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 third quarter ended September 30, 2021. 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 September 30, 2021
- Revenue increased 5.3% sequentially and 48.7% year-over-year to $233.7 million.
- Fifth consecutive quarter of positive GAAP net income, delivering $20.2 million or $0.08 per diluted share.
- Adjusted Operating EBITDA grew 2.4% sequentially and 52.6% year-over-year to $81.2 million or 34.7% of revenue.
- Seventh consecutive quarter of positive cash flow from operations, delivering $82.8 million year-to-date.
- Cash at quarter-end totaled $285.8 million.
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Key Recent Developments
- On July 1, 2021, the Company expanded into the Virginia cannabis market upon closing the acquisition of Dharma Pharmaceuticals, LLC, the holder of one of five vertical licenses in Virginia, which included a cultivation and operating production facility with one retail location and the opportunity to open up to five additional retail stores. On August 2, the Company opened Rise Salem, its second retail location in Virginia.
- On August 1, 2021, the Company expanded into the Rhode Island cannabis market by acquiring Mobley Pain Management and Wellness (Delaware) LLC and Canwell Processing (Rhode Island) LLC, which both held contractual interests in Summit Medical Compassion Center Inc., including a cultivation and production facility and an open dispensary in the city of Warwick, one of only three operating retail dispensaries in the state.
- On September 1, 2021, the Company acquired GreenStar Herbals, a Massachusetts licensee operating two adult-use retail stores in Dracut and Maynard. A third adult-use location is expected to open in Chelsea in the coming months.
- On October 15th, subsequent to the quarter end, the Company raised an additional $33.2 million of debt at 7% under its $250 million facility. The Company will use the proceeds for general working capital, strategic investments and other growth initiatives.
“Our third quarter results reflected continued execution on our long-term goal to be a brand leader in this rapidly emerging, high-growth consumer category. On a year-over-year basis, we grew revenue by 49% to $234 million; Adjusted EBITDA by 53% to $81 million and we delivered positive cash flow from operations for the seventh consecutive quarter. We ended the quarter with $286 million in cash, which gives us flexibility to generate long-term returns for our stakeholders,” said Green Thumb Chairman, Founder and Chief Executive Officer Ben Kovler.
“As part of our commitment to give back to local communities devastated by the failed War on Drugs, we were very proud to award three unrestricted grants of $75,000 to the inaugural recipients of our Good Green Grant Program: Philadelphia Lawyers for Social Equity, Innovation Works Baltimore and Why Not Prosper. The second round of applications, which can be accessed at www.good.green, is now open to 501c3 organizations through January 12, 2022. We are excited to invest in and work with these amazing organizations to advance meaningful change.”
“Green Thumb is laying tracks for strong growth in 2022, 2023 and beyond. Our net capital expenditures exceeded $70 million in the third quarter bringing year-to-date net capex to over $115 million. Today, the U.S. cannabis market is a $24 billion industry and we believe as new states, new products and new consumers come into the market, it can triple over the next decade,” concluded Kovler.
Third Quarter Financial Overview
Total revenue for the third quarter 2021 was $233.7 million, up 5.3% sequentially and up 48.7% from $157.1 million in the prior year period. Overall performance was driven by expanded distribution of Green Thumb’s branded products and increased traffic in the Company’s 65 open and operating retail stores.
In the third quarter of 2021, Green Thumb generated revenue from all 14 of its markets: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Virginia. The Company continued to invest in expanding the cultivation and production of its branded products, including premium Rythm flower, nationwide.
As of September 30, 2021, current assets were $420.8 million, including cash and cash equivalents of $285.8 million. Total debt outstanding was $206.5 million.
Total basic and diluted weighted average shares outstanding for the three months ended September 30, 2021, were 226,529,671 shares and 230,879,437 shares, respectively.
On October 15th, subsequent to the quarter end, the Company raised an additional $33.2 million of debt at 7% under its $250 million facility. The Company will use the proceeds for general working capital, strategic investments and other growth initiatives.
Expansion of Consumer Packaged Goods Business
- As of September 30, 2021, Green Thumb’s family of consumer brands—Rythm, Dogwalkers, incredibles, Beboe, Dr. Solomon’s and now Good Green—were produced, distributed, and available in retail locations across the country.
- During the third quarter and subsequent to quarter end, Green Thumb’s Consumer Packaged Goods activity included:
- On July 1, 2021, the Company expanded into Virginia and added a cultivation and production facility through its acquisition of Dharma Pharmaceuticals, LLC.
- On August 1, 2021, Green Thumb expanded into Rhode Island and added a cultivation and production facility in Warwick, Rhode Island.
- On October 14, 2021, subsequent to quarter end, Green Thumb announced that Good Green products—its line of cannabis products that reflects the Company’s mission to promote change by making impactful investments in organizations working to correct the harms created by the War on Drugs—are now available in Illinois, Maryland, Massachusetts, New Jersey and Pennsylvania.
Retail Business Development
- Green Thumb’s third quarter revenue included sales from 65 retail stores across 13 states: California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Virginia.
- Comparable sales growth (stores opened at least 12 months) was 14% on a base of 48 stores, driven primarily by increased transactions. Sequential comparable sales were up 1% on a base of 56 stores.
- Retail revenue increased 7.3% sequentially, driven by increased foot traffic in established stores and new store openings.
- During the third quarter and subsequent to quarter end, Green Thumb’s retail activity included:
- Virginia: Green Thumb added Rise Abingdon through its acquisition of Dharma Pharmaceuticals, LLC on July 1. The Company opened Rise Salem, its second location in the state on August 2, 2021. Proceeds from the first day of sales at Rise Salem were donated to Feeding Southwest Virginia, a local food bank. Green Thumb has the opportunity to open four more retail locations in the Commonwealth.
- Rhode Island: Green Thumb added Summit Medical Compassion Center in Warwick through an acquisition on August 1, 2021.
- Pennsylvania: On August 10, 2021, the Company opened Rise Warminster. Profits from the first day of sales were donated to National Giving Alliance (NGA), which works to improve the quality of life for homeless, low-income and moderate-income children, women and men.
- Massachusetts: On September 1, 2021, Green Thumb acquired GreenStar Herbals, a licensee that operates two adult-use retail locations in Dracut and Maynard, with a third adult-use retail location expected to open in Chelsea in the coming months.
- New Jersey: On September 14, 2021, Green Thumb opened Rise Bloomfield, its third store in the state. First day profits were donated to the Bloomfield Youth Aid Foundation that provides developmental opportunities to local youth.
- Illinois: On October 16, 2021, subsequent to quarter end, Green Thumb held the grand re-opening of its newly expanded store, Rise Mundelein, in a northern suburb of Chicago. The enhanced space provides guests and patients an open concept bar for consultations, purchases and legal on-site consumption of cannabis. It is the first store in Illinois to offer roll-through car service for medical patients to pick-up orders.
Green Thumb in the Community
On July 21, the Company announced plans to launch Good Green, a line of cannabis products dedicated to making impactful investments in organizations working to correct the harms created by the War on Drugs. Green Thumb plans to allocate at least $1,000,000 in social equity grants by the end of 2022 to be funded by ongoing Good Green sales. Grant applications were made available to nonprofits supporting the brand’s three pillars: education, employment and expungement.
On July 29, Green Thumb launched the application process for its previously announced LEAP (Licensed Education Assistance Program) New Business Accelerator. The LEAP incubation program is intended to help Illinois social equity licensees not only operationalize their licenses but also ensure their success through mentorship and guidance from the Green Thumb team. Green Thumb will loan a total of at least $1 million to the winning applicants. Applications and additional information are available at www.gtigrows.com/LEAP. The Company is also exploring options to bring the LEAP program to New York, New Jersey and Connecticut, where social equity-focused cannabis business licenses have been developed as part of new adult-use legislation.
On October 14, Green Thumb announced the inaugural recipients of Good Green grants—the Company’s program where purpose and profits go hand-in-hand. Three nonprofits were selected out of 80 applicants. The second round of Good Green grant applications is now open to 501c3 organizations until January 12, 2022. Applications and additional information are 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. 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.
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 stock-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, November 10, 2021, at 5:00 pm ET to discuss its third quarter 2021 financial results for the quarter ended September 30, 2021. The earnings call may be accessed by dialing 866-777-2509 (toll-free) or 412-317-5413 (International) with conference ID: 10160347. 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.