- Q4 2021 Revenue of $111.8 Million, up 16% sequentially
- Q4 2021 Adjusted EBITDA of $26.1 Million, flat sequentially
- FY 2021 Revenue and Adjusted EBITDA of $357.6 Million and $98.0 Million, up 131% and 84% Year-over-Year, respectively
- US GAAP Operating Loss of $13.8 Million and $56 Million for Q4 and FY 2021, respectively
MIAMI, March 17, 2022 (GLOBE NEWSWIRE) — Ayr Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO), is reporting financial results for the three and twelve months ended December 31, 2021. Unless otherwise noted, all results are presented in U.S. dollars.
Jonathan Sandelman, Founder, Chairman and CEO of Ayr, said, “2021 was a transformative year for Ayr, with outsized revenue and Adjusted EBITDA growth, and an expanded operating footprint bringing us from our two original states to seven leading cannabis markets, with an eighth pending acquisition close. We added 62 dispensaries and 8 cultivation facilities, while welcoming more than 1,600 teammates. Following this transformative year for our operating footprint, we are now squarely focused on making 2022 a transformative year for Ayr’s earnings power. The CapEx projects we began in 2021 are expected to begin generating revenue for us throughout 2022, leading to our expected significant second half ramp. While these projects have been delayed, we are proud of the extensive expansion our team has achieved through this global pandemic and supply chain crisis.”
“The talent that we have brought into our team and the culture we are strengthening every day continue to be the hidden assets on our balance sheet. Our teammates are all pulling in the same direction, driven by our collective goals of producing high-quality cannabis at scale, delivering remarkable experiences to our customers every day and being a force for good in our communities.”
Fourth Quarter Financial Highlights ($ in millions, excl. margin items)
| Q4 20201 | Q3 2021 | Q4 2021 | % Change Q4/Q4 | % Change Q4/Q3 | |||||||||
| Revenue | $47.8 | $96.2 | $111.8 | 133.9% | 16.2% | ||||||||
| Adjusted Gross Profit1 | $28.7 | $56.6 | $63.3 | 120.6% | 11.8% | ||||||||
| Operating Income/(Loss) | $6.7 | $(8.9) | $(13.9) | NA | NA | ||||||||
| Adj. EBITDA1 | $18.6 | $26.0 | $26.1 | 40.3% | 0.4% | ||||||||
| Adj. EBITDA Margin1 | 38.9% | 27.0% | 23.3% | -1560bps | -370bps |
Full Year 2021 Financial Highlights ($ in millions, excl. margin items)
| FY 20201 | FY 2021 | % Change Y/Y | ||||||
| Revenue | $155.1 | $357.6 | 130.6% | |||||
| Adjusted Gross Profit1 | $91.7 | $207.3 | 126.1% | |||||
| Adjusted Gross Profit1 % | 59.1% | 58.0% | -110bps | |||||
| Operating Income/(Loss) | $1.2 | $(56.0) | NM | |||||
| Adj. EBITDA1 | $53.4 | $98.0 | 83.5% | |||||
| Adj. EBITDA Margin1 | 34.4% | 27.4% | -700bps |
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.
Fourth Quarter and Recent Highlights
- Northeast
- In the first quarter, the Company completed construction of its Boylston Street and Watertown adult-use dispensaries in Massachusetts, both of which are awaiting regulatory approval to open, with revenue from these dispensaries expected in the second quarter.
- In the first quarter, the Company’s final Massachusetts cultivation expansion began the regulatory approval process, with sales from this cultivation facility expected to begin in the fourth quarter.
- In the fourth quarter, the Company opened two new Pennsylvania dispensaries in Montgomeryville and Bryn Mawr.
- Because additional cultivation capacity has come online ahead of expected adult-use demand in Pennsylvania, the Company has decided to defer its cultivation expansion plans in the state to align more closely with the expected timing of adult-use sales.
- In the first quarter, the Company submitted required documentation to allow for adult-use sales at its three dispensaries in New Jersey and is awaiting regulatory approval for conversion.
- In the fourth quarter, the Company completed the construction of its 75,000 sq. ft. cultivation facility in New Jersey, which is awaiting regulatory approval to open.
- Southwest
- In the fourth quarter, the Company completed construction of its 80,000 sq. ft. cultivation facility in Arizona, which is expected to begin generating revenue in the second quarter of 2022.
- The Company continued to grow market share in Nevada to roughly 16% as of January 2022, maintaining strong retail sales despite the fact that the overall Nevada market declined according to BDSA.
- Kynd premium flower has been the top selling flower brand in Nevada for 5 straight months.
- Florida
- In the first quarter, the Company has opened two additional retail stores bringing its total store count to 45.
- As of the first quarter, the Company has doubled monthly revenues relative to the same period in the prior year.
- Initiatives to refresh and expand genetics and improve plant health have resulted in first quarter to date 2022 yields of approximately 1,200 pounds per harvest, up from approximately 650 pounds per harvest in the first quarter of 2021.
- As of the first quarter 2022, the Company’s Gainesville cultivation campus had 68 unique strains under cultivation, approximately half of which are available across Ayr’s Florida stores.
- The Company recently added 40% more power capacity to its Gainesville cultivation site to further improve cultivation results.
- The Company’s hoop houses are in the process of being re-planted with a new strategy better suited to the local weather environment, with the first harvest from the initial 5 acres now expected in the second quarter of 2022.
Recent M&A Highlights
- On February 15, 2022, Ayr announced the closing of its acquisition of Cultivauna, LLC, the owner of Levia branded infused seltzers and water-soluble tinctures.
- On February 7, 2022, Ayr announced regulatory approval of its Interim Management Services Agreement with Tahoe Hydroponics Company and related business NV Green, Inc., deepening the Company’s cultivation presence in Nevada and adding strong cultivation talent and an improved genetic bank to the Ayr portfolio.
- On November 22, 2021 Ayr entered into a definitive agreement to acquire Gentle Ventures, LLC d/b/a Dispensary 33, in addition to the previously announced agreement to acquire Herbal Remedies Dispensaries, LLC , to establish a retail footprint in the state of Illinois. Both acquisitions are subject to customary closing conditions and regulatory approvals.
- On October 4, 2021, Ayr closed its acquisition of PA Natural Medicine, LLC, which added three key dispensary locations in central Pennsylvania to the Company’s footprint, including the college towns of State College and Bloomsburg.
Financing and Capital Structure
- On March 16, 2022, the Company entered into a $26.2 million mortgage loan agreement with a community bank with an annual interest rate of 4.625%.
- During the fourth quarter, the Company repurchased approximately 573,000 subordinate voting shares as part of its stock repurchase program for a total of over CAD $11 million.
- On November 12, 2021, the Company added approximately $147 million of cash to its balance sheet following the sale of Senior Secured Notes at a yield-to-maturity of 9.8%.
- During the fourth quarter, the Company deployed approximately $123 million of capital expenditures and anticipates an additional $70 million of capital expenditures for 2022.
- At December 31, 2021, there were approximately 70.7 million fully diluted sharesi outstanding based on a treasury method calculation as of that date.
_________________
i Excludes Ayr granted but unvested LTIP shares totaling 8.1 million.
Outlook:
Given prior construction delays and uncertain regulatory timelines regarding key revenue-generating initiatives, including regulatory approval for adult-use sales and cultivation expansions in both Massachusetts and New Jersey, the Company expects financial results in the first half of 2022 to remain relatively flat, in-line with industry trends, followed by a step-function in growth beginning in Q3 2022 and continuing through Q4 2022.
Assuming the Company receives these regulatory approvals sufficiently early in Q3 2022, the Company anticipates 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 ending December 31, 2021 as filed on SEDAR.
