Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) (“Trulieve” or “the Company”), a leading and top-performing cannabis company in the U.S., today announced its results for the quarter ended June 30, 2023. Results are reported in U.S. dollars and in accordance with U.S. Generally Accepted Accounting Principles unless otherwise indicated. Numbers may not sum perfectly due to rounding.
Q2 2023 Financial and Operational Highlights*
- Revenue of $282 million, with 96% of revenue from retail sales. Excluding deferred revenue, retail revenue increased by $3 million sequentially driven by increased traffic and volume partly offset by price compression.
- Achieved GAAP gross margin of 50%, with gross profit of $142 million. Reclassification of idle capacity expense to COGS resulted in $2 million of tax savings.
- SG&A expenses lowered by $4 million sequentially to $96 million.
- Reported net loss of $404 million. Adjusted net loss of $15 million* excludes non-recurring charges, asset and goodwill impairments, disposals and discontinued operations. Goodwill impairment was triggered by the recent stock price performance and is not connected to management’s forecasts.
- Achieved adjusted EBITDA of $79 million*, or 28% of revenue.
- Generated cash flow from operations excluding tax payments of $98 million year to date.
- Inventory reduction initiatives drive $24 million in cash generation year to date.
- Cash at quarter end of $160 million.
- Realized record traffic, customers served, and units sold on 4/20 holiday, up 10%, 11%, and 9%, respectively, year over year.
- Sold 11.6 million units of branded product through branded retail, up 9% sequentially.
- Opened five new dispensaries in Macon, Marietta, and Newnan, GA, Apache Junction, AZ, and Limerick, PA.
- Relocated one dispensary in Phoenix, AZ and one dispensary in Fort Myers, FL.
- Exited California retail assets and commenced wind down of operations in Massachusetts as part of cash preservation and generation plan to bolster business resilience.
- Ended the quarter with 32% of retail locations outside of the state of Florida.
*See “Non-GAAP Financial Measures” below for additional information and a reconciliation to GAAP for all Non-GAAP metrics.
Recent Developments
- Realized 200% increase in Maryland traffic in July compared to June following the launch of adult-use sales at our three dispensaries.
- Opened first medical marijuana dispensary in Columbus, OH.
- Added retail locations in Sanford, FL and Pooler, GA and relocated one dispensary in Kissimmee, FL.
- Currently operate 186 retail dispensaries and over 4 million square feet of cultivation and processing capacity in the United States.
Management Commentary
“Demand for legal cannabis remains strong and Trulieve sells the highest volume of branded product through branded retail in the U.S.,” said Kim Rivers, Trulieve CEO. “Our focused strategy, scaled operations and leading retail position provide distinct competitive advantages.”
Rivers continued, “We are on track to exit this year as a leaner, stronger organization, ready to meet the opportunities ahead.”
Financial Highlights*
| Results of Operations | For the Three Months Ended | For the Six Months Ended | ||||||||||||||
| (Figures in millions except per share data and % change based on these figures) | June 30, 2023 | June 30, 2022 | change | March 31, 2023 | change | June 30, 2023 | June 30, 2022 | change | ||||||||
| Revenue | $ | 282 | $ | 314 | (10 %) | $ | 285 | (1 %) | $ | 567 | $ | 624 | (9 %) | |||
| Gross Profit | $ | 142 | $ | 183 | (23 %) | $ | 150 | (6 %) | $ | 292 | $ | 363 | (20 %) | |||
| Gross Margin % | 50 % | 58 % | 53 % | 51 % | 58 % | |||||||||||
| Operating Expenses | $ | 433 | $ | 142 | 205 % | $ | 133 | 225 % | $ | 566 | $ | 291 | 94 % | |||
| Operating Expenses % | 154 % | 45 % | 47 % | 100 % | 47 % | |||||||||||
| Net Loss** | $ | (404) | $ | (22) | — | $ | (64) | — | $ | (468) | $ | (54) | — | |||
| Net Loss Continuing Ops | $ | (342) | $ | (19) | — | $ | (34) | — | $ | (377) | $ | (46) | — | |||
| Adjusted Net Income (Loss) | $ | (15) | $ | 3 | — | $ | (18) | — | $ | (33) | $ | 7 | — | |||
| Diluted Shares Outstanding | 189 | 187 | 189 | 189 | 187 | |||||||||||
| EPS Continuing Ops | $ | (1.80) | $ | (0.09) | — | $ | (0.18) | — | $ | (1.98) | $ | (0.23) | — | |||
| Adjusted EPS | $ | (0.08) | $ | 0.01 | — | $ | (0.09) | — | $ | (0.17) | $ | 0.04 | — | |||
| Adjusted EBITDA | $ | 79 | $ | 111 | (29 %) | $ | 78 | 1 % | $ | 157 | $ | 216 | (27 %) | |||
| Adjusted EBITDA Margin % | 28 % | 35 % | 27 % | 28 % | 35 % |
| *See “Non-GAAP Financial Measures” below for additional information and a reconciliation to GAAP for all Non-GAAP metrics. |
| **Net loss and comprehensive loss attributable to common shareholders which Includes discontinued operations and excludes non-controlling interest. |
Conference Call
The Company will host a conference call and live audio webcast on August 9, 2023, at 8:30 A.M. Eastern time, to discuss its second quarter 2023 financial results. Interested parties can join the conference call by dialing in as directed below. Please dial in 15 minutes prior to the call.
| North American toll free: 1-888-317-6003 | Passcode: 7518560 |
| International: 1-412-317-6061 | Passcode: 7518560 |
A live audio webcast of the conference call will be available at:
https://app.webinar.net/RkxPrgez0bW
A powerpoint presentation and archived replay of the webcast will be available at:
https://investors.trulieve.com/events
The Company’s Form 10-Q for the quarter ended June 30, 2023, will be available on the SEC’s website or at https://investors.trulieve.com/quarterly-results. The Company’s Management Discussion and Analysis for the period and the accompanying financial statements and notes will be available under the Company’s profile on SEDAR and on its website at https://investors.trulieve.com/quarterly-results. This news release is not in any way a substitute for reading those financial statements, including the notes to the financial statements.
| Trulieve Cannabis Corp.Condensed Consolidated Balance Sheets (Unaudited)(in millions, expect per share data) | |||||||
| June 30, 2023 | December 31, 2022 | ||||||
| ASSETS | (Audited) | ||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 152.4 | $ | 207.2 | |||
| Restricted cash | 7.6 | 6.6 | |||||
| Accounts receivable, net | 7.0 | 6.5 | |||||
| Inventories, net | 252.8 | 276.5 | |||||
| Prepaid expenses and other current assets | 42.9 | 62.3 | |||||
| Notes receivable – current portion | 0.8 | 0.7 | |||||
| Assets associated with discontinued operations | 11.5 | 33.7 | |||||
| Total current assets | 474.8 | 593.5 | |||||
| Property and equipment, net | 708.7 | 743.3 | |||||
| Right of use assets – operating, net | 98.7 | 99.6 | |||||
| Right of use assets – finance, net | 62.9 | 70.5 | |||||
| Intangible assets, net | 951.5 | 984.8 | |||||
| Goodwill | 483.9 | 791.5 | |||||
| Notes receivable, net | 11.9 | 12.0 | |||||
| Other assets | 14.4 | 12.8 | |||||
| Long-term assets associated with discontinued operations | 2.0 | 92.4 | |||||
| TOTAL ASSETS | $ | 2,808.7 | $ | 3,400.4 | |||
| LIABILITIES | |||||||
| Current Liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 75.5 | $ | 82.1 | |||
| Income tax payable | — | 49.8 | |||||
| Deferred revenue | 5.8 | 9.4 | |||||
| Notes payable – current portion | 9.1 | 12.5 | |||||
| Private placement notes – current portion, net | 125.9 | — | |||||
| Operating lease liabilities – current portion | 9.7 | 10.3 | |||||
| Finance lease liabilities – current portion | 7.6 | 8.3 | |||||
| Construction finance liabilities – current portion | 1.3 | 1.2 | |||||
| Contingencies | 2.4 | 34.7 | |||||
| Liabilities associated with discontinued operations | 3.4 | 2.3 | |||||
| Total current liabilities | $ | 240.6 | $ | 210.5 | |||
| Long-term liabilities: | |||||||
| Notes payable, net | 93.0 | 94.2 | |||||
| Private placement notes, net | 418.6 | 541.7 | |||||
| Warrant liabilities | — | 0.3 | |||||
| Operating lease liabilities | 100.7 | 100.5 | |||||
| Finance lease liabilities | 64.6 | 69.9 | |||||
| Construction finance liabilities | 136.9 | 137.1 | |||||
| Deferred tax liabilities | 211.9 | 224.7 | |||||
| Other long-term liabilities | 37.4 | 26.0 | |||||
| Long-term liabilities associated with discontinued operations | 42.9 | 67.7 | |||||
| TOTAL LIABILITIES | $ | 1,346.7 | $ | 1,472.7 | |||
| SHAREHOLDERS’ EQUITY | |||||||
| Common stock, no par value; unlimited shares authorized. 185,987,512 issued and outstanding as of June 30, 2023 and December 31, 2022, respectively. | $ | — | $ | — | |||
| Additional paid-in-capital | 2,047.9 | 2,045.0 | |||||
| Accumulated deficit | (581.8) | (113.8) | |||||
| Non-controlling interest | (4.1) | (3.5) | |||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,462.0 | 1,927.7 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,808.7 | $ | 3,400.4 |
| Trulieve Cannabis Corp.Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)(in millions, except per share data) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||
| Revenue, net | $ | 281.8 | $ | 313.8 | $ | 567.0 | 624.4 | |||||
| Cost of goods sold | 140.2 | 130.5 | 275.2 | 261.2 | ||||||||
| Gross profit | 141.6 | 183.4 | 291.8 | 363.2 | ||||||||
| Expenses: | ||||||||||||
| Sales and marketing | 61.1 | 73.9 | 121.8 | 145.4 | ||||||||
| General and administrative | 34.9 | 33.6 | 74.2 | 67.0 | ||||||||
| Depreciation and amortization | 26.1 | 29.4 | 55.7 | 57.2 | ||||||||
| Impairments and disposals of long-lived assets, net | 3.3 | 5.1 | 6.7 | 21.5 | ||||||||
| Impairment of goodwill | 307.6 | — | 307.6 | — | ||||||||
| Total expenses | 432.9 | 141.9 | 566.0 | 291.0 | ||||||||
| (Loss) income from operations | (291.3) | 41.5 | (274.2) | 72.2 | ||||||||
| Other (expense) income: | ||||||||||||
| Interest expense | (18.9) | (18.1) | (40.1) | (34.5) | ||||||||
| Change in fair value of derivative liabilities – warrants | — | 1.4 | 0.3 | 2.3 | ||||||||
| Other income, net | 2.0 | 1.7 | 6.9 | 2.6 | ||||||||
| Total other expense, net | (17.0) | (15.0) | (32.9) | (29.7) | ||||||||
| (Loss) income before provision for income taxes | (308.3) | 26.5 | (307.1) | 42.6 | ||||||||
| Provision for income taxes | 34.0 | 45.2 | 69.5 | 88.4 | ||||||||
| Net loss from continuing operations | (342.3) | (18.8) | (376.6) | (45.8) | ||||||||
| Net loss from discontinued operations, net of tax (provision) benefit of $(946), $473, $(439), and $1,299, respectively | (64.6) | (5.2) | (95.9) | (10.7) | ||||||||
| Net loss | (406.9) | (24.0) | (472.5) | (56.5) | ||||||||
| Less: Net loss attributable to non-controlling interest from continuing operations | (2.4) | (1.5) | (3.3) | (2.0) | ||||||||
| Less: Net loss attributable to non-controlling interest from discontinued operations | (0.7) | — | (1.2) | — | ||||||||
| Net loss attributable to common shareholders | $ | (403.8) | $ | (22.5) | $ | (468.0) | $ | (54.5) | ||||
| Net loss per share – Continuing operations: | ||||||||||||
| Basic and diluted | $ | (1.80) | $ | (0.09) | $ | (1.98) | $ | (0.23) | ||||
| Net loss per share – Discontinued operations: | ||||||||||||
| Basic and diluted | $ | (0.34) | $ | (0.03) | $ | (0.50) | $ | (0.06) | ||||
| Weighted average number of common shares used in computing net loss per share: | ||||||||||||
| Basic and diluted | 189.1 | 187.2 | 189.0 | 187.1 |
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we supplement our results with non-GAAP financial measures, including adjusted EBITDA, adjusted net loss (income), and adjusted net income (loss) per diluted share. Our management uses these non-GAAP financial measures in conjunction with GAAP financial measures to evaluate our operating results and financial performance. We believe these measures are useful to investors as they are widely used measures of performance and can facilitate comparison to other companies. These non-GAAP financial measures are not, and should not be considered as, measures of liquidity. These non-GAAP financial measures have limitations as analytical tools in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. Because of these limitations, these non-GAAP financial measures should be considered along with GAAP financial performance measures. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found below. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with GAAP.
Reconciliation of Non-GAAP Adjusted EBITDA
The following table presents a reconciliation of GAAP net loss to non-GAAP Adjusted EBITDA, for each of the periods presented:
| (Amounts expressed in millions of United States dollars) | For the Three Months Ended | For the Six Months Ended | ||||||||||
| June 30, 2023 | June 30, 2022 | March 31, 2023 | June 30, 2023 | June 30, 2022 | ||||||||
| Net Loss GAAP | $ | (403.8) | $ | (22.5) | $ | (64.1) | $ | (468.0) | $ | (54.5) | ||
| Add (Deduct) Impact of: | ||||||||||||
| Interest Expense | $ | 18.9 | $ | 18.1 | $ | 21.2 | $ | 40.1 | $ | 34.5 | ||
| Provision For Income Taxes | $ | 34.0 | $ | 45.2 | $ | 35.5 | $ | 69.5 | $ | 88.4 | ||
| Depreciation and Amortization | $ | 26.1 | $ | 29.4 | $ | 29.6 | $ | 55.7 | $ | 57.2 | ||
| Depreciation in COGS | $ | 16.0 | $ | 12.6 | $ | 12.1 | $ | 28.1 | $ | 21.9 | ||
| EBITDA | $ | (308.9) | $ | 82.8 | $ | 34.2 | $ | (274.6) | $ | 147.4 | ||
| Impairment of Goodwill | $ | 307.6 | $ | — | $ | — | $ | 307.6 | $ | — | ||
| Impairments and Disposals of Long-lived Assets, Net | $ | 3.3 | $ | 5.1 | $ | 3.4 | $ | 6.7 | $ | 21.5 | ||
| Results of Discontinued Operations | $ | 63.9 | $ | 5.2 | $ | 30.8 | $ | 94.7 | $ | 10.7 | ||
| Acquisition and Transaction Costs | $ | — | $ | 7.0 | $ | — | $ | — | $ | 10.3 | ||
| Integration and Transition Costs | $ | 5.7 | $ | 5.1 | $ | 1.9 | $ | 7.6 | $ | 10.4 | ||
| Other Non-Recurring Costs | $ | — | $ | 3.5 | $ | — | $ | — | $ | 9.7 | ||
| Share-Based Compensation | $ | 0.5 | $ | 5.7 | $ | 2.4 | $ | 2.9 | $ | 10.3 | ||
| Legislative Campaign Contributions | $ | 8.6 | $ | — | $ | 10.5 | $ | 19.1 | $ | — | ||
| Inventory Step Up Fair Value | $ | — | $ | 0.6 | $ | — | $ | — | $ | 1.0 | ||
| Covid Related Expenses | $ | — | $ | 0.2 | $ | — | $ | — | $ | 0.6 | ||
| Other (Income) Expense, net | $ | (2.0) | $ | (1.7) | $ | (4.9) | $ | (6.9) | $ | (2.6) | ||
| Fair Value of Derivative Liabilities – Warrants | $ | — | $ | (1.4) | $ | (0.3) | $ | (0.3) | $ | (2.3) | ||
| Results of Entities Not Legally Controlled | $ | — | $ | (1.1) | $ | — | $ | — | $ | (1.1) | ||
| Adjusted EBITDA Non-GAAP | $ | 78.7 | $ | 111.0 | $ | 78.1 | $ | 156.8 | $ | 216.0 |
Reconciliation of Non-GAAP Adjusted Net Income
The following table presents a reconciliation of GAAP net loss to non-GAAP adjusted net loss (income), for each of the periods presented:
| (Amounts expressed in millions of United States dollars) | For the Three Months Ended | For the Six Months Ended | ||||||||||
| June 30, 2023 | June 30, 2022 | March 31, 2023 | June 30, 2023 | June 30, 2022 | ||||||||
| Net Loss GAAP | $ | (403.8) | $ | (22.5) | $ | (64.1) | $ | (468.0) | $ | (54.5) | ||
| Add (Deduct) Impact of: | ||||||||||||
| Impairment of Goodwill | $ | 307.6 | $ | — | $ | — | $ | 307.6 | $ | — | ||
| Fair Value of Derivative Liabilities – Warrants | $ | — | $ | (1.4) | $ | (0.3) | $ | (0.3) | $ | (2.3) | ||
| Inventory Step Up Fair Value | $ | — | $ | 0.6 | $ | — | $ | — | $ | 1.0 | ||
| Transaction, Acquisition, and Integration Costs | $ | 5.7 | $ | 15.6 | $ | 1.9 | $ | 7.6 | $ | 30.4 | ||
| Legislative Campaign Contributions | $ | 8.6 | $ | — | $ | 10.5 | $ | 19.1 | $ | — | ||
| Covid Related Expenses | $ | — | $ | 0.2 | $ | — | $ | — | $ | 0.6 | ||
| Impairments and Disposals of Long-lived Assets, Net | $ | 3.3 | $ | 5.1 | $ | 3.4 | $ | 6.7 | $ | 21.5 | ||
| Results of Discontinued Operations | $ | 63.9 | $ | 5.2 | $ | 30.8 | $ | 94.7 | $ | 10.7 | ||
| Adjusted Net (Loss) Income Non-GAAP | $ | (14.8) | $ | 2.8 | $ | (17.8) | $ | (32.6) | $ | 7.4 |
Reconciliation of Non-GAAP Adjusted Earnings Per Share
The following table presents a reconciliation of GAAP loss per share to non-GAAP adjusted earnings per share, for each of the periods presented:
| (Amounts expressed are per share) | For the Three Months Ended | For the Six Months Ended | ||||||||||
| June 30, 2023 | June 30, 2022 | March 31, 2023 | June 30, 2023 | June 30, 2022 | ||||||||
| Loss Per Share GAAP | $ | (2.14) | $ | (0.12) | $ | (0.34) | $ | (2.48) | $ | (0.29) | ||
| Add (Deduct) Impact of: | ||||||||||||
| Impairment of Goodwill | $ | 1.63 | $ | — | $ | — | $ | 1.63 | $ | — | ||
| Fair Value of Derivative Liabilities – Warrants | $ | — | $ | (0.01) | $ | (0.00) | $ | (0.00) | $ | (0.01) | ||
| Inventory Step Up Fair Value | $ | — | $ | 0.00 | $ | — | $ | — | $ | 0.01 | ||
| Transaction, Acquisition, and Integration Costs | $ | 0.03 | $ | 0.08 | $ | 0.01 | $ | 0.04 | $ | 0.16 | ||
| Legislative Campaign Contributions | $ | 0.05 | $ | — | $ | 0.06 | $ | 0.10 | $ | — | ||
| Covid Related Expenses | $ | — | $ | 0.00 | $ | — | $ | — | $ | 0.00 | ||
| Impairments and Disposals of Long-lived Assets, Net | $ | 0.02 | $ | 0.03 | $ | 0.02 | $ | 0.04 | $ | 0.11 | ||
| Results of Discontinued Operations | $ | 0.34 | $ | 0.03 | $ | 0.16 | $ | 0.50 | $ | 0.06 | ||
| Adjusted Earnings Per Share Non-GAAP | $ | (0.08) | $ | 0.01 | $ | (0.09) | $ | (0.17) | $ | 0.04 |
