Tweet

Sayshu Medicherla

11 Mar, 10 tweets, 3 min read

$AYRWF earnings - my takeaways.

1. Micro misses on 4Q revs and EBITDA but the execution continues to be v strong. 48% organic growth
2. EBITDA margins ticked down due to investments as the company prepares to integrate assets and build foundation for future growth.
...

3. $AYRWF mgmt are high quality operators. The 5 NV dispensaries in 4Q generated $21.3MM run-rate revs each(!). MA disp run-rate grew to $11.8MM from $10.1MM in 3Q. MA wholesale grew 109% yoy and 22% qoq. NV performance likely tough to replicate but strong foundation
...

4. Company delivered its 7th straight qtr of positive EBITDA and 6th straight qtr of positive CFO. FCF was $22MM for the year...
5. Great year but, the $AYRWF story is a 2021 and 2022 story, on that front...

6. AZ expected to close this month. OH also soon. NJ in early 3Q
7. Company is growing disp count from 7 in 4Q20 to 64 by YE21 (37 acquired in FL, AZ, and NJ. 6th NV already open. 2 PA opened in 1Q21 with 4 more coming as well as MA AU disp)
...

8. What stood out to me though are the company's cultivation expansions. $AYRWF is doubling cultivation sq. ft. from 554K (including all acquisitions) to 1.03M by YE. More importantly, these expansions come in supply-constrained MA, PA, AZ, NJ with strong near-term tailwinds
...

9. If $AYRWF can replicate its cultivation success in MA to these other states, that is a lot of embedded value and will position the company to both service its dispensaries and build a strong wholesale presence in key states.
...

10. Quick math suggests the ROIC on the cultivation capex is going to be very high, but more importantly, will lead to very strong sales and earnings growth over the next few years
11. Company will start reporting GAAP in 1Q. Positioned for up-listing
...

12. Company is not done with M&A. Deck points out MI, MD, IL, and NY as states they would like to enter. PA and AZ bolt-ons would also be attractive and deepen vertical integration in those markets.
13. Reiterated 22 guide of $725M revs and $325M EBITDA
...

14. Overall, a strong qtr. Mgmt continues to execute at a high level, making high-ROIC decisions. I also like that they are proactively investing in tech, systems, and processes. These kinds of investments are key to scale smoothly and efficiently.
...

15. It seems like the company has all the right pieces in place. Biggest risk is around execution (which always exists) but at 6.5x 22 EBITDA, the stock is already discounting much of that risk. Best r/r in US cannabis.

#cannabis #MSOGang

• • •

Missing some Tweet in this thread? You can try to force a refresh

This Thread may be Removed Anytime!

Twitter may remove this content at anytime! Save it as PDF for later use!

More from @Sayshu_MM

Sayshu Medicherla

@Sayshu_MM

1 Oct

@rivers_kim

This morning, $TCNNF completed its acquisition of $HRVSF. A big moment for the company, and congrats to @rivers_kim and team for closing the deal in under 5 months. Some highlights and thoughts from their call this morning:

...

1. PF company is the largest and most profitable MSO (by a small amount on revenue and by a meaningful amount on Adj. EBITDA)
2. PF Company has 149 stores (37% more than nearest comp) and 3.1mm sq. ft. of cultivation (~2mm is in FL)
3. Core markets: FL, AZ, PA
...

4. The biggest new (and positive) thing on the call was that the PA regulator did not require any divestitures. The PF company will have 15/16 open stores in PA with the opportunity to have up to 21 stores. They will also hold 3 cultivation licenses
...

Read 12 tweets

Sayshu Medicherla

@Sayshu_MM

10 May

Merger Monday! Quick thoughts on $TCNNF / $HRVSF deal:

1. Announced price of $4.79 implies ~$2.1bn equity value and $2.25Bn EV for $HRVSF.
2. Multiples matter in M&A. $TCNNF was trading at 10.5x 22 EBITDA and is buying $HRVSF for 15.5x 22 EBITDA...

3. Its reasonable to ask if $TCNNF overpaid for $HRVSF, but also easy to understand why it is strategic. Combined entity has instant scale in FL, AZ, and PA, and gives $TCNNF something to work with in several other states...

4. Lot of questions this morning on regulatory process and caps. $TCNNF said they think there is a path to preserve value in what they bought, which I interpret to mean that if they have to divest assets/licenses they will be able to recoup value. Really only matters in PA...

Read 13 tweets

Sayshu Medicherla

@Sayshu_MM

8 Apr

$VRNOF Earnings - My Takeaways:

1. Strong headline numbers on their first ever qtrly report. Total revs in 2020 up ~200% on PF basis and +247% for Verano standalone and +134% for AltMed (FL) standalone. Mostly organic per my understanding
...

2. Margins were very impressive. 63% PF GMs and 48% PF EBITDA margins. Looks like Verano standalone EM was 45% and AltMed was 53.5% in 2020. These are $TCNNF level margins with a more diversified footprint. EBITDA recon. looked fairly clean to me. There were some ??s on that...

3. Core states: IL, FL, AZ, NJ, PA, OH, MD. Company executing on capacity expansions in most of these states and deepening retail footprint throughout. Recent M&A and commentary suggests they aren't done in AZ and PA. I anticipate they will acquire cultivation in PA before YE
...

Read 12 tweets

Sayshu Medicherla

@Sayshu_MM

23 Mar

$TCNNF Earnings - My Takeaways:

1. Solid beat on revs and EBITDA
2. Now selling 1 ton of weed/week(!)
3. Dominant position in FL = v strong financial metrics. 2020: 74% GM, 48% EBITDA margin, GAAP EPS of $0.53, CFO positive. Can't be overstated how strong these metrics are
...

4. In particular, I'm impressed by the magnitude of GAAP EPS. The company generated GAAP profits (and ~$100M of CFO) AFTER paying a 60% effective tax rate in 2020. Folks got excited about $GTBIF's GAAP profitability last week - $TCNNF easily beating that bar
...

5. We should expect some margin dilution over the next 24 months as the company ramps operations outside of FL. Unlikely $TCNNF will be able to achieve such high margins outside of FL so expect blended margins to mix down (not a negative, just math)
...

Read 8 tweets

Sayshu Medicherla

@Sayshu_MM

18 Mar

$GTBIF Earnings - My Takeaways:

1. Strong beat across the board. 4Q revs/EBITDA up 2.3x/4.7x yoy, mostly organic. 37% EBITDA margin. Positive on a GAAP net income basis for 2nd straight qtr. 4th straight qtr of positive cash from ops. Execution continues to be v. strong.
...

2. 54 disp open rn; looking to hit the cap where they can. Driving deep into their core markets
3. CPG mix continues to increase on a net basis from 26% in 1Q to 32% in 4Q.
4. Sounds like they pulled forward a little revenue in 4Q from 1Q21
...

@Bkov9

5. Company invested $110-120M of capex in 2020. "Will go bigger" in 2021
6. Company doesn't think AZ is as attractive as their other markets. I recently heard @Bkov9 say something similar about FL. Interesting given other MSOs are aggressively investing in these two states
...

Read 7 tweets

Sayshu Medicherla

@Sayshu_MM

16 Mar

$CCHWF Earnings - My Takeaways:

1. Strong quarter, with highest qtrly EBITDA ever. Key part of the "improving profitability" story
2. Top markets in 4Q: CO, MA, PA, OH, IL
3. CA and FL should be big drivers in 2021
...

4. On CA, company is a real believer in the market (unlike most of the MSOs). CC looking to build regional density and scale accordingly. Company also looking to be a major wholesale player
...

5. On FL, $CCHWF believes it will be one of their best markets. Company working hard here including launching edibles (2021) and driving operational efficiencies. Sees a lot of "white space" in FL, which I see as a positive readthrough for $TCNNF (and others)
...

Read 7 tweets

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!