GTBIF Earnings (LONG)
Green Thumb Industries GAAP EPS of $0.12 beats by $0.06, and the revenue of $242.6M beats by $5.5M.
GTBIF reported a strong quarter under the backdrop of a significant slowdown in industry sales. In Hedgeye Tracked states, industry sales declined 5% QoQ and slowed to 7% YoY growth. Industry sales grew 24% YoY in 4Q21. In 1Q22, adult-use states improved 8% QoQ but declined 4.8% YoY. The Medical States improved 7% MoM and slowed to only 3% YoY growth.
GTBIF 1Q22 revenue increased 25% year-over-year to $243 million (seventh consecutive quarter of positive GAAP net income) and came in at $29 million or $0.12 per share. The company continued to benefit from increased scale and operating leverage to deliver (A)EBITDA of $67 million and free cash flow from operations of $55 million. Total net revenue decreased by $1 million QoQ, with gross CPG revenue declining $4 million and gross retail revenue declining $1 million (the company sold 4 million fewer products to itself in Q1 than it did in Q4.) The company generated gross margins of approximately 51% during the quarter, and a 200bps QoQ decline with pricing headwinds in Pennsylvania, Nevada, Massachusetts, and inflation are the most significant factors. Also contributing to the decline were attributable to start-up costs associated with New Jersey adult use and recently completed wholesale facility expansions. On the SG&A side, (ex D&A) one-time transaction costs, and stock-based comp, normalized operating costs approximated $61 million, with a $4 increase over the $57 million incurred in 4Q21. The majority of the increase was payroll-related, primarily across retail and shared service functions.
Looking at the balance of 2022, bad actors will keep pressure on pricing in some states, but the GTI model will see some benefits for additional revenues from NJ. The adult-use transition in New Jersey will make it a market that is now estimated to reach $2 billion in sales in the next couple of years. Then we can layer in RI, CT, and NY over the next 12-18 months. The company reiterated its goal keep gross margins and adjusted operating EBITDA margins at or above 50% and 30%, respectively.
