GTI 1Q23 earnings results.
Green Thumb Industries (GTBIF) is a Hedgeye Cannabis Best Idea Long.
GTI was one of the first companies in the cannabis space to report 1Q23 earnings and they put up total revenue growth of 2.4% YoY, $248.5M, which the company commented was primarily driven by the operations of the retail segment. Overall retail revenue increased 9.4% YoY, and SSS increased by 6.3%. The company reported gross profit margins 50.2%, which was down from 50.7% last year, but better then expected when we factor in the price deterioration that we have seen in the last 12 months. Net income attributable to the Company for 1Q23 was $9.1M or $0.04 per basic and diluted share. Adjusted EBITDA margin was 30.7% for the quarter compared to 27.6% last year.
“Green Thumb’s momentum continues to build in 2023, and I am incredibly proud of our team for their unwavering commitment to creating high-quality products and delivering positive experiences for our patients and consumers. In the first quarter, our revenue increased 2% year-over-year to $249 million, despite continued price compression. Net income was $9 million, or $0.04 per diluted share. Adjusted EBITDA increased 14% to $76 million in the quarter, a greater than 300 basis point margin improvement to 30.7% year-over-year,” said Green Thumb Founder, Chairman and Chief Executive Officer Ben Kovler. “Our $185 million cash balance continues to give us the optionality to make investment decisions that will position us for the increasing demand for legal cannabis, a market estimated by analysts to grow to $75 billion over the next decade. For the past few years, we have made sizeable investments to strengthen our infrastructure and expand our capacity rather than focus our dollars on significant M&A. These strategic decisions strengthen our balance sheet and will allow us to support additional retail locations in key markets this year,” concluded Kovler.
GTI has current assets worth $357.6M, including cash and cash equivalents of $185.4M, with total debt of only $277.8M. This company has one of the balance sheets in the industry, and management commentary around M&A is a good sign of the future. They aren't in the business of chasing trends, like CURLF, but rather position themselves to capabilities on undervalued assets when the industry has been hit the hardest. We would have loved to see better top-line growth numbers, but GTI sales growth was higher than the 2.1% sales growth we saw across the U.S. Green Thumb remains a best idea long.
Maryland CANNABIS TRENDS.
In March, Maryland recorded ~$40M in cannabis sales, representing a sequential increase of 10.2% but a YoY decrease of 10.7%. Unit volumes in the month were up 10.8% sequentially and up 9.2% YoY. The average price per unit was down 0.6% sequentially and down 18.2% YoY.
PA Policy Update
Pennsylvania legalized medical cannabis back in 2016, but the state's first sales didn't come until February of 2018. Yesterday, State Representative David Delloso, along with 20 cosponsors, filed House Bill 1080. This bill would legalize adult-use cannabis possession and private cultivation for those 21 years and older. It would also allow licensed marijuana retail outlets to sell marijuana and marijuana products, with the Pennsylvania Liquor Control Board overseeing the industry. The state also proposed a 19% point-of-sale tax on this product, which would be one of the highest taxes for cannabis products in the country.
Interstate Commerce Call.
Cannabis Interstate Commerce Webcast:
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