Adjusted Operating EBITDA increased 50.2% to $53.2 million, or 33.9% of revenue, quarter-over-quarter driven by continued operational scale and increased operating leverage
Revenue increased 31.3% quarter-over-quarter and 131.1% year-over-year to $157.1 million
New milestone of positive net income of $9.6 million or $0.04 per basic and diluted share
Positive cash flow from operations for the third consecutive quarter
Strong balance sheet and financial flexibility will support continued growth in 2021
CHICAGO and VANCOUVER, British Columbia, Nov. 11, 2020 (GLOBE NEWSWIRE) -- Green Thumb Industries Inc. (“Green Thumb,” or the “Company”) (CSE: GTII) (OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner of Rise™ retail stores, today reported its financial results for the third quarter ended September 30, 2020. Financial results are reported in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and all currency is in U.S. dollars.
“This was an excellent quarter for Green Thumb as we delivered substantial revenue growth and our ‘Enter, Open, Scale’ strategy is generating meaningful operating leverage across our business. We expanded gross margins and EBITDA margins quarter-over-quarter while delivering positive net income for the first time. This was driven by the execution of our capital projects in Illinois, New Jersey, Pennsylvania and Ohio, and the rebound in our Nevada and Massachusetts markets following the initial impact of COVID-19. We are poised to further benefit from the strong tailwinds driving a robust, multi-billion-dollar marketplace*,” said Green Thumb Chairman, Founder and Chief Executive Officer Ben Kovler.
Kovler continued, “Momentum remains strong across the country and in our business. The national election saw a green wave sweep across the country with five states – New Jersey, Montana, South Dakota, Arizona and Mississippi – all legalizing their respective cannabis programs. New Jersey is great news for us as we think that legal market has the potential to mirror Illinois – a single state, multi-billion dollar legal cannabis market about to be born. There was resounding support for our mission to promote well-being through cannabis and we remain bullish on our strategic position and the long-term prospects of our business.”
Revenue: Revenue for the third quarter 2020 increased 31.3% quarter-over-quarter and 131.1% year-over-year to $157.1 million. Revenue growth was driven primarily by the increased scale in the Company’s Consumer Packaged Goods and Retail businesses.
Gross Margin: Gross margin for the third quarter 2020 was 55.4% compared to 53.2% for the prior quarter.
Net Income Attributable to Green Thumb: Net income attributable to the Company for the third quarter 2020 was $9.6 million or $0.04 per basic and diluted share.
Adjusted Operating EBITDA: Adjusted Operating EBITDA(1), which is a non-GAAP financial measure as described below and in an accompanying financial table in this release, increased 50.2% to $53.2 million or 33.9% of revenue for the third quarter 2020 compared to $35.4 million or 29.6% of revenue for the prior quarter.
Balance Sheet: As of September 30, 2020, current assets totaled $159.1 million and included cash and cash equivalents of $78.1 million. Total debt outstanding was $97.1 million, $0.3 million of which is due within 12 months.
(1) EBITDA refers to earnings before income, taxes, depreciation and amortization. EBITDA and Adjusted Operating EBITDA are non-GAAP financial measures. Please see the “Supplemental Information (Unaudited) Regarding Non-GAAP Financial Measures” at the end of this press release for a reconciliation of non-GAAP to GAAP measures.
Additional Management Commentary
Kovler added, “As we near the close of 2020, Green Thumb is positioned to win. We remain focused on distributing our consumer brands at scale and delivering superior consumer experiences while giving back to our communities. Our focus, along with our strong balance sheet, underlying fundamentals and prudent capital allocation, will continue to provide the flexibility to capitalize on the growth opportunities ahead. We remain laser focused on delivering shareholder value in everything we do.”
Consumer Packaged Goods Business Development
As of September 30, 2020, Green Thumb’s family of consumer brands are produced, distributed, and available in retail locations in eleven states: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, Ohio and Pennsylvania.
Gross branded product sales grew sequentially by approximately 32.6% quarter-over-quarter, driven primarily by expanded product distribution.
Green Thumb completed the initial phase of construction of its manufacturing facility in Oglesby, Illinois and began producing and distributing its brand portfolio from that facility during the third quarter. The Company also added branded-product production and distribution capabilities to two new markets, New Jersey and Ohio.
Green Thumb continued to develop its brand portfolio with the launch of Snoozzzeberry gummies under the incredibles brand in Illinois and Nevada.
Retail Business Development
Green Thumb’s third quarter revenue included sales from 48 retail stores across ten states: Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio and Pennsylvania.
Comparable sales growth (stores opened at least 12 months) exceeded 65.0% on a base of 25 stores, driven primarily by increased transactions. Sequential quarter-over-quarter comparable sales were up 17.9% on a base of 42 stores.
Retail revenue increased sequentially by 27.9% quarter-over-quarter, primarily driven by increased foot traffic in established stores.
Subsequent to the quarter end, in October, Green Thumb expanded retail service in Pennsylvania and Illinois:
Pennsylvania: Opened Rise™ Monroeville, bringing total open stores in the state to 13.
Illinois: Began adult-use sales in Naperville with the opening of Rise™ Naperville (a rebrand of 3C Compassionate Care Center which previously only serviced registered medical cardholders), the city’s first adult-use cannabis store. The Company has a total of eight open stores in the state with the ability to open two additional stores for a total of ten stores.
Green Thumb announced the launch of the License Education Assistance Program (LEAP) New Business Accelerator, a cannabis business incubator intended to help promote opportunity and success for new social equity entrepreneurs in Illinois.
Green Thumb partnered with Last Prisoner Project (“LPP”), a coalition of cannabis industry leaders, executives and artists dedicated to bringing restorative justice to the cannabis industry, on an integrated marketing campaign, including a short documentary (“Waiting to Breathe”) to raise awareness and funds for LPP.
Third Quarter 2020 Financial Overview
Total revenue for the third quarter 2020 was $157.1 million, up 131.1% from $68.0 million for the third quarter 2019, driven by growth from both the Consumer Packaged Goods and Retail businesses, particularly in Illinois and Pennsylvania. Key year-over-year performance drivers were the expanded distribution of Green Thumb’s branded products, 15 new store openings and increased traffic to the Company’s 48 open and operating retail stores.
Gross profit for the third quarter 2020 was $87.0 million or 55.4% of revenue as compared to $32.1 million or 47.3% of revenue for the third quarter 2019.
Total selling, general and administrative expenses for the third quarter were $49.7 million or 31.7% of revenue, as compared to $30.8 million or 45.2% of revenue for the third quarter 2019. Improved operating costs as a percentage of revenue was driven primarily by cost controls and increased operating leverage in the Company’s Consumer Packaged Goods and Retail businesses.
Total other income was $2.0 million for the third quarter 2020 and primarily reflected favorable fair value adjustments on the Company’s equity investments net of interest and warrant expense associated with the Company’s senior secured notes.
EBITDA for the third quarter 2020 was $48.7 million or 31.0% of revenue as compared to $9.1 million or 13.3% of revenue for the third quarter 2019. Adjusted Operating EBITDA for the third quarter 2020, which excluded only non-cash stock-based compensation of $4.4 million, was $53.2 million or 33.9% of revenue as compared to $13.8 million or 20.3% of revenue for the third quarter 2019. The significant improvement in EBITDA and Adjusted Operating EBITDA was driven primarily by revenue growth from both the Consumer Packaged Goods and Retail businesses. For additional information on these non-GAAP financial measures, see below under “Non-GAAP Financial Information.”
Net income attributable to Green Thumb for the third quarter 2020 was $9.6 million or $0.04 per basic and diluted share as compared to a net loss of $14.6 million or ($0.07) per basic and diluted share for the third quarter 2019.
Balance Sheet and Liquidity
As of September 30, 2020, current assets were $159.1 million, including cash and cash equivalents of $78.1 million. The Company had $97.1 million of total debt.
Total basic and diluted weighted average shares outstanding for the three months ended September 30, 2020 were 211,990,405 and 214,212,292, respectively.
Capital Markets & Financing
Subsequent to the quarter end, in October Green Thumb amended its previously announced sale and leaseback transaction with Innovative Industrial Properties for its Toledo, Ohio manufacturing facility, securing an additional $25.0 million in funding for the construction of a cultivation facility at the property for total investment value of $32.2 million.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial measures as defined by the SEC. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are included in the financial schedules attached to this press release. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP.
*Source: Cowen research report “Cowen’s Cannabis Catalyst Series Part 7 – Alcohol Implications” dated October 22, 2020 estimates the U.S. cannabis total addressable market to reach $100 billion by 2030.
EBITDA: Earnings before interest, taxes, other income or expense and depreciation and amortization.
Adjusted Operating EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for other income, non-cash share-based compensation, one-time transaction related expenses, or other non-operating costs.
Conference Call and Webcast
Green Thumb will host a conference call on Wednesday, November 11, 2020 at 5:00 pm ET to discuss its financial results for the third quarter ended September 30, 2020. The conference call may be accessed by dialing 833-502-0470 (Toll-Free) or 236-714-2182 (International) with conference ID: 5079863. A live audio webcast of the call will also be available on the Investor Relations section of Green Thumb’s website at https://investors.gtigrows.com and will be archived for replay.
Green Thumb Industries Inc.
Highlights from Unaudited Interim Condensed Consolidated Statements of Operations
Three Months Ended September 30, 2020, June 30, 2020 and September 30, 2019
(Amounts Expressed in United States Dollars, Except for Share Amounts)
Green Thumb Industries Inc.
Highlights from Unaudited Interim Condensed Consolidated Balance Sheets
(Amounts Expressed in United States Dollars)
Adjusted Operating EBITDA
(Amounts Expressed in United States Dollars)
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