Cronos Group (TSX: CRON) appears to be falling apart at the seams following the discontinuance of its US-based CBD operations earlier this year. The company published its second quarter earnings results this morning, indicating declining revenue among continuing operations, while cutting guidance and further reducing its operations.
Cronos has withdrawn its previously issued revenue guidance of net revenue between $100 to $110 million for full-year 2023, which is said to reflect “turbulent market conditions beyond expectations,” including political unrest in Israel, and the discontinuance of US operations.
At the same time, the company is shuttering the Cronos Fermentation facility, which is found in Winnipeg, Manitoba. The exit is slated to be complete by the end of the year, with the facility to be listed for sale. This closure along with savings in sales and marketing, research, and general and administrative is expected to drive an increase in operating expense savings, the target for which has increased to a range of $20 to $25 million, up from $10 to $20 million.
It is unclear how many jobs the closure will impact.
The second quarter meanwhile saw consolidated net revenue decline on a year over year basis for continuing operations. Revenue fell from $21.6 million to the of $19.0 million, a decline of 12%. Gross margins meanwhile fell four percentage points to 16%.
The company meanwhile posted a $5.6 million net loss for the period, while adjusted EBITDA came in at a loss of $15.9 million.
The saving grace for Cronos is its cash position, which sits at $409.4 million, while short term investments amounts to $431.5 million.
Notably, there was no mention of a potential takeover, as was alluded to in early July with the rumoured acquisition of Cronos by Curaleaf.
Cronos Group last traded at $2.48 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. 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.
