After the bell, Green Thumb Industries (CSE: GTII) released earnings and are beginning to show why they are becoming a bellwether for the cannabis industry. We broke down the quarter-over-quarter numbers for readers here:
|Expressed in Millions (US$)||Q3’19||Q2 ‘ 19||QoQ Change|
|Gross Profit (pre-bio)||$ 34.80||23.24||50%|
|Bio Adjustements||$ 1.35||$ (0.68)|
|Gross Profit (post-bio)||$ 36.15||$ 22.56||60%|
|Operating Expenses||$ 36.73||$ 32.47||13%|
|Net Loss||$ 13.57||$ 2.20||517%|
|Operating Cash Flow||$ 6.50||$ (2.03)|
|Investing Cash Flow||$ (73.27)||$ (73.54)||0%|
|Cash||$ 66.12||$ 135.76||-51%|
|Receivables||$ 6.54||$ 8.25||-21%|
|Inventory||$ 31.53||$ 29.77||6%|
|Biological Assets||$ 12.82||$ 11.48||12%|
|Payables||$ 30.85||$ 24.18||28%|
|EBITDA||$ 1.57||$ (9.38)|
|Adjusted EBITDA||$ 14.10||$ 5.05||179%|
The measuring sticks we like to use for profitable cannabis companies are Net Income, Operating Cash Flow and Adjusted EBITDA. Green Thumbs is coming very close here, showing positive results on two the three metrics. The company noted in the MD&A they have seen a 50% quarter-over-quarter growth on branded products, with Green Thumb’s brands in over 700 retail stores, including their own.
The company completed a major transaction in the quarter acquiring New York cannabis operator Fiorello Pharmaceuticals Inc. One of the ten license holders in the state.
Green Thumbs generated revenue in 11 of their 12 markets, absent of New Jersey. The company currently operates 32 stores, and saw a 22 percent increase in comparable stores.
It’s hard not to like what the company has done in the last quarter. Green Thumb’s emerged as a company with a solid management team, executing at both an operating level and an M&A level. They finished the quarter with current assets of $123.8 million, including cash and cash equivalents of $66.1 million and long-term liabilities of $154.5 million. The Company has $96.9 million total debt. This seems manageable for a team that is growing organically at 22%, adding accretive deals, and is at the inflection point of profitability.
Information for this briefing was found via Sedar and Green Thumb Industries. 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.