Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) (“Curaleaf” or the “Company”), a leading international provider of consumer products in cannabis, today reported its financial and operating results for the first quarter ended March 31, 2021. All financial information is provided in U.S. dollars unless otherwise indicated.
Joe Bayern, Chief Executive Officer of Curaleaf stated, “Curaleaf delivered record first quarter 2021 financial results with total revenue exceeding the high-end of our guidance range as we extended our U.S. leadership, all while creating a new foundation for future international growth opportunities. The stronger than expected first quarter performance drove record adjusted EBITDA as well as approximately 640 basis points of improvement in gross margin year-over-year. These impressive results reflect the leverage of the strategic investments we have made across the organization in cultivation, product innovation as well as expanding our branded retail and wholesale distribution channels. Curaleaf launched a range of innovative new products to our retail and wholesale channels during the quarter, including our new Select Squeeze THC-infused beverage enhancer which marked our most successful product launch ever and represented one of the cannabis industry’s widest national product launches to date. With our revenue projected to increase to $305 million to $315 million in the second quarter, we also expect to generate significant improvements in terms of achieving positive net income and positive operating cash flows in the back half of 2021.”
Boris Jordan, Executive Chairman of Curaleaf commented, “With the acceleration of cannabis liberalization momentum at the state and federal levels, Curaleaf’s prospects for growth in the United States have never been stronger. The recent approvals of adult-use cannabis in New Jerseyand New York, which are states where Curaleaf has a leading market share, will unlock vast new markets, worth an estimated $2.1 billion and $5 billion in sales respectively. We raised approximately $300 million in new capital during the first quarter to help support our ability to scale for new adult-use markets while also allowing us to be opportunistic for highly attractive assets that further strengthen our position as the global cannabis market leader.”
First Quarter Highlights
- Record revenue of $260 million, a growth of 170% YoY, above guidance of $250 million to $255 million.
- Record adjusted EBITDA of $63 million, a growth of 213% YoY, and equivalent to a margin of 24%.
- Raised net proceeds of $240.6 million in a public offering and net proceeds of $49.9 million from a tack-on to the existing secured credit facility.
- Closed the quarter with 102 retail locations and 1,992 wholesale partner accounts.
- Launched Select Squeeze, a THC-infused beverage enhancer, to date the widest cannabis product launch in the nation, available in 14 states.
- Retail revenue grew by 14% sequentially, and 231% YoY, representing 72% of total revenue.
- Wholesale revenue grew by 12% sequentially, and 254% YoY, representing 28% of total revenue.
Post First Quarter Highlights
- Successfully closed the acquisition of EMMAC, Europe’s largest vertically integrated independent cannabis company, while securing $80 million in new capital into the European business subsidiary from a strategic investor to support future growth.
- Opened four new stores since March 31, 2021 in Illinois and Pennsylvania, bringing total retail locations to 106.
Financial Results for the First Quarter Ended March 31, 2021
Total revenue increased by 170% to $260 million during the first quarter of 2021, compared to $96 million in the first quarter of 2020.
Retail revenue increased by 231% to $188 million during the first quarter of 2021, compared to $57 million in the first quarter of 2020, representing 72% of total revenue. Growth in retail revenue was primarily due to strong organic growth across Curaleaf’s footprint, the opening of six new stores across Florida, Maine, and Pennsylvania, and the rapid acceleration of revenue growth in Arizona after the introduction of adult-use sales in January of 2021.
Wholesale revenue increased 254% to $72 million during the first quarter of 2021, compared to $20 million in the first quarter of 2020, representing 28% of total revenue. Growth in wholesale revenue was due primarily to the continued national expansion of the Select brand in both the Central and Northeastern markets including Massachusetts, New York, New Jersey, Maryland, Illinois, and Pennsylvania, and the successful launch of new products such as Select Squeeze, Select Essentials, and Select Fresh. It also resulted from strength of the Select brand in core Western markets including Arizona, California, and Oregon.
Gross profit on cannabis sales was $128 million for the first quarter of 2021, compared to $33 million in the first quarter of 2020. Gross profit margin reached 49%, equivalent to a year-over-year increase of 636 basis points. The increase was primarily due to an expansion in operating capacity as well as improved efficiency in the Company’s cultivation and processing facilities.
For the first quarter of 2021, net loss attributable to Curaleaf Holdings, Inc. was $17 million, compared to a net loss of $15 million in the first quarter of 2020. The net result was primarily impacted by an income tax provision of $31 million due to increased gross profit in certain of the Company’s subsidiaries that are subject to the restrictions of Section 280E of the Internal Revenue Code and, to a lesser degree, by an increase in the interest expense related to lease liabilities due to the expanded number of retail sites. Net loss for the quarter included approximately $6 million in one-time charges which mostly include expenses associated with the equity offering and debt raise. These effects were partially compensated by a significant increase in Income from Operations.
| (1) | Depreciation and amortization expense in Q1 2021, Q4 2020, and Q1 2020 include amounts charged to cost of goods sold on the statement of profits and losses. |
| (2) | One time charges in Q1 2021 mostly include expenses associated with the equity offering and debt raise. |
Adjusted EBITDA was a record $63 million for the first quarter of 2021, compared to $20 million for the first quarter of 2020. The year-over-year increase in adjusted EBITDA was primarily driven by solid revenue growth combined with strong operating leverage.
Balance Sheet and Liquidity
As of March 31, 2021, the Company had $315 million of cash and $340 million of outstanding debt net of unamortized debt discounts.
Capital Expenditures
During the first quarter of 2021, Curaleaf invested $31 million net in capital expenditures, mostly attributable to cultivation, processing, and retail sites development activities.
Shares Outstanding
As of March 31, 2021 and December 31, 2020, our weighted average shares outstanding amounted to 682,041,420 and 557,192,899 shares, respectively.
As of March 31, 2021 and December 31, 2020, our issued and outstanding SVS and MVS shares amounted to 686,409,852 and 663,801,845 shares, respectively.
Non-IFRS Financial and Performance Measures
In this press release Curaleaf refers to certain non-IFRS financial measures such as “Gross Profit on Cannabis Sales” and “Adjusted EBITDA”. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. The Company defines “Gross Profit on Cannabis Sales” as retail and wholesale revenues less cost of goods sold. “Adjusted EBITDA” is defined by Curaleaf as earnings before interest, taxes, depreciation and amortization less share-based compensation expense and one-time charges related to business development, acquisition, financing and reorganization costs. Curaleaf considers these measures to be an important indicator of the financial strength and performance of our business. We believe the adjusted results presented provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies and allow investors to review performance in the same way as our management. Since these measures are not calculated in accordance with IFRS, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies. The following tables provide a reconciliation of each of the non-IFRS measures to its closest IFRS measure.
| Consolidated Statements of Profits and Losses (Unaudited) |
| ($ thousands, except for share and per share amounts) |
