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Sayshu Medicherla

8 Apr, 12 tweets, 3 min read

$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
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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
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4. Company says they are taking a balanced approach across retail and wholesale. $VRNOF started off focusing on cultivation because it is "the harder part" and cultivation expansions suggest it will continue to be a focus
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5. I like to see MSOs investing in cultivation because the ROIC is high and is an important leading indicator of sales growth
6. Company generated $53MM in FCF in 2020 after spending $98MM on capex - impressive. Ramp in revs/profits in 2021 should see FCF increase in 2021...

7. Same-store daily transaction growth +60%; basket +14%. Company also opened 12 disp in 4Q which should start to hit productivity in 1H21, driving revenue
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8. I estimate the 7 announced M&A deals = $60-65MM of in-place EBITDA. Big headline values but accretive + strategic. Total dilution from deals is ~4% (there is a cash component as well). Not bad.
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9. Company is debt-free, which represents another opportunity. As cost of debt comes down for the industry, $VRNOF well positioned to lever up the balance sheet to enhance returns
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10. Overall, a strong report. The metrics suggest $VRNOF has one of the better operations (if not the best?) in US cannabis, and continues to invest for the future. As of today's close, stock trading ~11x 22 EBITDA, making it the cheapest of the top tier group.
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11. $VRNOF just went public so not surprising more ppl aren't talking about them. Their Zen Leaf disp have a really nice aesthetic, they have a growing set of owned brands, and are active on social media...

12. Likely to see margin pressure as cultivation ramps but I anticipate this one will re-rate higher as the market gets to know the company better. If we don't get decrim. bill and/or uplisting, this group could trade on relative value, and $VRNOF seems to offer one of the best.

#cannabisstocks #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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