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 fourth quarter and full year ended December 31, 2022. 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 fourth quarter ended December 31, 2022:
- Revenue of $259 million increased 6% year-over-year and decreased 1% sequentially.
- Cash flow from operations of $70 million.
- Cash at quarter end totaled $178 million.
- GAAP net loss of ($51 million) or ($0.22) per basic and diluted share.
- Adjusted net income of $12 million or adjusted basic and diluted earnings per share of $0.05, excluding non-cash impairment charges.
- Adjusted Operating EBITDA of $81 million or 31% of revenue.
Highlights for the year ended December 31, 2022:
- Revenue of $1 billion increased 14% over the prior year.
- Cash flow from operations of $159 million.
- GAAP net income of $12 million or $0.05 per basic and diluted share.
- Adjusted net income of $75 million or adjusted basic and diluted earnings per share of $0.32, excluding non-cash impairment charges recognized in the fourth quarter.
- Adjusted Operating EBITDA of $311 million or 31% of revenue.
- Strong balance sheet and disciplined capital allocation to support continued future growth.
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
“In 2022, Green Thumb reached $1 billion in annual revenue while delivering over $300 million in Adjusted Operating EBITDA. Our team continued to execute on our mission by building authentic brands that resonate with consumers. As a federally illegal business with limited access to capital, we remain focused on our cash position, while consistently paying interest and taxes on time. The lack of progress regarding cannabis regulation from our elected officials in Congress is mind-numbing. The crippling tax burden continues to hurt new operators by greatly reducing their prospects for a profitable and sustainable cannabis business,” said Green Thumb Founder, Chairman and Chief Executive Officer Ben Kovler.
“While there is notable price compression in the market right now, units sold continues to climb, up 28% year-over-year according to BDSA, indicating that demand for cannabis products remains strong. I am confident that Green Thumb has the right team, the right brands, and the right operational setup to navigate the middle innings of this industry and beyond. Equally important, Green Thumb had $178 million in cash at year end, which is a $31 million increase over last quarter, and we delivered $159 million in cash flow from operations for the year. This financial strength provides for both optionality and durability going forward.”
Fourth Quarter and Full Year 2022 Financial Overview
Total revenue for the fourth quarter 2022 was $259.3 million, up 6.4% from $243.6 million for the fourth quarter 2021. For the full year 2022, total revenue increased 13.9% to $1.0 billion. Revenue growth in the fourth quarter was primarily driven by the legalization of adult-use sales in New Jersey, which began on April 21, 2022, as well as revenue generated from acquisitions made throughout 2021.
Overall retail revenue increased 14.2% versus the fourth quarter of 2021 and 24.1% for the full year 2022. Fourth quarter 2022 comparable sales (stores open at least 12 months) increased 3.4% versus prior year on a base of 65 stores. Consumer Packaged Goods gross revenue increased 1.7% versus the fourth quarter of 2021 and 6.0% for the full year 2022.
Gross profit for the fourth quarter 2022 was $124.0 million or 47.8% of revenue compared to $128.6 million or 52.8% of revenue for the fourth quarter 2021. For the full year, gross margin was $504.0 million or 49.5% of revenue versus $491.9 million or 55.1% in 2021. The decline in gross margin percentage was primarily driven by price compression.
Total selling, general and administrative expenses for the fourth quarter were $80.0 million or 30.9% of revenue, compared to $74.3 million or 30.5% of revenue for the fourth quarter 2021. Total selling, general and administrative expenses for the full year 2022 were $294.4 million or 28.9% of revenue, an increase from $277.1 million or 31.0% of revenue in the prior year. During the fourth quarter 2022, the Company also recorded a non-cash impairment charge of $88.5 million related to its Nevada business. This consisted of two charges: a $57.4 million goodwill impairment charge and a $31.1 million write off of the Essence tradename intangible.
Total other expense was $14.1 million for the fourth quarter 2022, primarily reflecting interest expense associated with the Company’s senior secured notes, as well as various fair value adjustments associated with the Company’s existing investment portfolio. Total other expense for the full year was $12.6 million.
Net loss attributable to the Company for the fourth quarter 2022 was ($51.2 million) or ($0.22) per basic and diluted share, compared to net income of $22.8 million, or $0.10 per basic and diluted share in the prior year. Net income for the full year 2022 was $12.0 million or $0.05 per basic and diluted share. Excluding the non-cash impairment charges of $88.5 million, adjusted net income for the fourth quarter and full year 2022 was $12 million and $75 million, or adjusted basic and diluted earnings per share of $0.05 and $0.32, respectively.
EBITDA for the fourth quarter 2022 was ($19.6 million) or (7.5%) of revenue compared to $75.6 million or 31.0% of revenue for the fourth quarter 2021. EBITDA for the full year 2022 was $217.7 million, or 21.4% of revenue. Adjusted Operating EBITDA for the fourth quarter 2022, which excluded non-cash stock-based compensation, other non-operating costs, and impairment charges, was $81.2 million or 31.3% of revenue as compared to $76.0 million or 31.2% of revenue for the fourth quarter 2021. Adjusted Operating EBITDA for the full year was $311.5 million or 30.6% of revenue, compared to $307.8 million or 34.5% of revenue last year.
For additional information on these non-GAAP financial measures, see below under “Non-GAAP Financial Information.”
Balance Sheet and Liquidity
As of December 31, 2022, current assets were $351.4 million, including cash and cash equivalents of $177.7 million. Total debt outstanding was $275.7 million.
Total basic and diluted weighted average shares outstanding for the three months ended December 31, 2022 were 237.2 million.
On July 14, 2022, Green Thumb announced it exercised its right to extend the maturity date of its senior non-brokered debt by one year, from April 30, 2024 to April 30, 2025. The Company’s senior secured notes (the “Notes”), which have a total principal amount of approximately $250 million, bear interest at a rate of 7.0% per annum that is paid quarterly. The extended maturity date did not involve any amendments to the Notes or any additional consideration to the existing lenders.
Green Thumb in the Community
Since 2021, Green Thumb has donated more than $3.5 million to organizations nationwide through grants, retail giving programs, cannabis education scholarships, and efforts to increase voter participation in support of cannabis policy reform. This includes contributions of $1.5 million made through the Company’s Good Green brand to nonprofit organizations that are enacting real, positive change in Black and Brown communities disproportionately affected by the War on Drugs.
On November 29, 2022, the Company announced its third round of grants to four nonprofits through its Good Green grant program. Each organization selected encompasses one or more of Good Green’s core pillars: education, employment and expungement. The four recipients: The Petey Green Program, Minority Cannabis Academy, CEIC Corp (DBA Cannabis Equity IL Coalition) and Nolef Turns, Inc. received unrestricted grants of $50,000 each to help advance their organization’s mission. Additional information is available at www.good.green.
Non-GAAP Financial Information
This press release includes certain non-GAAP financial measures as defined by the U.S. Securities and Exchange Commission (“SEC”). Reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP are included in the financial schedules attached to this press release. This information should be considered as supplemental in nature and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP.
Definitions
EBITDA: Earnings before interest, taxes, depreciation and amortization and is a measurement of financial performance without having to factor in financing decisions, accounting decisions or tax environments.
Adjusted Operating EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for other income, non-cash share based compensation, one-time transaction related expenses, or other non-operating costs.
Adjusted Net Income: Net income attributable to Green Thumb Industries Inc., adjusted for non-cash goodwill impairment charges, write-off of trade name intangible assets and income tax benefits related to these charges.
Conference Call and Webcast
Green Thumb will host a conference call on Tuesday, February 28, 2023 at 5:00 pm ET to discuss its fourth quarter and full year 2022 financial results for the year ended December 31, 2022. The conference call may be accessed by dialing 844-883-3895 (Toll-Free) or 412-317-5797 (International). A live audio webcast of the call will also be available on the Investor Relations section of Green Thumb’s website at https://investors.gtigrows.com and will be archived for replay.
