- Q1 2022 Revenue of $111.2 Million, up 90% YoY
- Q1 2022 Adjusted EBITDA of $19.5 Million, up 6% YoY
- US GAAP Operating Loss of $21.1 Million and $8.4 Million for Q1 2022 and Q1 2021, Respectively
- Recently Received Final Approval for Adult Use Sales in New Jersey and Boston
Ayr Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (“Ayr” or the “Company”), a leading vertically integrated U.S. multi-state cannabis operator (“MSO”), is reporting financial results for the three months ended March 31, 2022. Unless otherwise noted, all results are presented in U.S. dollars.
Jonathan Sandelman, Founder, Chairman and CEO of Ayr, said, “We have made excellent progress this year to complete major capex projects and receive regulatory approvals across our footprint. We will now unlock the revenue streams from these various assets going forward – including the start of adult use sales in New Jersey and Boston next month. We invested heavily in these assets ahead of the revenue benefits which has temporarily reduced our operating margins, however we expect these investments to put our forward earnings power in a much stronger position and anticipate improvements to both our top and bottom line in the second half of 2022 as these assets come online and begin to ramp.”
“It has been well-telegraphed by our peers that Q1 was a challenging period for the industry. However, we have maintained or even increased retail market share across most of our footprint despite this challenging backdrop, while also increasing wholesale revenue.”
“The foundation for our business is set, and the investments we have made into our people, our customers, our technology infrastructure, and our retail and cultivation processes are now set to bear fruit. It has been a long journey that has required incredible patience, but as our assets turn on and ramp in Q3 and Q4, we believe we are at the inflection point we’ve been planning for the past 18 months.”
First Quarter Financial Highlights ($ in millions, excl. margin items)
|Q1 2021||Q4 2021||Q1 2022||% Change|
|Adjusted Gross Profit1||$34.2||$63.3||$57.9||69.3%||-8.5%|
|Adjusted EBITDA Margin1||31.5%||23.3%||17.5%||-1,400bps||-580bps|
1Adjusted EBITDA, Adjusted Gross Profit and Adjusted EBITDA Margin are non-GAAP measures, and accordingly are not standardized measures and may not be comparable to similar measures used by other companies. See Definition and Reconciliation of Non-GAAP Measures below. For a reconciliation of Operating Loss to Adjusted EBITDA as well as Gross Profit to Adjusted Gross Profit, see reconciliation table appended to this release.
First Quarter and Recent Highlights
- On May 12, Ayr received its final license to sell adult-use cannabis in the heart of Boston’s Back Bay, the Company’s first adult-use dispensary in Greater Boston. Ayr expects the dispensary to open in June.
- Earlier this week, the New Jersey Cannabis Regulatory Commission approved the Company for adult-use cannabis sales for all three of its retail locations, which is the maximum allowable dispensaries under current state law.
- On May 18, Ayr completed the first sale from its new 80,000 square foot Phoenix cultivation facility. Concurrently, the Company announced the launch of its national pre-roll brand, STiX Pre-Roll Co. (“STiX”) in Arizona.
- Ayr’s flower brand, Kynd, maintained its #1 market position in Nevada per BDSA.
- The Company opened two new dispensaries during the first quarter and an additional two stores in April and May, bringing Ayr’s total footprint to 47 dispensaries across the state.
- Launched Entourage vapes, one of the Company’s ten national brands, Kynd premium flower, and STiX in all 47 Florida dispensaries.
- Closed acquisition of Cultivauna, LLC, the owner of Levia branded cannabis infused seltzers and water-soluble tinctures, on February 15, 2022.
- Signed a consolidating management services agreement with Tahoe Hydroponics, one of Nevada’s top cultivators of high-quality cannabis flower, and NV Green, Inc., producers of leading concentrates, on February 1, 2022, pursuant to the previously announced definitive agreement signed in July 2021.
- Closed acquisition of Herbal Remedies Dispensaries, LLC, an operator of two licensed dispensaries in Illinois, on May 25, 2022.
Financing and Capital Structure
- The Company ended the quarter with a cash balance of $78.7 million.
- At March 31, 2022, there were approximately 70.0 million fully diluted shares outstanding based on a treasury method calculation as of that date.i
- During the first quarter, the Company deployed $33.2 million of capital expenditures and anticipates an additional $37 million of capital expenditures for the remainder of 2022.
- During the first quarter, the Company secured a $26.2 million mortgage loan at a 4.625% interest rate. This loan represents the first monetization of Ayr’s $180 million real estate portfolio. Subsequent to quarter-end, Ayr closed on a second real estate backed financing, with principal of $25.8 million and a 5.5% interest rate. These financings combined have unlocked $52 million of capital for the Company with an industry leading blended interest rate of 5.06%.
i Excludes Ayr granted but unvested LTIP shares totaling 7.7 million.
To date in 2022, the Company has made progress with respect to the milestones that underpin its Q4 2022 expectations. As such, Ayr continues to anticipate an annualized run-rate of $250 million of Adjusted EBITDA, $100 million of operating income and $800 million of revenue for Q4 2022.
The Company’s expectations for future results are based on the assumptions and risks detailed in its MD&A for the period ended March 31, 2022 as filed on SEDAR.
Ayr CEO Jonathan Sandelman, Co-COO Jennifer Drake, and CFO Brad Asher will host the conference call, followed by a question-and-answer period.
Conference Call Date: Thursday, May 26, 2022
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10018928
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the Company’s investor relations team at AYR@elevate-ir.com.
The conference call will be broadcast live and available for replay here.
A telephonic replay of the conference call will also be available for one month beginning at 11:30 a.m. ET on Thursday, May 26, 2022.
Toll-free replay number: (855) 669-9658
International replay number: (412) 317-0088
Replay ID: 8845