Proactive Investors - Cannabis earnings season has started off strong with major players in the sector largely delivering better sales and earnings than expected by Wall Street analysts.
Tier 1 multi-state operators (MSOs) Trulieve Cannabis Corp. (CSE:TRUL), Curaleaf (TSX:CURA) Hldgs Inc. (CSE:CURA, OTCQX:CURLF), Green Thumb Industries Inc. (CSE:GTII, OTCQX:GTBIF) and Verano Holdings Corp (CSE:VRNO, OTCQX:VRNOF) reported their first quarter earnings last week.
On average, these four MSOs beat the revenue consensus by 2.27% and the adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) consensus by 9.15%, according to Water Tower Research analysts.
“Tier 1 MSO earnings have largely been better than expected,” the analysts wrote in a note dated May 13, noting that typically cannabis firms see the softest revenue during the first quarter.
One standout was Florida-focused Trulieve Cannabis Corp. (CSE:TRUL) which posted a 4% sequential improvement in revenue to $298 at a 58% gross margin, attributed to higher retail traffic and average basket size.
Adjusted EBITDA was $106 million, up 21% sequentially and 35% year-over-year.
Revenue topped estimates by 4.2% and earnings by 27.32%.
On the other hand, Curaleaf, modestly missed revenue expectations by 0.09% and earnings estimates by 2.91%.
The New York-based firm saw revenue increase by 2% year-over-year to $339 million and adjusted EBITDA of $77 million, marking a 40 basis point improvement.
Green Thumb Industries saw the greatest revenue growth during Q1 of the four Tier 1 MSOs that reported last week, adding 11% over the year-ago quarter at $276 million while adjusted EBITDA increased 19% to $91 million.
Verano was the only MSO of the four to report a contraction in revenue, down 3% year-over-year at $221 million.
However, this was ahead of the company’s guidance, with the decrease in revenue driven by expected declines in Verano's New Jersey retail segment as more dispensaries open in the state, partially offset by its wholesale business’ strong performance.
Another Tier 1 MSO Cresco Labs Inc. (CSE:CSE:CL, OTCQX:CRLBF) handed down its Q1 earnings on Wednesday. Like its peers, the Chicago-headquartered firm demonstrated an improvement in profitability during the period.
Adjusted EBITDA was up 82% year-over-year at $53 million while its margins were 29%, marking a 1,380 basis point improvement.
Revenue was flat year-over-year at $184 million, slightly beating Street estimates of $183.3 million.
Shares of Cresco Labs traded 3.5% higher at $2.10 following the release of its earnings report.