$ |
11.6 |
|
Share-Based Compensation |
$ |
4.5 |
$ |
4.3 |
$ |
0.5 |
$ |
7.4 |
$ |
14.6 |
|
Legislative Campaign Contributions |
$ |
0.5 |
$ |
10.0 |
$ |
8.6 |
$ |
19.6 |
$ |
10.0 |
|
Inventory Step Up Fair Value |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
1.0 |
|
Covid Related Expenses |
$ |
— |
$ |
0.2 |
$ |
— |
$ |
— |
$ |
0.8 |
|
Other (Income) Expense, net |
$ |
(11.2) |
$ |
(0.4) |
$ |
(2.0) |
$ |
(18.1) |
$ |
(3.0) |
|
Fair Value of Derivative Liabilities – Warrants |
$ |
— |
$ |
(0.4) |
$ |
— |
$ |
(0.3) |
$ |
(2.6) |
|
Results of Entities Not Legally Controlled |
$ |
— |
$ |
(0.9) |
$ |
— |
$ |
— |
$ |
(1.9) |
|
Adjusted EBITDA Non-GAAP |
$ |
77.7 |
$ |
99.6 |
$ |
78.7 |
$ |
234.6 |
$ |
315.5 |
Reconciliation of Non-GAAP Adjusted Net Income (Loss)
The following table presents a reconciliation of GAAP net loss to non-GAAP adjusted net loss, for each of the periods presented:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||
|
(Amounts expressed in millions of United |
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
|||||
|
Net Loss GAAP |
$ |
(25.4) |
$ |
(114.6) |
$ |
(403.8) |
$ |
(493.4) |
$ |
(169.0) |
|
Add (Deduct) Impact of: |
||||||||||
|
Impairment of Goodwill |
$ |
— |
$ |
— |
$ |
307.6 |
$ |
307.6 |
$ |
— |
|
Fair Value of Derivative Liabilities – Warrants |
$ |
— |
$ |
(0.4) |
$ |
— |
$ |
(0.3) |
$ |
(2.6) |
|
Inventory Step Up Fair Value |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
1.0 |
|
Transaction, Acquisition, and Integration Costs |
$ |
8.5 |
$ |
15.5 |
$ |
5.7 |
$ |
16.1 |
$ |
45.9 |
|
Legislative Campaign Contributions |
$ |
0.5 |
$ |
10.0 |
$ |
8.6 |
$ |
19.6 |
$ |
10.0 |
|
Covid Related Expenses |
$ |
— |
$ |
0.2 |
$ |
— |
$ |
— |
$ |
0.8 |
|
Impairments and Disposals of Long-lived |
$ |
(1.2) |
$ |
54.6 |
$ |
3.3 |
$ |
5.5 |
$ |
76.2 |
|
Results of Discontinued Operations |
$ |
2.9 |
$ |
42.4 |
$ |
63.9 |
$ |
97.9 |
$ |
53.2 |
|
Adjusted Net (Loss) Income Non-GAAP |
$ |
(14.7) |
$ |
7.9 |
$ |
(14.7) |
$ |
(47.0) |
$ |
15.4 |
Reconciliation of Non-GAAP Adjusted Earnings (Loss) Per Share
The following table presents a reconciliation of GAAP loss per share to non-GAAP adjusted earnings per share, for each of the periods presented:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||
|
(Amounts expressed are per share) |
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
|||||
|
Loss Per Share GAAP |
$ |
(0.13) |
$ |
(0.61) |
$ |
(2.14) |
$ |
(2.61) |
$ |
(0.90) |
|
Add (Deduct) Impact of: |
||||||||||
|
Impairment of Goodwill |
$ |
— |
$ |
— |
$ |
1.63 |
$ |
1.63 |
$ |
— |
|
Fair Value of Derivative Liabilities – Warrants |
$ |
— |
$ |
0.00 |
$ |
— |
$ |
0.00 |
$ |
(0.01) |
|
Inventory Step Up Fair Value |
$ |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
0.01 |
|
Transaction, Acquisition, and Integration Costs |
$ |
0.04 |
$ |
0.08 |
$ |
0.03 |
$ |
0.09 |
$ |
0.24 |
|
Legislative Campaign Contributions |
$ |
0.00 |
$ |
0.05 |
$ |
0.05 |
$ |
0.10 |
$ |
0.05 |
|
Covid Related Expenses |
$ |
— |
$ |
0.00 |
$ |
— |
$ |
— |
$ |
0.00 |
|
Impairments and Disposals of Long-lived |
$ |
(0.01) |
$ |
0.29 |
$ |
0.02 |
$ |
0.03 |
$ |
0.41 |
|
Results of Discontinued Operations |
$ |
0.02 |
$ |
0.23 |
$ |
0.34 |
$ |
0.52 |
$ |
0.28 |
|
Adjusted Earnings Per Share Non-GAAP |
$ |
(0.08) |
$ |
0.04 |
$ |
(0.08) |
$ |
(0.25) |
$ |
0.08 |
Reconciliation of Non-GAAP Free Cash Flow
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 |
September 30, |
September 30, |
June 30, |
September 30, |
September 30, |
|||||
|
Cash Flow From Operating Activities |
$ |
93.4 |
$ |
(21.6) |
$ |
(23.5) |
$ |
70.4 |
$ |
(31.9) |
|
Payments for Property and Equipment |
$ |
(6.3) |
$ |
(37.6) |
$ |
(11.0) |
$ |
(31.0) |
$ |
(130.4) |
|
Free Cash Flow |
$ |
87.2 |
$ |
(59.2) |
$ |
(34.5) |
$ |
39.4 |
$ |
(162.3) |
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, prospects, and other plans, intentions, expectations, estimates, and beliefs and include statements regarding 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, 2022 and in our periodic reports subsequently filed with the United Sates Securities and Exchange Commission and in the Company’s filings on SEDAR at www.sedar.com. 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.
IMC prepares for accelerated growth after legalization in Germany and recovers from the impact of the Israel-Hamas war.
TORONTO and GLIL YAM, Israel, May 8, 2024 /PRNewswire/ — IM Cannabis Corp. (the “Company” or “IMC“) (NASDAQ: IMCC) (CSE: IMCC), an international medical cannabis company, announced its financial results today for the first quarter ended March 31, 2024. All amounts are reported in Canadian dollars and compared to the quarter ended March 31, 2023, unless otherwise stated.
Q1 2024 Financial Highlights
- 13% Revenue increase vs. Q4 2023 of $12.1M vs. $10.7M and 4% decrease vs. Q1 2023 of $12.5M
- 125% Gross profit increase vs. Q4 2023 of $1.8M vs. $0.8 and 39% Gross profit decrease vs. Q1 2023 of $2.9M
- 29% decrease in operating expenses vs. Q1 2023 excluding the one-time Oranim revoke related losses of $4.6M vs. $6.5M and 14% increase including Oranim
- 12% increase of Non-IFRS Adjusted EBITDA loss to $2.1M
Operational Highlights
The Company intends to complete a non-brokered private placement (the “Offering“) of secured convertible debentures of the Company (each, a “Debenture“) for aggregate proceeds of up to C$2,500,000. The Debentures will mature on the date that is 12 months from the date of issuance and will not incur interest except in the event of default. The Debentures are being issued to holders of short term loans and obligations owed by the Company or its wholly owned subsidiaries. The principal of the Debenture may be converted into common shares in the Company (each, a “Share“) at a conversion price of $1.08 per Share.
Management Commentary
“With the April 1st cannabis legalization in Germany, we are augmenting our focus and resources on the German market, where we expect to see the biggest growth potential, and the best return on investment. While it is still too early to make any predictions, our sales in Germany almost doubled during the month of April,” said Oren Shuster, Chief Executive Officer of IMC. “Looking back on the first month post legalization in Germany, I see that we have the infrastructure and the supply agreements in place to continue delivering the accelerated growth we have already seen in April. We will also ensure that we have the necessary resources in place for success.”
“In 2023 we completely restructured, becoming a very lean and agile company, leaning into active cost management. This process is reflected in the numbers, our G&A decreased 27% vs Q1 2023” said Uri Birenberg, Chief Financial Officer of IMC. “While our results have recovered from the impact of the Israel-Hamas war, our revenue was still effected by both an unfavorable exchange rate, as well as price reductions to sell off inventory.”
Q1 2024 Conference Call
The Company will host a Zoom web conference call today at 9:00 a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. Investors are invited to register by clicking here. All relevant information will be sent upon registration.
If you are unable to join us live, a recording of the call will be available on our website at https://investors.imcannabis.com/ within 24 hours after the call.
Q1 2024 Financial Results
- Revenues for the first quarter of 2024 were $12.1 million compared to $12.5 million in the first quarter of 2023, a decrease of 3%. The decrease is mainly due an exchange rate effect of about $0.2 million and decrease in avg. price per sale due to increased competition.
- Gross profit for the first quarter of 2024 was $1.8 million, compared to $2.9 million in Q1 2024, a decrease of 39%. The downside is attributed mainly to the slow-moving stock that was moved out at a lower price and an exchange rate difference totaling $0.4 million and $0.64 million cost of sales loss due to an inventory erase of the slow-moving stock. Company fair value adjustment was $0 and $0.4 million for the Q1 2024 and Q1 2023 respectively.
- Total Dried Flower sold in Q1 2024 was approximately 1,873 kg with an average selling price of $5.68 per gram, compared to approximately 1,842kg in Q1 2023, with an average selling price of $6.59 per gram. This difference is mainly due to increased competition within the retail segment, and mid-range stock discounts to move out slow moving stock.
- Total operating expenses in Q1 2024 were $7.4 million compared to $6.5 million in Q1 2023. The increase is due to the other operating expenses related to Oranim Deal revoke, with an expected losses of $2.8 million. Adjusting for this one-time losses, Q1 2024 operating expenses were $4.6 million compared to $6.5 million in Q1 2023, a decrease of 29%.
- G&A Expenses in Q1 2024 were $2.3 million, compared to $3.2 million in Q1 2023, a decrease of 28%. The decrease in the G&A expense is attributable mainly to salaries and professional services of $0.64 million.
- Selling and Marketing Expenses in Q1 2024 were $2.3 million, compared to $2.8 million in Q1 2023, a decrease of 18% mainly due to a decrease in Salaries and professional services of $0.5 million.
- Net Loss from continuing operations in Q1 2024 was $6.0 million, compared to $0.9 million in Q12023.
- Basic and diluted Loss per Share in Q1 2024 was $0.42, compared to a loss of $0.05 per Share in Q1 2023.
- Non-IFRS Adjusted EBITDA loss in Q1 2024 was $2.1 million, compared to an Adjusted EBITDA loss of $1.9 million in Q1 2023 an increase of 10%.
- Cash and Cash Equivalents as of March 31, 2024, were $1.0 million compared to $1.8 million in December 31, 2023.
- Total assets as of March 31, 2024, were $41.1 million, compared to $48.8 million in December 31, 2023, a decrease of 16%. The decrease is mainly attributed to the goodwill reduction due to Oranim agreement cancelation of about $2.8M, a reduction in Inventory of $2.1 million, reduction of Cash and cash equivalents of $0.8M and reduction in Trade payables of $1.2 million.
- Total Liabilities as of March 31, 2024, were $32.8 million, compared to $35.1 in December 31, 2023, a decrease of about 7%. The decrease was mainly due to the reduction in other accounts payables and accrued expenses of $1.8 million and reduction in the PUT option liability of $0.7 million.
The Company’s financial statements as of March 31, 2024 includes a note regarding the Company’s ability to continue as a going concern. The Company’s Q1 2024 financial results do not include any adjustments relating to the recoverability and classification of assets or liabilities that might be necessary should the Company be unable to continue as a going concern. For more information, please refer to the “Liquidity and Capital Resources” and “Risk Factors” sections in the Company’s management’s discussion and analysis for the quarter ended March 31, 2024.
Non-IFRS Measures
This press release makes reference to “Gross Margin” and “Adjusted EBITDA”, which are financial measures that are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as complementary information to the Company’s IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should neither be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.
For an explanation of how management defines Gross Margin and Adjusted EBITDA, see the Company’s management’s discussion and analysis for the period ended March 31, 2024, available under the Company’s SEDAR+ profile at www.sedarplus.ca on EDGAR at www.sec.gov/edgar.
We reconcile these non-IFRS financial measures to the most comparable IFRS measures as set out below.
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
|
Canadian Dollars in thousands |
||||||
|
March 31, |
December 31, |
|||||
|
Note |
(Unaudited) |
|||||
|
ASSETS |
||||||
|
CURRENT ASSETS: |
||||||
|
Cash and cash equivalents |
$ 1,048 |
$ 1,813 |
||||
|
Trade receivables |
6,506 |
7,651 |
||||
|
Advances to suppliers |
780 |
936 |
||||
|
Other accounts receivable |
3,732 |
3,889 |
||||
|
Inventories |
3 |
7,901 |
9,976 |
|||
|
19,967 |
24,265 |
|||||
|
NON-CURRENT ASSETS: |
||||||
|
Property, plant and equipment, net |
4,939 |
5,058 |
||||
|
Investments in affiliates |
2,078 |
2,285 |
||||
|
Right-of-use assets, net |
1,243 |
1,307 |
||||
|
Intangible assets, net |
5,440 |
5,803 |
||||
|
Goodwill |
7,442 |
10,095 |
||||
|
21,142 |
24,548 |
|||||
|
Total assets |
$ 41,109 |
$ 48,813 |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
|
Canadian Dollars in thousands |
||||||
|
March 31, |
December 31, |
|||||
|
Note |
(Unaudited) |
|||||
|
LIABILITIES AND EQUITY |
||||||
|
CURRENT LIABILITIES:
|
||||||
|
Trade payables |
$ 9,511 |
$ 9,223 |
||||
|
Bank loans and credit facilities |
11,941 |
12,119 |
||||
|
Other accounts payable and accrued expenses |
4,440 |
6,218 |
||||
|
Accrued purchase consideration liabilities |
2,165 |
2,097 |
||||
|
PUT Option liability |
1,967 |
2,697 |
||||
|
Current maturities of operating lease liabilities |
461 |
454 |
||||
|
30,485 |
32,808 |
|||||
|
NON-CURRENT LIABILITIES:
|
||||||
|
Warrants measured at fair value |
4 |
137 |
38 |
|||
|
Operating lease liabilities |
744 |
815 |
||||
|
Long-term loans |
401 |
394 |
||||
|
Employee benefit liabilities, net |
96 |
95 |
||||
|
Deferred tax liability, net |
902 |
963 |
||||
|
2,280 |
2,305 |
|||||
|
Total liabilities |
32,765 |
35,113 |
||||
|
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: |
5 |
|||||
|
Share capital and premium |
253,887 |
253,882 |
||||
|
Translation reserve |
1,399 |
95 |
||||
|
Reserve from share-based payment transactions |
9,664 |
9,637 |
||||
|
Accumulated deficit |
(255,431) |
(249,145) |
||||
|
Total equity attributable to equity holders of the Company |
9,519 |
14,469 |
||||
|
Non-controlling interests |
(1,175) |
(769) |
||||
|
Total equity |
8,344 |
13,700 |
||||
|
Total liabilities and equity |
$ 41,109 |
$ 48,813 |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||
|
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
||||||
|
Canadian Dollars in thousands, except per share data |
||||||
|
Three months ended March 31, |
||||||
|
Note |
2024 |
2023 (*) |
||||
|
Revenues |
$ 12,063 |
$ 12,529 |
||||
|
Cost of revenues |
10,274 |
9,286 |
||||
|
Gross profit before fair value adjustments |
1,789 |
3,243 |
||||
|
Fair value adjustments: |
||||||
|
Realized fair value adjustments on inventory sold in the period |
(10) |
(339) |
||||
|
Total fair value adjustments |
(10) |
(339) |
||||
|
Gross profit |
1,779 |
2,904 |
||||
|
General and administrative expenses |
2,332 |
3,175 |
||||
|
Selling and marketing expenses |
2,292 |
2,805 |
||||
|
Restructuring expenses |
– |
283 |
||||
|
Share-based compensation |
32 |
258 |
||||
|
Other operating expenses |
9 |
2,753 |
– |
|||
|
Total operating expenses |
7,409 |
6,521 |
||||
|
Operating loss |
5,630 |
3,617 |
||||
|
Finance income |
4 |
(14) |
3,530 |
|||
|
Finance expense |
(487) |
(795) |
||||
|
Finance income, net |
(501) |
2,735 |
||||
|
Gain (loss) before income taxes |
(6,131) |
(882) |
||||
|
Income tax benefit |
(111) |
(16) |
||||
|
Net )loss( gain |
(6,020) |
(866) |
||||
|
Other comprehensive income that will not be reclassified to profit or loss in |
||||||
|
Total other comprehensive income that will not be reclassified to profit or loss |
67 |
36 |
||||
|
Exchange differences on translation to presentation currency |
1,330 |
(562) |
||||
|
Total other comprehensive income (loss) that will not be reclassified to profit |
1,397 |
(526) |
||||
|
Other comprehensive income that will be reclassified to profit or loss in |
||||||
|
Adjustments arising from translating financial statements of foreign operation |
(35) |
155 |
||||
|
Total other comprehensive income (loss) that will be reclassified to profit or loss |
(35) |
155 |
||||
|
Total other comprehensive income (loss) |
1,362 |
(371) |
||||
|
Total comprehensive loss |
$ (4,658) |
$ (1,237) |
||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS |
||||||
|
AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
||||||
|
Canadian Dollars in thousands, except per share data |
||||||
|
Three months ended March 31, |
||||||
|
Note |
2024 |
2023 (*) |
||||
|
Net income (loss) attributable to: |
||||||
|
Equity holders of the Company |
(5,623) |
(600) |
||||
|
Non-controlling interests |
(397) |
(266) |
||||
|
$ (6,020) |
$ (866) |
|||||
|
Total comprehensive income (loss) attributable to: |
||||||
|
Equity holders of the Company |
(4,252) |
(959) |
||||
|
Non-controlling interests |
(406) |
(278) |
||||
|
$ (4,658) |
$ (1,237) |
|||||
|
Net income (loss) per share attributable to equity holders of the Company: |
7 |
|||||
|
Basic and diluted (loss) gain per share (in CAD) |
$ (0.42) |
$ (0.05) |
||||
|
Earnings (loss) per share attributable to equity holders of the Company |
||||||
|
Basic and diluted (loss) gain per share (in CAD) |
$ (0.42) |
$ (0.05) |
||||
|
(*) See note 1 regarding figures disclosure. |
||||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||
|
Canadian Dollars in thousands |
||||
|
Three months ended March 31, |
||||
|
2024 |
2023 (*) |
|||
|
Cash provided by operating activities: |
||||
|
Net income (loss) for the period |
$ (6,020) |
$ 43 |
||
|
Adjustments for non-cash items: |
||||
|
Fair value adjustment on sale of inventory |
10 |
339 |
||
|
Fair value adjustment on Warrants, investments and accounts receivable |
100 |
(3,636) |
||
|
Depreciation of property, plant and equipment |
147 |
174 |
||
|
Amortization of intangible assets |
452 |
456 |
||
|
Depreciation of right-of-use assets |
118 |
179 |
||
|
Impairment of goodwill |
2,753 |
– |
||
|
Finance expenses, net |
401 |
635 |
||
|
Deferred tax liability, net |
(69) |
(150) |
||
|
Share-based payment |
32 |
258 |
||
|
Restructuring expense |
– |
283 |
||
|
3,944 |
(1,462) |
|||
|
Changes in working capital: |
||||
|
Decrease (increase) in trade receivables |
1,332 |
1,937 |
||
|
Decrease (increase) in other accounts receivable and advances to suppliers |
159 |
(940) |
||
|
Decrease (increase) in inventories, net of fair value adjustments |
2,159 |
90 |
||
|
Decrease (increase) in trade payables |
663 |
(6,021) |
||
|
Changes in employee benefit liabilities, net |
– |
(22) |
||
|
Increase in other accounts payable and accrued expenses |
(2,745) |
(14) |
||
|
1,568 |
(4,970) |
|||
|
Taxes (paid) received |
(121) |
328 |
||
|
Net cash used in operating activities |
(629) |
(6,061) |
||
|
Cash flows from investing activities: |
||||
|
Purchase of property, plant and equipment |
(2) |
(411) |
||
|
Payment of purchase consideration |
– |
(56) |
||
|
Net cash used in investing activities |
$ (2) |
$ (467) |
||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||
|
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
||||
|
Canadian Dollars in thousands |
||||
|
Three months ended March 31, |
||||
|
2024 |
2023 |
|||
|
Cash flow from financing activities: |
||||
|
Proceeds from issuance of share capital, net of issuance costs |
176 |
825 |
||
|
Proceeds from issuance of warrants |
(176) |
7,027 |
||
|
Repayment of lease liability |
(118) |
(175) |
||
|
Interest paid – lease liability |
(15) |
(18) |
||
|
Receipt (repayment) of bank loan and credit facilities |
(2,856) |
(1,046) |
||
|
Cash paid for interest |
(444) |
(56) |
||
|
Proceeds from discounted checks |
2,581 |
|||
|
Net cash (used in) provided by financing activities |
(852) |
6,557 |
||
|
Effect of foreign exchange on cash and cash equivalents |
718 |
(1,059) |
||
|
Decrease in cash and cash equivalents |
(765) |
(1,030) |
||
|
Cash and cash equivalents at beginning of the period |
1,813 |
2,449 |
||
|
Cash and cash equivalents at end of the period |
$ 1,048 |
$ 1,419 |
||
|
Supplemental disclosure of non-cash activities: |
||||
|
Right-of-use asset recognized with corresponding lease liability |
$ 40 |
$ 49 |
||
|
Issuance of shares in payment of debt settlement to a non-independent director of the company |
$ – |
$ 222 |
||
|
(*) See note 1 regarding Figures disclosure. |
||||
|
The accompanying notes are an integral part of the interim condensed consolidated financial statements. |
||||
About IM Cannabis Corp.
IMC (Nasdaq: IMCC) (CSE: IMCC) is an international cannabis company that provides premium cannabis products to medical patients in Israel and Germany, two of the largest medical cannabis markets. The Company has exited operations in Canada to pivot its focus and resources to achieve sustainable and profitable growth in its highest value markets, Israel and Germany. The Company leverages a transnational ecosystem powered by a unique data-driven approach and a globally sourced product supply chain. With an unwavering commitment to responsible growth and compliance with the strictest regulatory environments, the Company strives to amplify its commercial and brand power to become a global high-quality cannabis player.
The IMC ecosystem operates in Israel through Focus Medical Herbs Ltd., which imports and distributes cannabis to medical patients, leveraging years of proprietary data and patient insights. The Company also operates medical cannabis retail pharmacies, online platforms and logistical hubs in Israel that enable the safe delivery and quality control of IMC products throughout the entire value chain. In Germany, the IMC ecosystem operates through Adjupharm GmbH, where it distributes cannabis to pharmacies for medical cannabis patients. The Company also operated in Canada through Trichome Financial Corp and its wholly owned subsidiaries. The Company has exited operations in Canada and considers these operations as discontinued.
Disclaimer for Forward-Looking Statements
This press release contains forward-looking information or forward-looking statements under applicable Canadian and United States securities laws (collectively, “forward-looking statements“). All information that addresses activities or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect”, “likely” and “intend” and statements that an event or result “may”, “will”, “should”, “could” or “might” occur or be achieved and other similar expressions. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made. In the press release, such forward-looking statements include, but are not limited to, statements relating to: the impact of the Israel-Hamas war on the Company, including its operations and the medical cannabis industry in Israel; the timing and impact of the legalization of medicinal cannabis in Germany, including, the Company having it “all in house”; the Company being positioned to take advantage of the legalization; the Company’s growth in 2024; the market growth for medicinal cannabis in Germany; the stated benefits of the Company’s EU-GMP processing facility and an EU-GDP logistics center; the Company to host a teleconference meeting as stated; and the Company’s stated goals, scope, and nature of operations in Germany, Israel, and other jurisdictions the Company may operate.
Forward-looking statements are based on assumptions that may prove to be incorrect, including but not limited to: the Company’s ability to focus and resources to achieve sustainable and profitable growth in its highest value markets; the Company’s ability to mitigate the impact of the Israel-Hamas war on the Company; the Company’s ability to take advantage of the legalization of medicinal cannabis in Germany; the Company’s ability to host a teleconference meeting as stated; and the Company’s ability to carry out its stated goals, scope, and nature of operations in Germany, Israel, and other jurisdictions the Company may operate.
The above lists of forward-looking statements and assumptions are not exhaustive. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated or implied by such forward-looking statements due to a number of factors and risks. These include: the failure of the Company to comply with applicable regulatory requirements in a highly regulated industry; unexpected changes in governmental policies and regulations in the jurisdictions in which the Company operates; the Company’s ability to continue to meet the listing requirements of the Canadian Securities Exchange and the NASDAQ Capital Market; any unexpected failure to maintain in good standing or renew its licenses; the ability of the Company and its subsidiaries (collectively, the “Group“) to deliver on their sales commitments or growth objectives; the reliance of the Group on third-party supply agreements to provide sufficient quantities of medical cannabis to fulfil the Group’s obligations; the Group’s possible exposure to liability, the perceived level of risk related thereto, and the anticipated results of any litigation or other similar disputes or legal proceedings involving the Group; the impact of increasing competition; any lack of merger and acquisition opportunities; adverse market conditions; the inherent uncertainty of production quantities, qualities and cost estimates and the potential for unexpected costs and expenses; risks of product liability and other safety-related liability from the usage of the Group’s cannabis products; supply chain constraints; reliance on key personnel; the risk of defaulting on existing debt; risks surrounding war, conflict and civil unrest in Eastern Europe and the Middle East, including the impact of the Israel-Hamas war on the Company, its operations and the medical cannabis industry in Israel; risks associated with the Company focusing on the Israel and Germany markets; the inability of the Company to achieve sustainable profitability and/or increase shareholder value; the inability of the Company to actively manage costs and/or improve margins; the inability of the company to grow and/or maintain sales; the inability of the Company to meet its goals and/or strategic plans; the inability of the Company to reduce costs and/or maintain revenues; the Company’s inability to take advantage of the legalization of medicinal cannabis in Germany; and the Company’s inability to host a teleconference meeting as stated.
Please see the other risks, uncertainties and factors set out under the heading “Risk Factors” in the Company’s annual report dated March 28, 2024, which is available on the Company’s issuer profile on SEDAR+ at www.sedarplus.ca and Edgar at www.sec.gov/edgar. Any forward-looking statement included in this press release is made as of the date of this press release and is based on the beliefs, estimates, expectations and opinions of management on the date such forward looking information is made. The Company does not undertake any obligation to update forward-looking statements except as required by applicable securities laws. Investors should not place undue reliance on forward-looking statements. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Company Contact:
Anna Taranko, Director Investor & Public Relations
IM Cannabis Corp.
+49 157 80554338
[email protected]
Oren Shuster, CEO
IM Cannabis Corp.
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View original content:https://www.prnewswire.co.uk/news-releases/im-cannabis-reports-first-quarter-financial-results-302139688.html
Cannabis
Sannabis, Inc. (OTC: USPS) Announces First Shipment of Cannabis Essential Oil from Colombia to U.S. to Fill First Order, as the DEA Re-Classifies Marijuana from Schedule I to Schedule III
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Cannabis1 week ago
Technological Advancements in Breathalyzers Drive Market Growth and Enhance Road Safety
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Humboldt1 week agoHumboldt Seed Company partners with Apollo Green to bring California cannabis genetics to the global marketplace
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SCHWAZZE1 week agoSchwazze Sets First Quarter 2024 Conference Call for May 15, 2024 at 5:00 p.m. ET
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Cannabis1 week ago
Bay Area Social Equity Operator Launches the Purple Raina Balm Wand 1:1, an Inclusive Multipurpose Cannabis Topical
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Cannabis1 week ago
Sannabis, Inc. (OTC: USPS) Announces First Shipment of Cannabis Essential Oil from Colombia to U.S. to Fill First Order, as the DEA Re-Classifies Marijuana from Schedule I to Schedule III
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Cannabis1 day agoIM Cannabis Reports First Quarter Financial Results
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Cannabis5 hours agoMikra Announces Partnership with Virun NutraBiosciences Inc. and Releases CELLF 2.0
