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Sayshu Medicherla

9 Aug, 10 tweets, 2 min read

$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
...

8. Retail sales +18% qoq (driven by transactions) and wholesale up 27%. AOV at retail flat.
9. Next phase of retail expansion to emphasize quality locations over quantity. Has 108 stores today with 8 more coming in 2H
...

10. What really caught my ear is the plan to expand FL to 60 stores by end of 2022, up from 37 today. That's a big bet on FL, and in-line with the opp most of the other operators seem to see. Boris said its a race btwn $TCNNF, $CURLF, AltMed ($VRNOF), and Surterra (Parallel)
...

11. $GTBIF the only major operator who isnt making a big push into FL (yet). I continue to find this interesting
12. FL is getting competitive. Seeing price pressure (muted margin impact). A critical debate that will come to the forefront in 2022 is if the market can handle it...

13. $CURLF has commissioned the majority of new cultivation they planned for the year already. Incremental piece will come on-line in 2H21 but major additions won't hit until 2022. Company said the $140m of 2021 capex is a good benchmark for ongoing capex
...

14. EMMAC (now Curaleaf International) contributed $5m of revs in the qtr. CFO said losses from this biz should narrow in 4Q (still negative)
15. $CURLF continues to invest in product innovation. More to come
...

16. On SAFE/legalization, Boris believes we will get SAFE by 2022 midterms, perhaps April. Sees legislative priorities as infra, budget/debt ceiling, then cannabis. Maybe.
17. Boris does not see interstate commerce passing next year
...

Overall, another solid qtr out of $CURLF, delivering on their guide and strategy of being the largest, most-scaled player in the game. Big negative OCF qtr driven by inventories and CFO said they should be cash flow +ive by 4Q.

Good start to earnings. $VRNOF on deck.

End.

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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

1 Jun

$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
...

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
...

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
...

Read 12 tweets

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