GTII Sees Adjusted EBITDA Increase 180% Over Previous Quarter
Green Thumb Posts Gross Profit of $36.1 Million in Q3
Green Thumb Industries (CSE: GTII) (OTCQX: GTBIF) announced its Q3 2019 earnings today after the closing bell. The company reported revenue for the third quarter of $68 million, up 296% year over year and 52% over the previous quarter. The company’s Q2 2019 revenue was $44.73 million. Analysts projected Green Thumb would post Q3 revenue of $62.3 million which the company easily surpassed. In the fourth quarter of 2019, analysts are forecasting revenue of $75.86 million for GTI.
Green Thumb attributes its strong top-line numbers to the organic growth across the company’s retail and consumer products businesses in addition to a full quarter of revenue from Integral Associates. The company generated revenue from 11 of the 12 markets it is currently operating in which included California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New York, Ohio and Pennsylvania.
Green Thumb reported gross profit before biological adjustments for the third quarter of $34.8 million and $36.1 million after factoring in net gains on biological assets. Gross margin before biological adjustments for the quarter came in at 51.2% compared to 52% in the last quarter and 45.6% in Q3 2018. After biological adjustments, gross margin for Q3 was 53.2% compared to 49.6% last year. The company said its improved gross margin was driven by increased scale across its retail and consumer packaged goods businesses.
The company posted EBITDA and adjusted EBITDA for Q3 of $1.6 million and $14.1 million respectively. Quarter over quarter the company saw its adjusted EBITDA improve by 180% from the $5 million recorded in Q2 and EBITDA go from negative $9.4 million into positive territory.
However, Green Thumb did post a net loss for the third quarter of $17.1 million, an improvement over its Q2 net loss of $22.2 million.
“We are pleased to deliver another quarter of solid execution highlighted by significant improvements to profitability on top of strong revenue growth. Our consumer products and retail businesses continue to scale as expected. Critical to our ongoing success is a strong balance sheet that provides us with ample liquidity and financial flexibility to support our growth plans,” stated GTI Founder and CEO Ben Kovler.
Taking a look at Green Thumb’s balance sheet, the company reported at the end of Q3 it had $66.1 million in cash and cash equivalents as well as total current assets of $123.8 million. Total debt at the end of the third quarter amounted to $96.9 million.
Following the end of Q3 2019, the company announced it had completed a sales leaseback deal involving its Danville, Pennsylvania cultivation and manufacturing facility with Innovative Industrial Properties (NYSE: IIPR). In total, IIP invested $39.6 million which Green Thumb will put towards its strategic expansion initiatives.
“We continue to make progress on the ‘Open and Scale’ chapter of the business, solidifying our position in our current markets by investing in the infrastructure that is required to distribute brands at scale. We are starting to see leverage in the platform that we built. Our brand portfolio is now produced, distributed and sold in eight markets, a significant improvement from our position just one year ago, and yet this is just the beginning. To meet growing demand in key markets such as Illinois, Pennsylvania and Massachusetts, we continue to expand our cultivation and manufacturing capacity. Our stores are delivering same-store sales that exceed our expectations. We are well-positioned to end 2019 on a strong note and expect to generate over $200 million in total revenue for the year as planned,” added Kovler.
Shares of GTII closed trading today at $12.83 per share, up 7.82% on the day.
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