Curaleaf Earnings + Call Notes
Global canna leader reports results.
$324.2M Revs; est. $317M
$63.4M AEBITDA; est. $61.4M
$157.3M GP; est. $153.7M
$0.7M OI; est. ($2.9M)
48.5% GM; est. 48.5%
$69.8M NI; est. ($57.1M)
^ due to $98.7m benefit for income taxes
$0.09 EPS; est. ($0.07)
$21.3m OPCF
$4.3m FCF
Filed applications for DEA registration
Intl revs down 6.7% QoQ, up 35% YoY
Management Commentary
“2026 is off to a strong start across the business. The macro headwinds that constrained growth over the past three years are now beginning to turn into meaningful tailwinds.
Moreover, the historic rescheduling of medical cannabis provides a shift in the trajectory of our business and the industry overall, for which we are well-positioned.
The investments we’ve made in the core pillars of our “Built for Growth” strategy are translating directly into tangible performance.
First quarter revenue was $324 million, with 6% year-over-year growth, exceeding both our guidance and internal expectations.
Our domestic and international segments grew 2% and 35%, respectively.
Gross margin was 49% and adjusted EBITDA was $63 million, or a 20% margin, including a 170 basis point drag from international.
Net income from continuing operations was $70 million or $0.09 per share.
As we continue with our “Built for Growth” strategy, we believe we are uniquely positioned not just to benefit from the recent regulatory shift, but to lead the next phase of industry growth.”
Curaleaf Chairman & CEO Boris Jordan
Call Notes
Seeing clear shift in trajectory of business + industry. 👀
Macro headwinds that constrained growth are now turning into a tailwind.
Consumer spending healthy in Q1.
^ monitoring inflation pressures.
High demand, even in the face of higher gas prices.
Hemp ban benefitting legal market.
Alcohol retailers are beginning to stop stocking hemp products.
Lack of hemp driving consumers back into regulated channel.
Investments made in core pillars are translating into P&L performance.
$324m revs, up 6% YoY, exceeding guidance and expectations.
Domestic and int’l grew 2% and 35% YoY.
$63m adj EBITDA, 20% margin, 170bps drag from INTL.
Net income from continuing ops of $70m / $0.09 EPS.
Continue to strengthen balance sheet ; reduced acquisition debt by $9m.
Completed buyout of remaining 45% interest in Four20 Pharma.
Implied value of CURLF international is $1B.
^ based on recent transactions.
^ not reflective in current valuations
Medical cannabis formally rescheduled.
A/U rescheduling process restarted.
^ ALJ on June 29th, concluding July 15th.
Rescheduling approach is deliberate.
Federal funding for medical research will be allowed.
CURLF UK team conducting research at imperial college in London.
Access to research should shed light to medicinal research of the plant.
Removal of 280e taxation on medical cannabis.
Expected to be retroactive to at least Jan 1 ‘26.
60% of CURLF business is medical and stands to get substantial 280e relief.
Expect 280e relief benefits to A/U, post-court hearing.
Industry racing to explore access to banking and credit card use.
Credit would expand profitability for CURLF.
A/U better access to financial services A/U post-rescheduling.
Uplisting to meaningful exchanges is available post-rescheduling and post-banking guidance.
NC SC TN IN all exploring cannabis frameworks. 👀
DA licenses to state-legal cannabis operators makes them legal providers under CSA + international treaty ; opens doors to import / export transactions.
Real import/export market will require permits from DEA, many states have said they will support interstate commerce.
Built one of largest / most sophisticated cultivation footprints in the US.
Positioned to supply INTL ops w/ domestically grown products.
^ improving margins and supply chain control.
Produce 20% of the product CURLF sells internationally today.
Believe uniquely positioned to benefit from regulatory shift and lead next phase of industry growth.
CURLF international delivered 35% rev growth YoY.
^ performance led by GRMY + UK, early signs of recovery in POL.
GRMY soft Jan, sales rebuilt through the quarter, March is strongest month.
UK patient growth at clinics offset pricing compression dynamics.
Previously evaluated international cultivation footprint.
Now re-evaluating strategy for domestic markets to supply international markets.
^ would unlock meaningful GM expansion as scale.
France and Turkey looking at legalization framework.
US rescheduling should push legalization forward worldwide.
Domestic business up 2% YoY.
^ seeing clear proof points that strategy is working.
Saw clearest early success in FL.
^ where implemented strategy first.
Improving flower quality and strain diversity, new product intros, aligned assortment w/ demand, and retail improvement.
Saw 15% transaction growth YoY, more than offsetting price compression.
Taking playbook in FL and deploying into new markets like UT OH PA.
^ similarly encouraging early results.
R&D efforts start w/ consumer needs.
^ Briq 2 launch a key example.
Launch of Dark Heart last month establishes new ultra-premium benchmark.
^ Brand driving strong sell-through and establishing CURLF as a leader in premium.
Steady gains in traffic and units per transaction.
^ compounding into meaningful performance.
Simplified Select product architecture, seeing positive consumer reception.
Investing in trade marketing, elevated visual marketing.
Expanding distribution w/ a focus on profitable growth.
Believe leading brands will capture disproportionate share of the market.
CURLF portfolio owns top national market share.
Select #1 position in vapes.
Believe 3 year down cycle is now turning upward.
Combination of improving fundamentals, accelerating regulatory momentum, scaled international platform positions CURLF for what’s next.
OH INTL NY MA growth is offset by challenges in NV IL.
Retail segment contracted 2% YoY.
19% growth in domestic wholesale YoY.
GRMY UK driving international growth.
Wholesale represents 28% of total revenue.
^ NY MA OH INTL driven.
$157m Q1 GP, 49% GM, -220bps YoY..
^ Driven by price compression and discounts.
^ Offset by efficiency gains and expense controls.
50% domestic GM, flat QoQ.
Demand outstripping supply in some markets.
Seeing price compression decelerate.
Seeing pricing pressure in UK business + GRMY flower.
$118m SG&A, up $7m YoY ; $108m core SG&A, up $5m YoY.
Store openings in FL OH during the quarter.
Q1 Adj EBITDA $63m.
^ -4% YoY
20% adj EBITDA margin.
^ 170bps drag from intl.
^ -200bps YoY.
$70m net income, $0.09 EPS vs. ($50m) in YoY period.
Completed routine tax review during the quarter based on new information.
Certain tax positions in previous years allowed CURLF to release previously recorded tax reserves and accrued interest.
Will also reduce UTP going forward.
Expect to receive future 280e benefits in future periods.
Cash/equivs of $106m.
Inventory up $16m QoQ due to inventory build ahead of Briq 2 and Dark Heart launches and 4/20 prep.
’26 CAPEX approx. $80m.
$21m OPCF and $4m FCF.
Expect OPCF to build as year progresses, consistent w/ cadence of business.
$565m debt.
Reduced acquisition related debt by $9m during the quarter.
Completed refinancing of $475m note w/ new note.
Transitioning to auditing partners at BDO. 👀
^ 5th rank global accounting firm.
^ Move reflects commitment to transparency, oversight, and best-in-class partners.
First in cannabis industry to make shift to leading accounting firm.
Experiencing strong increases in traffic.
^ Closely watching impact of higher energy prices on consumers.
Expect Q2 revs to increase 2-3% QoQ.
^ Implies $333m revenue.
International supply chain has been difficult for the sector.
Cultivators aren’t producing flower that passes strict EUGMP regulations.
Looking in Canada for increased owned production of products to ship to intl markets.
Recent rescheduling, language gives CURLF pause on acquisition strategy.
^ Can use US infrastructure.
^ Unsure on timing
On return from EU, Boris will spend time in Washington w/ DEA/DOJ to see timing on intl export (from US).
S1 to S3 should allow export pretty quickly. 👀
Expect not to export until end of year, will see at that point.
Looking at 25-30% growth in intl channel this year (vs. 50% growth last year).
Expect new markets to accelerate intl growth significantly into ‘27.
Not commenting on SSS, but trends are moving in the right direction in general.
^ Will be able to talk about it in next quarter
Transactions are moving up and right now eclipsing price compression seen in the marketplace.
Boris previously mentioned Sen Scott would move SAFE banking forward.
Expect him to do that, probably in Q3.
Could maybe even get a vote before mid-term elections or before YE.
SAFE a popular issue, expect it to pass House + Senate.
|^ More bipartisan than it was previously.
^ McConnell retiring in ’27 and the largest opponent.
A chance we get guidance from FINCEN and Sec Bessent that would indicate banking industry could start to serve the sector.
^ Believe will be good enough for some institutions.
^ Others will need some level of legislation.
^ Don’t want a new President to come in and change laws, therefore need legislation
Believe credit card companies and mid-sized regional banks, and credit + working capital banks, could open up once we get FINCEN + treasury guidance.
CURLF has substantially increased quality of product over the last year.
^ rationalized SKUs ; now able to increase prices internally.
^Better margins in wholesale and retail business due to increased product quality.
FL MA beginning to see stabilization in pricing.
^ Not seeing any decline in those markets.
^ Other markets still compressing, but beginning to see stabilization
Overall, slightly better feeling, partially bc hemp products beginning to disappear.
Believe hemp supply chains are starting to break down.
^ Certain retailers already stopping replenishing those products.
Don’t believe hemp shuttering impact to begin reflecting until ’27.
Could see 10-15% growth due to hemp shutdown.
Believe we will see a tremendous amount of consolidation + M&A.
^ already seeing many in the country.
^ know of 10-15 transactions done in last 2 quarters regionally.
^^ haven’t been announced yet
Expect to see larger consolidation between MSOs.
^ very much a velocity business.
^ many companies compete across the street from each other.
Seeing less product availability in regulated markets.
M&A will see combining grow facilities.
^ will see massive cost savings and massive synergies.
Will see significant MSOs starting to merge on the back of 280E.
^ now finally have certainty on balance sheet.
^ need IRS guidance on 280e and hopefully rescheduling of A/U.
^ will then see industry consolidation.
Hemp industry doing everything they can, lobbying very aggressively.
At moment, believe very little appetite in House + Senate to change hemp rules.
In a few years, could see hemp regulation changes, particularly around beverages.
Don’t think we see changes between now and November.
Medical products in medical states will be legal under federal law.
^ believe most states will pass medical legislation
5 states that previously didn’t look at medical legislation are finally looking.
Under CSA, medical cannabis is going to be legal.
Have option to spin out CURLF intl business.
^ right now want to see what happens w/ A/U in Q2.
80% of revenue worldwide is medical.
Assuming/hoping A/U legislation will generate significant institutional interest.
Boris talking to many large institutional investors, large funds.
^ cant look at this sector until they have visibility into A/U, visibility into B/S impact.
^ then they need to do research and go to compliance.
Will take 6-12 months post-rescheduling for large institutional players to enter market.
Don’t see reason to split intl business if SIII (med/ A/U) goes according to plan.
Believe intl medical business overall margin improves dramatically over time.
^ especially w/ US export.
/end
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CB1 has a position and nothing contained herein should be considered advice.