Green Thumb Industries Reports Second Quarter 2021 Results

CHICAGO and VANCOUVER, B.C.– Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF), a national cannabis consumer packaged goods company and owner of Rise Dispensaries, today reported its financial results for the second quarter ended June 30, 2021. Financial results are reported in accordance with U.S. generally accepted accounting principles and all currency is in U.S. dollars.

Highlights for the quarter ended June 30, 2021:

• Revenue increased 14.1% sequentially and 85.4% year-over-year to $221.9 million.
• First half 2021 revenue increased 87.3% to $416.3 million.
• Fourth consecutive quarter of positive GAAP net income, delivering $22.1 million or $0.10 per basic and diluted share.
• Adjusted Operating EBITDA grew 11.1% sequentially and more than doubled year-over-year to $79.3 million or 35.7% of revenue.
• Sixth consecutive quarter of positive cash flow from operations, delivering $48.3 million year-to-date.
• On April 30, 2021, Green Thumb raised $216.7 million in senior secured debt at 7%. The proceeds were used to retire $105.5 million in senior secured debt (at 12%) and the remainder will be used for general working capital and growth-driving initiatives.
• On June 1, 2021, the Company acquired Liberty Compassion, Inc., a Massachusetts-based medical cannabis cultivator and retailer. The acquisition adds cultivation and production capacity to the Company’s existing Massachusetts operations.See definition and reconciliation of non-GAAP measures elsewhere in this release.

Key Developments Post-Quarter

• On July 1, 2021, the Company expanded into the Virginia cannabis market upon closing the acquisition of Dharma Pharmaceuticals, LLC (“Dharma”), 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 locations in the state. On August 2, the Company exercised its option under the license to open Rise Salem.
• 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 open dispensary in Warwick, which is one of only three operating retail dispensaries in the state.
• On August 10, 2021, the Company opened Rise Warminster, its 62nd store nationwide. Profits from the first day of sales will be 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.

Management Commentary

“The second quarter continued to be about disciplined execution and the team should be proud of the results. On a year-over-year basis, we grew revenue by 85% to $222 million; more than doubled Adjusted EBITDA to $79 million and continued to deliver positive cash flow. Since the first quarter, we closed three acquisitions, expanding our manufacturing capabilities in Massachusetts and geographic footprint into two new states, Virginia and Rhode Island. These critical steps strengthened our position to distribute our brands to more patients and consumers in existing and new markets,” said Green Thumb Chairman, Founder and Chief Executive Officer Ben Kovler. “Finding new and meaningful ways to support the communities we serve is a mission we all share at Green Thumb. We are especially proud of our recently announced Good Green grant program for heroes helping to fight problems created by the failed War on Drugs. Ahead of launching the Good Green brand of products later this year, we are allocating at least $1,300,000 in social equity grants to qualified 501(c)(3) organizations over the next 18 months to jump start this important initiative,” said Kovler.

“The great American growth story in cannabis is happening–the momentum is undeniable. Consumers demand safe, reliable alternatives for well-being and we are excited to meet their needs with high-quality cannabis experiences. There is still incredible untapped potential in all of our operating regions, and we will continue our strategy to invest in high-return initiatives that prepare us for the growth ahead and future value creation for our stakeholders,” concluded Kovler.

Second Quarter Financial Overview

Total revenue for the second quarter 2021 was $221.9 million, up 14.1% sequentially and up 85.4% from $119.6 million in the prior year period. Revenue growth was primarily driven by increased scale in the Consumer Packaged Goods and Retail businesses, especially in Illinois and Pennsylvania. Overall performance was driven by expanded distribution of Green Thumb’s branded products, 10 additional stores and increased traffic in the Company’s 58 open and operating retail stores.

In the second quarter of 2021, Green Thumb generated revenue from all 12 of its markets: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio and Pennsylvania. The Company continued to invest in expanding its cultivation and manufacturing capabilities.

Gross profit for the second quarter 2021 was $122.9 million or 55.4% of revenue compared to $63.7 million or 53.2% of revenue year-over-year. Gross margin performance was driven by increased scale in the Consumer Packaged Goods and Retail businesses.

Total selling, general and administrative expenses for the second quarter were $72.1 million or 32.5% of revenue, compared to $49.6 million or 41.5% of revenue for the second quarter 2020. Improved operating costs as a percentage of revenue reflected increased operating leverage in the Company’s Consumer Packaged Goods and Retail businesses.

Net income attributable to the Company for the second quarter 2021 was $22.1 million or $0.10 per basic and diluted share, compared to a net loss of $12.9 million, or a loss of $0.06 per basic and diluted share in the prior year.

In the second quarter 2021, EBITDA was $65.9 million or 29.7% of revenue versus $28.3 million or 23.6% of revenue in the prior year period. Adjusted Operating EBITDA, which excluded non-cash stock-based compensation of $5.7 million and other non-operating expenses of $7.7 million, was $79.3 million or 35.7% of revenue as compared to $35.4 million or 29.6% of revenue for the second quarter 2020. The significant improvement in EBITDA and Adjusted Operating EBITDA over the prior year period largely reflected revenue growth and increased scale-driven operating leverage from both the Consumer Packaged Goods and Retail businesses. For additional information on these non-GAAP financial measures, see below under “Non-GAAP Financial Information.”

Balance Sheet and Liquidity

As of June 30, 2021, current assets were $481.6 million, including cash and cash equivalents of $359.2 million. Total debt outstanding was $197.6 million.

Total basic and diluted weighted average shares outstanding for the three months ended June 30, 2021, were 220,323,622 shares and 224,843,155 shares, respectively.

Capital Markets & Financing

On April 30, 2021, the Company issued $216.7 million of senior secured notes. The Company used the proceeds to retire its existing $105.5 million senior secured debt and for general working capital and various growth initiatives.

Expansion of Consumer Packaged Goods Business

• As of June 30, 2021, Green Thumb’s family of consumer brands were produced, distributed, and available in retail locations in twelve states: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio and Pennsylvania.
• Consumer Packaged Goods gross revenue grew 13% sequentially, driven primarily by expanded scale in production and distribution of branded products.
• During the second quarter and subsequent to quarter end, Green Thumb’s Consumer Packaged Goods activity included:
  • In April 2021, in partnership with The Cann + Botl Company, Green Thumb launched Cann’s leading cannabis-infused beverage portfolio in Illinois and plans to expand distribution to other markets later this year.
  • Through its acquisition of Liberty Compassion, Inc. on June 1, 2021, Green Thumb added and expanded cultivation and production capacity to the Company’s existing operations in Massachusetts.
  • On July 1, 2021, subsequent to quarter end, the Company expanded into Virginia and added a cultivation and production facility through its acquisition of Dharma Pharmaceuticals, LLC.
  • On August 1, 2021, subsequent to quarter end, Green Thumb expanded into Rhode Island through an acquisition and added a cultivation and production facility in Warwick, Rhode Island.
  • On July 21, 2021, subsequent to quarter end, Green Thumb announced plans to launch Good Green, a line of cannabis products whose mission is to promote change by making impactful investments in organizations working to correct the harms created by the War on Drugs.

Retail Business Development

• Green Thumb’s second quarter revenue included sales from 58 retail stores across eleven states: California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio and Pennsylvania.
• Comparable sales growth (stores opened at least 12 months) was 34% on a base of 42 stores, driven primarily by increased transactions. Sequential comparable sales were up 7% on a base of 51 stores.
• Retail revenue increased 15% sequentially, driven by increased foot traffic in established stores and new store openings.
• During the second quarter and subsequent to quarter end, Green Thumb’s retail activity included:
  • Nevada: Green Thumb and Cookies rebranded the Essence on the Strip store to Cookies on the Strip on May 14, making it the first Cookies store in Nevada and the only cannabis store on the strip.
  • Massachusetts: Green Thumb added two medical cannabis retail stores in Boston and West Springfield through its acquisition of Liberty Compassion on June 1.
  • Virginia: Subsequent to quarter end, Green Thumb added a retail dispensary in Abingdon, Virginia through its acquisition of Dharma Pharmaceuticals, LLC on July 1. The Company opened Rise Salem, its second Virginia location on August 2, 2021. Green Thumb has the opportunity to open four more retail locations in the Commonwealth.
  • Rhode Island: Subsequent to quarter end, Green Thumb added a retail dispensary, its 61^st retail location, in Warwick, Rhode Island through an acquisition on August 1, 2021.
  • On August 10, the Company opened Rise Warminster, its 62nd store nationwide. Profits from the first day of sales will be 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.

Cautionary Note Regarding Forward-Looking Information

This press release contains statements that we believe are, or may be considered to be, “forward-looking statements.” All statements other than statements of historical fact included in this document regarding the prospects of our industry or our prospects, plans, financial position or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,” “plan,” “forecast,” “continue,” “suggests” or “could” or the negative of these terms or variations of them or similar terms. Furthermore, forward-looking statements may be included in various filings that we make with the SEC), or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These known and unknown risks include, without limitation: cannabis remains illegal under federal law, and enforcement of cannabis laws could change; the Company may be subject to action by the U.S. federal government; state regulation of cannabis is uncertain; the Company may be subject to heightened scrutiny by Canadian regulatory authorities; the Company may face limitations on ownership of cannabis licenses; the Company may become subject to U.S. Food and Drug Administration or the U.S. Bureau of Alcohol, Tobacco Firearms and Explosives regulation; cannabis businesses are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services; the Company may face difficulties acquiring additional financing; the Company lacks access to U.S. bankruptcy protections; the Company operates in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where we carry on business; the Company may face difficulties in enforcing its contracts; the Company has limited trademark protection; cannabis businesses are subject to unfavorable tax treatment; cannabis businesses may be subject to civil asset forfeiture; the Company is subject to proceeds of crime statutes; the Company faces exposure to fraudulent or illegal activity; the Company’s use of joint ventures may expose it to risks associated with jointly owned investments; the Company faces risks due to industry immaturity or limited comparable, competitive or established industry best practices; the Company faces risks related to its products; the Company is dependent on the popularity of consumer acceptance of the Company’s brand portfolio; the Company’s business is subject to the risks inherent in agricultural operations; the Company may be adversely impacted by rising or volatile energy costs; the Company faces an inherent risk of product liability or similar claims; the Company’s products may be subject to product recalls; the Company may face unfavorable publicity or consumer perception; the Company may face unfavorable publicity or consumer perception; the Company’s voting control is concentrated; the Company’s capital structure and voting control may cause unpredictability; issuances of substantial amounts of Super Voting Shares, Multiple Voting Shares or Subordinate Voting Shares may result in dilution; and the Company is governed by corporate laws in British Columbia, Canada which in some cases have a different effect on shareholders than the corporate laws in Delaware, United States. Further information on these and other potential factors that could affect the Company’s business and financial condition and the results of operations are included in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and elsewhere in the Company’s filings with the SEC, which are available on the SEC’s website or at https://investors.gtigrows.com. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this document, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this document.

Coronavirus Pandemic

In March 2020, the World Health Organization categorized coronavirus disease 2019 (together with its variants, “COVID-19”) as a 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 in the face of this pandemic and other events. The Company’s condensed 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 the condensed consolidated 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 assets and intangible assets; operating lease right of use assets and operating lease liabilities; assessment of the annual effective tax rate; 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 first three months of 2021, 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 the Company’s supply chain partners, and the Company’s continued designation as an “essential” business in states where the Company does business that currently or in the future impose restrictions on business operations. The carrying value of the Company’s goodwill and other long-lived assets may change in future periods as the expected impacts from COVID-19 are revised, resulting in further potential impacts to the Company’s financial statements.

The Canadian Securities Exchange does not accept responsibility for the adequacy or accuracy of this release.

Source: Green Thumb Industries