Cresco Labs Inc 6-K, filed Mar 29, 2021
Cresco Labs Inc. (CRLBF)
About this 6-K
Cresco Labs Inc filed this 6-K on March 29, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
Under the Securities Exchange Act of 1934
For the Month of March 2021
000-56241
(Commission File Number)
Cresco Labs Inc.
(Exact name of Registrant as specified in its charter)
400 W Erie St Suite 110
Chicago, IL 60654
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Exhibit Index
| Exhibit No. | Description | |
| 99.1 | News Release dated March 18, 2021 | |
| 99.2 | News Release dated March 25, 2021 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CRESCO LABS INC. | ||||||
| Date: March 29, 2021 | By: | /s/ Charles Bachtell | ||||
| Charles Bachtell Chief Executive Officer | ||||||
Exhibit 99.1
CRESCO LABS TO GAIN LEADERSHIP POSITION IN MASSACHUSETTS THROUGH ACQUISITION OF CULTIVATE
Upon completion of planned expansions, combined operations will include 100,000 sq. ft. of active canopy, 3 adult-use dispensaries and 3 medical dispensaries, the maximum allowed for cultivation and retail within the state
CHICAGO – March 18th, 2021 — Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco Labs” or “the Company”), one of the largest vertically integrated, multistate cannabis operators in the United States, today announced the execution of a definitive agreement to acquire 100% of the outstanding equity interests in Cultivate Licensing LLC and BL Real Estate LLC (collectively, “Cultivate”), a vertically integrated Massachusetts operator, for upfront consideration equal to US$90 million plus an earnout of up to US$68 million (the “Transaction”). The Transaction is expected to close in the fourth quarter of 2021.
“At the precipice of a transformational moment in U.S. cannabis, now is the time to further our leadership in the country’s largest and most important markets. Through this acquisition, Cresco Labs will immediately vault to a top 3 share position in Massachusetts, the third $1B+ cannabis market where we’ve achieved this status,” said Charles Bachtell, CEO of Cresco Labs.
“We continue to demonstrate our ability to execute operationally and make accretive investments to accelerate growth. Cultivate has been a trailblazer and an operational standout since the early days of the Massachusetts market. Like us, the Cultivate team is focused on growing premium flower, offering a full suite of branded products, delivering the best customer experience at retail, and elevating the cannabis industry to a new level of professionalism and social responsibility.” Mr. Bachtell continued, “This will also mark the fourth state in which we operate the maximum number of retail stores. Once again, we look forward to executing our playbook and demonstrating the growth and leverage that can be achieved by going deeper in strategic states. At a period of industry inflection, we are cementing our leadership in a deliberate manner as the most important company in cannabis.”
Cultivate Highlights:
| • | Approximately 42,000 sq. ft. of flowering canopy. |
| • | Planned indoor expansion of approximately 20,000 sq. ft. of additional flowering canopy. |
| • | Premium flower and edibles offerings in addition to concentrates and medicinals across well known, owned brands. |
| • | Two operational dispensaries in Leicester and Framingham. |
| • | Third dispensary in Worcester, estimated to be opened in Q2 2021. |
Massachusetts Market Highlights:
| • | 15th most populous state in the U.S. with 6.9 million people1. |
| • | Nearly $1bn in total retail sales in 2020, including robust expansion of medical program and despite 6 weeks of lost sales due to COVID-19 restrictions on the adult-use market |
| • | $83.4M in adult use sales for the 4 weeks ending 3/7/21 – the largest 4 week total to date |
| • | Second-highest per-gram pricing within U.S. adult-use markets |
| • | Strong margin profile achievable through vertical integration and emphasis on wholesale. |
| • | Supply constrained market and largest adult use market in the North East. |
Terms
The maximum consideration amount for the Transaction is One Hundred Fifty-Eight Million Dollars (US$158,000,000) (the “Purchase Price”), representing an implied EV/2021 EBITDA multiple of 4.0x to 4.5x dependent on earnout milestones achieved. The Transaction will be completed on a cash-free, debt-free basis with a mutually agreed upon normalized target level of working capital.
A portion of the Purchase Price would be payable upon closing of the Transaction, subject to the adjustments and lock-up agreements contained in the definitive agreement, and will be comprised of:
| • | Fifteen Million Dollars (US$15,000,000) in cash (the “Cash Amount”); and |
| • | Shares of Cresco (“Cresco Shares”) having an aggregate value equal to Seventy-Five Million Dollars (US$75,000,000) based on the volume-weighted average closing price of Cresco Shares reported on the Canadian Securities Exchange for the ten (10) consecutive trading day period ending on the trading day immediately preceding the date of execution of the definitive agreement. |
The remaining portion of the Purchase Price shall be structured as an earnout based on the achievement of certain EBITDA target thresholds in 2021, up to Sixty-Eight Million Dollars (US$68,000,000). An amount equal to approximately 12.5% of any earnout payments earned by seller shall be paid in cash. The remaining portion of any earned earnout payments shall be satisfied via issuance of Cresco Shares.
Approximately 68% of the Cresco Shares to be issued to seller upon the closing of the Transaction or upon achievement of the earnout, if any, will be subject to the following lock-up restrictions: such Cresco Shares shall be released in three (3) equal installments beginning with 1/3rd of the Cresco Shares released on each of the following dates: (i) four (4) months following the closing date or the end of the earnout period, as applicable; (ii) eight (8) months following the closing date or the end of the earnout period, as applicable; and (iii) twelve (12) months following the closing date or the end of the earnout period, as applicable.
The Transaction is subject to, among other things, the approval and receipt of all required CSE, regulatory and court approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
About Cresco Labs
Cresco Labs is one of the largest vertically integrated, multistate cannabis operators in the United States, with a mission to normalize and professionalize the cannabis industry. Employing a consumer-packaged goods (“CPG”) approach, Cresco Labs is the largest wholesaler of branded cannabis products in the U.S. Its brands are designed to meet the needs of all consumer segments and comprised of some of the most recognized and trusted brands including Cresco, Remedi, High Supply, Cresco Reserve, Good News, Wonder Wellness, FloraCal Farms and Mindy’s Chef Led Artisanal Edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside, Cresco Labs’ national dispensary brand, is a wellness-focused retailer created to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco Labs operates the industry’s largest Social Equity and Educational Development initiative, SEED, which was established to ensure that all members of society have the skills, knowledge and opportunity to work and own businesses in the cannabis industry. Learn more about Cresco Labs at CrescoLabs.com.
Forward-Looking Statements
This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as, “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” or “continue” or the negative of those forms or other comparable terms. The Company’s forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to those risks discussed under “Risk Factors” in the company’s Annual Information Form dated April 28, 2020 and other documents filed by the Company with Canadian securities regulatory authorities; the timing and completion of the Transaction and the acquisition of all of the issued and outstanding equity of Cultivate, the timing and anticipated receipt of required regulatory, court and shareholder approvals for the Transaction and other customary closing conditions; the anticipated benefits of the Transaction, including the corporate, operational and financial benefits, the Company’s strategic plans and expansion and expectations regarding the growth of the Massachusetts cannabis market; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Because of these uncertainties, you should not place undue reliance on the Company’s forward-looking statements. No assurances are given as to the future trading price or trading volumes of Cresco Labs’ shares, nor as to the Company’s financial performance in future financial periods. The Company does not intend to update any of these factors or to publicly announce the result of any revisions to any of the Company’s forward-looking statements contained herein, whether as a result of new information, any future event or otherwise. Except as otherwise indicated, this press release speaks as of the date hereof. The distribution of this press release does not imply that there has been no change in the affairs of the Company after the date hereof or create any duty or commitment to update or supplement any information provided in this press release or otherwise.
Contacts
Media:
Jason Erkes, Cresco Labs
Chief Communications Officer
press@crescolabs.com
Investors:
Jake Graves, Cresco Labs
Manager, Investor Relations
investors@crescolabs.com
For general Cresco Labs inquiries:
312-929-0993
info@crescolabs.com
Exhibit 99.2
Cresco Labs Announces Fourth Quarter & Full Year 2020 Results with Record Revenue, Adjusted EBITDA1 and Operating Cash Flow
Company affirms position as the largest wholesaler of branded products in the industry with $274.0 million in wholesale revenue for the year
| • | Record full year 2020 revenue of $476.3 million, up 271% YoY |
| • | Record full year 2020 adjusted EBITDA1 of $116.0 million |
| • | Record fourth quarter revenue of $162.3 million Record fourth quarter adjusted EBITDA1 of $50.0 million |
| • | Record fourth quarter retail revenue of $68.8 million from 19 stores, an average of $3.6 million per store2 |
CHICAGO—(BUSINESS WIRE)— Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) (FSE: 6CQ) (“Cresco Labs” or the “Company”), one of the largest vertically integrated multi-state cannabis operators in the United States, today released its financial results for the year ended December 31, 2020. All financial information presented in this release is in U.S. dollars, unless otherwise noted.
Management Commentary
“2020 was a remarkable year for Cresco Labs. We dedicated our resources to the most strategic markets, grew our leadership as the number one wholesaler of branded cannabis products, executed high efficiency retail, and generated substantial operating leverage as we scaled. We laid out our objectives at the beginning of the year and we executed on what we set out to accomplish, resulting in the largest year-over-year revenue growth among tier one MSOs,” said Charles Bachtell, Co-founder and CEO of Cresco Labs. “In 2021, cultivation expansions are underway and we are executing accretive M&A as we repeat our playbook in more states. Our best-in-class execution was on display in 2020 and it’s what you can expect from Cresco Labs for years to come.”
Financial Highlights
Full Year 2020 Operating Results
| • | Revenue was $476.3 million, an increase of $347.7 million or a 271% increase over full year 2019 revenue. Growth was driven by cultivation expansion in Illinois and Pennsylvania as well as strong sequential same-store growth. |
| • | Operational Gross Profit1 as a Percentage of Revenue was 51.5% as compared to 48.2% for full year 2019. |
| • | Adjusted EBITDA1 was $116.0 million, an increase of $108.0 million over full year 2019 Adjusted EBITDA. |
Fourth Quarter 2020 Operating Results
| • | Revenue for the fourth quarter of 2020 was $162.3 million, an increase of $9.0 million or a 6% increase over the third quarter of 2020. Second half 2020 revenue grew 96% over first half of 2020 revenue. |
| • | Operational Gross Profit1 as a Percentage of Revenue was 55% for the fourth quarter of 2020 as compared to 53% for the third quarter of 2020. |
| • | Adjusted EBITDA1 was $50.0 million, an increase of 8% over the third quarter of 2020. |
| • | Net Cash Provided by Operating Activities was $21.4 million for the fourth quarter of 2020, compared to $17.8 million provided in the third quarter of 2020. |
Balance Sheet and Liquidity
| • | As of December 31, 2020, current assets were $361.8 million, including cash and cash equivalents of $136.3 million. The Company had working capital of $167.1 million and total debt, net of issuance costs of $184.5 million. |
| • | Total shares on a fully converted basis were 384,801,220 as of December 31, 2020. |
Summary of Cresco Labs’ 2020 Social Equity and Education Development Program
Please click here to view our 2020 annual SEED Report.
Capital Markets and Financing
| • | On December 14, 2020, the Company closed an agreement with lenders to extend maturity of senior secured term loan to 2023 and increased the facility to $200 million. |
| • | Subsequent to year end, on January 14, 2021, the Company entered into a definitive agreement with Bluma Wellness Inc. (CSE: BWEL.U) (OTCQX:BMWLF), a vertically integrated operator in Florida. |
| • | On January 14, 2021, the Company announced the commencement of a best efforts overnight marketed offering (the “Offering”) of Subordinate Voting Shares of the Company. On January 15, 2021, the Company closed the Offering for total gross proceeds of approximately $125.0 million. |
| • | On February 16, 2021, the Company closed its acquisition of four Ohio dispensaries previously operated by Verdant Creations, LLC and its affiliates. |
| • | Lastly, on March 18, 2021, the Company entered into a definitive agreement to acquire all of the issued and outstanding equity interests in Cultivate Licensing LLC and BL Real Estate LLC, a vertically integrated Massachusetts operator. |
Conference Call and Webcast
The Company will host a conference call and webcast to discuss its financial results and provide investors with key business highlights on Thursday, March 25, 2021, at 8:30am Eastern Time (7:30am Central Time). The conference call may be accessed via webcast or by dialing 1-855-979-6654 (US), 1-833-294-2546 (CA), 0800-640-6441 (UK), or 44-20-3936-2999 (Int’l) and providing conference ID 885607. Archived access to the webcast will be available for one year on the Cresco Labs’ investor relations website.
Consolidated Financial Statements
The financial information reported in this press release is based on unaudited management prepared financial statements for the year ended December 31, 2020. The Company expects to file its audited consolidated financial statements on SEDAR by March 26, 2021. Accordingly, such financial information may be subject to change. All financial information contained in this press release is qualified in its entirety with reference to such financial statements. While the
Company does not expect there to be any material changes between the information contained in this press release and the consolidated financial statements it files on SEDAR, to the extent that the financial information contained in this press release is inconsistent with the information contained in the Company’s financial statements, the financial information contained in this press release shall be deemed to be modified or superseded by the Company’s filed financial statements. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation for purposes of applicable securities laws. Further, the reader should refer to the additional disclosures in the Company’s audited financial statements for the year ended December 31, 2019, previously filed on SEDAR.
Cresco Labs references certain non-IFRS financial measures throughout this press release, which may not be comparable to similar measures presented by other issuers. Please see the “Non-IFRS Financial Measures” section at the end of this press release for more detailed information.
Non-IFRS Financial Measures
Operational gross profit, EBITDA and Adjusted EBITDA, net of impact of biological assets, are non-IFRS measures and do not have standardized definitions under IFRS. The Company has provided these non-IFRS financial measures, which are not calculated or presented in accordance with IFRS, as supplemental information and in addition to the financial measures that are calculated and presented in accordance with IFRS and may not be comparable to similar measures presented by other issuers. These supplemental non-IFRS financial measures are presented because management has evaluated the financial results both including and excluding the adjusted items and believes that the supplemental non-IFRS financial measures presented provide additional perspective and insights when analyzing the core operating performance of the business. These supplemental non-IFRS financial measures should not be considered superior to, as a substitute for or as an alternative to, and should only be considered in conjunction with, the IFRS financial measures presented herein. Accordingly, the Company has included below reconciliations of the supplemental non-IFRS financial measures to the most directly comparable financial measures calculated and presented in accordance with IFRS.
About Cresco Labs Inc.
Cresco Labs is one of the largest vertically integrated, multistate cannabis operators in the United States, with a mission to normalize and professionalize the cannabis industry. Employing a consumer-packaged goods (“CPG”) approach, Cresco Labs is the largest wholesaler of branded cannabis products in the U.S. Its brands are designed to meet the needs of all consumer segments and comprised of some of the most recognized and trusted national brands including Cresco, High Supply, Mindy’s Edibles, Good News, Remedi, Wonder Wellness Co. and FloraCal Farms. Sunnyside*, Cresco Labs’ national dispensary brand, is a wellness-focused retailer created to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco Labs operates the industry’s largest Social Equity and Educational Development initiative, SEED, which was established to ensure that all members of society have the skills, knowledge and opportunity to work and own businesses in the cannabis industry. Learn more about Cresco Labs at www.crescolabs.com.
Forward Looking Statements
This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’ ‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the negative of those forms or other comparable terms. The Company’s forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to those risks discussed under “Risk Factors” in the Company’s Annual Information Form for the year ended December 31, 2020 expected to be filed on March 26, 2021, and other documents filed by the Company with Canadian securities regulatory authorities; and other factors, many of which are beyond the control of the Company. Readers are cautioned that the foregoing list of factors is not exhaustive. Because of these uncertainties, you should not place undue reliance on the Company’s forward-looking statements. No assurances are given as to the future trading price or trading volumes of Cresco Labs’ shares, nor as to the Company’s financial performance in future financial periods. The Company does not intend to update any of these factors or to publicly announce the result of any revisions to any of the Company’s forward-looking statements contained herein, whether as a result of new information, any future event or otherwise. Except as otherwise indicated, this press release speaks as of the date hereof. The distribution of this press release does not imply that there has been no change in the affairs of the Company after the date hereof or create any duty or commitment to update or supplement any information provided in this press release or otherwise.
| 1 | See “Non-IFRS Financial Measures” at the end of this press release for more information regarding the Company’s use of non-IFRS financial measures. Adjusted EBITDA is presented net of impact of biological assets. |
| 2 | Includes only revenue from the 19 cannabis stores open for the entire quarter. |
Cresco Labs Inc.
Financial Information and Non-IFRS Reconciliations
(All amounts expressed in thousands of U.S. Dollars)
Consolidated Statements of Operations
For the Three Months Ended December 31, 2020, September 30, 2020 and December 31, 2019
and
Years Ended December 31, 2020 and 2019
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||
| Dec 31, | Sep 30, | Dec 31, | Dec 31, | Dec 31, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| ($ in thousands) |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||
| Revenue |
$ | 162,317 | $ | 153,298 | $ | 41,382 | $ | 476,251 | $ | 128,534 | ||||||||||
| Cost of sales - production costs |
(89,346 | ) | (74,148 | ) | (27,676 | ) | (270,529 | ) | (82,904 | ) | ||||||||||
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| Gross profit before fair value adjustments |
72,971 | 79,150 | 13,706 | 205,722 | 45,630 | |||||||||||||||
| Realized changes in fair value of inventory sold |
(75,983 | ) | (72,560 | ) | (34,657 | ) | (214,901 | ) | (91,080 | ) | ||||||||||
| Unrealized gain on changes in fair value of biological assets |
98,712 | 78,041 | 28,601 | 293,119 | 109,531 | |||||||||||||||
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| Gross profit |
95,700 | 84,631 | 7,650 | 283,940 | 64,081 | |||||||||||||||
| GP% |
59.0 | % | 55.2 | % | 18.5 | % | 59.6 | % | 49.9 | % | ||||||||||
| Expenses: |
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| Selling, general and administrative |
68,136 | 46,763 | 32,166 | 206,738 | 94,118 | |||||||||||||||
| Depreciation and amortization |
5,584 | 5,800 | 1,361 | 21,361 | 4,219 | |||||||||||||||
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| Total expenses |
73,720 | 52,563 | 33,527 | 228,099 | 98,337 | |||||||||||||||
| Income (loss) from operations |
21,980 | 32,068 | (25,877 | ) | 55,841 | (34,256 | ) | |||||||||||||
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| Other expense: |
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| Interest expense, net |
(10,361 | ) | (11,319 | ) | (4,275 | ) | (39,493 | ) | (7,875 | ) | ||||||||||
| Other expense, net |
(19,809 | ) | (2,983 | ) | (10,606 | ) | (8,009 | ) | (8,647 | ) | ||||||||||
| Loss from investment in associates |
(927 | ) | (134 | ) | (170 | ) | (1,181 | ) | (63 | ) | ||||||||||
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| Total other expense, net |
(31,097 | ) | (14,436 | ) | (15,051 | ) | (48,683 | ) | (16,585 | ) | ||||||||||
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| Income (loss) before income taxes |
(9,117 | ) | 17,632 | (40,928 | ) | 7,158 | (50,841 | ) | ||||||||||||
| Income tax expense |
(14,256 | ) | (12,690 | ) | (4,288 | ) | (43,720 | ) | (14,461 | ) | ||||||||||
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| Net income (loss) 1 |
$ | (23,373 | ) | $ | 4,942 | $ | (45,216 | ) | $ | (36,562 | ) | $ | (65,302 | ) | ||||||
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| 1 | Net income (loss) includes amounts attributable to non-controlling interests. |
Cresco Labs Inc.
Summarized Consolidated Statements of Financial Position
As of December 31, 2020 and 2019
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| ($ in thousands) |
(Unaudited) | (Audited) | ||||||
| Cash and cash equivalents |
$ | 136,339 | $ | 49,102 | ||||
| Other current assets |
225,415 | 110,236 | ||||||
| Property and equipment, net |
195,231 | 155,839 | ||||||
| Intangible assets, net |
195,518 | 94,206 | ||||||
| Goodwill |
451,861 | 137,719 | ||||||
| Other non-current assets |
128,760 | 69,452 | ||||||
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| Total assets |
$ | 1,333,124 | $ | 616,554 | ||||
| Total current liabilities |
194,640 | 150,169 | ||||||
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| Total long-term liabilities |
413,726 | 143,762 | ||||||
| Total shareholders’ equity |
724,758 | 322,623 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,333,124 | $ | 616,554 | ||||
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Cresco Labs Inc.
Unaudited Revenue and Gross Profit Metrics
For the Three Months Ended December 31, 2020, September 30, 2020 and December 31, 2019
and
Years Ended December 31, 2020 and 2019
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||
| Dec 31, | Sep 30, | Dec 31, | Dec 31, | Dec 31, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| ($ in thousands) |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||
| Revenue |
$ | 162,317 | $ | 153,298 | $ | 41,382 | $ | 476,251 | $ | 128,534 | ||||||||||
| Cost of sales – production costs1 |
(89,346 | ) | (74,148 | ) | (27,676 | ) | (270,529 | ) | (82,904 | ) | ||||||||||
| Realized changes in fair value of inventory sold |
(75,983 | ) | (72,560 | ) | (34,657 | ) | (214,901 | ) | (91,080 | ) | ||||||||||
| Unrealized gain on changes in fair value of biological assets |
98,712 | 78,041 | 28,601 | 293,119 | 109,531 | |||||||||||||||
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| Gross profit |
$ | 95,700 | $ | 84,631 | $ | 7,650 | $ | 283,940 | $ | 64,081 | ||||||||||
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| Cultivation costs expensed under IAS 412 |
4,549 | (3,934 | ) | 2,807 | 10,616 | 8,837 | ||||||||||||||
| Net impact of fair value of biological assets |
(22,729 | ) | (5,481 | ) | 6,056 | (78,218 | ) | (18,451 | ) | |||||||||||
| Expansion, relaunch and rebranding costs3 |
9,669 | 2,693 | 3,380 | 20,859 | 6,259 | |||||||||||||||
| COVID-19 related expenses |
785 | 846 | — | 3,518 | — | |||||||||||||||
| Adjustments for acquisition and other non-core costs |
545 | — | — | 545 | — | |||||||||||||||
| Fair value markup for acquired inventory |
— | 1,843 | 1,273 | 4,063 | 1,273 | |||||||||||||||
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| Operational gross profit (Non-IFRS) |
$ | 88,519 | $ | 80,598 | $ | 21,166 | $ | 245,323 | $ | 61,999 | ||||||||||
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| Operational GP% |
54.5 | % | 52.6 | % | 51.1 | % | 51.5 | % | 48.2 | % | ||||||||||
| 1 | Production (cultivation, manufacturing, and processing) costs related to products sold during the period. |
| 2 | Costs would be capitalized under IAS 2 and do not reflect cost of inventory sold in the period. |
| 3 | Costs related to non-recurring third-party product costs, start-up costs, discontinued inventory, and samples/discounts to expand footprint and relaunch in certain markets. |
Cresco Labs Inc.
Unaudited Reconciliation of Net Income to Adjusted EBITDA
For the Three Months Ended December 31, 2020, September 30, 2020, and December 31, 2019
and
Years Ended December 31, 2020 and 2019
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||
| Dec 31, | Sep 30, | Dec 31, | Dec 31, | Dec 31, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| ($ in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||
| Net income (loss)1 |
$ | (23,373 | ) | $ | 4,942 | $ | (45,216 | ) | $ | (36,562 | ) | |
$ (65,302) |
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| Depreciation and amortization |
11,194 | 10,831 | 3,925 | 40,019 | 11,911 | |||||||||||||||
| Interest expense, net |
10,361 | 11,319 | 4,275 | 39,493 | 7,875 | |||||||||||||||
| Income tax expense |
14,256 | 12,690 | 4,288 | 43,720 | 14,461 | |||||||||||||||
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| Earnings before interest, taxes, depreciation and amortization (EBITDA) (Non-IFRS) |
$ | 12,438 | $ | 39,782 | $ | (32,728 | ) | $ | 86,670 | $ | (31,055 | ) | ||||||||
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| Expansion, relaunch and rebranding costs2 |
9,669 | 2,693 | 3,380 | 20,859 | 6,259 | |||||||||||||||
| COVID-19 related expenses |
1,040 | 956 | — | 4,644 | — | |||||||||||||||
| Other expense, net |
19,809 | 2,983 | 10,606 | 8,009 | 8,647 | |||||||||||||||
| Loss from investment in associates |
927 | 134 | 170 | 1,181 | 63 | |||||||||||||||
| Fair value markup for acquired inventory |
— | 1,843 | 1,273 | 4,063 | 1,273 | |||||||||||||||
| Cultivation costs expensed under IAS 413 |
4,549 | (3,934 | ) | 2,807 | 10,616 | 8,837 | ||||||||||||||
| Adjustments for acquisition and other non-core costs |
18,233 | 4,424 | 7,179 | 39,705 | 17,549 | |||||||||||||||
| Management incentive compensation (share-based) |
6,019 | 3,033 | 4,122 | 18,494 | 14,867 | |||||||||||||||
| Adjusted EBITDA (Non-IFRS) |
$ | 72,684 | $ | 51,914 | $ | (3,191 | ) | $ | 194,241 | $ | 26,440 | |||||||||
| Net impact of fair value of biological assets |
(22,729 | ) | (5,481 | ) | 6,056 | (78,218 | ) | (18,451 | ) | |||||||||||
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| Adjusted EBITDA (non-IFRS), net of impact of biological assets |
$ | 49,955 | $ | 46,433 | $ | 2,865 $ | 116,023 | $ | 7,989 | |||||||||||
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| 1 | Net income (loss) includes amounts attributable to non-controlling interests. |
| 2 | Costs related to non-recurring third-party product costs, start-up costs, discontinued inventory, and samples/discounts to expand footprint and relaunch in certain markets. |
| 3 | Costs would be capitalized under IAS 2 and do not reflect cost of inventory sold in the period. |
Cresco Labs Inc.
Summarized Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 2020, September 30, 2020 and December 31, 2019
and
Years Ended December 31, 2020 and 2019
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||
| Dec 31, | Sep 30, | Dec 31, | Dec 31, | Dec 31, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| ($ in thousands) |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | |||||||||||||||
| Net provided by (used in) operating activities |
$ | 21,379 | $ | 17,770 | $ | (6,551 | ) | $ | (10,831 | ) | $ | (25,189 | ) | |||||||
| Net cash used in investing activities |
(8,214 | ) | (12,147 | ) | (21,694 | ) | (44,113 | ) | (107,596 | ) | ||||||||||
| Net cash provided by (used in) financing activities |
68,752 | (18,869 | ) | 645 | 142,674 | 48,909 | ||||||||||||||
| Effect of foreign currency exchange rate changes on cash |
(760 | ) | (1,005 | ) | — | (1,108 | ) | — | ||||||||||||
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| Net increase (decrease) in cash and cash equivalents |
$ | 81,157 | $ | (14,251 | ) | $ | (27,600 | ) | $86,622 | $ | (83,876 | ) | ||||||||
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| Cash and cash equivalents and restricted cash, beginning of period |
59,617 | 73,868 | 81,752 | 54,152 | 138,028 | |||||||||||||||
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| Cash and cash equivalents and restricted cash, end of period |
$ | 140,774 | $ | 59,617 | $ | 54,152 | $140,774 | $ | 54,152 | |||||||||||
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Contacts
Media
Jason Erkes, Cresco Labs
Chief Communications
Officer press@crescolabs.com
312-953-2767
Investors
Jake Graves, Cresco Labs
Investor Relations Manager
investors@crescolabs.com
For general Cresco Labs inquiries:
312-929-0993
info@crescolabs.com
Source: Cresco Labs Inc.