Cresco Earnings + Call Notes
U.S. cannabis leader looks ahead.
$151 M Revs; est. $148.8M
$ 33M AEBITDA; est. $33.7M
$ 75M GP; est. $72.7M
$11 M OI; est. $16.6M
49.6 % GM; est. 49%
Retained the No. 1 share position in multiple billion dollar markets.
Management Commentary
“Q1 reflects continued progress against a clear plan and the strengthening of our growth platform.
Subsequent to the quarter, we have added 11 dispensaries to our platform across Pennsylvania and Ohio, expanding our scaled footprint in core markets.
We’ve shifted Kentucky from the investment phase into revenue generation with our first harvest in April and we have added meaningful long-term optionality by being awarded a conditional medical license in Texas.
Moving state-legal medical cannabis from Schedule I to Schedule III is the most consequential reform this industry has seen, and it validates the work we’ve been executing on for years.
More broadly, this is an important step in a longer path towards normalization.
We look forward to the hearings on the general rescheduling of cannabis on June 29th.
We’ve built the operational foundation and balance sheet discipline to capture immediate benefits of rescheduling, while positioning Cresco to capitalize on the broader path to normalization.”
Charlie Bachtell, CEO of Cresco Labs
Call Notes
Building for growth off scaled foundation.
Going deeper in markets w/ structural advantages.
Q1 establishes baseline for ’26 and beyond.
$151m revenue.
$77m adj GP.
$33m adj EBITDA.
Results in line w/ expectations, reflect efficiency gains over last few years.
Results will grow throughout the year.
Strengthening leadership positions in priority markets.
Adding new markets w/ clear LT value.
Hold #1 share in PA.
Entered into agreement to acquire 9 dispensaries in PA under an MSA.
27 stores in PA footprint currently.
PA transaction expected to close after regulatory approvals.
Expanding OH position.
^ ompleted strategic buildout w 2 new stores in Q2.
^ bringing total to 8 stores.
Growing organically in new markets.
In Kentucky, reached first harvest milestone in April ; products into market in Q2.
Kentucky contribution in ’26 will be modest.
^ expected to scale materially later this year and into ‘27.
1 of 15 licenses in TX.
^ one of the most attractive long term growth opportunities in the industry.
^ low-cost, high return entry into 2nd most populated state.
Focused on improving base business.
Wholesale business a core strength.
Leading positions across IL PA MA OH.
Focused on improved yields and quality.
Held FL position despite increased competition coming online.
^ driven by operational gains within own footprint.
^ avg flower potency much higher YoY and improved yields.
Rescheduling the most comprehensive reform we’ve seen.
Q1 the baseline for the year.
Exited CA, tax disruption in MI market, growth initiatives last year.
^ all wont show up in results until later this year.
Wholesale revenue down 1.6% QoQ.
Retail revenue down 3.1% QoQ.
Adj GM of 51%.
Adj SG&A of $54m, 34% of revenue.
Adj EBITDA $33m, 22% of revenue.
$67m cash..
Q1 lowest OPCF.
$11m CAPEX during the quarter ; most towards P1 build out of Kentucky.
Improvements in Q2, post-seasonality, inclusion of dispensaries.
Expect Q2 revs up 10% QoQ, subject to timing of initiatives
Anticipate maintaining 48-50% GMs in Q2.
Expect SG&A to reflect modestly, reflecting store openings.
Expect Adj EBITDA margin of 21%.
YTD added 11 dispensaries across PA OH.
More focused and structurally efficient than a year ago.
PA a main state.
^ branded share leader.
^ new stores will put CRLBF into a leadership footprint as well.
Believe A/U catalyst comes for PA.
Conviction from the admin to see rescheduling through.
4 months worth of really intense focus and evaluation and learning that the admin went through to understand cannabis.
Expect additional color and guidance to come from the admin.
Application for manufacturing part of business just came out a few days ago.
A little too early to know how exactly everything unfolds, how CRLBF will approach it.
Will adapt/modify business structure as new rescheduling guidance comes out.
^ will do as expeditiously as possible.
Seeing growth into Q2 low-single digit growth.
^ remaining Q2 growth comes from M&A initiatives.
Don’t think PA market has enough capacity to service A/U at maturity.
CRLBF would turn on additional capacity to service the new market.
Making sure having PA retail footprint in place into A/U was priority #1.
Focused on turning more grams/sq ft out of facility.
Approx 50% of revenue comes from medical.
^ not a proxy for 280e impact, work to be done around costs, etc.
MI taxes have to be shared across the state.
^ Can’thave cult/manu operators taking the bulk of that tax hit.
^ need to see taxes through the whole system.
Seeing manu/retailers closing, as new taxes will remove ability to operate.
^ should consolidate the industry and help the state market position.
Saw MI retailers load up on inventory ahead of tax change.
^ taking some time to flow through
Limited info on rescheduling process so far.
Expect more clarity in the weeks and months ahead.
/end
If you’d like to help Mission [Green] change federal cannabis policies, please click here.
CB1 has a position and nothing herein should be considered advice.