TCNNF Earnings
TCNNF is a LONG
- Achieved record quarterly revenues of $193.8 million, a sequential increase of 15% over Q4 2020, and a 101.8% increase in YoY
- Delivered Adjusted EBITDA of $90.8 million, an 87% YoY increase
- Achieved gross profit of $135.3 million and gross margin of 70%
- Delivered $60.4 million in cash flows from operations
After a big week of earnings, our takeaway is that the US MSOs remain the most attractive way to play the growth in global Cannabis sales. Trulieve Cannabis trades at a slight discount to Curaleaf and others after factoring in the deal to acquire Harvest Health as the company still generates most of its revenues and profitability from Florida. We like the stock with some short-term caveats. You can buy TCNNF at a discount buy by buying shares in Harvest Health. The regulatory risk is small to the deal not closing.
MSOS Has Company
MSOS has been the leading US-based cannabis ETF in terms of assets under management. MSOS actively manages just over $1 Billion. ETF managers group launched MJUS, which will begin trading today on The NYSE. MJUS offers exposure to cannabis companies operating in the US, including MSOs involved in the cultivation, production, and distribution of cannabis. This is ETF manager group's second cannabis ETF after launching MJ in December 2017, which has over $1.7 Billion AUM but focuses on worldwide names rather than just US names. ETF managers group likely saw the success of MSOS and the tremendous opportunity the US market possessed and wanted a piece of the pie. As we emphasized in our Canadian sales update, Canadian names as a whole are far more overvalued compared to US names due to their increased liquidity. MSOS has an expense ratio of .74%, and MJUS has an expense ratio of .75%. Both will be actively managed.
MSOS top 3 holdings:
CURLF 11.95%
GTBIF 11.32%
TCNNF 11.02%
MJUS top 3 Holdings:
CURLF 10.28%
GTBIF 8.71%
CRLBF 7.6%
ACB Misses
ACB is struggling, with revenues falling well short of expectations. Revenues declined 25% overall to C$55.2M; Cannabis net revenue fell 21%. While medical cannabis net revenue rose 17% to C$36.4M, consumer revenues slid 53% to C$18M. "Consistent with many of our peers, the quarter presented challenges in the Canadian adult-use segment," says CEO Miguel Martin. He highlighted "the strongest performance in domestic medical and the best results in international medical cannabis of any Canadian LP during the period." but that is not saying much. Also, the company notes lead independent director Ronald Funk has been appointed as chairman. Current Executive Chairman Michael Singer will remain on the board. And it intends to file a new prospectus supplement for a C$300M at-the-market offering program, which it believes "will provide maximum flexibility to pursue select acquisitions in the future, including within the U.S." In the graphic below, we can see ACB's large decline in market share in Canada.
