AWH ANNOUNCES Q1 2022 FINANCIAL RESULTS
Updated February 13th, 2023
Q1 2022 Net Revenue of
Cash and Cash Equivalents of
- Gross Revenue: Total revenue of
$101.2 million decreased 0.8% quarter-over-quarter and increased 33.4% year-over-year. - Net Revenue: Net revenue, which excludes intercompany sale of wholesale products, decreased 3.8% quarter-over-quarter, but increased 28.7% year-over-year, to
$85.1 million . - Net Loss: Net loss of
$27.8 million during the quarter, compared to net loss of$16.5 million in Q4 2021. - Adjusted EBITDA1: Adjusted EBITDA1 of
$16.4 million , representing a 19.2% margin. - Balance Sheet: As of
March 31, 2022 , cash and cash equivalents were$143.8 million , and net debt2 was$89.9 million .
- During Q1 2022, the Company focused on bringing online new canopy in
Barry, Illinois andAthol, Massachusetts and preparing for the imminent start of adult-use sales at theRochelle Park dispensary inNew Jersey . The Company completed its first harvest at theBarry greenhouse onMarch 29th , and began planting an additional 37,000 square feet of canopy inAthol subsequent to the end of the quarter. The Company also launched its value segment brand, Simply Herb, which is now sold in all current markets which the Company operates. The Company ended the quarter with 20 operating dispensaries and 213,000 square feet of canopy across five states. - Subsequent to Q1 2022, the Company completed an equity transaction to roll up all of the other existing members of Story of
PA CR, LLC . The Company will use the remainder of the year to build a cultivation facility and six dispensaries, with plans to commence operations inPennsylvania in 2023. - Also after the quarter, the Company was one of the first in the state of
New Jersey to launch adult-use sales at its dispensary inRochelle Park , marking the start to the highly anticipated adult-use market in the state. On the first day of recreational sales, the Company had approximately 1,500 customers and average basket sizes of$135 , further substantiating the promising market. - Lastly, subsequent to the quarter, AWH,
MedMen NY, Inc. andMM Enterprises USA, LLC (CSE: MMEN) (OTCQX: MMNFF) ("MedMen") signed a term sheet agreeing to settle their lawsuit in the Commercial Division of theSupreme Court of the State of New York inNew York County . To settle the dispute, AWH will increase the transaction consideration by$15 million ,$4 million of which is contingent on the start of adult-use sales at a MedMen NY dispensary. The revised total consideration of$88 million remains significantly below recent precedent transactions. The parties have also amended certain terms in their previously announced transaction agreement, which they expect to close in the coming month. Upon closing, AWH will enter its seventh state.
"Q1 2022 was a transitionary quarter for Ascend as we made investments to launch the next phase of our growth story," said
Net revenue, which excludes intercompany sale of wholesale products, was
Total retail revenue was
Gross wholesale revenue increased to
Q1 2022 gross profit was
Q1 2022 Adjusted Gross Profit1 was
Total general and administrative expenses (excluding litigation settlement) for Q1 2022 were
Net loss attributable to AWH for the first quarter of 2022 was
Adjusted EBITDA1, which adjusts for tax, interest, depreciation, amortization, equity-based compensation, and other items deemed one-time in nature, was
This press release includes certain non-GAAP financial measures as defined by the
AWH will host a conference call on
Abner Kurtin, CEO; Frank Perullo, President; and Dan Neville, CFO participated on the call.
AWH is a vertically integrated multi-state cannabis operator with licenses and assets in
Additional information relating to the Company's first quarter 2022 results is available on the Investor Relations section of AWH's website at https://awholdings.com/investors/, the
This news release includes forward-looking information and statements, which may include, but are not limited to, the plans, intentions, expectations, estimates, and beliefs of the Company. Words such as "expects", "continue", "will", "anticipates" and "intends" or similar expressions are intended to identify forward-looking information and statements. Without limiting the generality of the preceding statement, all statements in this press release relating to estimated and projected revenue, expectations regarding production capacity, anticipated capital expenditures, proceeds from sale leasebacks, expansion, profit, product demand, margins, costs, cash flows, sources of capital, growth rates and future financial and operating results are forward-looking information and statements. We caution investors that any such forward-looking statements are based on the Company's current projections and expectations about future events and financial trends, the receipt of all required regulatory approvals, and on certain assumptions and analysis made by the Company in light of the experience of the Company and perception of historical trends, current conditions and expected future developments and other factors management believes are appropriate.
Forward-looking information and statements involve and are subject to assumptions and known and unknown risks, uncertainties, and other factors which may cause actual events, results, performance, or achievements of the Company to be materially different from future events, results, performance, and achievements expressed or implied by forward-looking information and statements herein. Such factors include, among others, the risks and uncertainties identified in the Company's Annual Report on Form 10-K for the year ended
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION (UNAUDITED)
Three Months Ended |
|||||
(in thousands, except per share amounts) |
2022 |
2021 |
|||
Revenue, net |
$ |
85,090 |
$ |
66,137 |
|
Cost of goods sold |
(61,643) |
(36,470) |
|||
Gross profit |
23,447 |
29,667 |
|||
Operating expenses |
|||||
General and administrative expenses |
33,227 |
25,146 |
|||
Settlement expense |
5,000 |
36,511 |
|||
Total operating expenses |
38,227 |
61,657 |
|||
Operating loss |
(14,780) |
(31,990) |
|||
Other (expense) income |
|||||
Interest expense |
(6,031) |
(7,337) |
|||
Other, net |
103 |
80 |
|||
Total other expense |
(5,928) |
(7,257) |
|||
Loss before income taxes |
(20,708) |
(39,247) |
|||
Income tax expense |
(7,107) |
(8,976) |
|||
Net loss |
$ |
(27,815) |
$ |
(48,223) |
|
Net loss per share attributable to Class A and Class B common |
$ |
(0.16) |
$ |
(0.45) |
|
stockholders — basic and diluted(1) |
|||||
Weighted-average common shares outstanding — basic and |
172,494 |
106,443 |
|||
diluted(1) |
(1) |
Net loss per share and weighted-average common shares outstanding have been computed on the basis of treating the historical common unit equivalents previously outstanding as shares of Class A common stock, as such historical units converted into shares of Class A common stock in the Company's conversion to a C-Corporation prior to the initial public offering. |
SELECTED CONDENSED CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED)
Three Months Ended |
|||||
(in thousands) |
2022 |
2021 |
|||
Net cash used in operating activities |
$ |
(10,245) |
$ |
(7,829) |
|
Cash flows from investing activities |
|||||
Additions to capital assets |
(10,214) |
(23,351) |
|||
Investments in notes receivable |
(1,000) |
(760) |
|||
Collection of notes receivable |
82 |
82 |
|||
Proceeds from sale of assets |
35,400 |
— |
|||
Acquisition of businesses, net of cash acquired |
(24,890) |
(11,174) |
|||
Net cash used in investing activities |
(622) |
(35,203) |
|||
Cash flows from financing activities |
|||||
Proceeds from issuance of debt |
— |
49,500 |
|||
Repayments of debt |
(786) |
(1,286) |
|||
Debt issuance costs |
(31) |
— |
|||
Net cash (used in) provided by financing activities |
(817) |
48,214 |
|||
Net (decrease) increase in cash, cash equivalents, and restricted cash |
(11,684) |
5,182 |
|||
Cash, cash equivalents, and restricted cash at beginning of period |
155,481 |
58,097 |
|||
Cash, cash equivalents, and restricted cash at end of period |
$ |
143,797 |
$ |
63,279 |
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
(in thousands) |
|
|
|||
Cash and cash equivalents |
$ |
143,797 |
$ |
155,481 |
|
Inventory |
78,233 |
65,588 |
|||
Other current assets |
38,522 |
36,943 |
|||
Property and equipment, net |
226,129 |
239,656 |
|||
Operating lease right-of-use assets |
107,279 |
103,958 |
|||
Intangible assets, net |
57,301 |
59,271 |
|||
|
43,018 |
42,967 |
|||
Other noncurrent assets |
19,925 |
19,572 |
|||
Total Assets |
$ |
714,204 |
$ |
723,436 |
|
Total current liabilities |
$ |
109,328 |
$ |
117,395 |
|
Long-term debt, net |
222,593 |
230,846 |
|||
Operating lease liabilities, noncurrent |
223,981 |
197,295 |
|||
Other noncurrent liabilities |
276 |
1,423 |
|||
Total stockholders' equity |
158,026 |
176,477 |
|||
Total Liabilities and Stockholders' Equity |
$ |
714,204 |
$ |
723,436 |
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
We define "Adjusted Gross Profit" as gross profit excluding non-cash inventory costs, which include depreciation and amortization included in cost of goods sold, equity-based compensation included in cost of goods sold, start-up costs included in cost of goods sold, and other non-cash inventory adjustments. We define "Adjusted Gross Margin" as Adjusted Gross Profit as a percentage of net revenue. Our "Adjusted EBITDA" is a non-GAAP measure used by management that is not defined by
The following table presents Adjusted Gross Profit for the three months ended
Three Months Ended |
||||||
($ in thousands) |
2022 |
2021 |
||||
Gross Profit |
$ |
23,447 |
$ |
29,667 |
||
Depreciation and amortization included in cost of goods sold |
2,943 |
2,162 |
||||
Equity-based compensation included in cost of goods sold |
3,995 |
— |
||||
Start-up costs included in cost of goods sold(1) |
3,923 |
— |
||||
Non-cash inventory adjustments(2) |
2,204 |
750 |
||||
Adjusted Gross Profit |
$ |
36,512 |
$ |
32,579 |
||
Adjusted Gross Margin |
42.9% |
49.3% |
(1) |
Incremental expenses associated with the expansion of activities at our cultivation facilities that are not yet operating at scale, including excess overhead expenses resulting in delays from regulatory approvals at certain cultivation facilities. |
(2) |
Primarily consists of write-offs of expired products and obsolete packaging. |
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
The following table presents Adjusted EBITDA for the three months ended
Three Months Ended |
||||||
(in thousands) |
2022 |
2021 |
||||
Net loss |
$ |
(27,815) |
$ |
(48,223) |
||
Income tax expense |
7,107 |
8,976 |
||||
Other (income) expense |
(103) |
(80) |
||||
Interest expense |
6,031 |
7,337 |
||||
Depreciation and amortization |
2,732 |
2,419 |
||||
Depreciation and amortization included in cost of goods sold |
2,943 |
2,162 |
||||
Non-cash inventory adjustments(1) |
2,204 |
750 |
||||
Equity-based compensation |
2,504 |
2,487 |
||||
Equity-based compensation included in cost of goods sold |
3,995 |
— |
||||
Start-up costs(2) |
837 |
1,311 |
||||
Start-up costs included in cost of goods sold(3) |
3,923 |
— |
||||
Transaction-related and other non-recurring expenses(4) |
6,194 |
2,178 |
||||
Loss on sale of assets |
818 |
— |
||||
Litigation settlement |
5,000 |
36,511 |
||||
Adjusted EBITDA |
$ |
16,370 |
$ |
15,828 |
||
Adjusted EBITDA Margin |
19.2% |
23.9% |
(1) |
Primarily consists of write-offs of expired products and obsolete packaging. |
(2) |
One-time costs associated with acquiring real estate, obtaining licenses and permits, and other costs incurred before commencement of operations at certain locations. |
(3) |
Incremental expenses associated with the expansion of activities at our cultivation facilities that are not yet operating at scale, including excess overhead expenses resulting in delays from regulatory approvals at certain cultivation facilities. |
(4) |
Legal and professional fees associated with litigation matters, potential acquisitions, and other regulatory matters and other non-recurring expenses. The prior year includes expenses related to the Company's Initial Public Offering. |
1 |
Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA and Adjusted EBITDA Margin are a non-GAAP financial measures. Please see the "Supplemental Information (Unaudited) Regarding Non-GAAP Financial Measures" at the end of this press release for a reconciliation of non-GAAP to GAAP measures. |
2 |
Total debt less cash and cash equivalents less unamortized deferred financing costs. |
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SOURCE
Media Contact: MATTIO Communications, Mark Sinclair, (650) 269-9530, AWH@mattio.com; Investor Contact: Rebecca Koar, (617) 453-4042 ext. 90102, IR@awholdings.com