Green Thumb Industries Reports Second Quarter 2022 Results
CHICAGO and VANCOUVER, British Columbia, August 3, 2022 — Green Thumb Industries Inc. (Green Thumb) (CSE: GTII) (OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner of RISE dispensaries, today reported its financial results for the second quarter ended June 30, 2022. 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 second quarter and six months ended June 30, 2022:
- Revenue increased 4.8% sequentially and 14.6% year-over-year to $254.3 million.
- First half 2022 revenue increased 19.4% to $496.9 million compared to the first half of 2021.
- Eighth consecutive quarter of positive GAAP net income, delivering $24.4 million or $0.11 per basic and $0.10 per diluted share.
- Adjusted Operating EBITDA grew 17.4% sequentially to $78.7 million or 31.0% of revenue.
- Cash flow from operations of $39.9 million year-to-date.
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
We are pleased with our second quarter results, especially in this challenging economic environment. Five percent revenue growth and greater than 300 basis point improvement in Adjusted EBITDA margins over the previous quarter demonstrate the results of our focus. We continue to maintain a strong balance sheet, which gives us ample flexibility to support our growth initiatives.
Green Thumb Founder, Chairman and Chief Executive Officer Ben Kovler.
Despite the macro and consumer headwinds, our team continued to execute and build momentum. The complexity in U.S. cannabis makes us work harder and smarter every day to create long-term value for all our stakeholders. We are confident in our strategy, we believe in our brands, and we are committed to promoting well-being through the power of cannabis for the American people.
Second Quarter 2022 Financial Overview
Total revenue for the second quarter 2022 was $254.3 million, up 4.8% sequentially and up 14.6% from $221.9 million in the prior year period. Revenue growth was primarily driven by increased retail sales in New Jersey, reflecting the legalization of adult-use cannabis; increased retail sales in Illinois; 19 additional retail locations versus second quarter last year, and increased traffic in the Company’s 77 open and operating retail stores.
All 15 of Green Thumb’s state markets contributed to second quarter revenue: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Virginia. The Company continued to invest in expanding its cultivation and manufacturing capabilities across its footprint.
Gross profit for the second quarter 2022 was $125.8 million or 49.5% of revenue compared to $122.9 million or 55.4% of revenue year-over-year. Gross profit performance was driven by increased sales in the Company’s retail business, new store openings, New Jersey adult-use sales and continued growth in the Illinois market.
Total selling, general and administrative expenses for the second quarter were $63.5 million or 25.0% of revenue, compared to $72.1 million or 32.5% of revenue for the second quarter 2021. The decrease in total expenses primarily reflected a non-cash reduction in acquisition-related contingent liabilities.
Net income attributable to the Company for the second quarter 2022 was $24.4 million or $0.11 per basic and $0.10 per diluted share, compared to a net income of $22.1 million, or income of $0.10 per basic and diluted share in the prior year period.
In the second quarter 2022, EBITDA was $86.5 million or 34.0% of revenue versus $65.9 million or 29.7% of revenue for the comparable period. Adjusted Operating EBITDA, which excluded non-cash stock-based compensation of $6.8 million and other non-operating adjustments of ($14.6 million), was $78.7 million or 31.0% of revenue as compared to $79.3 million or 35.7% of revenue for the second quarter 2021.
For additional information on these non-GAAP financial measures, see below under “Non-GAAP Financial Information.”
Balance Sheet and Liquidity
As of June 30, 2022, current assets were $311.5 million, including cash and cash equivalents of $145.3 million. Total debt outstanding was $253.4 million.
Total basic and diluted weighted average shares outstanding for the three months ended June 30, 2022, were 236.8 million shares and 237.8 million shares, respectively.
Consumer Packaged Goods Business
- As of June 30, 2022, Green Thumb’s family of consumer brands including RYTHM, Dogwalkers, incredibles, Beboe, Doctor Solomon’s, Good Green and &Shine were produced, distributed, and available in retail locations across the country.
- Good Green, the Company’s newest brand, has expanded to seven total markets with additional markets coming later this year.
- Consumer Packaged Goods gross revenue was flat sequentially, with intercompany sales increasing 17.1% quarter-over-quarter. The launch of New Jersey adult-use sales was the main driver of the increase of intercompany sales.
Retail Business Development
- Green Thumb’s second quarter revenue included sales from 77 retail stores in the following states: California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Virginia.
- Retail revenue increased 11.7% quarter-over-quarter. Comparable sales growth (stores opened at least 12 months) were down 1.5% on a base of 56 stores. Sequential quarter-over-quarter comparable sales were up 9.9% on a base of 73 stores.
- The Company opened one new retail store in Minnesota, RISE Mankato. Profits from the first day of sales were donated to Habitat for Humanity of Minnesota (Habitat Minnesota).
Capital Markets and Financing
On July 14, 2022, Green Thumb announced it exercised its right to extend the maturity date of its senior non-brokered debt by one year, from April 30, 2024 to April 30, 2025. The Company’s senior secured notes (the “Notes”), which have a total principal amount of approximately $250 million, bear interest at a rate of 7.0% per annum that is paid quarterly. The extended maturity date did not involve any amendments to the Notes or any additional consideration to the existing lenders.
On June 29, 2022, the Company entered into the third amendment (the “Amendment”) to its existing lease agreement with Innovative Industrial Properties, Inc. associated with one of its cultivation and production facilities. The Amendment provided an additional tenant improvement allowance of $55 million to be used on enhancements to the facility.
Green Thumb in the Community
On June 2, 2022, the Company opened applications for the third round of Good Green grant applications to 501(c)3 organizations that encompass one or more of the brand’s three pillars: education, employment and expungement. Good Green is a flower brand delivering a high-quality, affordable product that gives back to communities disproportionately affected by the War on Drugs. Green Thumb plans to donate more than $1 million in grants via Good Green by year end. 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.
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 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, August 3, 2022, at 5:00 pm ET to discuss its second quarter 2022 financial results for the quarter ended June 30, 2022. The earnings call may be accessed by dialing 844-883-3895 (Toll-Free) or 412-317-5797 (International). 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.
About Green Thumb Industries:
Green Thumb Industries Inc. (“Green Thumb”), a national cannabis consumer packaged goods company and retailer, promotes well-being through the power of cannabis while giving back to the communities in which it serves. Green Thumb manufactures and distributes a portfolio of branded cannabis products including &Shine, Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredibles and RYTHM. The company also owns and operates rapidly growing national retail cannabis stores called RISE. Headquartered in Chicago, Illinois, Green Thumb has 17 manufacturing facilities, 77 open retail locations and operations across 15 U.S. markets. Established in 2014, Green Thumb employs approximately 4,000 people and serves millions of patients and customers each year. The company was named to Crain’s Chicago Business Fast 50 list in 2021 and 2022 and a Best Workplace by MG Retailer magazine in 2018, 2019 and 2021. More information is available at www.GTIgrows.com.
Coronavirus Pandemic
In March 2020, the World Health Organization categorized coronavirus disease 2019 (together with its variants, “COVID-19”) as a global pandemic. COVID-19 continues to spread throughout the U.S. and other countries across the world, and the duration and severity of its effects are currently unknown. The Company continues to implement and evaluate actions to strengthen its financial position and support the continuity of its business and operations. The Company’s unaudited interim condensed and consolidated financial statements presented herein reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of such financial statements and reported amounts of revenue and expenses during the periods presented. Such estimates and assumptions affect, among other things, the Company’s goodwill, long-lived asset and intangible assets; operating lease right of use assets and operating lease liabilities; valuation of deferred income taxes; the allowance for doubtful accounts; assessment of the Company’s lease and non-lease contract expenses; and measurement of compensation cost for bonus and other compensation plans. While the Company’s revenue, gross profit and operating income were not impacted during the first six months of 2022, the uncertain nature of the spread of COVID-19 and the uncertainty of the impact of nationwide vaccine programs may impact the Company’s business operations for reasons including the potential quarantine of the Company’s employees or those of its supply chain partners.
The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.
