Ascend Earnings + Call Notes
U.S. canna earnings kick off.
Ascend Announces Q224 Earnings
$141.5M Revs; est. $145.8M
$28.3M AEBITDA; est. $31.1M
$41.5M GP; est. $55.6M
$(1.5m) OI; est. $3.6M
34% GM; est. 38.1%
($ 21.7M) NI; est. ($20M)
($0.10 ) EPS; est. ($0.08)
Achieved $141.5M Net Revenue in Q2 2024, a 15% Increase Year-Over-Year
Reported $28.3 million in Adjusted EBITDA, a 33% Increase Year-Over-Year
Generated Positive Cash from Operations and Free Cash Flow
Call Notes
Revenue reached $141.5m.
aEBITDA of $28.3m.
Fell short of expectations due to decline in wholesale profitability in MA.
Actively managing costs.
6th consecutive quarter of CFFO ($14m, excluding tax refunds).
$9m FCF.
Refinanced term loan before Aug ’25 maturity.
Largest MSO debt deal in 1.5 years; 3rd largest issuance of all time (for MSOs).
Opened 2 dispensaries, + 2 partner dispensaries in IL.
Exploring additional partnership opportunities to expand reach in existing markets.
OH 12m residents, one of the largest cannabis markets.
AAWH operates dispensaries near each of the top 3 cities in OH.
Each dispensary for AAWH is granted dual use, effective tomorrow.
6th consecutive quarter of wholesale growth.
First harvest in MA facility now complete.
Received commitments to issue more debt before notes mature.
49% vertical mix.
IL was once 100% of EBITDA, now meaningfully diversified.
Retail revenue made up 66% of net revs in Q2.
Highest per dispensary revenue from any MSO in the US.
Wholesale revs +0.8% QoQ; net wholesale revs +2.7% QoQ.
6th consecutive quarter of wholesale revenue growth.
Launched AWH brands into MD through production partner.
3rd largest brand house in IL MA NJ.
4th largest brand house overall.
Selling into 95% social equity stores in IL + NJ.
IL NJ faster ramp of competitors than expected.
Created a more challenging environment impacting retail performance.
Net revs up 15.1% YoY ; aEBITDA up 33% YoY.
Net revs down 0.6% QoQ ; aEBITDA margin down 12.7% QoQ.
QoQ revenue decline driven by retail declines in IL NJ MA.
^ partially offset by retail increases in PA MD + wholesale improvements in NJ PA MA.
Margin reductions in wholesale business.
^ particularly in MA IL, as well as retail declines in MA NJ IL.
Implemented reduction in headcount during the quarter.
$83.7m cash ; $309.3m debt
FY’24 Guidance - Now anticipate net revs to grow by 11-13% and aEBITDA to grow by 5-10% YoY ; anticipate CFFO of approx. $40m, excl tax refunds.
Will continue to see margin pressure into Q3, expect that to bounce back in Q4.
Reflected in guidance.
Working through some low margin inventory.
Margin impact driven by reduction in wholesale margins in MA (+ lesser in IL).
Will have FCF+ this year (on top of $40m CFFO guidance).
Continue to see increased retail licenses come online in NJ, continued pressure from retail perspective; offset by continued wholesale opportunities.
In 82-83% of total doors in state of NJ, in 95%+ of social equity doors.
OH non-medical is included in new guidance.
Slower ramp up anticipated in initial guidance.
Observed a slow down in retail during the quarter.
Softness in June particularly.
^ stabalization in July.
MA cult facility product + mixture had impact on GM during the quarter.
Change in testing in MA, impacted the entire market.
Also lowered THC potency of some products.
Kitchen operationalized in Q2 for edibles + manufactured goods.
Continue to be a purchaser of biomass in MA.
Ability to bring cultivation portion of new facility online / grow own products will allow decrease purchases made in open market.
Will see continued leverage from new asset.
Feel very good about inventory levels in OH.
Have a modest (2k sq ft) grow.
Also some good relationships with other in-state producers.
^ signed long term supply agreements.
/end
Thank you, stay safe and please enjoy responsibly.
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CB1 has a position in Ascend Holdings.