The Cannabist Company Holdings Inc. (Cboe CA: CBST) CBSTF 3LP, one of the largest and most experienced cultivators, manufacturers and retailers of cannabis products in the U.S., reported its financial and operating results Thursday for the first quarter ended March 31, 2024.
Q1 2024 Financial Highlights
- Revenue was $122.6 million, a slight decrease from the $124.5 from the same period last year.
- Net loss was $34.6 million, compared with the $36.6 million from Q1 2023.
- Adjusted EBITDA was $15.3 million, compared to the $16.4 reported in the same period 2023.
- Gross profit was $42.5 million, compared to the $124.5 million from the same period last year.
The company concluded the first quarter with $44.5 million in cash, buoyed by successful fundraising initiatives including a $25.75 million private placement offering of convertible notes. Additionally, strategic debt exchanges further fortified the company’s financial position, exemplifying a prudent approach to capital management.
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Despite facing cash flow challenges, with negative cash from operations amounting to $6.2 million, the company remained steadfast in its commitment to prudent capital expenditure, earmarking investments for new store openings and manufacturing upgrades.
Operational Highlights
Strategic partnerships with renowned brands such as Old Pal, Airo Brands, ButACake, Revelry Herb Co., and Edie Parker Flower facilitated enhanced throughout in manufacturing facilities and bolstered utilization of cultivation footprint.
Retail revenue, although experiencing seasonal fluctuations, exhibited a resilient performance, accompanied by a disciplined approach to discounting, resulting in a 200 basis point improvement in gross margin. The company’s retail footprint expanded to 85 locations across 15 markets, with plans for additional openings slated for 2024.
Management Perspective
"Our first quarter results demonstrate an improvement over the prior quarter on a margin basis, and we are encouraged by the green shoots that are evident in several critical areas of the business. As we have emphasized, this year we are committed to building a better business, with a focus on improving our margins as we target free cash flow generation," CEO David Hart said in a press release,
"We have demonstrated early successes in better utilizing our footprint and existing cultivation and manufacturing facilities, evidenced by a decrease in the overhang on gross margin in the quarter. We are transforming the wholesale business, including shifting the wholesale mix toward finished goods and building strategic brand partnerships that are helping to recapture margin across the portfolio,” Hart continued. “As we look ahead, we are preparing for the upcoming adult use transition in Ohio and are continuing to capitalize on growth opportunities in markets like Virginia and New Jersey. Though we are encouraged by the results of the first quarter, we know there is more work to do. We look forward to enacting additional changes to the business so that we end 2024 having a materially improved financial position and are poised to compete more effectively."
CBSTF Price Action
CBSTF's shares were trading 9.09% lower at $0.28 per share at the time of this writing around 10:15 AM ET Thursday.
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