After the bell Acreage Holdings (CSE: ACGR.u) released their financial statements on Sedar. They previously gave us a detailed news release with some statements, sans accounting notes, on November 12th. A move common amongst US cannabis operators leaving Canadian’s scratching their heads.
We broke down the quarter over quarter results for readers here:
|In Millions ($US)||Q3’19||Q2 ‘ 19||QoQ Change|
|Pro-forma revenue||$ 42.22||$ 36.60||15%|
|Revenue||$ 22.40||$ 17.75||26%|
|Gross Profit (pre-bio)||$ 9.16||$ 6.81||35%|
|Bio Adjustements||$ 2.52||$ 7.63||-67%|
|Gross Profit (post-bio)||$ 11.67||$ 14.44||-19%|
|Operating Expenses||$ 58.14||$ 52.25||11%|
|Net Loss||$ 39.39||$ (33.93)|
|Operating Cash Flow||$ (16.25)||$ (23.24)||-30%|
|Investing Cash Flow||$ (22.74)||$ 57.46|
|Cash||$ 37.64||$ 84.49||-55%|
|Receivables||$ 0.13||$ 0.24||-46%|
|Inventory||$ 38.21||$ 36.66||4%|
|Biological Assets||$ 9.49||$ 6.59||44%|
|Payables||$ 13.81||$ 13.62||1%|
|EBITDA||$ (44.62)||$ (37.43)||19%|
|Adjusted EBITDA||$ (12.39)||$ (15.25)||-19%|
|Pro-Forma Adj. EBITDA||$ (9.08)||$ (12.02)||-24%|
The quarter saw pro-forma revenue grow by 15% to $42.2M, with reported top line revenue growing to $22.4M up 26%. The company saw a relatively smaller increase in operating expenses up only 11%, with operating cashflows getting closer to break even down from $23.2M to $16.3M.
Acreage saw their investing cash flow reach back into negative territory after the Q2 positive number that saw the maturation of $149M worth of US treasury bills.
Now let’s take a moment to compare what the company guided in their October 2018 investor deck:
Murphy and Linton, Two Peas in a Pod?
They guided to $292.0M in revenue and $71.8M in EBITDA. To date, if we use the pro-forma numbers, the Company has reached $111.9M in revenue and -$32.56M in EBITDA. Making it unlikely they will come close to either of those figures. A reasonable estimate based on the current top line growth rate would suggest the company should come in around 50% from their guided revenue figure and fail to generate positive EBITDA on the year.
Overall, it’s not a terrible quarter. And the reality is that Acreage likely had aggressive plans to reach the guidance that included easier access to capital. It’s been a rough year. But who knows, perhaps there is way for Constellation Brands to sneak some cash into the coffers so Mr. Murphy can operate.
Information for this briefing was found via Sedar and Acreage Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
SmallCapSteve started blogging in the Winter of 2009. During that time, he was able to spot many take over candidates and pick a variety of stocks that generated returns in excess of 200%. Today he consults with microcap companies helping them with capital markets strategy and focuses on industries including cannabis, tech, and junior mining.