Le Lézard
Classified in: Health, Business, Covid-19 virus
Subjects: ERN, CCA, MAT

Curaleaf Reports Record Second Quarter 2020 Financial and Operational Results


Record Second Quarter Pro Forma Revenue(1)(2)of $165.4 Million and Record Second Quarter Managed Revenue(1)of $121.4 Million;

Record First Half Managed Revenue(1) of $226.4 Million;

Record Adjusted EBITDA(1) of $28.0 Million as Operations Across 17 States Continue to Scale;

Completed Closing of the Grassroots Acquisition Expanding Presence to 23 States

WAKEFIELD, Mass., Aug. 17, 2020 /CNW/ -- Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) ("Curaleaf" or the "Company"), a leading vertically integrated cannabis operator in the U.S., today reported its financial and operating results for the second quarter ended June 30, 2020. All financial information is provided in U.S. dollars unless otherwise indicated.

Q2 2020 Financial Highlights (Unaudited)

($ thousands, except per share amounts)

Q2 2020

Q1 2020

 % qoq
Change

Q2 2019

 % yoy
Change

Managed Revenue(1)

$121,402

$105,022

16%

$55,100

120%

Total Revenue

$117,480

$96,496

22%

$48,489

142%

Gross profit before impact of biological assets

$60,636

$52,483

16%

$26,020

133%

Gross profit on cannabis sales(1) 

$42,735

$33,042

29%

$15,257

180%

Gross margin on cannabis sales(1) 

43%

43%


40%


Adjusted EBITDA(1)

$27,994

$20,006

40%

$4,412

534%

Net income (loss) attributable to Curaleaf Holdings Inc.

($2,029)

($15,089)


($24,541)


Net income (loss) per share ? basic and diluted

($0.00)

($0.03)


(0.05)




(1)

See "Non-IFRS Financial and Performance Measures" below for more information regarding Curaleaf's use of Non-IFRS financial measures and other reconciliations.

(2)

Pro Forma Revenue includes the revenue from closed acquisitions of Arrow Alternative Care ("Arrow") and GR Companies, Inc. ("Grassroots") as if they occurred on April 1, 2020.

Second Quarter Highlights

Post Second Quarter Highlights

Joseph Lusardi, Chief Executive Officer of Curaleaf stated "Curaleaf, once again, delivered record quarterly results highlighted by managed revenues exceeding our outlook, as well as, a 40% sequential improvement in Adjusted EBITDA. The outstanding results come despite headwinds related to temporary COVID-19 related closures and restrictions in Massachusetts and Nevada. After quarter end, we successfully completed the transformative acquisition of Grassroots, expanding our presence into 6 new states, including the high-growth Illinois and Pennsylvania markets. The closing of Grassroots affirms our position as the world's largest cannabis company when measured by both revenue and operating presence. Overall, Curaleaf remains well positioned for continued growth in the second half of 2020. This growth will be driven by organic initiatives, the integrations of the Select and Grassroots businesses, as well as, the closing of multiple strategic tuck-in acquisitions across a number of key states."

Mike Carlotti, Chief Financial Officer of Curaleaf, added "Our top-line growth drove record adjusted EBITDA and an improved adjusted EBITDA margin. The strength of our balance sheet has allowed us to invest in our base business and opportunistically pursue additional strategic acquisitions. Looking forward, we anticipate a continued rise in managed revenue and adjusted EBITDA leading to strong sequential growth in the third quarter and second half of 2020 driven by organic growth, continued investment in key states, as well as, the integration of Select, Grassroots, Arrow and BlueKudu into our portfolio. Finally, we continue to make progress in converting and consolidating our managed entities in Maine, New Jersey and Massachusetts. As of today, we have consolidated all of our managed entities except for ATG which we expect to consolidate in the third quarter."

Financial Results for the Second Quarter Ended June 30, 2020
Managed Revenue for the second quarter of 2020 was a record $121.4 million, an increase of 120% compared to $55.1 million in the second quarter of 2019. Managed Revenue for the second quarter increased 16% sequentially.

Total Revenue for the second quarter of 2020 was a record $117.5 million, an increase of 142% compared to $48.5 million in the second quarter of 2019. Total Revenue for the second quarter of 2020 increased 22% sequentially.

Retail revenue increased by 112% to $66.3 million during second the quarter of 2020, compared to $31.3 million in the second quarter of 2019. Growth in retail revenue was primarily due to organic growth and new store openings in Florida, Massachusetts and New York, impact of the Select acquisition, as well as, the acquisitions of three dispensaries in Arizona, two dispensaries in Nevada and from Maryland due to the addition of the HMS/MI businesses and Elevate Takoma, offset partially by the unforeseen negative impact of COVID-19 in Massachusetts and Nevada.  

Wholesale revenue increased by 422% to $33.3 million during the second quarter of 2020, compared to $6.4 million in the second quarter of 2019. Growth in wholesale revenue was due primarily to the addition of Select.

Management fee income increased by 66% to $17.9 million during the second quarter of 2020, compared to $10.8 million in the second quarter of 2019. Growth in management fee income was due primarily to growth in New Jersey and management fees generated from Alternative Therapies Group ("ATG") in Massachusetts.

Gross profit before impact of biological assets for the second quarter of 2020 was $60.6 million, compared to $26.0 million for the second quarter of 2019. The increase was primarily due to the continued improvement in the operating capacity and efficiency of the Company's cultivation and processing facilities.

Gross profit on cannabis sales was $42.7 million for the second quarter of 2020, resulting in a 43% margin, compared to $15.3 million in the second quarter of 2019. The increase was primarily due to the continued improvement in the operating capacity and efficiency of the Company's cultivation and processing facilities.

Adjusted EBITDA was a record $28.0 million for the second quarter of 2020, compared to $4.4 million for the second quarter of 2019.

Net loss for the second quarter of 2020 was $2.0 million, compared to a net loss of $24.5 million in the second quarter of 2019. The increase was primarily driven by a $19.2 million increase in the fair value of biological assets and a $1.1 million decrease in one-time charges. These benefits were partially offset by a $9.5 million increase in depreciation and amortization and a $0.3 million increase in share-based compensation, both of which are non-cash, a $5.3 million increase in income tax expense, and a $7.0 million increase in net interest expense.

Balance Sheet and Liquidity
As of June 30, 2020, we had $122.8 million of cash, $283.3 million of outstanding debt net of unamortized debt discounts and 533.2 million fully diluted shares outstanding.

Conference Call and Webcast Information
Curaleaf will host a conference call and audio webcast today at 5:00 pm ET to answer questions about the Company's operational and financial highlights. The dial-in numbers for the conference call are +1-888-317-6003 (U.S.), +1-866-284-3684 (Canada) or +1-412-317-6061 (Int'l) Passcode: 0446838. Please dial-in 10 to 15 minutes prior to the start time of the conference call and an operator will register your name and organization.

The conference call will also be available via webcast, which can be accessed through the Investor Relations section of Curaleaf's website, https://ir.curaleaf.com/events.

For interested individuals unable to join the conference call, a dial-in replay of the call will be available until August 24, 2020 at 11:59 pm ET and can be accessed by dialing +1-877-344-7529 (U.S.), +1-855-669-9658 (Canada) or +1-412-317-0088 (International) and entering replay pin number: 10146052. The online archive of the webcast will be available on https://ir.curaleaf.com/events for 90 days following the call.

Non-IFRS Financial and Performance Measures
In this press release Curaleaf refers to certain non-IFRS financial measures such as "Pro Forma Revenue", "Managed Revenue", "Gross Profit on Cannabis Sales" and "Adjusted EBITDA". These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. Curaleaf defines "Managed Revenue" as total revenue plus revenue from entities for which the Company has a management contract but does not consolidate the financial results based on IFRS 10 ? Consolidated Financial Statements. Curaleaf defines "Pro Forma Revenue" as "Managed Revenue" plus revenue from operations of pending and closed acquisitions as if such acquisitions occurred on April 1, 2020. The Company defines "Gross Profit on Cannabis Sales" as retail and wholesale revenues less cost of goods sold. "Adjusted EBITDA" is defined by Curaleaf as earnings before interest, taxes, depreciation and amortization less share-based compensation expense and one-time charges related to business development, acquisition, financing and reorganization costs. Curaleaf considers these measures to be an important indicator of the financial strength and performance of our business. We believe the adjusted results presented provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies and allow investors to review performance in the same way as our management. Since these measures are not calculated in accordance with IFRS, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies. The following tables provide a reconciliation of each of the non-IFRS measures to its closest IFRS measure.

Managed Revenue

($ thousands)




Q2 2020



Q1 2020



Q2 2019

Retail revenue

$

66,275


$

56,633


$

31,341

Wholesale revenue


33,304



20,422



6,385

Management fee income


17,901



19,441



10,763

Total Revenue


117,480



96,496



48,489

Revenue from managed entities, net of MSA fees


3,922



8,526



6,611

Managed revenue

$

121,402


$

105,022


$

55,100



Gross Profit on Cannabis Sales

($ thousands)




Q2 2020



Q1 2020



Q2 2019

Retail and wholesale revenues

$

99,579


$

77,055


$

37,726

Cost of goods sold


56,844



44,013



22,469

Gross profit on cannabis sales

$

42,735


$

33,042


$

15,257



Adjusted EBITDA

($ thousands)




Q2 2020



Q1 2020



Q2 2019

Net income (loss) 

$

(1,836)


$

(15,452)


$

(24,435)

Interest expense, net


9,916



9,804



2,895

Income tax recovery (expense)


13,534



13,249



8,192

Depreciation and amortization (1)


17,869



14,906



8,338

Share-based compensation


4,833



4,501



4,489

Other (income) expense


77



(2,608)



1,047

Change in fair value of biological assets


(20,591)



(15,556)



(1,392)

One time charges 


4,192



11,162



5,278

Adjusted EBITDA

$

27,994


$

20,006


$

4,412



(1)

Depreciation and amortization expense in Q2 2020, Q1 2020 and Q4 2019 include amounts charged to cost of goods sold on the statement of profits and losses. Prior period Q2 2019 has been adjusted to reflect the current period calculation of Adjusted EBITDA.

About Curaleaf Holdings
Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) ("Curaleaf") is the leading vertically integrated U.S. multi-state cannabis operator with a mission to improve lives by providing clarity around cannabis and confidence around consumption. As a high-growth cannabis company known for quality, expertise and reliability, the company and its brands, including Curaleaf and Select, provide industry-leading service, product selection and accessibility across the medical and adult-use markets. Curaleaf currently operates in 23 states with 87 dispensaries, 22 cultivation sites and over 30 processing sites, and employs over 3,000 team members across the United States. Curaleaf is listed on the Canadian Securities Exchange under the symbol CURA and trades on the OTCQX market under the symbol CURLF. For more information please visit www.curaleaf.com.

Condensed Interim Consolidated Statements of Financial Position (Unaudited)

($ thousands)  




June 30,


December 31,



2020


2019

Assets







Current assets:







Cash


$

122,763


$

42,310

Accounts receivable



18,197



18,335

Inventory, net



129,763



63,210

Biological assets



27,025



19,197

Assets held for sale



35,050



?

Prepaid expenses and other current assets



7,342



6,479

Total current assets



340,140



149,531

Deferred tax asset



2,687



2,628

Notes receivable



83,635



57,166

Property, plant and equipment, net



179,687



129,812

Right-of-use assets



81,010



82,794

Intangible assets, net



404,110



185,635

Goodwill



179,955



69,326

Investments



51,244



51,209

Other assets



10,110



8,825

Total assets


$

1,332,578


$

736,926








Liabilities and Shareholders' Equity







Current liabilities:







Accounts payable


$

25,300


$

12,742

Accrued expenses



30,585



18,016

Income tax payable 



40,308



15,114

Current portion of lease liability



13,415



11,835

Current portion of notes payable 



6,290



17,000

Current contingent consideration liability



9,700



?

Liabilities held for sale



3,612



?

Other current liabilities



337



31,549

Total current liabilities



129,547



106,256

Deferred tax liability



85,587



22,642

Notes payable



273,559



87,953

Lease Liabilities



81,868



81,319

Non-controlling interest redemption liability



2,694



2,694

Contingent consideration liability 



81,662



32,616

Total liabilities



654,917



333,480








Shareholders' equity:







Share capital



992,141



693,699

Treasury shares



(5,208)



(5,208)

Reserves



(155,469)



(146,819)

Accumulated deficit



(150,027)



(132,910)

Total Curaleaf Holdings, Inc. shareholders' equity



681,437



408,762

Redeemable non-controlling interest



(2,694)



(2,694)

Non-controlling interest   



(1,082)



(2,622)

Total shareholders' equity



677,661



403,446

Total liabilities and shareholders' equity


$

1,332,578


$

736,926

 

Condensed Interim Consolidated Statements of Profits and Losses (Unaudited)

($ thousands, except for share and per share amounts)



Three Months Ended


Six Months Ended


June, 30


June, 30


2020


2019


2020


2019

Revenues:












Retail and wholesale revenues

$

99,579


$

37,726


$

176,635


$

65,494

Management fee income


17,901



10,763



37,342



18,246

Total revenues


117,480



48,489



213,977



83,740

Cost of goods sold


56,844



22,469



100,856



39,614

Gross profit before impact of biological assets


60,636



26,020



113,121



44,126

Realized fair value amounts included in inventory sold


(22,423)



(15,478)



(43,613)



(25,833)

Unrealized fair value gain on growth of biological assets


43,014



16,870



79,761



29,471

Gross profit


81,227



27,412



149,269



47,764

Operating expenses:












Selling, general and administrative


40,466



28,029



86,324



51,298

Share-based compensation


4,833



4,489



9,334



6,270

Depreciation and amortization


14,237



7,195



26,924



12,091

Total operating expenses


59,536



39,713



122,582



69,659

Income (Loss) from operations


21,691



(12,301)



26,687



(21,895)

Other income (expense):












Interest income


3,573



2,436



6,419



4,919

Interest expense


(11,357)



(3,983)



(21,849)



(8,147)

Interest expense related to lease liabilities


(2,132)



(1,348)



(4,290)



(2,315)

Other income (expense)


(77)



(1,047)



2,529



(1,073)

Total other income (expense), net


(9,993)



(3,942)



(17,191)



(6,616)

Income (Loss) before provision for income taxes


11,698



(16,243)



9,496



(28,511)

Income tax benefit (expense)


(13,534)



(8,192)



(26,783)



(6,753)

Net loss and comprehensive loss


(1,836)



(24,435)



(17,287)



(35,264)

Less: Net income (loss) attributable to non-controlling interest


193



106



(170)



(513)

Net loss attributable to Curaleaf Holdings, Inc.

$

(2,029)


$

(24,541)


$

(17,117)


$

(34,751)

Loss per share attributable to Curaleaf Holdings, Inc. ? basic and diluted

$

(0.00)


$

(0.05)


$

(0.03)


$

(0.08)

Weighted average common shares outstanding ? basic and diluted


533,192,806



461,313,741



520,446,921



459,499,816

Investor Contact:
Curaleaf Holdings, Inc.
Daniel Foley, VP, Corporate Finance & Investor Relations
IR@curaleaf.com 

Media Contact:
Curaleaf Holdings, Inc. Tracy Brady, VP of Corporate Communications
media@curaleaf.com

This press release contains "forward-looking information" and "forward-looking statements" within the meaning of Canadian securities laws and United States securities laws ("forward-looking statements"). Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on management's current beliefs, expectations or assumptions regarding the future of the business, plans and strategies, operational results and other future conditions of the Company. In addition, the Company may make or approve certain statements in future filings with Canadian securities regulatory authorities, in press releases, or in oral or written presentations by representatives of the Company that are not statements of historical fact and may also constitute forward-looking statements. All statements, other than statements of historical fact, made by the Company that address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements, including, but not limited to, statements preceded by, followed by or that include words such as "assumptions", "assumes", "guidance", "outlook",  "may", "will", "would", "could", "should", "believes", "estimates", "projects", "potential", "expects", "plans", "intends", "anticipates", "targeted", "continues", "forecasts", "designed", "goal", or the negative of those words or other similar or comparable words and includes, among others, information regarding: its outlook for and expected operating margins, capital allocation, free flow cash and other financial results; growth of its operations via expansion, for the effects of any transactions; expectations for the potential benefits of any transactions; statements relating to the business and future activities of, and developments related to, the Company after the date of this press release, including such things as future business strategy, competitive strengths, goals, expansion and growth of the Company's business, operations and plans; expectations that planned acquisitions will be completed; expectations regarding cultivation and manufacturing capacity; expectations regarding receipt of regulatory approvals; expectations that licenses applied for will be obtained; potential future legalization of adult-use and/or medical cannabis under U.S. federal law; expectations of market size and growth in the U.S. and the states in which the Company operates; expectations for other economic, business, regulatory and/or competitive factors related to the Company or the cannabis industry generally; and other events or conditions that may occur in the future. Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations. Holders of securities of the Company are cautioned that forward-looking statements are not based on historical facts but instead are based on reasonable assumptions and estimates of management of the Company at the time they were provided or made and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, as applicable, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties related to: the available funds of the Company and the anticipated use of such funds; the availability of financing opportunities; legal and regulatory risks inherent in the cannabis industry; risks associated with economic conditions, dependence on management and currency risk; risks relating to U.S. regulatory landscape and enforcement related to cannabis, including political risks; risks relating to anti-money laundering laws and regulation; other governmental and environmental regulation; public opinion and perception of the cannabis industry; risks related to contracts with third-party service providers; risks related to the enforceability of contracts; reliance on the expertise and judgment of senior management of the Company, and ability to retain such senior management; risks related to proprietary intellectual property and potential infringement by third-parties; the concentrated voting control of the Company's Chairman and the unpredictability caused by the capital structure; risks relating to the management of growth; increasing competition in the industry; risks inherent in an agricultural business; risks relating to energy costs; risks associated to cannabis products manufactured for human consumption including potential product recalls; reliance on key inputs, suppliers and skilled labor; cybersecurity risks; ability and constraints on marketing products; fraudulent activity by employees, contractors and consultants; tax and insurance related risks; risks related to the economy generally; risk of litigation; conflicts of interest; risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service outside of Canada; risks related to future acquisitions or dispositions; sales by existing shareholders; limited research and data relating to cannabis; as well as those risk factors discussed under "Risk Factors" in the Company's Annual Management, Discussion and Analysis dated March 26, 2020, and in the Company's Annual Information Form dated September 23, 2019, and as described from time to time in documents filed by the Company with Canadian securities regulatory authorities. The purpose of forward-looking statements is to provide the reader with a description of management's expectations, and such forward-looking statements may not be appropriate for any other purpose. In particular, but without limiting the foregoing, disclosure in this press release as well as statements regarding the Company's objectives, plans and goals, including future operating results and economic performance may make reference to or involve forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. You should not place undue reliance on forward-looking statements contained in this press release. Such forward-looking statements are made as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement.

This news release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about the Company's prospective results of operations, production and production efficiency, commercialization, revenue and cash on hand, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set second in the above paragraph. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about the Company's future business operations. The Company disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein.

The financial information reported in this news release is based on unaudited management prepared financial statements for the quarter ended June 30, 2020. Accordingly, such financial information may be subject to change. Financial statements for the period will be released and filed under the Company's profiles on SEDAR at www.sedar.com by August 19, 2020.  All financial information contained in this news release is qualified in its entirety with reference to such unaudited financial statements. While the Company does not expect there to be any material changes, to the extent that the financial information contained in this news release is inconsistent with the information contained in the Company's unaudited financial statements, the financial information contained in this news release shall be deemed to be modified or superseded by the Company's unaudited financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws.

Neither the Canadian Securities Exchange nor its Regulation Service Provider has reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.

SOURCE Curaleaf Holdings, Inc.


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