TERRASCEND CORP. Net Revenue of
Cash Flow from operations of
The following financial measures are reported as results from continuing operations due to the shutdown of the licensed producer business in
First Quarter 2024 Financial Highlights
- Net Revenue was
$80.6 million , an increase of 16.1% year-over-year. - Gross Profit Margin was 48.0%, compared to 48.8% in Q1 2023.
- Net loss from continuing operations was
$14.9 million , compared to a net loss of$19.2 million in Q1 2023. - EBITDA from continuing operations1 was
$8.7 million , compared to$6.1 million in Q1 2023. - Adjusted EBITDA from continuing operations1 was
$16.2 million , compared to$12.2 million in Q1 2023, an increase of 33.0% year-over-year. - Adjusted EBITDA Margin from continuing operations1 was 20.1%, compared to 17.6% in Q1 2023.
- Cash flow provided by operating activities from continuing operations was
$13.3 million compared to$10.5 million in Q1 2023. - Free Cash Flow1 was
$10.5 million compared to$8.0 million in Q1 2023.
“For the first quarter, revenue and Adjusted EBITDA increased materially year-over-year and we delivered another quarter of strong positive Free Cash Flow,” stated
Financial Summary Q1 2024 and Comparative Periods
All figures are restated for the Canadian business recorded as discontinued operations through Q3 2023.
| (in millions of | Q1 2024 | Q1 2023 | ||||
| Revenue, net | 80.6 | 69.4 | ||||
| Year-over-Year increase | 16.1 | % | 42.8 | % | ||
| Gross profit | 38.7 | 33.9 | ||||
| Gross profit margin | 48.0 | % | 48.8 | % | ||
| General & Administrative expenses | 28.0 | 27.7 | ||||
| Share-based compensation expense (included in G&A expenses above) | 1.5 | 1.7 | ||||
| G&A as a % of revenue, net | 34.7 | % | 39.9 | % | ||
| Net loss from continuing operations | (14.9 | ) | (19.2 | ) | ||
| EBITDA from continuing operations | 8.7 | 6.1 | ||||
| Adjusted EBITDA from continuing operations1 | 16.2 | 12.2 | ||||
| Adjusted EBITDA Margin from continuing operations1 | 20.1 | % | 17.6 | % | ||
| Net cash provided by (used in) operations- continuing operations | 13.3 | 10.5 | ||||
| Free Cash Flow1 | 10.5 | 8.0 |
1 EBITDA from continuing operations, Adjusted EBITDA from continuing operations, Adjusted EBITDA Margin from continuing operations, and Free Cash Flow are non-GAAP measures defined in the section titled “Definition and Reconciliation of Non-GAAP Measures” below and reconciled to the most directly comparable GAAP measure, at the end of this release.
First Quarter 2024 Business and Operational Highlights
- Seventh consecutive quarter of positive cash flow provided by continuing operations.
- Paid down
$9.8 million in debt. - Grew
Pennsylvania wholesale sales 80% year-over-year. Michigan achieved 40% gross margin for the second consecutive quarter.- Acquired the remaining 50.1% equity in State Flower and three Apothecarium dispensaries in
California , all of which were already previously consolidated into financial results. - Expanded
Valhalla product lineup to include one of the first 100mg edibles inPennsylvania resulting in Valhalla brand growth of 54% sequentially. - Won two
Cannademix Community Awards for New Jersey Best Flower and New Jersey Best Extract.
First Quarter 2024 Financial Results
Net revenue for the first quarter of 2024 was
Gross profit margin for the first quarter of 2024 was 48.0% as compared to 48.8% in the first quarter of 2023. The year-over-year decrease of 80 basis points was driven by channel mix shift in
General & Administrative expenses (G&A) for the first quarter of 2024 were
Net loss from continuing operations was
Adjusted EBITDA from continuing operations grew 33% year-over-year to
Balance Sheet and Cash Flow
Cash and cash equivalents, including restricted cash, were
As of
Conference Call
| Date: | |
| Time: | |
| Webcast: | https://ir.terrascend.com/news-events/ir-calendar |
| Dial-in Number: | 1-888-664-6392 |
| Replay: | 416-764-8677 or 1-888-390-0541 Available until 12:00 Replay Entry Code: 100922# |
Financial results and analyses are available on the Company’s website (www.terrascend.com) and SEDAR+ (www.sedarplus.ca).
About
Caution Regarding Cannabis Operations in
Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the
While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve
Forward Looking Information
This news release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information contained in this press release may be identified by the use of words such as, “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe, “intend”, “plan”, “forecast”, “project”, “estimate”, “outlook” and other similar expressions, and include statements with respect to future revenue and profits. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.
Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these statements. Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, current and future market conditions; risks related to federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in
The statements in this press release are made as of the date of this release. The Company disclaims any intent or obligation to update any forward-looking information, whether, as a result of new information, future events, or results or otherwise, other than as required by applicable securities laws.
Definition and Reconciliation of Non-GAAP Measures
In addition to reporting the financial results in accordance with GAAP, the Company reports certain financial results that differ from what is reported under GAAP. Non-GAAP measures used by management do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. The Company believes that certain investors and analysts use these measures to measure a company’s ability to meet other payment obligations or as a common measurement to value companies in the cannabis industry, and the Company calculates: (i) EBITDA from continuing operations and Adjusted EBITDA from continuing operations as net income (loss), adjusted to exclude [provision for income taxes, finance expenses, depreciation and amortization, relief of fair value upon acquisition, share-based compensation, gain on extinguishment of debt, restructuring related charges, impairment of good will and intangible assets and certain other items which management believes are not reflective of the ongoing operations and performance, (ii) Adjusted EBITDA Margin from continuing operations as EBITDA from continuing operations adjusted for certain material non-cash items such as inventory write downs outside of the normal course of operations, share based compensation expense, impairment charges taken on goodwill, intangible assets and property and equipment, the gain or loss recognized on the revaluation of our contingent consideration liabilities, the gain or loss recognized on the remeasurement of the fair value of the
For more information regarding TerrAscend:
Chief Financial Officer
ir@terrascend.com
855-837-7295
Consolidated Balance Sheet
(Amounts expressed in thousands of
| At | At | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 22,664 | $ | 22,241 | ||||
| Restricted cash | 3,110 | 3,106 | ||||||
| Accounts receivable, net | 17,013 | 19,048 | ||||||
| Investments | 1,965 | 1,913 | ||||||
| Inventory | 49,199 | 51,683 | ||||||
| Prepaid expenses and other current assets | 3,704 | 4,898 | ||||||
| 97,655 | 102,889 | |||||||
| Non-Current Assets | ||||||||
| Property and equipment, net | 194,256 | 196,215 | ||||||
| Deposits | 284 | 337 | ||||||
| Operating lease right of use assets | 41,488 | 43,440 | ||||||
| Intangible assets, net | 214,060 | 215,854 | ||||||
| 106,929 | 106,929 | |||||||
| Other non-current assets | 867 | 854 | ||||||
| 557,884 | 563,629 | |||||||
| Total Assets | $ | 655,539 | $ | 666,518 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 49,673 | $ | 49,897 | ||||
| Deferred revenue | 4,510 | 4,154 | ||||||
| Loans payable, current | 133,668 | 137,737 | ||||||
| Contingent consideration payable, current | 1,490 | 6,446 | ||||||
| Operating lease liability, current | 1,816 | 1,244 | ||||||
| Lease obligations under finance leases, current | 2,079 | 2,030 | ||||||
| Corporate income tax payable | 5,143 | 4,775 | ||||||
| Other current liabilities | 737 | 717 | ||||||
| 199,116 | 207,000 | |||||||
| Non-Current Liabilities | ||||||||
| Loans payable, non-current | 58,409 | 61,633 | ||||||
| Operating lease liability, non-current | 43,967 | 45,384 | ||||||
| Lease obligations under finance leases, non-current | 383 | 407 | ||||||
| Derivative liability | 6,075 | 5,162 | ||||||
| Convertible debt | 7,682 | 7,266 | ||||||
| Deferred income tax liability | 16,919 | 17,175 | ||||||
| Contingent consideration payable, non-current | 1,424 | — | ||||||
| Liability on uncertain tax position and other long term liabilities | 89,455 | 81,751 | ||||||
| 224,314 | 218,778 | |||||||
| Total Liabilities | 423,430 | 425,778 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity | ||||||||
| Share Capital | ||||||||
| Series A, convertible preferred stock, no par value, unlimited shares authorized; 12,350 and 12,350 shares outstanding as of | — | — | ||||||
| Series B, convertible preferred stock, no par value, unlimited shares authorized; 600 and 600 shares outstanding as of | — | — | ||||||
| Series C, convertible preferred stock, no par value, unlimited shares authorized; nil and nil shares outstanding as of | — | — | ||||||
| Series D, convertible preferred stock, no par value, unlimited shares authorized; nil and nil shares outstanding as of | — | — | ||||||
| Proportionate voting shares, no par value, unlimited shares authorized; nil and nil shares outstanding as of | — | — | ||||||
| Exchangeable shares, no par value, unlimited shares authorized; 63,492,038 and 63,492,038 shares outstanding as of | — | — | ||||||
| Common shares, no par value, unlimited shares authorized; 291,284,814 and 288,327,497 shares outstanding as of | — | — | ||||||
| Additional paid in capital | 945,825 | 944,859 | ||||||
| Accumulated other comprehensive income | 2,197 | 1,799 | ||||||
| Accumulated deficit | (717,398 | ) | (704,162 | ) | ||||
| Non-controlling interest | 1,485 | (1,756 | ) | |||||
| Total Shareholders' Equity | 232,109 | 240,740 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 655,539 | $ | 666,518 | ||||
Consolidated Statements of Operations and Comprehensive Loss
(Amounts expressed in thousands of
| For the Three Months Ended | ||||||
| Revenue, net | 80,633 | 69,398 | ||||
| Cost of Sales | 41,902 | 35,498 | ||||
| Gross profit | 38,731 | 33,900 | ||||
| Operating expenses: | ||||||
| General and administrative | 28,008 | 27,730 | ||||
| Amortization and depreciation | 2,215 | 2,029 | ||||
| Impairment of property and equipment and right of use assets | 2,438 | 335 | ||||
| Total operating expenses | 32,661 | 30,094 | ||||
| Income from operations | 6,070 | 3,806 | ||||
| Other (income) expense | ||||||
| Loss from revaluation of contingent consideration | 1,393 | — | ||||
| Loss (gain) on fair value of warrants and purchase option derivative assets | 983 | (438 | ) | |||
| Finance and other expenses | 8,589 | 10,087 | ||||
| Transaction and restructuring costs | — | 3 | ||||
| Unrealized and realized foreign exchange loss (gain) | 285 | (31 | ) | |||
| Unrealized and realized loss on investments | — | 699 | ||||
| Loss from continuing operations before provision for income taxes | (5,180 | ) | (6,514 | ) | ||
| Provision for income taxes | 9,671 | 12,664 | ||||
| Net loss from continuing operations | (14,851 | ) | (19,178 | ) | ||
| Discontinued operations: | ||||||
| Loss from discontinued operations, net of tax | — | (3,591 | ) | |||
| Net loss | (14,851 | ) | (22,769 | ) | ||
| Foreign currency translation adjustment | (398 | ) | 347 | |||
| Comprehensive loss | (14,453 | ) | (23,116 | ) | ||
| Net loss from continuing operations attributable to: | ||||||
| Common and proportionate Shareholders of the Company | (17,055 | ) | (21,364 | ) | ||
| Non-controlling interests | 2,204 | 2,186 | ||||
| Comprehensive loss attributable to: | ||||||
| Common and proportionate Shareholders of the Company | (16,657 | ) | (25,302 | ) | ||
| Non-controlling interests | 2,204 | 2,186 | ||||
| Net loss per share | ||||||
| Net loss per share - basic: | ||||||
| Continuing operations | (0.06 | ) | (0.08 | ) | ||
| Discontinued operations | — | (0.01 | ) | |||
| Net loss per share - basic | (0.06 | ) | (0.09 | ) | ||
| Weighted average number of outstanding common shares | 290,618,567 | 267,211,093 | ||||
| Net loss per share - diluted: | ||||||
| Continuing operations | (0.06 | ) | (0.08 | ) | ||
| Discontinued operations | — | (0.01 | ) | |||
| Net loss per share - diluted | (0.06 | ) | (0.09 | ) | ||
| Weighted average number of outstanding common shares, assuming dilution | 290,618,567 | 267,211,093 | ||||
Consolidated Statements of Cash Flows
(Amounts expressed in thousands of
| For the Three Months Ended | |||||||
| Operating activities | |||||||
| Net loss from continuing operations | $ | (14,851 | ) | $ | (19,178 | ) | |
| Adjustments to reconcile net loss to net cash provided by operating activities | |||||||
| Non-cash adjustments of inventory | — | 797 | |||||
| Accretion expense | 5,875 | 4,763 | |||||
| Depreciation of property and equipment and amortization of intangible assets | 5,000 | 4,771 | |||||
| Amortization of operating right-of-use assets | 716 | 454 | |||||
| Share-based compensation | 1,485 | 1,713 | |||||
| Deferred income tax expense | (256 | ) | 1,446 | ||||
| Loss (gain) on fair value of warrants and purchase option derivative | 983 | (438 | ) | ||||
| Gain on disposal of fixed assets | — | 307 | |||||
| Loss from revaluation of contingent consideration | 1,393 | — | |||||
| Impairment of property and equipment and right of use assets | 2,439 | — | |||||
| Loss on derecognition of right of use assets and lease termination | — | 205 | |||||
| Bad debt expense | 67 | — | |||||
| Unrealized and realized foreign exchange loss (gain) | 285 | (31 | ) | ||||
| Unrealized and realized loss on investments | — | 699 | |||||
| Changes in operating assets and liabilities | |||||||
| Receivables | 1,954 | 773 | |||||
| Inventory | 2,476 | (4,969 | ) | ||||
| Prepaid expense and other current assets | 1,189 | 1,203 | |||||
| Deposits | — | 97 | |||||
| Other assets | (12 | ) | (131 | ) | |||
| Accounts payable and accrued liabilities and other payables | (3,512 | ) | 6,882 | ||||
| Operating lease liability | (670 | ) | (473 | ) | |||
| Other liability | (537 | ) | (14 | ) | |||
| Uncertain tax position liabilities | 8,503 | — | |||||
| Corporate income tax payable | 368 | 11,773 | |||||
| Deferred revenue | 356 | (195 | ) | ||||
| Net cash provided by operating activities- continuing operations | 13,251 | 10,454 | |||||
| Net cash used in operating activities - discontinued operations | — | (2,020 | ) | ||||
| Net cash provided by operating activities | 13,251 | 8,434 | |||||
| Investing activities | |||||||
| Investment in property and equipment | (2,796 | ) | (2,497 | ) | |||
| Investment in intangible assets | (127 | ) | (14 | ) | |||
| Principal payments received on lease receivable | — | 111 | |||||
| Success fees related to ATC and other investment | — | 738 | |||||
| Payment for land contracts | (250 | ) | (308 | ) | |||
| Cash portion of consideration paid in acquisitions, net of cash of acquired | (250 | ) | (9,611 | ) | |||
| Net cash used in investing activities - continuing operations | (3,423 | ) | (11,581 | ) | |||
| Net cash provided investing activities - discontinued operations | — | — | |||||
| Net cash used in investing activities | (3,423 | ) | (11,581 | ) | |||
| Financing activities | |||||||
| Transfer of Employee Retention Credit | — | 12,677 | |||||
| Proceeds from loan payable, net of transaction costs | 3,137 | — | |||||
| Proceeds from options and warrants exercised | — | 81 | |||||
| Loan principal paid | (12,215 | ) | (1,204 | ) | |||
| Capital distributions paid to non-controlling interests | (337 | ) | (1,884 | ) | |||
| Proceeds from private placement, net of share issuance costs | — | — | |||||
| Payments made for financing obligations and finance lease | (184 | ) | (157 | ) | |||
| Net cash (used in) provided by financing activities- continuing operations | (9,599 | ) | 9,513 | ||||
| Net cash used in financing activities- discontinued operations | — | (115 | ) | ||||
| Net cash (used in) provided by financing activities | (9,599 | ) | 9,398 | ||||
| Net increase in cash and cash equivalents and restricted cash during the period | 229 | 6,251 | |||||
| Net effects of foreign exchange | 198 | 523 | |||||
| Cash and cash equivalents and restricted cash, beginning of the period | 25,347 | 26,763 | |||||
| Cash and cash equivalents and restricted cash, end of the period | $ | 25,774 | $ | 33,537 | |||
| Supplemental disclosure with respect to cash flows | |||||||
| Income taxes paid (refund received) | $ | 1,013 | $ | (551 | ) | ||
| Interest paid | $ | 6,264 | $ | 2,456 | |||
| Lease termination fee paid | $ | 163 | $ | — | |||
| Non-cash transactions | |||||||
| Equity and warrant liability issued for acquisitions and non-controlling interest | $ | 4,674 | $ | 750 | |||
| Shares issued for | $ | — | $ | 593 | |||
| Accrued capital purchases | $ | 1,253 | $ | 555 | |||
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts expressed in thousands of
The table below reconciles net loss from continuing operations to EBITDA from continuing operations and Adjusted EBITDA from continuing operations:
| For the Three Months Ended | ||||||||||||
| Revenue, net | $ | 80,633 | $ | 86,566 | 69,398 | |||||||
| Net loss | (14,851 | ) | (41,814 | ) | $ | (22,769 | ) | |||||
| Net loss margin % | -18.4 | % | -48.3 | % | -32.8 | % | ||||||
| Loss from discontinued operations | — | — | 3,591 | |||||||||
| Loss from continuing operations | (14,851 | ) | (41,814 | ) | (19,178 | ) | ||||||
| Add (deduct) the impact of: | ||||||||||||
| Provision for income taxes | 9,671 | (9,202 | ) | 12,664 | ||||||||
| Finance expenses | 8,872 | 9,065 | 7,875 | |||||||||
| Amortization and depreciation | 5,000 | 5,203 | 4,771 | |||||||||
| EBITDA from continuing operations | 8,692 | (36,748 | ) | 6,132 | ||||||||
| Add (deduct) the impact of: | ||||||||||||
| Share-based compensation | 1,485 | 2,238 | 1,713 | |||||||||
| Impairment of goodwill and intangible assets | — | 55,993 | — | |||||||||
| Loss from revaluation of contingent consideration | 1,393 | — | — | |||||||||
| Restructuring and executive severance | — | 186 | — | |||||||||
| Other one-time items | 958 | 2 | 1,358 | |||||||||
| Employee Retention Credits Transfer Fee | — | — | 2,235 | |||||||||
| Loss (gain) on lease termination and derecognition of right of use assets | — | (1,217 | ) | 205 | ||||||||
| Loss (gain) on fair value of warrants and purchase option derivative asset | 983 | (2,886 | ) | (437 | ) | |||||||
| Impairment of property and equipment and impairment of right of use assets | 2,438 | 1,734 | 334 | |||||||||
| Gain on disposal of fixed assets | — | (35 | ) | — | ||||||||
| Unrealized and realized loss on investments | — | 238 | 699 | |||||||||
| Unrealized and realized foreign exchange loss (gain) | 285 | 122 | (31 | ) | ||||||||
| Adjusted EBITDA from continuing operations | $ | 16,234 | $ | 19,627 | $ | 12,208 | ||||||
| Adjusted EBITDA Margin from continuing operations | 20.1 | % | 22.7 | % | 17.6 | % | ||||||
The table below reconciles Net cash provided by (used in) operating activities – continuing operations to Free Cash Flow:
| For the Three Months Ended | ||||||||||||
| Net cash provided by operating activities- continuing operations | $ | 13,251 | $ | 9,420 | $ | 10,454 | ||||||
| Capital expenditures for property and equipment | (2,796 | ) | (1,538 | ) | (2,497 | ) | ||||||
| Free Cash Flow | $ | 10,455 | $ | 7,882 | $ | 7,957 | ||||||
The table below reconciles Revenue, net to General & Administrative expenses excluding stock-based compensation as a percentage of revenue, net:
| For the Three Months Ended | ||||||||||||
| Revenue, net | $ | 80,633 | $ | 86,566 | $ | 69,398 | ||||||
| General & Administrative expenses | 28,008 | 27,684 | 27,730 | |||||||||
| Less: stock-based compensation | 1,485 | 2,238 | 1,713 | |||||||||
| General & Administrative expenses excluding stock-based compensation | $ | 26,523 | $ | 25,446 | $ | 26,017 | ||||||
| G&A excluding stock-based compensation as a % of revenue, net | 32.9 | % | 29.4 | % | 37.5 | % | ||||||
2024 GlobeNewswire, Inc., source
