Last night, Cresco Labs (CSE: CL), released their unaudited financial results for Q2/19, well sort of…. They released a news release with key select data, and didn’t post the financial statements on Sedar. A trend common with many other MSOs, where they “release” their earnings in a news release, and then post the financial statements and MD&A weeks after.
The company did not disclose a cash flow statement, or any of the critical accounting notes, and in terms of the balance sheet the multi-billion dollar corporation posted the following:
We went back through the last 3 quarters to try to give investors a look at how the company is doing through the following lines we could obtain:
|Revenue||41.96%||$ 29,890.00||$ 21,055||$ 16,957|
|Gross Profit||19.65%||$ 12,745.00||$ 10,652||$ 24,297|
|Income Taxes||-15197.30%||$ (5,586.00)||$ 37||$ 3,555|
|Net Income||-48.27%||$ (3,918.00)||$ (7,574)||$ (2,606)|
|EBITDA||n/a||$ 6,415.00||$ (4,808)||$ (252)|
|Adjusted EBITDA||1667.97%||$ 14,462.00||$ 818||$ 14,559|
At this stage it is very difficult to assess how Cresco is performing for shareholders. There are many moving parts and they will continue to need more cash. The company has completed and continues to work towards various acquisitions that will make it difficult for investors to gauge how accretive each deal looks like. The bright side is that the company is generating positive EBITDA and paying more in income taxes than most cannabis companies would dream of. A sign they are selling real cannabis and are a real operating business.
Beyond that, the company still awaits pending deals in New York, Massachusetts, Michigan and Florida. These deals will certainly alter the cap table, but give Cresco a larger footprint in tremendous growth states. As of the end of last quarter, the company had $61.1M cash on the balance sheet. Given the deals Cresco has on the table, one would assume they will be raising cash to close each deal and further build out. But hey, it’s cannabis, everyone has their next raise around the corner!
Information for this briefing was found via Sedar and Cresco Labs. 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.