Cresco Labs Reports Continued Trend of Financial Improvement with First Quarter 2024 Financial Results
Cresco Labs (CSE: CL, OTCQX: CRLBF, FSE: 6CQ) reported its Q1 2024 financial results, highlighting significant improvements and strategic advancements.
Revenue stood at $184 million, remaining flat year-over-year, excluding strategic divestitures. The company achieved a gross profit of $92 million and an adjusted gross profit of $95 million, up by 7%. Adjusted gross margin improved to 51%.
SG&A expenses were $54 million, with adjusted SG&A reduced by 24% to $52 million, making up 28% of revenue. Adjusted EBITDA soared by 82% to $53 million, yielding a 29% adjusted EBITDA margin.
Cash flow from operations grew dramatically by 1,000% to $36 million, leading to a free cash flow of $33 million. Despite these gains, Cresco Labs reported a net loss of $2 million for the quarter.
The company maintained its leading market positions in Illinois, Pennsylvania, and Massachusetts. As of March 31, 2024, the company held $125 million in cash and cash equivalents. Cresco Labs has a total debt of $405 million and 475,235,515 total shares.
- Revenue of $184 million, flat year-over-year, showing steady financial performance.
- Adjusted gross profit up by 7% year-over-year to $95 million.
- Adjusted gross margin improved to 51%, a 580 basis point increase.
- Adjusted SG&A expenses reduced by 24% to $52 million.
- Adjusted EBITDA increased by 82% to $53 million.
- Adjusted EBITDA margin improved to 29%, a 1,380 basis point enhancement.
- Operating cash flow grew 1,000% year-over-year to $36 million.
- Free cash flow reached $33 million.
- Maintained market leadership in Illinois, Pennsylvania, and Massachusetts.
- Cash and cash equivalents stood at $125 million as of March 31, 2024.
- Net loss of $2 million for Q1 2024.
- Total debt of $405 million, including a senior secured term loan and a mortgage loan.
- Revenue remained flat year-over-year, indicating no growth.
Over 10x year-over-year increase in operating cash flow
First Quarter 2024 Highlights
-
First quarter revenue of
, flat year-over-year, excluding the impact from strategic divestitures aimed to drive profitability.$184 million -
Gross profit of
. Adjusted gross profit1 of$92 million up$95 million 7% year-over-year; and an Adjusted gross margin1 of51% of revenue, a 580 bps improvement. -
SG&A of
. Reduced Adjusted SG&A1 by$54 million 24% year-over-year to , or$52 million 28% of revenue. -
First quarter income before income taxes of
, net loss of$16 million .$2 million -
First quarter Adjusted EBITDA1 of
, up$53 million 82% year-over-year; and Adjusted EBITDA margin1 of29% , a 1,380 bps improvement. -
in operating cash flow up 1,$36 million 000% year-over-year. in Free Cash Flow1.$33 million -
Retained the No. 1 share position in
Illinois ,Pennsylvania andMassachusetts 2.
1 |
See “Non-GAAP Financial Measures” at the end of this press release for more information regarding the Company’s use of non-GAAP financial measures. |
|
2 |
According to BDSA. |
Management Commentary
“I want to thank the Cresco team for taking our learnings from the Year-of-the-Core, making them a part of our DNA and producing such a strong start to 2024. The continued development of our teams’ capabilities and our relentless focus on efficient execution is leading to very strong performance across our retail and branded product business resulting in a 10x increase in operating cash flow year-over-year. This is just the start, with upcoming adult use catalysts in
I also want to thank the team for continuing Cresco’s leadership on cannabis reform. The recently announced potential federal rescheduling will fundamentally change the future for cannabis and all of its stakeholders. The team is fulfilling our vision of being the most important company in cannabis and leading the development of the most responsible, respectable and robust industry possible,” said Charles Bachtell, CEO of Cresco Labs.
Balance Sheet, Liquidity and Other Financial Information
-
As of March 31, 2024, current assets were
, including cash, cash equivalents and restricted cash of$285 million . The Company had senior secured term loan debt, net of discount and issuance costs, of$125 million and a mortgage loan, net of discount and issuance costs of$387 million .$18 million - Total shares on a fully converted basis to Subordinate Voting Shares were 475,235,515 as of March 31, 2024.
Conference Call and Webcast
The Company will host a conference call and webcast to discuss its financial results on Wednesday, May 15, 2024, at 8:30am Eastern Time (7:30am Central Time). The conference call may be accessed via webcast or by dialing 1-833-470-1428 (US Toll Free) or 1-404-975-4839 (US Local), providing access code 897519. Archived access to the webcast will be available for one year on Cresco Labs’ investor website.
Consolidated Financial Statements
The financial information reported in this press release is based on unaudited management prepared financial statements for the quarter ended March 31, 2024. These financial statements have been prepared in accordance with
Cresco Labs references certain non-GAAP financial measures throughout this press release, which may not be comparable to similar measures presented by other issuers. Please see the “Non-GAAP Financial Measures” section below for more detailed information.
Non-GAAP Financial Measures
This release reports its financial results in accordance with
About Cresco Labs Inc.
Cresco Labs’ mission is to normalize and professionalize the cannabis industry through a CPG approach to building national brands and a customer-focused retail experience, while acting as a steward for the industry on legislative and regulatory-focused initiatives. As a leader in cultivation, production and branded product distribution, the Company is leveraging its scale and agility to grow its portfolio of brands that include Cresco, High Supply, FloraCal, Good News, Wonder Wellness Co., Mindy’s and Remedi, on a national level. The Company also operates highly productive dispensaries nationally under the Sunnyside brand that focus on building patient and consumer trust and delivering ongoing education and convenience in a wonderfully traditional retail experience. Through year-round policy, community outreach and SEED initiative efforts, Cresco Labs embraces the responsibility to support communities through authentic engagement, economic opportunity, investment, workforce development and legislative initiatives designed to create the most responsible, respectable and robust cannabis industry possible. Learn more about Cresco Labs’ journey by visiting www.crescolabs.com or following the Company on Facebook, X or LinkedIn.
Forward-Looking Statements
This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). Such forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking statements can be identified by the use of forward-looking terminology such as, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’ ‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the negative of those forms or other comparable terms. The Company’s forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to those risks discussed under “Risk Factors” in the Company’s Annual Information Form for the year ended December 31, 2023, filed on SEDAR+ and EDGAR, other documents filed by the Company with Canadian securities regulatory authorities; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Because of these uncertainties, you should not place undue reliance on the Company’s forward-looking statements. No assurances are given as to the future trading price or trading volumes of Cresco Labs’ shares, nor as to the Company’s financial performance in future financial periods. The Company does not intend to update any of these factors or to publicly announce the result of any revisions to any of the Company’s forward-looking statements contained herein, whether as a result of new information, any future event or otherwise. Except as otherwise indicated, this press release speaks as of the date hereof. The distribution of this press release does not imply that there has been no change in the affairs of the Company after the date hereof or create any duty or commitment to update or supplement any information provided in this press release or otherwise.
Cresco Labs Inc. |
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Financial Information and Non-GAAP Reconciliations |
||||||||||||
(All amounts expressed in thousands of |
||||||||||||
|
|
|
|
|
|
|
||||||
Unaudited Consolidated Statements of Operations |
||||||||||||
For the Three Months Ended March 31, 2024, December 31, 2023 and March 31, 2023 |
||||||||||||
|
|
|
||||||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
Revenues, net |
|
$ |
184,295 |
|
|
$ |
188,237 |
|
|
$ |
194,202 |
|
Cost of goods sold |
|
|
92,083 |
|
|
|
92,091 |
|
|
|
108,322 |
|
Gross profit |
|
|
92,212 |
|
|
|
96,146 |
|
|
|
85,880 |
|
Gross profit % |
|
|
50.0 |
% |
|
|
51.1 |
% |
|
|
44.2 |
% |
Operating expenses: |
|
|
|
|
|
|
||||||
Selling, general and administrative |
|
|
54,013 |
|
|
|
56,767 |
|
|
|
71,897 |
|
Share-based compensation |
|
|
3,614 |
|
|
|
2,278 |
|
|
|
6,124 |
|
Depreciation and amortization |
|
|
5,422 |
|
|
|
9,978 |
|
|
|
4,273 |
|
Impairment loss |
|
|
— |
|
|
|
24 |
|
|
|
— |
|
Total operating expenses |
|
|
63,049 |
|
|
|
69,047 |
|
|
|
82,294 |
|
Income from operations |
|
|
29,163 |
|
|
|
27,099 |
|
|
|
3,586 |
|
|
|
|
|
|
|
|
||||||
Other income (expense), net: |
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
(14,071 |
) |
|
|
(14,331 |
) |
|
|
(15,548 |
) |
Other income, net |
|
|
856 |
|
|
|
50 |
|
|
|
959 |
|
Total other expense, net |
|
|
(13,215 |
) |
|
|
(14,281 |
) |
|
|
(14,589 |
) |
Income (loss) before income taxes |
|
|
15,948 |
|
|
|
12,818 |
|
|
|
(11,003 |
) |
Income tax expense |
|
|
(18,003 |
) |
|
|
(7,950 |
) |
|
|
(16,809 |
) |
Net (loss) income1 |
|
$ |
(2,055 |
) |
|
$ |
4,868 |
|
|
$ |
(27,812 |
) |
1 Net (loss) income includes amounts attributable to non-controlling interests. |
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of Gross Profit to Adjusted Gross Profit (Non-GAAP) |
||||||||||||
For the Three Months Ended March 31, 2024, December 31, 2023 and March 31, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
Revenues, net |
|
$ |
184,295 |
|
|
$ |
188,237 |
|
|
$ |
194,202 |
|
Cost of goods sold1 |
|
|
92,083 |
|
|
|
92,091 |
|
|
|
108,322 |
|
Gross profit |
|
$ |
92,212 |
|
|
$ |
96,146 |
|
|
$ |
85,880 |
|
Cost of goods sold adjustments for acquisition and other non-core costs |
|
|
2,662 |
|
|
|
3,576 |
|
|
|
2,819 |
|
Adjusted gross profit (Non-GAAP) |
|
$ |
94,874 |
|
|
$ |
99,722 |
|
|
$ |
88,699 |
|
Adjusted gross profit % (Non-GAAP) |
|
|
51.5 |
% |
|
|
53.0 |
% |
|
|
45.7 |
% |
1 Production (cultivation, manufacturing and processing) costs related to products sold during the period. |
Cresco Labs Inc. |
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Summarized Consolidated Statements of Financial Position |
||||||
As of March 31, 2024 and December 31, 2023 |
||||||
|
|
|
|
|
||
($ in thousands) |
|
March 31,
|
|
December 31,
|
||
|
|
(unaudited) |
|
|
||
Cash, cash equivalents and restricted cash |
|
$ |
124,901 |
|
$ |
108,520 |
Other current assets |
|
|
160,182 |
|
|
169,567 |
Property and equipment, net |
|
|
359,984 |
|
|
368,308 |
Intangible assets, net |
|
|
298,069 |
|
|
296,966 |
Goodwill |
|
|
279,697 |
|
|
279,697 |
Other non-current assets |
|
|
137,232 |
|
|
135,409 |
Total assets |
|
$ |
1,360,065 |
|
$ |
1,358,467 |
|
|
|
|
|
||
Total current liabilities |
|
$ |
209,154 |
|
$ |
200,242 |
Total non-current liabilities |
|
|
730,939 |
|
|
730,158 |
Total shareholders’ equity |
|
|
419,972 |
|
|
428,067 |
Total liabilities and shareholders’ equity |
|
$ |
1,360,065 |
|
$ |
1,358,467 |
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of SG&A to Adjusted SG&A (Non-GAAP) |
||||||||||||
For the Three Months Ended March 31, 2024, December 31, 2023 and March 31, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
Selling, general and administrative |
|
$ |
54,013 |
|
|
$ |
56,767 |
|
|
$ |
71,897 |
|
Adjustments for acquisition and other non-core costs |
|
|
2,297 |
|
|
|
2,242 |
|
|
|
4,041 |
|
Adjusted SG&A (Non-GAAP) |
|
$ |
51,716 |
|
|
$ |
54,525 |
|
|
$ |
67,856 |
|
Adjusted SG&A % (Non-GAAP) |
|
|
28.1 |
% |
|
|
29.0 |
% |
|
|
34.9 |
% |
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of Net Income to Adjusted EBITDA (Non-GAAP) |
||||||||||||
For the Three Months Ended March 31, 2024, December 31, 2023 and March 31, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
Net (loss) income1 |
|
$ |
(2,055 |
) |
|
$ |
4,868 |
|
|
$ |
(27,812 |
) |
Depreciation and amortization |
|
|
15,331 |
|
|
|
20,252 |
|
|
|
12,961 |
|
Interest expense, net |
|
|
14,071 |
|
|
|
14,331 |
|
|
|
15,548 |
|
Income tax expense |
|
|
18,003 |
|
|
|
7,950 |
|
|
|
16,809 |
|
EBITDA (Non-GAAP) |
|
$ |
45,350 |
|
|
$ |
47,401 |
|
|
$ |
17,506 |
|
|
|
|
|
|
|
|
||||||
Other income, net |
|
|
(856 |
) |
|
|
(50 |
) |
|
|
(959 |
) |
Adjustments for acquisition and other non-core costs |
|
|
4,470 |
|
|
|
4,434 |
|
|
|
5,671 |
|
Impairment loss |
|
|
— |
|
|
|
24 |
|
|
|
— |
|
Share-based compensation |
|
|
4,197 |
|
|
|
3,017 |
|
|
|
7,062 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
53,161 |
|
|
$ |
54,826 |
|
|
$ |
29,280 |
|
1 Net (loss) income includes amounts attributable to non-controlling interests. |
Cresco Labs Inc. |
||||||||||||
Unaudited Summarized Consolidated Statements of Cash Flows |
||||||||||||
For the Three Months Ended March 31, 2024, December 31, 2023 and March 31, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
For the Three Months Ended |
|||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
Net cash provided by (used in) operating activities |
|
|
36,471 |
|
|
$ |
(3,301 |
) |
|
$ |
3,270 |
|
Net cash (used in) provided by investing activities |
|
|
(5,677 |
) |
|
|
2,609 |
|
|
|
(20,668 |
) |
Net cash used in financing activities |
|
|
(11,149 |
) |
|
|
(3,782 |
) |
|
|
(13,635 |
) |
Effect of foreign currency exchange rate changes on cash and cash equivalents |
|
|
(13 |
) |
|
|
(22 |
) |
|
|
(25 |
) |
Net change in cash and cash equivalents and restricted cash |
|
$ |
19,632 |
|
|
$ |
(4,496 |
) |
|
$ |
(31,058 |
) |
Cash and cash equivalents and restricted cash, beginning of period |
|
|
108,520 |
|
|
|
113,016 |
|
|
|
121,510 |
|
Cash and cash equivalents and restricted cash, end of period |
|
$ |
128,152 |
|
|
$ |
108,520 |
|
|
$ |
90,452 |
|
Cresco Labs Inc. |
||||||||||||
Unaudited Reconciliation of Operating Cash Flow to Free Cash Flow (Non-GAAP) |
||||||||||||
For the Three Months Ended March 31, 2024, December 31, 2023 and March 31, 2023 |
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
For the Three Months Ended |
||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||
Net cash provided by (used in) operating activities |
|
$ |
36,471 |
|
|
$ |
(3,301 |
) |
|
$ |
3,270 |
|
Purchases of property and equipment |
|
|
(3,782 |
) |
|
|
(4,818 |
) |
|
|
(20,546 |
) |
Proceeds from tenant improvement allowances |
|
|
478 |
|
|
|
1,147 |
|
|
|
437 |
|
Free Cash Flow (Non-GAAP) |
|
$ |
33,167 |
|
|
$ |
(6,972 |
) |
|
$ |
(16,839 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240515589627/en/
Media
Jason Erkes, Cresco Labs
Chief Communications Officer
press@crescolabs.com
312-953-2767
Investors
TJ Cole, Cresco Labs
SVP, Corporate Development & Investor Relations
investors@crescolabs.com
For general Cresco Labs inquiries:
312-929-0993
info@crescolabs.com
Source: Cresco Labs
FAQ
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