- The Consensus Amongst Investors is That the United States Cannabis Market Will Be Responsible for Creating the Next Round of Marijuana Millionaires
- To Prove How Strong the Emerging U.S. Marijuana Industry is, These 4 Leading MSOs Recently Reported Exceptional Q1 Earnings, Despite Having to Operate During the COVID-19 Pandemic
It was an unexpectedly great quarter for this group of leading U.S. multi-state operators (MSOs). While the global pandemic harmed most industries, cannabis has been flourishing. The sector was deemed essential in most legal states, and, with the nation sitting at home in quarantine with nothing to do, sales boomed.
Trulieve (CSE: TRUL) (OTCQX: TCNNF), Curaleaf (CSE: CURA) (OTCQX: CURLF), Green Thumb (CSE: GTII) (OTCQX: GTBIF) (FRA: R9U2) and Cresco Labs (CSE: CL) (OTCQX: CRLBF) are amongst the largest cannabis companies in the U.S., based on revenues. Below you will find the top highlights from each companies’ recently reported first-quarter 2020 earnings.
- Record revenue of $96.1 million, up 21% quarter-over-quarter
- Adjusted EBITDA of $49.4 million
- Earnings per share (EPS) of $0.12
- Cash flow positive, with a cash balance of $101 million
- 54% market share in Florida
- Achieved two record revenue days of roughly $2 million each day
- Goal of 68 dispensaries by the end of 2020
- Reaffirmed full-year 2020 earnings guidance:
- Revenue $380 million – $400 million
- Adjusted EBITDA $140 million – $160 million
“Trulieve posted exceptional operational results for the quarter, continuing to grow our market share in Florida as we saw our dedicated team along with our scale and supply chain efficiencies successfully meet the increased demand for our products. Trulieve’s execution of key fundamentals and financial discipline coupled with market share growth this quarter contributed to positive free cash flow, further strengthening our balance sheet and validating our financial stewardship. Our financial position continues to differentiate us in the market by providing flexibility to support both organic and external growth initiatives, which is increasingly important during these times.” stated Trulieve CEO Kim Rivers.
- View Trulieve’s Q1 2020 Earnings Press Release
- Read/Listen to Trulieve’s Q1 2020 Earnings Call Transcript
- Record pro forma revenue of $147.4 million
- Record managed revenue of $105.0 million, up 29% sequentially and 158% year-over-year
- Record total revenue of $96.5 million, up 28% sequentially and 174% over Q1 2019
- Record adjusted EBITDA of $20.0 million
- Goal of 100 dispensaries across 22 states by the end of 2020
- Grassroots acquisition is nearing completion and will add:
- 63 dispensary licenses, 33 operating dispensaries, 23 cultivation/processing licenses in Illinois, Pennsylvania, Arkansas, North Dakota and Vermont
“Curaleaf delivered record first-quarter results, highlighted by managed revenues exceeding our outlook as well as a 45% sequential improvement in Adjusted EBITDA. We achieved these results while remaining fully committed to protecting the health and wellness of customers and team members, all as we operate as an essential service across our markets. Our ability to adapt and innovate Curaleaf’s operations, as well as the customer experience within the current environment, has allowed us to continue to expand through these extraordinary times. We expect the pending completion of our purchase of Grassroots, the largest private vertically integrated multi-state cannabis operator, to affirm our position as the world’s largest cannabis company by both revenue and operating presence,” stated Curaleaf CEO Joseph Lusardi.
- View Curaleaf’s Q1 2020 Earnings Press Release
- Read/Listen to Curaleafs’s Q1 2020 Earnings Call Transcript
- Total revenue of $102.6 million, up 35.4% quarter-over-quarter and 267.6% year-over-year
- Adjusted Operating EBITDA of $25.5 million, up 85% from the previous quarter
- Total current assets of $140.8 million including cash and cash equivalents of $71.5 million
- Opened three new stores in Illinois and Pennsylvania bringing total open stores nationwide to 44
- Successfully launched Illinois adult-use cannabis sales on January 1, 2020
“Our business model continues to prove out, and we delivered outstanding first-quarter results. We achieved a major milestone by breaking $100 million in quarterly revenue along with substantial EBITDA growth. These factors helped contribute to our positive free cash flow from operations. We believe that our operational strength and resilience, supported by a strong balance sheet, continue to differentiate and position us for long-term success, especially during these challenging times,” said GTI CEO Ben Kovler.
- Record revenue of $66.4 million, up 60% quarter-over-quarter
- Adjusted EBITDA of $3.2 million, up 11% over the last quarter
- Opened first adult-use dispensary in downtown Chicago and another in eastern Illinois
- Completed cultivation facility in Lincoln, Illinois, the largest in the state
- Completed largest cultivation expansion in company history
- Added 6x cultivation space in Illinois and 4x in Pennsylvania
“I couldn’t be more proud of what our team has achieved year to date – we have become an even better-operating company since the beginning of the year. We generated another sequential quarter of substantial revenue growth from the same asset base as pro-forma Q4 and our fourth consecutive quarter of positive adjusted EBITDA. I’m equally proud of the expansion of our operations during this quarter. In Q1, we built, staffed, integrated, and refined our operations in the largest and most important cannabis markets in the U.S. This positions us incredibly well to see the fruits of that labour in the coming quarters,” stated Charles Bachtell, CEO of Cresco Labs.
First Quarter 2020 Earnings Comparison
Despite the strong overall numbers across the board, in reality, these U.S. MSOs are just getting started in an American market that’s still relegated to a certain number states. Expansion opportunities in legal states remain bountiful, and with the United States yet to fully open up on a federal level, overall growth prospects are off the charts. While Green Thumb is leading the pack in revenue and growth, Trulieve is the most profitable. Both Cresco and Curaleaf have extensive expansion in the works and are not far behind. As more states open up and these MSOs continue to build out infrastructure in existing states, both revenue and profitability should continue to improve for all four companies.
The United States has no shortage of market catalysts on the horizon. It appears cannabis banking reform, in the SAFE banking act, will hopefully happen this year. Investors should also expect more states to come on board in the upcoming November election. Finally, we have the holy grail of catalysts in the form of federal cannabis legalization, which will inevitably happen at some point in the not too distant future. As the timeline around federal legalization becomes clearer, expect the top U.S. MSOs to receive an extra boost from investors looking to get in on the action. As mentioned, the U.S. cannabis sector is still in its early days and investors in the right companies should expect to see massive upside from here.
Disclosure: The Cannabis Investor does not hold a position in any of the stocks mentioned in this article.