AYR EARNINGS RESET
AYRWF is the USA long.
SUMMARY
- 3Q21 results - not an unexpected miss in Revenue and EBITDA
- Guidance - 2022 Target Revenue remains $800M, adjusted EBITDA guidance reduced to a range of $250M to $300M was $300M.
- M&A - Expanding presence in IL with Dispensary 33 acquisition. Additional M&A given management interest and capital position and 12 states that look appealing.
- Discounted valuation persists.
- This is a challenging time for cannabis operationally, not to mention how dysfunctional DC is. The sell-off yesterday is overdone, with the stock down 27% this year.
Ayr reported Q3 revenues of $96.2M vs. Factset $99.5M. Adjusted EBITDA was $26.0M vs FactSet $27.4M. The company reaffirmed 2022 revenue guidance of $800 Million and provided a range for EBITDA of $250-300M vs. prior guidance of $300 Million. The company attributed the slowdown of revenue and EBITDA growth to supply chain issues and pricing pressures in the states it is operating in. Ayr stock was down 12% on the earnings, while the MSOS was down 4.35%.
Ayr Wellness has agreed to acquire Gentle Ventures d/b/a Dispensary 33 and certain affiliates that collectively own and operate two licensed retail dispensaries in Chicago, Illinois. One dispensary is in the N Clark Street in the Andersonville neighborhood. The other on W Randolph Street in West Loop Purchase consideration is expected to consist of $55M upfront, including $12M of cash, $3M of sellers notes, and $40M of stock. An earn-out is payable if specific Adjusted EBITDA performance is achieved through Q3 2022.
On the back of the slight miss from AYRWF, the MSOS was down 4.3% as volume accelerated 76%; the AYR reset might be getting the short-term traders out into year-end.
TRSSF
TRSSF is a USA LONG
Gage Growth (GAEGF) closed on a senior secured term loan for gross proceeds of $55M. Proceeds to be used for financing the company's retail acquisition strategy in Michigan, supporting future growth and general corporate purposes. All retail acquisitions are expected to be accretive to Gage and TerrAscend and are based on the completion of its proposed acquisition of Gage. The term loan bears annual interest equal to the greater of 7.00% plus prime rate and 10.25%, payable monthly in arrears, with a maturity date of Nov.30, 2022. A first-lien secures the term loan on all company assets.
Uber Delivery in Canada
In the province of Ontario, Uber will now allow customers to place cannabis delivery orders on the Uber Eats app. The company is partnering with Tokyo Smoke to offer online pot orders. On the app, it will display a new section labeled "cannabis." Customers can place both delivery and pickup orders. "By combining a streamlined ordering process through the Uber Eats app with Tokyo Smoke's in-person pickup service, we're creating a new end-to-end experience for responsible cannabis ordering across the province," said Lola Kassim, general manager of Uber Eats Canada. Tokyo Smoke is owned by Canopy Growth and has 50 stores in Ontario. Uber CEO has also expressed that he is interested in entering the US market when legislation passes.
