First quarter 2024 revenue of $339 million, representing an increase of 2%
year-over-year and adjusted gross margin(1) of 48%
First quarter 2024 adjusted EBITDA(1) of
$77 million, representing 23% of
revenue, a 40 basis point improvement year-over-year
First quarter 2024 operating cash flow from
continuing operations of $46 million
and free cash flow(1) of $33
million
Repurchased $15
million of our December 2026
notes at a 7.75% discount
NEW
YORK, May 9, 2024 /PRNewswire/ -- Curaleaf
Holdings, Inc. (TSX: CURA) (OTCQX: CURLF) ("Curaleaf" or the
"Company"), a leading international provider of consumer
products in cannabis, today reported its financial and operating
results for the first quarter ended March 31, 2024. All
financial information is reported in accordance with U.S. generally
accepted accounting principles (GAAP) and is provided in U.S.
dollars unless otherwise indicated.
Boris Jordan, Executive Chairman
of Curaleaf, stated, "Consistent with our expectations, first
quarter revenue grew 2% to $339
million, and we achieved a 48% adjusted gross margin.
Adjusted EBITDA margin(1) was $77
million or 23% of sales, expanding 40bps from last year. We
ended the first quarter with $105
million of cash on the balance sheet, and generated
operating and free cash flow from continuing
operations(1) of $46
million and $33 million,
respectively. We have started to redeploy this cash toward reducing
leverage on our balance sheet, as seen by the $15 million bond repurchase executed in April. At
this important inflection point in our industry and our Company, on
the heels of rescheduling news, our expanded custody solutions and
the advances in Europe, Curaleaf
has evolved from an MSO to an MCO, a multi-country operator, a term
which represents our global vision and business that today spans
over 15 countries across the world. With each ensuing quarter, we
will create further separation from our peers because of the
strategic global lens through which we operate. We are very
encouraged by the catalysts thus far with more on the horizon, and
our success and future potential would not be possible without our
global team members. I thank them all."
Matt Darin, Chief Executive
Officer of Curaleaf, commented, "We are laser focused on
expanding the global reach of our brand portfolio, with Select,
Grassroots, Curaleaf, and Four20 in Europe leading the way. In the first quarter,
our team gained 33 basis points of total market share across all
BDSA states, expanding our share in some of the largest markets
throughout the U.S.. Our wholesale advantage is growing steadily,
and we continue to innovate with new products consumers love. Our
unique exposure to the most significant catalysts on the horizon –
continued expansion of the NY market, expansion of Pillar 1 in
Germany, and adult use in
Ohio, Florida, and Pennsylvania sets us up for robust growth in
2025 and beyond. The global cannabis industry is still in its
infancy and we are confident that the foundation we have built is
one for long-term success."
First Quarter 2024 Financial Highlights
- Net Revenue of $338.9 million, a
year-over-year increase of 2% compared to Q1 2023 revenue of
$332.6 million. Sequentially, net
revenue decreased 2%
- Gross profit of $160.9 million
and gross margin of 47%
- Adjusted gross profit(1) of $161.4 million and adjusted gross
margin(1) of 48%, up 120 basis points sequentially
- Net loss attributable to Curaleaf Holdings, Inc. of
$48.3 million or net loss per share
$0.07
- Adjusted EBITDA(1) of $76.7
million and adjusted EBITDA margin([1]) of 23%, a
40 basis point improvement year-over-year
- Cash at quarter end totaled $105.0
million
- Operating and free cash flow from continuing operations of
$46.1 million and $33.1 million, respectively
First Quarter 2024 Operational Highlights
- Opened our first adult-use store in New York's Hudson
Valley, ending the quarter with 145 U.S. retail stores.
- Launched Stir by Zero Proof, a fast-acting THC beverage mix, in
Illinois.
- Launched Stiq, a new 1g all-in-one cannabis oil vape, in
Arizona.
- Announced the acquisition of Northern Green Canada (NGC), a
vertically integrated Canadian EU-GMP indoor cannabis producer,
focused primarily on solidifying our supply chain and expanding our
international presence through its EU-GMP certified
facilities.
- Curaleaf International rebranded Sapphire Clinics to Curaleaf
Clinics in the U.K.
- Acquired Can4Med, an experienced pharmaceutical wholesaler in
Poland to enhance our market
presence.
- Curaleaf International made its first wholesale shipment into
Czech Republic.
Post First Quarter 2024 Operational Highlights
- Completed the Northern Green Canada acquisition for a purchase
price of approximately $16.0 million
plus an earnout.
- Purchased for cancellation $15.0
million of our Senior Secured Notes - 2026 at a discount of
7.75%, saving the Company $3.2
million of future interest payments.
1 Adjusted EBITDA, adjusted
gross profit and free cash flow from continuing operations are
non-GAAP financial measures, and adjusted EBITDA margin and
adjusted gross margin are non-GAAP financial ratios, in each case
without a standardized definition under GAAP and which may not be
comparable to similar measures used by other issuers. See "Non-GAAP
Financial Performance Measures" below for definitions and more
information regarding Curaleaf's use of non-GAAP financial measures
and non-GAAP financial ratios. See the section entitled
"Reconciliation of Non-GAAP financial measures" below for a
reconciliation of the non-GAAP financial measures used in this
press release to the most directly comparable GAAP financial
measures.
|
Balance Sheet and Cash Flow
As of March 31, 2024, the Company had $105.0 million
of cash and $580.3 million of outstanding debt net of
unamortized debt discounts.
During the three months ended March 31, 2024, Curaleaf
invested $13.0 million, net in
capital expenditures, focused on cultivation, automation, and
selective retail expansion in strategic markets.
Shares Outstanding
For the first quarter of 2024 and 2023, the Company's weighted
average Subordinate Voting Shares plus Multiple Voting Shares
outstanding amounted to 736,147,618 and 718,117,628 shares,
respectively.
Conference Call Information
The Company will host a conference call and audio webcast for
investors and analysts on Thursday May 9,
2024 at 5:00 P.M. ET to
discuss Q1 2024 earnings results. The call can be accessed by
dialing 1-844-512-2926 in the U.S., internationally 1-412-317-6300
or from Canada 1-416-639-5883. The
conference pin # is 7489402.
A replay of the conference call can be accessed at
1-877-344-7529 or internationally 1-412-317-0088 or from
Canada 1-855-669-9658, using the
replay pin # 7935470.
A webcast of the call can be accessed on the investor relations
section of the Curaleaf website at ir.curaleaf.com. The
teleconference will be available for replay starting at
approximately 7:00 P.M. ET on
May 9, 2024 and will end at
11:59 P.M. ET on May 16, 2024.
Non-GAAP Financial and Performance Measures
Curaleaf reports its financial results in accordance with GAAP
and uses a number of financial measures and ratios when assessing
its results and measuring overall performance. Some of these
financial measures and ratios are not calculated in accordance with
GAAP. Curaleaf refers to certain non-GAAP financial measures and
ratios, such as "adjusted gross profit", "adjusted gross margin",
"adjusted EBITDA" and "adjusted EBITDA margin". These measures do
not have any standardized meaning prescribed by GAAP and may not be
comparable to similar measures presented by other issuers. The
Company defines "adjusted gross profit" as gross profit net of cost
of goods sold and related other add-backs. "Adjusted gross margin"
is defined by Curaleaf as adjusted gross profit divided by total
revenues. "Adjusted EBITDA" is defined by Curaleaf as earnings
before interest, taxes, depreciation and amortization less
share-based compensation expense and other add-backs related to
business development, acquisition, financing and reorganization
costs. "Adjusted EBITDA margin" is defined by Curaleaf as adjusted
EBITDA divided by total revenue. "Free cash flow from operations"
is defined by Curaleaf as Net cash provided by operating activities
from continuing operations less the Purchases of property, plant
and equipment, net of proceeds from disposals (i.e. net capital
expenditures). Curaleaf considers these measures to be an important
indicator of the financial strength and performance of our
business. We believe the adjusted results presented provide
relevant and useful information for investors, because they clarify
our actual operating performance, make it easier to compare our
results with those of other companies and allow investors to review
performance in the same way as our management. Since these measures
are not calculated in accordance with GAAP, they should not be
considered in isolation of, or as a substitute for, our reported
GAAP financial results as indicators of our performance, and they
may not be comparable to similarly named measures from other
companies. The tables below provide reconciliations of Non-GAAP
measures to the most directly comparable GAAP measures.
Reconciliation of
Non-GAAP financial measures
Adjusted Gross
Profit from Continuing Operations (Unaudited)
($
thousands)
|
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Gross profit from
continuing operations
|
$
160,904
|
|
$
156,192
|
|
$
160,442
|
Other add-backs
(1)
|
511
|
|
4,205
|
|
649
|
Adjusted gross profit
from continuing operations (2)
|
$
161,415
|
|
160,397
|
|
161,091
|
Adjusted gross profit
margin from continuing operations (2)
|
48 %
|
|
46 %
|
|
47 %
|
|
|
|
|
|
|
(1) Other add-backs in
Q1 2024 primarily include inventory write-downs primarily
associated with idling capacity.
|
(2) Represents a
non-GAAP measure or Non-GAAP ratio. See preceding "Non-GAAP
Financial and Performance Measures" section for
definitions and more information regarding Curaleaf's use of
Non-GAAP financial measures and Non-GAAP ratios. The table above
provides a
reconciliation of Gross profit from continuing operations, the most
comparable GAAP measure, to Adjusted gross profit from
continuing
operations, a non-GAAP measure.
|
Gross profit from continuing operations was $160.9 million in the first quarter of 2024,
compared with $156.2 million in the
fourth quarter of 2023. Adjusted gross profit from continuing
operations net of add-backs for the first quarter was $161.4 million compared with $160.4 million in the fourth quarter of 2023.
Adjusted gross profit margin from continuing operations for the
first quarter of 2024 was 48%, an increase of 120 basis points
compared with the fourth quarter of 2023. The quarter-over-quarter
increase in adjusted gross profit margin was due to an improvement
in non-absorption costs partially offset by reduced vertical mix of
sales.
Adjusted EBITDA
(Unaudited)
($
thousands)
|
|
|
Three Months
Ended
|
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Net loss
|
$
(51,010)
|
|
$
(65,647)
|
|
$
(56,469)
|
Net loss from
discontinued operations
|
567
|
|
(7,995)
|
|
(12,589)
|
Net loss from
continuing operations
|
(51,577)
|
|
(57,652)
|
|
(43,880)
|
Interest expense,
net
|
25,762
|
|
28,423
|
|
20,640
|
Provision for income
taxes
|
40,090
|
|
(2,974)
|
|
40,732
|
Total depreciation and
amortization (1)
|
51,458
|
|
52,861
|
|
44,954
|
Share-based
compensation
|
7,509
|
|
5,833
|
|
1,708
|
Loss on impairment and
Other expense, net
|
(1,573)
|
|
46,170
|
|
487
|
Other add-backs
(2)
|
5,039
|
|
10,352
|
|
9,434
|
Adjusted EBITDA
(3)
|
$
76,708
|
|
$
83,013
|
|
$
74,075
|
Adjusted EBITDA Margin
(3)
|
23 %
|
|
24 %
|
|
22 %
|
|
|
|
|
|
|
(1) Depreciation and
amortization expense include amounts charged to cost of goods sold
on the statement of operations.
|
(2) Other add-backs in
Q1 2024 primarily include costs related to legal and professional
fees, rent and other facility costs, and $2 million related
to legislative campaign contributions.
|
(3) Represents a
non-GAAP measure or Non-GAAP ratio. See "Non-GAAP Financial and
Performance Measures" below for definitions and more
information regarding Curaleaf's use of Non-GAAP financial measures
and Non-GAAP ratios. The table above provides a reconciliation of
such
non-GAAP measure to net loss, the most comparable GAAP
measure.
|
Adjusted EBITDA was $76.7 million
for the first quarter of 2024, a decrease of 8% from $83.0 million in the fourth quarter of 2023, and
an increase of 4% from $74.1 million
in the first quarter of 2023. Adjusted EBITDA margin was 23%, a
decrease of 140 basis points from 24% in the prior quarter and an
increase of 40 basis points from 22% in the first quarter of 2023.
The sequential decrease in Adjusted EBITDA was primarily due to
seasonally lower sales and an increase in labor expenses.
Free Cash Flow
(Unaudited)
($
thousands)
|
|
|
Three months ended
March 31, 2024
|
Net cash provided by
operating activities from continuing operations
|
$
46,066
|
Less: Capital
expenditures
|
(12,996)
|
Free cash flow from
continuing operations(1)
|
$
33,070
|
|
|
(1) Represents a
non-GAAP measure or Non-GAAP ratio. See "Non-GAAP Financial and
Performance Measures" above for definitions and more
information regarding Curaleaf's use of Non-GAAP financial measures
and Non-GAAP ratios. The table above provides a reconciliation of
Net cash
provided by operating activities from continuing operations, a GAAP
measure, to Free cash flow from continuing operations, a non-GAAP
measure.
|
Condensed Interim
Consolidated Balance Sheets
|
($
thousands)
|
As of
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Unaudited
|
|
Audited
|
Assets
|
|
|
|
Cash, cash equivalents
and restricted cash
|
$
105,029
|
|
$
91,818
|
Other current
assets
|
331,228
|
|
326,785
|
Property, plant and
equipment, net
|
567,954
|
|
571,627
|
Right-of-use assets,
finance lease, net
|
139,301
|
|
143,203
|
Right-of-use assets,
operating lease, net
|
116,061
|
|
118,435
|
Intangible assets,
net
|
1,156,705
|
|
1,172,445
|
Goodwill
|
625,904
|
|
626,628
|
Other long-term
assets
|
40,916
|
|
45,635
|
Total
assets
|
$
3,083,098
|
|
$
3,096,576
|
|
|
|
|
Liabilities,
Temporary equity and Shareholders' equity
|
|
|
|
Total current
liabilities
|
$
607,080
|
|
$
494,034
|
Total long-term
liabilities
|
1,341,348
|
|
1,431,250
|
Total shareholders'
equity
|
1,018,325
|
|
1,050,642
|
Redeemable
non-controlling interest contingency
|
116,345
|
|
120,650
|
Total liabilities,
temporary equity and shareholders' equity
|
$
3,083,098
|
|
$
3,096,576
|
Condensed Interim
Consolidated Statements of Operations (Unaudited)
($ thousands, except
for share and per share amounts)
|
|
|
Three months ended
March 31,
|
|
2024
|
|
2023
|
Revenues,
net:
|
|
|
|
Retail and wholesale
revenues
|
$
337,577
|
|
$
331,264
|
Management fee
income
|
1,355
|
|
1,376
|
Total revenues,
net
|
338,932
|
|
332,640
|
Cost of goods
sold
|
178,028
|
|
172,198
|
Gross profit
|
160,904
|
|
160,442
|
Operating
expenses:
|
|
|
|
Selling, general and
administrative
|
104,392
|
|
110,482
|
Share-based
compensation
|
7,509
|
|
1,708
|
Depreciation and
amortization
|
36,301
|
|
30,273
|
Total operating
expenses
|
148,202
|
|
142,463
|
Income from
operations
|
12,702
|
|
17,979
|
Other income
(expense):
|
|
|
|
Interest
income
|
17
|
|
22
|
Interest
expense
|
(15,363)
|
|
(9,995)
|
Interest expense
related to lease liabilities and financial obligations
|
(10,416)
|
|
(10,667)
|
Gain (loss) on
impairment
|
3,926
|
|
—
|
Other expense,
net
|
(2,353)
|
|
(487)
|
Total other expense,
net
|
(24,189)
|
|
(21,127)
|
Loss before provision
for income taxes
|
(11,487)
|
|
(3,148)
|
Provision for income
taxes
|
(40,090)
|
|
(40,732)
|
Net loss from
continuing operations
|
(51,577)
|
|
(43,880)
|
Net income (loss) from
discontinued operations
|
567
|
|
(12,589)
|
Net loss
|
(51,010)
|
|
(56,469)
|
Less: Net loss
attributable to non-controlling interest
|
(2,697)
|
|
(2,089)
|
Net loss attributable
to Curaleaf Holdings, Inc.
|
$
(48,313)
|
|
$
(54,380)
|
|
|
|
|
Per share – basic and
diluted:
|
|
|
|
Loss per share from
continuing operations, net of loss attributable to
non-controlling interest
|
$
(0.07)
|
|
$
(0.06)
|
Income (loss) per share
from discontinued operations
|
—
|
|
(0.02)
|
Loss per share
attributable to Curaleaf Holdings, Inc. – basic and
diluted
|
$
(0.07)
|
|
$
(0.08)
|
Weighted average common
shares outstanding – basic and diluted
|
736,147,618
|
|
718,117,628
|
About Curaleaf Holdings
Curaleaf Holdings, Inc. (TSX: CURA) (OTCQX: CURLF) ("Curaleaf")
is a leading international provider of consumer products in
cannabis with a mission to enhance lives by cultivating, sharing
and celebrating the power of the plant. As a high-growth cannabis
company known for quality, expertise and reliability, the Company
and its brands, including Curaleaf, Select, Grassroots, JAMS, Find
and Zero Proof provide industry-leading service, product selection
and accessibility across the medical and adult use markets.
Curaleaf International is the largest vertically integrated
cannabis company in Europe with a
unique supply and distribution network throughout the European
market, bringing together pioneering science and research with
cutting-edge cultivation, extraction and production. Curaleaf is
listed on the Toronto Stock Exchange under the symbol CURA and
trades on the OTCQX market under the symbol CURLF. For more
information, please visit https://ir.curaleaf.com.
Curaleaf IR Twitter
Account:
https://twitter.com/Curaleaf_IR
Investor Relations
Website:
https://ir.curaleaf.com/
Contact Information:
Investor Contact:
Curaleaf Holdings, Inc.
Camilo Lyon, Chief Investment
Officer
ir@curaleaf.com
Media Contact:
Curaleaf Holdings, Inc.
Tracy Brady, SVP Corporate
Communications
media@curaleaf.com
Disclaimer
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of Canadian
securities laws and United States
securities laws (collectively, "forward-looking statements").
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based on
management's current beliefs, expectations or assumptions regarding
the future of the business, plans and strategies, operational
results and other future conditions of the Company. In addition,
the Company may make or approve certain statements in future
filings with Canadian securities regulatory authorities, in press
releases, or in oral or written presentations by representatives of
the Company that are not statements of historical fact and may also
constitute forward-looking statements. All statements, other than
statements of historical fact, made by the Company that address
activities, events or developments that the Company expects or
anticipates will or may occur in the future are forward-looking
statements, including, but not limited to, statements preceded by,
followed by or that include words such as "assumptions", "assumes",
"guidance", "outlook", "may", "will", "would", "could", "should",
"believes", "estimates", "projects", "potential", "expects",
"plans", "intends", "anticipates", "targeted", "continues",
"forecasts", "designed", "goal" or the negative of those words or
other similar or comparable words. In particular, but without
limiting the foregoing, disclosure in this press release as well as
statements regarding the Company's objectives, plans and goals,
including benefits of recent or future acquisitions, rebranding and
product offering expansion, as well as future operating results and
economic performance are forward-looking statements. These
statements speak only as at the date they are made and are based on
information currently available and on the then current
expectations.
Holders of securities of the Company are cautioned that
forward-looking statements are not based on historical facts but
instead are based on reasonable assumptions and estimates of
management of the Company at the time they were provided or made
and involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the Company, as applicable, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements, including,
but not limited to, risks and uncertainties related to: risks and
uncertainties related to the legality of cannabis in the U.S.,
including the fact that cannabis is a controlled substance under
the United States Federal Controlled Substances Act; anti-money
laundering laws and regulations; the lack of access to U.S.
bankruptcy protections; financing risks, including risks related to
additional financing and restricted access to banking; general
regulatory and legal risks, including the potential constraints on
the Company's ability to expand its business in the U.S. by virtue
of the restrictions of the TSX following the TSX listing; risk of
legal, regulatory or political change; general regulatory and
licensing risks; limitation on ownership of licenses; risks
relating to regulatory action and approvals from the U.S. Food and
Drug Administration ("FDA"); the fact that cannabis may become
subject to increased regulation by the FDA; potential heightened
scrutiny by regulatory authorities following the TSX listing; loss
of foreign private issuer status; risks related to internal
controls over financial reporting; litigation risks; increased
costs as a result of being a public company in Canada and the U.S.; recent and proposed
legislation in respect of U.S. cannabis licensing; environmental
risks, including risks related to environmental regulation and
unknown environmental risks; general business risks including risks
related to the Company's expansion into foreign jurisdictions;
future acquisitions or dispositions; service providers;
enforceability of contracts; the ability of our shareholders to
resell their subordinate voting shares on the Toronto Stock
Exchange; the Company's reliance on senior management and key
personnel, and the Company's ability to recruit and retain such
senior management and key personnel; competition risks; risks
inherent in an agricultural business; unfavorable publicity or
consumer perception; product liability; product recalls; the
results of future clinical research; dependence on suppliers;
reliance on inputs; risks related to limited market data and
difficulty to forecast; intellectual property risks; constraints on
marketing products; fraudulent or illegal activity by employees,
consultants and contractors; increased labor costs based on union
activity; information technology systems and cyber-attacks;
security breaches; the Company's reliance on management services
agreements with subsidiaries and affiliates; website accessibility;
high bonding and insurance coverage; risks of leverage; management
of the Company's growth; the fact that past performance may not be
indicative of future results and that financial projections may
prove materially inaccurate or incorrect; risks related to
conflicts of interests; challenging global economic conditions;
currency fluctuations; risks related to the Company's business
structure and securities; including the status of the Company as a
holding company; no dividend record; risks related to the senior
secured notes of the Company; concentrated voting control; risks
related to the sale of a substantial amount of the Company's
subordinate voting shares; the volatility of the market price for
the subordinate voting shares; liquidity risks associated with an
investment in the subordinate voting shares; risks associated with
securities or industry analysts not publishing or ceasing to
publish research or reports or publishing misleading information
about the Company; the potentially limited market for the
subordinate voting shares for holders of the Company's securities
who live in the U.S.; shareholders having little to no rights to
participate in the Company's business affairs; enforcement against
directors and officers outside of Canada may prove difficult; and tax risks; as
well as those risk factors discussed under "Risk Factors" in the
Company's Annual Information Form dated March 6, 2024 for the fiscal year ended
December 31, 2023, and additional risks described in the
Company's Annual Management's Discussion and Analysis for the year
ended December 31, 2023 (both of which documents have been
filed on the Company's SEDAR+ profile at www.sedarplus.ca and on
its EDGAR profile at www.sec.gov/edgar/html), and as described from
time to time in documents filed by the Company with Canadian
securities regulatory authorities. The purpose of forward-looking
statements is to provide the reader with a description of
management's expectations, and such forward-looking statements may
not be appropriate for any other purpose. Although the Company
believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. A number of factors
could cause actual events, performance or results to differ
materially from what is projected in the forward-looking
statements. You should not place undue reliance on forward-looking
statements contained in this press release. Such forward-looking
statements are made as of the date of this press release. We
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law. The Company's
forward-looking statements are expressly qualified in their
entirety by this cautionary statement.
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SOURCE Curaleaf Holdings, Inc.