Q1 2021 Systemwide Pro Forma Revenue of $31.4 million, an increase of 26% over Q4 2020
Q1 2021 Adjusted EBITDA of $5.9 million, representing an Adjusted EBITDA Margin of 19%
Reiterated FY2021 guidance for Systemwide Pro Forma Revenue of $170-180 million and Adjusted EBITDA of $40-50 million
The Company’s existing licensed projects at maturity represent a long-term revenue and EBITDA opportunity upwards of $650 million and $250 million, respectively
Conference call to be held today, May 24, 2021 at 5:00 p.m. ET
PHOENIX, Ariz., May 24, 2021 /CNW/ – 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) (“4Front” or the “Company”), a vertically integrated, multi-state cannabis operator and retailer, today announced its financial results for the first quarter ended March 31, 2021. All financial information is presented in U.S. dollars unless otherwise indicated.
First Quarter 2021 (“Q1 2021”) Financial Results Highlights
- Systemwide Pro Forma Revenue was $31.4 million
- GAAP-reported revenue was $23.0 million
- Adjusted EBITDA was $5.9 million
Operational Highlights
- Strong performance in sales and product adoption across retail locations, exceeding all internal projections; positive momentum continues in Q2
- California
- Company’s state-of-the-art 170,000 square foot production facility in Commerce, California is on track for planned Q2 2021 opening
- Certificate of Occupancy anticipated in the next ten days
- Signed distribution agreement with Nabis, a leading wholesale cannabis distributor to more than 750 stores in California
- Massachusetts
- The Company received its Certificate of Occupancy and approval to operate from the Town of Brookline for its third adult-use dispensary in Massachusetts
- Grand opening in June 2021 pending final approval from the Cannabis Control Commission
- Illinois
- Secured land and funding for new cultivation and production facility in Illinois; groundbreaking scheduled to occur in Q3 2021
Management Commentary
“Our strategy of replicating low-cost production methods in new markets began to take shape and grow at scale in Massachusetts, Illinois and California in our first quarter, extending the momentum we created in 2020,” said Leo Gontmakher, Chief Executive Officer of 4Front. “Utilizing the cultivation and production techniques developed for our facilities in Washington, we have increased the yields and quality of our products produced in both Illinois and Massachusetts, which has enabled us to supply our adult use dispensaries to meet the ever-increasing demand in those markets. As production increases, we plan to begin selling excess product into the wholesale market as well.”
Mr. Gontmakher added, “Continued positive momentum following the initiation of adult use sales in late 2020 in both Georgetown and Worcester, Massachusetts, along with an exceptionally strong launch of our Calumet City, Illinois dispensary in December, contributed to our robust sequential Q1 sales increases and exceeded all internal expectations. Looking ahead, with the completion and opening of our manufacturing facility in Commerce, California just a few weeks out, we expect to be in the market imminently with our suite of high-quality, branded products. As the largest legal cannabis market in the world, California offers a unique opportunity to build efficient operations and create incredible products that are replicable across our nationwide footprint.”
Mr. Gontmakher concluded, “With revenue-generating operations now in California, Illinois, Massachusetts, Michigan, and Washington, we are poised to further scale the business according to our expansion strategy for 2021. We continue to track towards our stated financial guidance for the year, anticipating $170-$180 million in Pro Forma Systemwide Revenue and $40-$50 million in Adjusted EBITDA.”
Business Updates and Developments
Systemwide pro forma revenue increased 26% to $31.4 million in Q1 2021, compared to $25.0 million in Q4 2020. Retail sales and product adoption exceeded internal expectations. This increase was primarily due to higher sales from the two Massachusetts dispensaries following the start of adult use sales in the second half of 2020, and a very strong launch from the Calumet City dispensary that opened in December 2020.
Q1 2021 Adjusted EBITDA was $5.9 million, steady with Q4 2020 representing an adjusted EBITDA margin of 19%. EBITDA margin in the quarter was negatively impacted by the ramp up of the Company’s expanded grow facility in Illinois. While the tripling of the Company’s Illinois cultivation facility’s flowering canopy was completed on time and under budget, the first harvest from the expanded facility was not completed until April, leading to a one-time, higher than expected average cost per gram for manufactured products in Q1 2021. Through the first month of Q2, 4Front has more than tripled its Illinois harvest output and expects a meaningful rebound in margins in Q2.
The Company’s fully-funded, state-of-the-art 170,000 square foot manufacturing facility in Commerce, California is nearing completion and remains on track to be ready to serve the California cannabis market beginning in Q2 2021. The Company’s first suite of products will include edibles, tinctures, capsules and infused pre-rolls, including Marmas™, Pebbles™, Chewees™, Hi-Burst™, Verdure™ and Terp Stix™. The Company has signed a distribution agreement with Nabis, a leading distributor of cannabis products. Nabis distributes brands to more than 750 dispensaries in California, covering 99% of licensed retailers in the state.
Construction of the Company’s third Massachusetts Mission Dispensary in Brookline is complete. The Company also announced that it has cleared all municipal processes with the City of Brookline including receiving its Certificate of Occupancy. Pending final approval from the Cannabis Control Commission, the grand opening is slated for June 2021.
In Illinois, the recently announced development of our new cultivation and production facility continues as scheduled with construction beginning in Q3 2021. The first phase, a 258,000 square foot building with 65,000 square feet of flowering canopy and approximately 70,000 square feet of manufacturing space is on track to break ground in Q3 2021.
Conference Call
The Company will host a conference call and webcast on Monday, May 24, 2021 at 5:00 p.m. ET to review its operational and financial results and provide an update on current business trends.
To join the call, dial 1-877-407-0792 toll free from the United States or Canada or 1-201-689-8263 if dialing from outside those countries. The webcast can be accessed at this link.
The call will be available for replay until Monday, May 31, 2021. To access the telephone replay, dial 1-844-512-2921 toll free from the United States and Canada, or 1-412-317-6671 if dialing from outside those countries, and use this replay pin number: 13719936.
