Green Thumb Industries Inc. (“Green Thumb” or the “Company”) (CSE: GTII) (OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner of RISE Dispensaries, today reported its financial results for the first quarter ended March 31, 2023. Financial results are reported in accordance with U.S. generally accepted accounting principles (“GAAP”) and all currency is in U.S. dollars.
Highlights for the first quarter ended March 31, 2023:
- Revenue increased 2% year-over-year to $249 million.
- GAAP net income of $9 million or $0.04 per basic and diluted share.
- Adjusted EBITDA was $76 million or 31% of revenue.
- Cash flow from operations of $75 million in the first quarter.
- Cash at quarter end totaled $185 million.
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
“Green Thumb’s momentum continues to build in 2023, and I am incredibly proud of our team for their unwavering commitment to creating high-quality products and delivering positive experiences for our patients and consumers. In the first quarter, our revenue increased 2% year-over-year to $249 million, despite continued price compression. Net income was $9 million, or $0.04 per diluted share. Adjusted EBITDA increased 14% to $76 million in the quarter, a greater than 300 basis point margin improvement to 30.7% year-over-year,” said Green Thumb Founder, Chairman and Chief Executive Officer Ben Kovler.
“Our $185 million cash balance continues to give us the optionality to make investment decisions that will position us for the increasing demand for legal cannabis, a market estimated by analysts to grow to $75 billion over the next decade. For the past few years, we have made sizeable investments to strengthen our infrastructure and expand our capacity rather than focus our dollars on significant M&A. These strategic decisions strengthen our balance sheet and will allow us to support additional retail locations in key markets this year,” concluded Kovler.
First Quarter 2023 Financial Review
Total revenue increased 2.4% to $248.5 million from $242.6 million in the prior year period, primarily driven by the operations of the Retail segment as well as adult-use legalization in certain markets. Overall retail revenue increased 9.4% versus the first quarter of 2022. First quarter 2023 comparable sales (stores open at least 12 months) increased 6.3% versus the prior year on a base of 73 stores. Consumer Packaged Goods gross revenue increased 4.3% versus the first quarter of 2022.
Gross profit for the first quarter 2023 was $124.7 million or 50.2% of revenue compared to $122.9 million or 50.7% of revenue for the comparable period. The decline in gross margin was primarily driven by price compression.
Total selling, general and administrative expenses for the first quarter were $80.5 million or 32.4% of revenue, compared to $68.4 million or 28.2% of revenue for the first quarter 2022. Last year benefitted from an acquisition related non-cash fair value credit, which did not occur in the current period.
Net income attributable to the Company for the first quarter 2023 was $9.1 million or $0.04 per basic and diluted share. This compares with net income in the prior year quarter of $28.9 million, or $0.12 per basic and diluted share.
Adjusted EBITDA, which excluded non-cash stock-based compensation of $6.2 million and $2.3 million of other non-operating expenses, was $76.2 million or 30.7% of revenue as compared to $67.0 million or 27.6% of revenue in the comparable period.
For additional information on these non-GAAP financial measures, see below under “Non-GAAP Financial Information.”
Balance Sheet and Liquidity
As of March 31, 2023, current assets were $357.6 million including cash and cash equivalents of $185.4 million. Total debt outstanding was $277.8 million.
Total basic and diluted weighted average shares outstanding for the three months ended March 31, 2023 were 237.4 million and 237.7 million, respectively.
Other Developments
Subsequent to the quarter end, the Company opened two new retail stores in April 2023:
- RISE New Hope, Minnesota, the Company’s 78th retail location in the nation. Profits from the first day of sales were donated to Balanced Veterans Network.
- RISE Grove City, Pennsylvania, the Company’s 79th retail location in the nation. Profits from the first day of sales were donated to Grove City Community Food Pantry.
On April 27, 2023, subsequent to quarter end, the Company announced that Ethan Nadelmann was appointed to its board of directors and joined its compensation committee. Nadelmann brings over 35 years of experience in cannabis policy reform and has a proven track record of transforming state, federal and foreign cannabis and other drug policies through assorted advocacy efforts. He is the founder of both the Drug Policy Alliance and The Lindesmith Center.
