$CRLBF 1Q21 Earnings - My Takeaways:
1. Company beat on revs by 4.5% but missed on EBITDA by 24%. Miss was driven by investments in cultivation and operating platform as well as transition to GAAP
2. GMs were 49% while EBITDA margin was 19.6%, below expectations
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1. Company beat on revs by 4.5% but missed on EBITDA by 24%. Miss was driven by investments in cultivation and operating platform as well as transition to GAAP
2. GMs were 49% while EBITDA margin was 19.6%, below expectations
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3. Margins are the key focus area this qtr. Big miss relative to consensus, but the Company guided for 30%+ EBITDA margins by 4Q21 as cultivation ramps in 2H21, generating operating leverage. Believable, but it puts $CRLBF in "show me" territory over the course of the year
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4. Speaking of cultivation, Company plans to bring online capacity in MA, OH, FL, and MI. Commentary suggests we will see incremental growth in 2Q and 3Q with a bigger pop in 4Q and into 2022
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5. Company maintained its #1 position in branded wholesale, with #1 share in IL and PA. $CRLBF making some investments in efficiencies in these states, but we won't see material cult expansions in 2021. Something to watch as competitors ramp up their operations this year
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6. In comments that sounded similar to $CURLF, $CRLBF said IL/PA GMs are in-line with peers and it is other states that are dragging down the blended margin
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7. Company making a big push in FL. Increasing cultivation, intro-ing edibles, and doubling store count. These initiatives will be felt in 2H21 and into 2022. Mgmt stated its desire to be top 3 player in FL, but $CRLBF will face stiff competition in the state
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8. Company also continues to make a push into CA, where it is gaining share. Tough, competitive market with lower margin structure than limited license states. But, $CRLBF believes it is strategically important to be in CA to build a national brand
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9. Wholesale revenue grew 5% QoQ, which is ok, but expect this to accelerate in 2H21
10. Retail operations remain strong with SSS up 9% qoq, and $3.8mm avg sales/store in the qtr (highest of major MSOs)
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10. Retail operations remain strong with SSS up 9% qoq, and $3.8mm avg sales/store in the qtr (highest of major MSOs)
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11. Keep in mind that $CRLBF runs a smaller/higher-value retail footprint relative to the other MSOs, yielding higher rev/unit. Likely to see this blend down as new store openings ramp
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12. On NY, mgmt said they are excited about the opportunity BUT waiting to get clarity on the regulatory structure before making a big investment here. Cautious tone. Also makes me think there will be time to build out NY
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Overall, bit of a mixed qtr out of $CRLBF, although they gave enough in the guide to keep investors bullish. All eyes will be on incremental improvement in margins, esp after the big margin pop last year and expectation that would continue in 1Q. Their plan sounds reasonable...
...and as we've seen time and time again, cultivation investments tend to depress margins followed by margin expansion as those facilities drive revenue growth. Imp for $CRLBF to show that ramp as the other major MSOs have higher margin profiles (and growing)
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