Green Thumb Industries Reports Record Results for the Fourth Quarter and Full Year 2020

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, 2020. 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 quarter ended December 31, 2020:

• Revenue increased 12.8% sequentially and 133.8% year-over-year to $177.2 million
  
• Second consecutive quarter of positive GAAP net income, delivering $22.5 million or $0.11 per basic and diluted share
  
• Adjusted Operating EBITDA grew 23.1% sequentially and 374.0% year-over-year to $65.4 million or 36.9% of revenue
  
• Fourth consecutive quarter of positive cash flow from operations
  
• Subsequent to quarter end, raised approximately $156.0 million in sales of U.S. Securities and Exchange Commission (“SEC”) registered shares

Highlights for the year ended December 31, 2020:

• Revenue increased 157.2% to $556.6 million
  
• Positive GAAP net income of $15.0 million or $0.07 per basic and diluted share, compared with a GAAP net loss of $59.1 million or a loss of $0.31 per basic and diluted share in the prior year
  
• Adjusted Operating EBITDA grew 546.9% to $179.6 million or 32.3% of revenue
  
• Strong balance sheet and disciplined capital allocation to support continued future growth
  
• Secured $25 million in an amended sale and leaseback transaction with Innovative Industrial Properties (“IIP”) for its Toledo, Ohio manufacturing facility to fund the construction of a cultivation facility on the property

See definition and reconciliation of non-GAAP measures elsewhere in this release.

Management Commentary        

“This was a solid quarter to top off a milestone year for the Green Thumb team. In the fourth quarter, we delivered substantial revenue growth, expanded gross margins, recorded our fourth consecutive quarter of improved operating leverage and achieved positive GAAP net income and EPS for the second quarter in a row. The entire Green Thumb team should be proud of these full year 2020 numbers: $557 million of revenue, $180 million of Adjusted EBITDA, $15 million of GAAP net income, 7 cents a share of GAAP EPS and over $95 million in cash flow from operations,” said Green Thumb Chairman, Founder and Chief Executive Officer Ben Kovler.

Kovler continued, “To start off 2021, we completed our U.S. initial public offering and first sale of SEC-registered shares directly to U.S. investors. We view the institutional support as a vote of confidence in our proven operating model and a leading indicator of what’s to come for the industry. The capital markets are waking up to the great American cannabis growth story and the ‘Green Wave’ is picking up steam.

“November 2020 also validated that Americans across the country from all walks of life want expanded access to cannabis. The new administration has indicated strong support for advancing comprehensive cannabis reform that will focus on social equity and recognize the wellness benefits of cannabis. The Green Thumb team is more energized than ever to provide consumers with more choices for well-being, create more jobs and opportunity for communities, and continue our advocacy for social equity.

“Green Thumb is well-positioned. Our balance sheet is strong, our brands are connecting with consumers and our capital projects are on track. At the same time, we will maintain our focus on diligent execution and high-value capital expenditure allocation that will create sustainable value for all our stakeholders. The real fun is just beginning.”

Investing in Community and Team Well-Being

• Green Thumb is working to ensure the health and safety of its front-line team by actively advocating on their behalf to receive COVID-19 vaccines when available.
  
• Green Thumb donates its First Day Profits of new retail locations to local charities as part of its mission of giving back to the communities in which it serves.
  
• Green Thumb’s Dogwalkers brand created the “Bailey Legacy Fund” to support animal rescue organizations to expand upon its founding program of donating a portion of Dogwalkers brand pre-roll proceeds to local community animal shelter programs.
  
• Green Thumb announced the expansion of its LEAP social equity opportunity and support program to include a cannabis business incubator intended to enable success for new entrepreneurs in Illinois.
  
• Green Thumb launched an integrated awareness campaign, including a short documentary, “Waiting to Breathe,” in partnership with The Last Prisoner Project (“LPP”), a coalition of cannabis industry leaders dedicated to bringing restorative justice to those most harmed by the war on drugs.
  
• Green Thumb announced key partnerships and scholarships to be granted to students for programs at the Cleveland School of Cannabis in Ohio and Olive-Harvey College in Illinois to support industry diversity through education. Additionally, Green Thumb will partner with the Cabrini Green Legal Aid and the North Lawndale Employment Network in Chicago as part of an ongoing collaboration including financial support, volunteerism and awareness initiatives.

Fourth-Quarter and Full-Year 2020 Financial Overview 

Total revenue for the fourth quarter 2020 was $177.2 million, up 12.8% sequentially and up 133.8% from $75.8 million for the fourth quarter 2019. For the full year 2020, total revenue was $556.6 million, up 157.2% from the prior year. Revenue growth was primarily driven by increased scale in the Company’s Consumer Packaged Goods and Retail businesses, especially in Illinois and Pennsylvania. Key year-over-year performance drivers were the expanded distribution of Green Thumb’s branded products, 11 new store openings and increased traffic in the Company’s 51 open and operating retail stores.

In the fourth quarter of 2020, Green Thumb generated revenue from all 12 of its markets: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio and Pennsylvania. The Company continued to invest in the expansion of its cultivation and manufacturing capabilities in Illinois, Maryland, Massachusetts, New Jersey, Ohio and Pennsylvania.

Gross profit for the fourth quarter 2020 was $100.5 million or 56.7% of revenue compared to $40.6 million or 53.6% of revenue for the fourth quarter 2019. For the full-year, gross margin was $304.2 million or 54.7% of revenue, increasing 520 basis points vs. 2019. Gross margin performance was driven by increased scale in the consumer packaged goods and retail business.

Total selling, general and administrative expenses for the fourth quarter were $53.2 million or 30.0% of revenue, compared to $46.7 million or 61.6% of revenue for the fourth quarter 2019. Improved operating costs as a percentage of revenue were driven primarily by increased operating leverage in the Company’s Consumer Packaged Goods and Retail businesses. Total selling, general and administrative expenses for the full year 2020 were $198.1 million or 35.6% of revenue, an increase from $134.7 million in the prior year, or 62.2% of revenue.

Total other income was $3.5 million for the fourth quarter 2020, primarily reflecting favorable fair value adjustments on the Company’s equity investments net of interest and warrant expense associated with the Company’s senior secured notes. Total other expense for the full year was $3.2 million.

Net income attributable to the Company for the fourth quarter 2020 was $22.5 million or $0.11 per basic and diluted share, compared to a net loss of $14.1 million, or a loss of $0.07 per basic and diluted share in the prior year. Net income for the full year 2020 was $15.0 million or $0.07 per basic and diluted share.

EBITDA for the fourth quarter 2020 was $61.3 million or 34.6% of revenue compared to $7.8 million or 10.3% of revenue for the fourth quarter 2019. EBITDA for the full year was $158.6 million, or 28.5% of revenue. Adjusted Operating EBITDA for the fourth quarter 2020, which excluded non-cash stock-based compensation of $4.1 million, was $65.4 million or 36.9% of revenue as compared to $13.8 million or 18.2% of revenue for the fourth quarter 2019. The significant improvement in EBITDA and Adjusted Operating EBITDA was driven primarily by revenue growth and increased scale-driven operating leverage from both the Consumer Packaged Goods and Retail businesses. For additional information on these non-GAAP financial measures, see below under “Non-GAAP Financial Information.” Adjusted EBITDA for the full year was $179.6 million or 32.3% of revenue, compared to $27.8 million or 12.8% of revenue last year.

Balance Sheet and Liquidity 

As of December 31, 2020, current assets were $183.9 million, including cash and cash equivalents of $83.8 million. Total debt outstanding was $99.1 million, $342.0 thousand of which is due within 12 months.

Total basic and diluted weighted average shares outstanding for the three months ended December 31, 2020 were 213.2 million and 217.2 million respectively.

Capital Markets & Financing

In October, Green Thumb amended its previously announced sale and leaseback transaction with IIP for its Toledo, Ohio manufacturing facility, securing an additional $25.0 million to fund the construction of a cultivation facility on the property for total investment value of $32.2 million.

In February 2021, subsequent to the quarter end, the Company raised approximately $156.0 million through direct public sales of approximately 4.7 million shares in the Company’s U.S. IPO. The U.S. shares are registered with the SEC. The offering was made pursuant to the Form S-1 Registration Statement, declared effective by the SEC on February 8, 2021, and completed on a “self-underwritten, best efforts” basis.

Expansion of Consumer Packaged Goods Business

• As of December 31, 2020, Green Thumb’s family of consumer brands are produced, distributed, and available in retail locations in twelve states: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio and Pennsylvania.
  
• Gross branded product sales grew sequentially by approximately 31% quarter-over-quarter, driven primarily by expanded scale in production and distribution of branded products.
  
• Green Thumb continued the development and expansion of its brand portfolio with the launch of the socially-dosed Beboe brand in Illinois. The portfolio includes the iconic rose gold Inspired and Downtime vape pens and Inspired Tartberry and Downtime Blueberry-lavender pastilles edibles.
  
• Subsequent to quarter end, Green Thumb announced an exclusive partnership with Cann, the leading cannabis-infused beverage brand, to manufacture and distribute its line of cannabis-infused sparkling beverages across the country, beginning in Illinois this Spring.

Retail Service Business Development

• Green Thumb’s fourth quarter revenue included sales from 51 retail stores across ten states: Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio and Pennsylvania. The company opened 11 new stores during 2020.
  
• Comparable sales growth (stores opened at least 12 months) was 60.0% on a base of 32 stores, driven primarily by increased transactions. Sequential quarter-over-quarter comparable sales were up 6% on a base of 48 stores.
  
• Retail revenue increased sequentially by 8% quarter-over-quarter, driven by increased foot traffic in established stores.
  
• During the fourth quarter, and subsequent to quarter end, Green Thumb expanded its retail service in:
  
  • Pennsylvania: Opened Rise™ Monroeville in the fourth quarter and Rise™ Erie Peach subsequent to quarter end. First Day Profits were donated to 412 Food Rescue and Community Shelter Services, whose mission is to provide services and shelter to homeless and those at risk of being homeless.
    
  • Illinois: Opened the first adult-use cannabis store in the fourth largest city in the state with the opening of Rise™ Naperville (a rebrand of medical dispensary 3C Compassionate Care Center). The Company operates nine stores with the ability to open a total of ten stores in the state. First Day Profits went to Loaves and Fishes, a local food pantry.
    
  • Florida: Opened Rise™ Kendall on November 18, 2020, bringing the total open stores in the state to seven. First Day Profits were donated to Florida Rights Restoration Coalition, an organization dedicated to establishing a humane re-entry program for individuals with convictions. 
    
  • Connecticut: Acquired Southern Wellness in December 2020, bringing the total open stores in the state to three. 
    
  • California: Expanded retail service to Pasadena, opening the Company’s first retail location in California on March 10, 2021. First Day Profits were contributed to Pasadena Chamber of Commerce Foundation with funds earmarked for the organization’s Minority Small Business Initiative which offers support to minority and women-owned businesses.
    
  • New Jersey: Opened Rise™ Paramus on March 15, 2021, bringing the number of stores in New Jersey to two. First Day Profits will be donated to the Paramus Children’s Health Foundation, which provides financial support to families of children who suffer from a severe illness or injury that results in economic hardship. 

Non-GAAP Financial Information

This press release includes certain non-GAAP financial measures as defined by the 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, other income or expense and depreciation and amortization.

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.

Conference Call and Webcast

Green Thumb will host a conference call on Wednesday, March 17, 2020 at 5:00 pm ET to discuss its fourth-quarter and full-year 2020 financial results for the year ended December 31, 2020. The conference call may be accessed by dialing 877-273-8145 (Toll-Free) or 647-689-5400 (International) with conference ID: 8054618. 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.