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Sayshu Medicherla

23 Mar, 8 tweets, 2 min read

$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
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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
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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)
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6. Sounds like $TCNNF will primarily grow organically with some opportunistic, tuck-in M&A (eg PA). Fun to think about splashy M&A the company could do but doesn't sound like they have the appetite. They have a vision for where they want to be and are being patient on entry
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7. 2021 plans: Grow stores from 83 today to 114. Continuing to invest in FL, PA, MA, and CT. Expect to open first MA disp in 2Q with more in 2H. No capex guide, but will continue to invest in cultivation. Expect WV cult to be online by EOY but unclear on timing of 1st harvest
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8. Completed SAP migration. This is the kind of detail that can fly below the radar but I love seeing this kind of stuff because its a sign the business is "growing up" and entering a new phase of scaling. Unified ERP + data analytics is a key part of "new retail"
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9. Revamp of loyalty program coming soon. Again, the kind of thing that can fly below the radar but good to see $TCNNF (and a few others) thinking about these kinds of initiatives. Will be important as competitive dynamics heat up
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10. Overall, strong qtr out of $TCNNF. Company continues to use its strong base in FL to fund expansion. Won't be surprised to see the company enter a couple new markets by the end of the year. Competition in FL something to keep an eye on but $TCNNF handling it well.
#MSOGang

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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

17 Aug

$AYRWF 2Q21 Earnings - My Takeaways:

1. Revs/AEBITDA of $91.3m/$27.4m vs. est. of $90.7m/$27.7m. Basically in-line; small misses on AEBITDA and margin
2. Adj. GMs and AEBITDA margins down 40bps/140bps QoQ. Some changes to GM calc that lifted #s
...

3. Guidance in focus. 3Q guide of $100mm revs and flat AEBITDA might've left some folks a little disappointed, but this was always going to be a 2022 story. 3Q guide incl. a little of NJ, anticipating acq close in 3Q. So, Co guiding to muted QoQ organic growth in 3Q...

4. While 3Q a little muted, Company raised 22 guide to $800m/$300m revs/AEBITDA vs. $725m/$300m previously. The jump in revs partly attributable to recent acquisitions (IL, NV, Levia bevs). Flat AEBITDA guidance implies some further investment. Could also suggest competition
...

Read 10 tweets

Sayshu Medicherla

@Sayshu_MM

12 Aug

$TCNNF 2Q21 Earnings - My Takeaways:

1. Revs/AEBITDA of $215.1m/$94.9m vs est. of $205m/$92m. Solid beats. 44% AEBITDA margins
2. Real story around gross margin. GMs compressed 300bps from 70% in 1Q21 to 67% in 2Q21
...

3. Company cited 2 main factors in FL: a) price discounts in response to competitors aggressive actions and b) tighter labor markets. CFO said without these two factors, GMs would've been 71%. Glad they quantified it, but I'd take the 71% with a grain of salt...

...given it feels like some of these pricing dynamics could linger for a while. Kim mentioned the discounting started in back-half of 2Q, then eased, and has now picked back up. She also said its not always the same player(s) discounting. Seems to be rolling behavior...

Read 18 tweets

Sayshu Medicherla

@Sayshu_MM

11 Aug

$GTBIF 2Q21 Earnings - My Takeaways:

1. Revenue and AEBITDA of $222m/$79.3 vs. $207m/$74.3m estimate (unadj. EBITDA down slightly QoQ). Nice beat on topline.
...

2. GMs were 55.4%, down 160bps QoQ driven by investments in cultivation and brand distribution. CFO said these investments will continue. Company focused on keeping GMs above 50% level, but sounds like excess will be reinvested for foreseeable future (not much upside NT)
...

3. CPG and retail grew 13%/15% QoQ. Over time we should expect to see CPG grow faster and become a bigger part of the mix. Company mentioned spending more cash on brand investments.
...

Read 12 tweets

Sayshu Medicherla

@Sayshu_MM

10 Aug

$VRNOF 2Q21 Earnings - My Takeaways:

1. Revs and AEBITDA of $199m/$81m vs. est. of $188m/$81.5m. GMs declined to 50%, and unadj. EBITDA margin was 26% and AEBITDA margin was 41%
2. Lots to unpack in the report, incl some one-time impacts from M&A and accounting changes
...

3. First, on 1Q call company guided to "near" $200mm in revs for 2Q, and said unadj EBITDA margins should be in low-40s range with some potential volatility as acquisitions are integrated. By this measure, Company did what they said on revs, and EBITDA indeed showed some vol
...

4. I was impressed by how mgmt tackled the margin issue head on and appreciated them quantifying the various impacts:
- 300bps from inv. step-up (1x)
- 300bps from accounting treatment of change in cultivation practices (1x?)
- 200bps from Agrikind acq. slipping from 2Q to 3Q
...

Read 15 tweets

Sayshu Medicherla

@Sayshu_MM

9 Aug

$CURLF 2Q21 Earnings - My Takeaways:

1. Revenue and AEBITDA of $312m and $84m vs. est. of $308m and $83.3m. Unclear if est. included the $5mm of EMMAC revs
2. EBITDA margins showed nice sequential improvement (total +300bps; US-only +400bps). GMs also up
...

3. 27% total EBITDA margin on track to hit 30% guidance in 4Q. Sounds like GM upside more muted in near term
4. Left 2021 guide unch. Some conservatism, perhaps
5. $CURLF has $100mm annualized revs in 5 states w/ 2 more joining that group soon
...

6. Expects NJ to start AU sales in 4Q, CT to start AU in 2Q22, and NY to start AU in 2023 (echoing $GTBIF)
7. Expect PA and MD to legalize AU by 2023. This would be a boon to several operators
...

Read 10 tweets

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