AWH ANNOUNCES Q3 2022 FINANCIAL RESULTS
Reported Record Quarterly Revenue and Adjusted EBITDA Since Company Inception
Achieved
Achieved Adjusted EBITDA of
Q3 2022 Financial Highlights
- Gross Revenue increased 14.1% quarter-over-quarter and increased 27.8% year-over-year, to
$134.3 million . - Net revenue, which excludes intercompany sale of wholesale products, increased 14.1% quarter-over-quarter and 17.9% year-over-year, to
$111.2 million . - Retail revenue grew 9.6% quarter-over-quarter to
$82.8 million . - Gross wholesale revenue grew 22.2% quarter-over-quarter to
$51.5 million and wholesale, net of intercompany sales, grew 29.6% sequentially to$28.4 million . - Net loss of
$16.9 million during the quarter, compared to a net loss of$21.2 million in Q2 2022. - Adjusted EBITDA1 was
$27.8 million , representing a 25.0% margin, a 354 basis point margin expansion quarter-over-quarter. - As of
September 30, 2022 , cash and cash equivalents were$91.4 million , and net debt2 was$219.0 million .
Business Highlights
- In August, the Company commenced adult-use sales at its
Montclair, New Jersey dispensary; and opened itsFort Lee, New Jersey dispensary to medical patients, with plans to welcome adult-use customers by year-end 2022. The Company also opened the kitchen at its cultivation facility inFranklin, New Jersey , which enables Ascend to produce edibles and meaningfully expand its wholesale offering. - During the quarter, the Company announced that it entered into a definitive agreement providing AWH the option to acquire 100% of the equity of Ohio Patient Access ("OPA"), which is licensed to operate three medical
Ohio dispensaries that are in the process of being built inCincinnati ,Piqua , andSandusky . The addition of OPA's three dispensaries will increase AWH'sOhio footprint to five dispensaries, the maximum permitted by the State. The Company also signed two agreements to acquire two dispensary licenses inIllinois from separate sellers that are in the process of being built-out. Following closing of the transactions, the Company would have ten dispensaries inIllinois , which would maximize scale and bring the Company to the state-imposed cap of ten. - Subsequent to the quarter, the Company completed construction of 6,000 sq.ft of canopy space at its cultivation facility in
Smithfield, Pennsylvania . AWH expects to plant in this new space by the end of the year. In addition, Ascend opened its first-ever "outlet" dispensary inScranton, Pennsylvania .
____________________________________ |
1 Adjusted EBITDA/margin and Adjusted Gross Profit/margin are a non-GAAP financial measures. Please see the "GAAP Reconciliations" at the end of this release. |
2 Total debt less cash and cash equivalents less unamortized deferred financing costs. |
Management Commentary
"AWH continues to be among the industry leaders in revenue growth and Adjusted EBITDA expansion, despite challenging macro and microenvironments," said
Q3 2022 Financial Overview
Net revenue increased 14.1% quarter-over-quarter, primarily driven by an increase in third-party wholesale sales, the conversion of retail stores to adult-use, and new store openings
Total retail revenue in the third quarter of 2022 was
Gross wholesale revenue was
Q3 2022 gross profit was
Total Q3 2022 general and administrative ("G&A") expenses were
Net loss in the third 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
____________________________ |
3 Excludes entire current and prior quarter revenue contribution from |
Non-GAAP Financial Information
This press release includes certain non-GAAP financial measures as defined by the
Conference Call and Webcast
AWH will host a conference call on
About
AWH is a vertically integrated multi-state cannabis operator with licenses and assets in
Additional information relating to the Company's third quarter 2022 results is available on the Investor Relations section of AWH's website at https://awholdings.com/investors/, the
Cautionary Note Regarding Forward-Looking Information
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, 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 and information 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 |
Nine Months Ended |
||||||
(in thousands, except per share amounts) |
2022 |
2021 |
2022 |
2021 |
|||
Revenue, net |
$ 111,238 |
$ 94,382 |
$ 293,827 |
$ 243,886 |
|||
Cost of goods sold |
(74,602) |
(53,428) |
(200,776) |
(138,749) |
|||
Gross profit |
36,636 |
40,954 |
93,051 |
105,137 |
|||
Operating expenses |
|||||||
General and administrative expenses |
34,159 |
29,341 |
100,959 |
85,099 |
|||
Settlement expense |
— |
— |
5,000 |
36,511 |
|||
Total operating expenses |
34,159 |
29,341 |
105,959 |
121,610 |
|||
Operating profit (loss) |
2,477 |
11,613 |
(12,908) |
(16,473) |
|||
Other (expense) income |
|||||||
Interest expense |
(8,434) |
(12,376) |
(23,711) |
(56,601) |
|||
Other, net |
273 |
44 |
527 |
206 |
|||
Total other expense |
(8,161) |
(12,332) |
(23,184) |
(56,395) |
|||
Loss before income taxes |
(5,684) |
(719) |
(36,092) |
(72,868) |
|||
Income tax expense |
(11,178) |
(12,307) |
(29,757) |
(33,278) |
|||
Net loss |
$ (16,862) |
$ (13,026) |
$ (65,849) |
$ (106,146) |
|||
Net loss per share attributable to Class A and Class B common stockholders — basic and diluted(1) |
$ (0.09) |
$ (0.08) |
$ (0.36) |
$ (0.75) |
|||
Weighted-average common shares outstanding — basic and diluted(1) |
187,697 |
169,879 |
181,833 |
142,221 |
(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 |
Nine Months Ended |
||||||
(in thousands) |
2022 |
2021 |
2022 |
2021 |
|||
Net cash used in operating activities |
$ (1,780) |
$ (10,239) |
$ (22,285) |
$ (22,294) |
|||
Cash flows from investing activities |
|||||||
Additions to capital assets |
(30,517) |
(14,872) |
(62,959) |
(70,918) |
|||
Investments in notes receivable |
(1,001) |
(529) |
(2,391) |
(2,185) |
|||
Collection of notes receivable |
81 |
81 |
245 |
245 |
|||
Proceeds from sale of assets |
— |
930 |
39,225 |
930 |
|||
Acquisition of businesses, net of cash acquired |
— |
— |
(24,890) |
(13,630) |
|||
Purchases of intangible assets |
(14,772) |
— |
(43,781) |
— |
|||
Net cash used in investing activities |
(46,209) |
(14,390) |
(94,551) |
(85,558) |
|||
Cash flows from financing activities |
|||||||
Proceeds from issuance of common stock in public offerings, net |
— |
— |
— |
86,065 |
|||
Proceeds from issuance of debt |
— |
210,000 |
65,000 |
259,500 |
|||
Repayments of debt |
(834) |
(76,342) |
(2,289) |
(78,413) |
|||
Repayments under finance leases |
(23) |
— |
(23) |
— |
|||
Debt issuance costs |
(312) |
(8,731) |
(4,998) |
(8,731) |
|||
Taxes withheld under equity-based compensation plans, net |
— |
— |
(4,942) |
— |
|||
Repurchase of warrants |
— |
— |
— |
(4,156) |
|||
Net cash (used in) provided by financing activities |
(1,169) |
124,927 |
52,748 |
254,265 |
|||
Net (decrease) increase in cash, cash equivalents, and restricted cash |
(49,158) |
100,298 |
(64,088) |
146,413 |
|||
Cash, cash equivalents, and restricted cash at beginning of period |
140,551 |
104,212 |
155,481 |
58,097 |
|||
Cash, cash equivalents, and restricted cash at end of period |
$ 91,393 |
$ 204,510 |
$ 91,393 |
$ 204,510 |
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
(in thousands) |
|
|
|
Cash and cash equivalents |
$ 91,393 |
$ 155,481 |
|
Inventory |
92,064 |
65,588 |
|
Other current assets |
35,635 |
36,943 |
|
Property and equipment, net |
268,456 |
239,656 |
|
Operating lease right-of-use assets |
109,085 |
103,958 |
|
Intangible assets, net |
186,426 |
59,271 |
|
|
43,566 |
42,967 |
|
Other noncurrent assets |
20,589 |
19,572 |
|
Total Assets |
$ 847,214 |
$ 723,436 |
|
Total current liabilities |
$ 137,496 |
$ 117,395 |
|
Long-term debt, net |
290,969 |
230,846 |
|
Operating lease liabilities, noncurrent |
229,838 |
197,295 |
|
Other noncurrent liabilities |
14,842 |
1,423 |
|
Total stockholders' equity |
174,069 |
176,477 |
|
Total Liabilities and Stockholders' Equity |
$ 847,214 |
$ 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 and nine months ended
Three Months Ended |
Nine Months Ended |
|||||||
($ in thousands) |
2022 |
2021 |
2022 |
2021 |
||||
Gross Profit |
$ 36,636 |
$ 40,954 |
$ 93,051 |
$ 105,137 |
||||
Depreciation and amortization included in cost of goods sold |
4,722 |
2,063 |
11,618 |
6,612 |
||||
Equity-based compensation included in cost of goods sold |
2,629 |
349 |
9,791 |
349 |
||||
Start-up costs included in cost of goods sold(1) |
2,610 |
— |
10,781 |
— |
||||
Non-cash inventory adjustments(2) |
4,049 |
335 |
6,365 |
3,799 |
||||
Adjusted Gross Profit |
$ 50,646 |
$ 43,701 |
$ 131,606 |
$ 115,897 |
||||
Adjusted Gross Margin |
45.5 % |
46.3 % |
44.8 % |
47.5 % |
(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. Additionally, during the third quarter of 2022, we recognized a loss of |
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
The following table presents Adjusted EBITDA for the three and nine months ended
Three Months Ended |
Nine Months Ended |
|||||||
($ in thousands) |
2022 |
2021 |
2022 |
2021 |
||||
Net loss |
$ (16,862) |
$ (13,026) |
$ (65,849) |
$ (106,146) |
||||
Income tax expense |
11,178 |
12,307 |
29,757 |
33,278 |
||||
Other (income) expense |
(273) |
(44) |
(527) |
(206) |
||||
Interest expense |
8,434 |
12,376 |
23,711 |
56,601 |
||||
Depreciation and amortization |
7,994 |
4,583 |
20,679 |
14,021 |
||||
Non-cash inventory adjustments(1) |
4,049 |
335 |
6,365 |
3,799 |
||||
Equity-based compensation |
6,382 |
2,936 |
19,936 |
7,134 |
||||
Start-up costs(2) |
3,953 |
1,227 |
5,906 |
4,254 |
||||
Start-up costs included in cost of goods sold(3) |
2,610 |
— |
10,781 |
— |
||||
Transaction-related and other non-recurring expenses(4) |
601 |
2,191 |
8,822 |
9,775 |
||||
(Gain) loss on sale of assets |
(296) |
649 |
450 |
649 |
||||
Litigation settlement |
— |
— |
5,000 |
36,511 |
||||
Adjusted EBITDA |
$ 27,770 |
$ 23,534 |
$ 65,031 |
$ 59,670 |
||||
Adjusted EBITDA Margin |
25.0 % |
24.9 % |
22.1 % |
24.5 % |
(1) |
Primarily consists of write-offs of expired products and obsolete packaging. Additionally, during the third quarter of 2022, we recognized a loss of |
(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. |
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SOURCE
Media Contact, MATTIO Communications, Mark Sinclair, (650) 269-9530, [email protected]; Investor Contact, Rebecca Koar, [email protected]; Chief Financial Officer, Daniel Neville, (617) 453-4042 ext. 90102