Conference Call with Investors and Analysts to be Held at 6:00
p.m. Eastern Time Today
CHICAGO--(BUSINESS WIRE)--
Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) (“Cresco” or the “Company”)
one of the largest vertically integrated multistate cannabis operators
in the United States, today released its unaudited financial results for
the first quarter ended March 31, 2019. All financial information
presented in this release is in U.S. dollars, unless otherwise noted.
First Quarter 2019 Highlights and Subsequent Events
Revenue
-
First quarter revenue of $21.1 million, up 313% year-over-year and 24%
quarter-over-quarter.
-
First quarter pro forma revenue1 of $33.9 million, which
includes the impact of pending acquisitions in New York,
Massachusetts, Florida, and in California with Origin House.
EBITDA
-
First quarter adjusted EBITDA2 of $0.8 million, compared to
$1.0 million in the prior-year period.
-
First quarter 2019 financial results included $3.2 million related to
share-based incentive compensation and acquisition and other
non-recurring costs of $2.5 million.
Net Income
-
First quarter net loss of $7.6 million, compared to net income of $0.6
million in the prior-year period.
Balance Sheet
-
As of fiscal year-end, total assets of $364.0 million, including cash
and cash equivalents of $106.1 million and a working capital position
of $146.3 million with zero debt on the balance sheet.
Operations
-
The Company is operational in seven U.S. states, with binding
transactions pending in New York, Massachusetts and Florida, as well
as approved expansion into Michigan.
-
On April 1, 2019, the Company announced that it has entered into a
definitive agreement with CannaRoyalty Corp. (d/b/a Origin House), a
premier cannabis brand distributor, which at the time was the
largest-ever public company acquisition in the U.S. cannabis sector.
Talent
-
Continued hiring top talent through key appointments and acquisitions,
total staff headcount to over 835 employees at the end of the first
quarter of 2019.
Other
-
Shareholders representing 205,172,192 common shares have entered into
voluntary lock-up agreements representing 97% of the shares subject to
the initial lock-up and 80% of the total issued subordinate voting
shares (on an as-if converted basis).
Management Commentary
“Since the beginning of the year, we have made significant progress on
the vision we have laid out for building Cresco into the most important
company in the cannabis industry,” said Charles Bachtell, Co-founder and
CEO of Cresco Labs. “We have continued to execute well from an
operational standpoint, generate higher levels of revenue in our
existing markets, and deliver strong profit margins. Through our pending
acquisitions of Origin House and VidaCann, we have also put a foundation
in place that we believe will enable us to capture a leading share in
the North American cannabis market. We believe we have built the most
strategic geographic footprint of any cannabis company in the United
States, and now with the acquisition of Origin House, we will have the
distribution platform to enable us to take market share in the largest
and most important markets in the cannabis industry. As we continue to
effectively execute on our strategic plan, we expect to create
significant additional value for our shareholders.”
Financial Results for the First Quarter Ended March 31, 2019
(Unaudited)
Revenue for the first quarter of 2019 was $21.1 million, an increase of
313% compared to revenue of $5.1 million for the first quarter of 2018.
The increase in revenue was driven by expansion into new markets and
gains in market share in the states where the Company operates. First
quarter 2019 revenue increased 24% compared to $17.0 million for the
fourth quarter of 2018. On a pro forma basis, revenue for the first
quarter of 2019 was $33.9 million, which includes the impact of Origin
House and VidaCann.
First quarter 2019 operational gross profit2, before the
impact of biological assets accounting, was $9.4 million, or 44.6% of
revenues, compared to $2.2 million, or 43.6% of revenues, for the first
quarter of 2018. The Company continued to see operational efficiencies
in its established markets, slightly offset by the impact of new markets
like Ohio, California and Arizona, where the Company expects margin
expansion as these businesses scale.
Total expenses for the first quarter of 2019 were $17.7 million,
compared to $2.1 million for the prior year period. Total expenses in
the first quarter of 2019 included $3.2 million in expenses related to
share-based incentive compensation, $2.5 million in acquisition and
other non-recurring costs, and $1.0 million of depreciation and
amortization. The balance of the increase represents significant
investments in our team and operational infrastructure to drive
strategic initiatives that better position the Company for future growth.
Net loss for the first quarter for 2019 was $7.6 million, compared to
net income of $0.6 million for the prior-year period.
Adjusted EBITDA for the first quarter of 2019 was $0.8 million compared
to $1.0 million for the prior-year period.
______________________
1 Pro forma revenue and adjusted EBITDA information reflect
the results of acquisitions closed and with definitive agreements as of
the beginning of the period in which the closing or definitive agreement
occurred.
2 See "Non-IFRS Financial Measures" at the end of this press
release for more information regarding Cresco Labs’ use of non-IFRS
financial measures.
Balance Sheet and Liquidity
As of March 31, 2019, the Company had total assets of $364.0 million,
including cash and cash equivalents of $106.1 million. At March 31,
2019, the Company had a working capital position of $146.3 million with
zero debt on the balance sheet.
Conference Call and Webcast
The Company will hold a conference call and webcast to discuss its
business and financial results on Wednesday, May 29, 2019 at 6 p.m.
Eastern Time. The conference call may be accessed via Cresco’s investors
website at investors.crescolabs.com
or by dialing 866-688-4235 (409-216-0711 for international callers) and
entering conference ID 5039798. Archived access to the webcast will be
available for one year on the Cresco’s investors website.
Consolidated Financial Statements
The financial information reported in this news release is based on
unaudited management prepared financial statements for the three months
ended March 31, 2019. The Company will file its condensed interim
consolidated financial statements on SEDAR on May 30, 2019. Accordingly,
such financial information may be subject to change. All financial
information contained in this news release is qualified in its entirety
with reference to such financial statements. While the Company does not
expect there to be any material changes, to the extent that the
financial information contained in this news release is inconsistent
with the information contained in the Company’s financial statements,
the financial information contained in this news release shall be deemed
to be modified or superseded by the Company’s financial statements. The
making of a modifying or superseding statement shall not be deemed an
admission for any purposes that the modified or superseded statement,
when made, constituted a misrepresentation for purposes of applicable
securities laws. Further, the reader should refer to the additional
disclosures in the Company’s audited financial statements for the year
ended December 31, 2018, previously filed on SEDAR.
Cresco references certain non-IFRS financial measures throughout this
press release, which may not be comparable to similar measures presented
by other issuers. Please see the “Non-IFRS Financial Measures” section
at the end of this press release for more detailed information.
About Cresco Labs Inc.
Cresco, based in Chicago, is a leading U.S. cannabis company with
experienced management, access to capital and a demonstrated growth
strategy. As a differentiated grower, processor and retailer of premium
cannabis operating in seven states, the Company focuses on entering
highly regulated markets with outsized demand potential and high
barriers to entry. Its speed-to-market to date has given Cresco a
distinct competitive advantage as it replicates its model to expand its
national footprint. Cresco’s proven ability to execute is complemented
by a cutting-edge brand strategy spearheaded by several of the brightest
minds in consumer marketing in the nation. Cresco’s products are
tailored to all major consumer segments: everyday cannabis, medicinally
focused, connoisseur grade and chef inspired edibles by James Beard
Award-winning pastry chef Mindy Segal. Learn more about Cresco at crescolabs.com.
Non-IFRS Financial Measures
Operational gross profit, EBITDA and Adjusted EBITDA are non-IFRS
measures and do not have standardized definitions under IFRS. The
following information provides reconciliations of the supplemental
non-IFRS financial measures, presented herein to the most directly
comparable financial measures calculated and presented in accordance
with IFRS. The Company has also provided unaudited pro forma financial
information, which assumes that closed and pending mergers and
acquisitions in 2018 are included in the Company’s financial results as
of the beginning of the quarterly and annual periods in 2018 and that
closed and pending mergers and acquisitions in 2019 are included in the
Company’s financial results as of the beginning of the quarterly and
annual periods in 2019. The Company has provided the non-IFRS financial
measures, which are not calculated or presented in accordance with IFRS,
as supplemental information and in addition to the financial measures
that are calculated and presented in accordance with IFRS. These
supplemental non-IFRS financial measures are presented because
management has evaluated the financial results both including and
excluding the adjusted items and believe that the supplemental non-IFRS
financial measures presented provide additional perspective and insights
when analyzing the core operating performance of the business. These
supplemental non-IFRS financial measures should not be considered
superior to, as a substitute for or as an alternative to, and should
only be considered in conjunction with, the IFRS financial measures
presented herein.
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. Such forward-looking
information and 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
information or 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 CSE Listing Statement
filed with SEDAR; 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’s 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.
Unaudited Financial Information and Non-IFRS Reconciliations
(All amounts expressed in thousands of U.S. Dollars)
Unaudited Condensed Interim Consolidated Statements of
Operations and Comprehensive Income
For the Three Months Ended March 31, 2019 and 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31,
|
|
|
|
|
2019
(Unaudited)
|
|
2018
(Unaudited)
|
|
Revenue
|
|
|
|
$ 21,055
|
|
$ 5,093
|
|
Cost of Sales – Production Costs
|
|
|
|
(15,168)
|
|
(3,456)
|
|
Gross Profit Before Fair Value Adjustments
|
|
|
|
5,887
|
|
1,637
|
|
|
|
|
|
|
|
|
Realized Changes in Fair Value of Inventory Sold
|
|
|
|
(15,441)
|
|
(321)
|
|
Unrealized Gain on Changes in Fair Value of Biological Assets
|
|
|
|
20,206
|
|
1,409
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
10,652
|
|
2,725
|
|
GP%
|
|
|
|
50.6%
|
|
53.5%
|
|
Expenses:
|
|
|
|
|
|
|
|
Selling, General and Administration
|
|
|
|
16,773
|
|
2,064
|
|
Depreciation and Amortization
|
|
|
|
973
|
|
39
|
|
Total Expenses
|
|
|
|
17,746
|
|
2,103
|
|
|
|
|
|
|
|
|
(Loss) Gain from Operations
|
|
|
|
(7,094)
|
|
622
|
|
|
|
|
|
|
|
|
Other (Expense) Income:
|
|
|
|
|
|
|
|
Interest Expense, Net
|
|
|
|
(419)
|
|
(9)
|
|
Other Expense, Net
|
|
|
|
(134)
|
|
(13)
|
|
Income from Investment in Associate
|
|
|
|
36
|
|
-
|
|
Total Other Expense, Net
|
|
|
|
(517)
|
|
(22)
|
|
(Loss) Income Before Income Taxes
|
|
|
|
(7,611)
|
|
600
|
|
Income Tax Recovery
|
|
|
|
37
|
|
-
|
|
Net (Loss) Income
1
|
|
|
|
$ (7,574)
|
|
$ 600
|
|
|
|
|
|
|
|
|
1 Net income includes amounts attributable to
non-controlling interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cresco Labs Inc.
Unaudited Summarized Consolidated Statements of Financial
Position
As of March 31, 2019 and December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2019
(Unaudited)
|
|
12/31/2018
(Audited)
|
|
Cash and Cash Equivalents
|
|
|
|
$ 106,090
|
|
$ 131,302
|
|
Other Current Assets
|
|
|
|
77,277
|
|
61,401
|
|
Property and Equipment, Net
|
|
|
|
50,823
|
|
39,721
|
|
Intangible Assets, Net
|
|
|
|
24,958
|
|
25,465
|
|
Goodwill
|
|
|
|
51,146
|
|
51,146
|
|
Other Long-Term Assets
|
|
|
|
53,750
|
|
9,076
|
|
Total Assets
|
|
|
|
$ 364,044
|
|
$ 318,111
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
|
$ 37,029
|
|
$ 25,230
|
|
Total Long-Term Liabilities
|
|
|
|
49,688
|
|
9,900
|
|
Total Shareholders' Equity
|
|
|
|
277,327
|
|
282,981
|
|
Total Liabilities and Shareholders' Equity
|
|
|
|
$ 364,044
|
|
$ 318,111
|
|
|
|
|
|
|
|
|
|
|
|
Cresco Labs Inc.
Unaudited Revenue and Gross Profit Metrics
For the Three Months Ended March 31, 2019 and 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31,
|
|
|
|
|
2019
(Unaudited)
|
|
2018
(Unaudited)
|
|
Revenue
|
|
|
|
$ 21,055
|
|
$ 5,093
|
|
|
|
|
|
|
|
|
Cost of Sales – Production Costs1 |
|
|
|
(15,168)
|
|
(3,456)
|
|
Realized Changes in Fair Value of Inventory Sold
|
|
|
|
(15,441)
|
|
(321)
|
|
Unrealized Gain on Changes in Fair Value of Biological Assets
|
|
|
|
20,206
|
|
1,409
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
|
$ 10,652
|
|
$ 2,725
|
|
Cultivation Costs Expensed Under IAS 412 |
|
|
|
3,497
|
|
585
|
|
Net Impact of Fair Value of Biological Assets
|
|
|
|
(4,765)
|
|
(1,088)
|
|
|
|
|
|
|
|
|
Operational Gross Profit (Non-IFRS)
|
|
|
|
$ 9,384
|
|
$ 2,222
|
|
Operational GP%
|
|
|
|
44.6%
|
|
43.6%
|
|
|
|
|
|
|
|
|
1 Production (cultivation, manufacturing, and
processing) costs related to products sold during the period.
|
|
2 Costs would be capitalized under IAS 2 and do not
relate to costs of inventory sold in the period.
|
|
|
|
|
|
|
|
|
|
|
|
Cresco Labs Inc.
Unaudited Reconciliation of Net Income to Adjusted EBITDA
For the Three Months Ended March 31, 2019 and 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31,
|
|
|
|
|
2019
(Unaudited)
|
2018
(Unaudited)
|
|
|
|
|
|
|
|
Net (Loss) Income
1
|
|
|
|
$ (7,574)
|
$ 600
|
|
Depreciation and Amortization
|
|
|
|
2,286
|
298
|
|
Other Expense, Net
|
|
|
|
134
|
13
|
|
Interest Expense, Net
|
|
|
|
419
|
9
|
|
Income from Investment in Associate
|
|
|
|
(36)
|
-
|
|
Income Tax Recovery
|
|
|
|
(37)
|
-
|
|
Earnings Before Interest, Taxes, Depreciation, and Amortization
|
|
|
|
|
|
|
(EBITDA) (Non-IFRS)
|
|
|
|
(4,808)
|
920
|
|
|
|
|
|
|
|
Acquisition and Other Non-Recurring Costs
|
|
|
|
2,458
|
-
|
|
Share-Based Compensation
|
|
|
|
3,168
|
62
|
|
Adjusted EBITDA (Non-IFRS)
|
|
|
|
$ 818
|
$ 982
|
|
|
|
|
|
|
|
1 Net income includes amounts attributable to
non-controlling interest.
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190529005948/en/
Media
Jason Erkes, Cresco Labs
Chief Communications
Officer
press@crescolabs.com
312-953-2767
Investors:
investors@crescolabs.com
For general Cresco Labs inquiries:
312-929-0993
info@crescolabs.com
Source: Cresco Labs Inc.