Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cansortium Inc (CNTMF, Financial) posted record quarterly earnings and achieved its 11th consecutive quarter of positive cash flow from operations.
- Revenue in Florida grew by 15%, with plans to open four additional retail stores by Q2 2025, bringing the total to 39 dispensaries in the state.
- Cost of goods sold decreased by approximately 44% in top-selling categories over the past 18 months, allowing the company to retain high profit margins.
- The company is expanding its presence in Texas with plans for a brick-and-mortar delivery center in Houston, expected to open by early 2025.
- Cansortium Inc (CNTMF) is in the final construction phase of new high-quality flower facilities, with the first harvest expected in Q1 2025 from the Rosa facility.
Negative Points
- Cash from operations decreased to $2.8 million in the second quarter compared to $4.8 million in the prior period, primarily due to settlement of tax payments carried over from previous periods.
- The Pennsylvania market remains stable but growth is largely dependent on expanded product offerings and enhanced dispensary facilities.
- The Texas market is still considered immature, limiting immediate growth potential despite the company's efforts to expand.
- The company is currently in the process of refinancing its debt, which terms in May 2025, indicating potential financial uncertainty.
- The integration activities with RIV Capital are still underway, which could pose operational challenges and require significant resources.
Q & A Highlights
Q: Can you provide more details on the revenue growth in Florida and the factors driving it?
A: (Robert Beasley, CEO) Revenue in Florida grew by 15% due to increased production and the opening of two new dispensaries in 2024. Additionally, a successful 4/20 marketing and sales campaign significantly contributed to this growth.
Q: What are the plans for expanding retail operations in Florida?
A: (Robert Beasley, CEO) We plan to open four additional retail stores by Q2 2025, bringing the total to 39 dispensaries in the state. This expansion is strategically positioned to prepare for a potential transition to an adult-use market in Florida.
Q: How has the cost of goods sold (COGS) changed, and what impact has this had on profit margins?
A: (Robert Beasley, CEO) COGS has decreased by approximately 44% in our top-selling categories over the past 18 months. This reduction has allowed us to maintain high profit margins despite increasing price competition.
Q: Can you elaborate on the developments in the Pennsylvania market?
A: (Robert Beasley, CEO) In Pennsylvania, we have expanded preferential partnerships with wholesale suppliers, completed the Hanover dispensary renovation, and maintained stable price trends. Growth is driven by expanded product offerings and enhanced dispensary facilities.
Q: What progress has been made in the Texas market?
A: (Robert Beasley, CEO) We are seeing patient growth and increased product sales in Texas. Plans are underway for a brick-and-mortar delivery center in Houston, expected to open by early 2025. We are one of only three license holders in the state and are working to grow our presence in this market.
Q: What are the updates on the new cultivation facilities?
A: (Robert Beasley, CEO) The Ruskin facility is now fully operational and hosted its first full harvest in July. The Rosa facility is in the final construction phase, with the first harvest expected in Q1 2025. We are also pursuing due diligence for a new facility in Williston, Florida.
Q: How is the integration with RIV Capital progressing?
A: (Robert Beasley, CEO) Integration activities are underway, focusing on streamlining processes, improving operational efficiencies, broadening product and brand portfolios, and enhancing the customer experience. Shareholder votes to approve the transaction are scheduled for 8/27, with closing anticipated before year-end.
Q: What are the financial highlights for the second quarter?
A: (Patricia Fonseca, CFO) Revenue increased 12% to $27.3 million, with Florida revenue up 15% to $23.1 million. Adjusted gross profit was $12.3 million, and adjusted EBITDA was $7.7 million. Cash from operations was $2.8 million, and we had $8.5 million in cash and $67.5 million in total debt as of June 30, 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
