TerrAscend Reports Record Fourth Quarter and Full Year 2022 Net Revenue
Fourth quarter 2022 record Net Revenue of $69.0 million, an increase of 50.3% year-over-year and 4.2% quarter-over-quarter
Fourth quarter 2022 positive cash flow from operations of $7.3 million compared to $1.5 million in the third quarter of 2022
Reduced debt by $80 million during the quarter
Submitted application to up-list to the Toronto Stock Exchange (TSX)
TORONTO, March 16, 2023 /CNW/ - TerrAscend Corp. ("TerrAscend" or the "Company") (CSE: TER) (OTCQX: TRSSF), a leading North American cannabis operator, today reported its financial results for the fourth quarter and full year ended December 31, 2022. All amounts are expressed in U.S. dollars and are prepared under U.S. Generally Accepted Accounting Principles (GAAP), unless indicated otherwise.
The following financial measures are reported as results from continuing operations due to the shutdown of the licensed producer business in Canada, which is reported as discontinued operations for all of 2022. All historical periods have been restated accordingly.
Fourth Quarter 2022 Financial Highlights
- Net Revenue was $69.0 million, an increase of 4.2% sequentially and 50.3% year-over-year.
- Gross Profit Margin was 44.6%, compared to 47.0% in Q3 2022 and 49.1% in Q4 2021.
- Adjusted Gross Profit Margin1 was 45.3%, compared to 47.8% in Q3 2022 and 52.9% in Q4 2021.
- GAAP Net loss from continuing operations was $2.0 million, compared to a net loss of $300.6 million in Q3 2022 and a net loss of $1.2 million in Q4 2021. As previously reported, a $331.2 non-cash impairment charge was recorded in Q3 2022 against goodwill and intangibles for the Company's Michigan business, which was reduced by $20.2 million in Q4 2022 as a result of the finalization of the fair value of net assets acquired.
- EBITDA from continuing operations1 was $30.0 million, compared to ($317.9) million in Q3 2022 and $15.3 million in Q4 2021. As previously reported, a $331.2 non-cash impairment charge was recorded in Q3 2022 against goodwill and intangibles for the Company's Michigan business, which was reduced by $20.2 million in Q4 2022 as a result of the finalization of the fair value of net assets acquired.
- Adjusted EBITDA from continuing operations1 was $12.2 million, compared to $13.0 million in Q3 2022 and $13.2 million in Q4 2021.
- Adjusted EBITDA Margin from continuing operations1 was 17.7%, compared to 19.6% in Q3 2022 and 28.6% in Q4 2021.
- Cashflow from Operations was a positive $7.3 million compared to a positive $1.5 million in Q3 2022 and negative $3.8 million in Q4 2021.
- Cash and Cash Equivalents, totaled $26.2 million as of December 31, 2022.
- Principal amounts of loans payable were $205.3 million as of December 31, 2022 compared to $284.2 million as of September 30, 2022.
Full Year 2022 Financial Highlights
- Net Revenue was $247.8 million, an increase of 27.6% year-over-year.
- Gross Profit Margin was 41.0% compared to 57.9% in 2021.
- Adjusted Gross Profit Margin1 was 46.0% compared to 59.9% in 2021.
- GAAP Net Loss from continuing operations was $299.4 million compared to net income of $15.7 million in 2021. In 2022, a $311.1 non-cash impairment charge was recorded against goodwill and intangibles for the Company's Michigan business.
- EBITDA from continuing operations1 was ($248.5) million, compared to $81.4 million in 2021. In 2022, a $311.1 non-cash impairment charge was recorded against goodwill and intangibles for the Company's Michigan business.
- Adjusted EBITDA from continuing operations1 was $38.8 million compared to $69.6 million in 2021.
- Adjusted EBITDA Margin from continuing operations1 was 15.7% compared to 35.9% in 2021.
- Cashflow from Operations was a negative $26.1 million compared to a negative $31.8 million in 2021.
"I am pleased that despite a challenging environment throughout most of 2022, we delivered record annual revenue of $248 million, an increase of 28% year-over-year. Revenue grew sequentially every quarter throughout the year, culminating in a record fourth quarter of $69 million, an increase of 50% year-over-year," commented Jason Wild, Executive Chairman of TerrAscend. "Perhaps most noteworthy was that, in addition to an $80 million reduction in debt during the quarter, Q4 2022 also marked our second consecutive quarter of generating positive cashflow from operations. Looking ahead, we expect the distress in the industry to lead to opportunities for us to pivot our deep not wide strategy to a deep and wide strategy, on our terms."
Financial Summary Q4 2022, Full Year 2022 and Comparative Periods
All figures are restated for the Canadian business recorded as discontinued operations.
(in millions of U.S. Dollars) |
Q4 2021 |
Q3 2022 |
Q4 2022 |
2021 |
2022 |
|||||||||||||||
Revenue, net |
45.9 |
66.2 |
69.0 |
194.2 |
247.8 |
|||||||||||||||
Quarter-over-Quarter increase (decrease) |
-0.2 |
% |
3.4 |
% |
4.2 |
% |
||||||||||||||
Year-over-Year increase |
2.2 |
% |
43.9 |
% |
50.3 |
% |
46.9 |
% |
27.6 |
% |
||||||||||
Gross profit |
22.6 |
31.1 |
30.8 |
112.5 |
101.5 |
|||||||||||||||
Gross profit margin |
49.1 |
% |
47.0 |
% |
44.6 |
% |
57.9 |
% |
41.0 |
% |
||||||||||
Adjusted Gross Profit1 |
24.3 |
31.7 |
31.3 |
116.4 |
113.9 |
|||||||||||||||
Adjusted Gross Profit Margin % |
52.9 |
% |
47.8 |
% |
45.3 |
% |
59.9 |
% |
46.0 |
% |
||||||||||
Share-based compensation expense |
1.5 |
2.7 |
1.6 |
14.9 |
12.2 |
|||||||||||||||
General & Administrative expense (excluding share based compensation) |
15.3 |
24.0 |
33.6 |
60.2 |
103.4 |
|||||||||||||||
G&A as a % of revenue, net |
33.3 |
% |
36.3 |
% |
48.7 |
% |
31.0 |
% |
41.7 |
% |
||||||||||
Net (loss) income from continuing operations |
(1.2) |
(300.6) |
(2.0) |
15.7 |
(299.4) |
|||||||||||||||
EBITDA from continuing operations1 |
15.3 |
(317.9) |
30.0 |
81.4 |
(248.5) |
|||||||||||||||
Adjusted EBITDA from continuing operations1 |
13.2 |
13.0 |
12.2 |
69.6 |
38.8 |
|||||||||||||||
Adjusted EBITDA Margin from continuing operations |
28.6 |
% |
19.6 |
% |
17.7 |
% |
35.9 |
% |
15.7 |
% |
||||||||||
Cash (used in) provided by operations |
(3.8) |
1.5 |
7.3 |
(31.8) |
(26.1) |
|||||||||||||||
1. Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA from continuing operations and Adjusted EBITDA Margin from continuing operations are non-GAAP measures. Please see discussion of non-GAAP measures and reconciliation to Gross Profit (for Adjusted Gross Profit), Net Income/(Loss) (for Adjusted EBITDA from continuing operations) and Net Revenue (for Adjusted Gross Profit Margin and Adjusted EBITDA Margin from continuing operations), the closest comparable GAAP measures, at the end of this press release. |
Fourth Quarter 2022 Business and Operational Highlights
- Closed on a non-brokered senior secured term loan in an aggregate principal amount of $45.5 million with Pelorus Equity Group.
- Paid down $30 million of debt related to Michigan term loan with Chicago Atlantic.
- Converted $90 million of debt with Canopy Growth to exchangable shares at CAD$5.10 per share.
- Amended certain terms of Ilera term loan, which afforded the Company the flexibilty to enter into a sale leaseback or mortgage on it's Pennsylvania cultivation facility in return for a $5 million pay down in Q4 2022, and a commitment for an early pay down of $35 million in Q1 2023, with no pre-payment fees, which was further amended subsequent to the quarter.
- Listed 67,000 square foot Mississuaga, Ontario facility for sale at a price of CAD$24.3 million.
- Opened fourth Michigan Cookies Dispensary in Jackson.
- Appointed Ira Duarte to the Board of Directors. Ms. Duarte will also serve as Chair of the Audit Committee.
Subsequent Events
- Applied to list common shares on the Toronto Stock Exchange (TSX), upon completion of a reorganization which is expected to qualify the Company for listing, subject to shareholder approval at the Company's annual general meeting to be scheduled in June, and subject to TSX approval.
- Signed non-binding term sheet with a commercial bank for a $25 million mortgage on Pennsylvania cultivation facility at a 9.25% fixed rate.
- Amended certain terms of Ilera term loan to extend the early paydown date to June 30, 2023.
- Launched Gage branded products in Maryland.
- Partnered with The Hoffman Centers to offer free expungement services in New Jersey.
- Appointed Jeroen De Beijer as Chief People and Culture Officer.
- Launched adult-use cannabis sales at Cookies Detroit retail location.
- Closed on acquisition of high performing and well located dispensary in Maryland.
- Entered into multi-year agreement to introduce Wana's products at The Apothecarium retail stores and additional third-party retailers in New Jersey and Maryland.
Full Year and Fourth Quarter 2022 Financial Results
Net revenue for the full year 2022 totaled $247.8 million as compared to $194.2 million for 2021, an increase of 27.6%, primarily driven by the launch of adult use sales in New Jersey and the acquisitions of Gage and Pinnacle in Michigan, partially offset by declines in Pennsylvania.
Net revenue for the fourth quarter of 2022 was $69.0 million as compared to $66.2 million for the third quarter of 2022 and $45.9 million for the fourth quarter of 2021, representing sequential growth of 4.2% and year-over-year growth of 50.3%. The sequential growth was driven by the acquisition of Pinnacle in Michigan, a rebound in Pennsylvania wholesale, and continued growth of adult use sales in New Jersey.
Gross profit margin for the full year 2022 was 41.0% as compared to 57.9% for the full year 2021. Adjusted gross margin, a non-GAAP financial measure, for the full year 2022 was 46.0% compared with 59.9% in 2021. The decline was driven by a reduction in gross margin in Pennsylvania, due to competitive pricing, and the inclusion of Michigan.
Gross margin for the fourth quarter of 2022 was 44.6% as compared to 47.0% in the third quarter of 2022 and 49.1% in the fourth quarter of 2021. Adjusted gross profit margin, a non-GAAP financial measure, was 45.3% for the fourth quarter of 2022 as compared to 47.8% for the third quarter of 2022 and 52.9% for the fourth quarter of 2021. The sequential decline in adjusted gross profit margin was driven by start-up expenses at the Company's new Hagerstown, Maryland cultivation facility and pricing pressure in Michigan, partially offset by improvement in Pennsylvania.
General & Administrative expenses (G&A) for the full year 2022, excluding stock-based compensation, were $103.4 million as compared to $60.2 million in 2021. The increase in G&A year-over-year was driven primarily by the addition of Michigan, which added $40 million of G&A spend, as well as the conversion to adult use in New Jersey.
G&A for the fourth quarter of 2022, excluding stock-based compensation, were $33.6 million as compared to $24.0 million in the third quarter of 2022 and $15.3 million in the fourth quarter of 2021. The sequential increase was driven by a $10.0 million reserve for bad debt related to a customer in Michigan. Trade receivables on December 31, 2022 were $4.2 million, 96% of which are current, after recording this reserve.
GAAP Net loss from continuing operations for the full year 2022 was $299.4 million compared to net income of $15.7 million in 2021. 2022 includes a $311.1 million non-cash impairment of goodwill and intangibles, as previously disclosed in the results related to the Company's Michigan reporting unit.
GAAP Net loss from continuing operations in the fourth quarter of 2022 was $2.0 million compared to a net loss from continuing operations of $300.6 million in Q3 2022. Q3 was impacted by the $331.2 non-cash impairment charge previously reported, which was reduced by $20.2 million in Q4 based on the finalization of the fair value of the net assets acquired.
Full year 2022 Adjusted EBITDA from continuing operations, a non-GAAP measure, was $38.8 million as compared to $69.6 million in 2021. The year-over-year decline was driven by competitive conditions in Pennsylvania, partially offset by an increase in New Jersey driven by the conversion to adult use.
Fourth quarter 2022 Adjusted EBITDA from continuing operations, a non-GAAP measure, was $12.2 million, representing a 17.7% Adjusted EBITDA Margin, as compared to $13.0 million and $13.2 million of Adjusted EBITDA from continuing operations and 19.6% and 28.6% of Adjusted EBITDA Margin from continuing operations in the third quarter of 2022 and the fourth quarter of 2021, respectively. The sequential decline in Adjusted EBITDA from continuing operations from the third quarter of 2022 to the fourth quarter of 2022 was driven by pricing pressure in Michigan and start-up expenses at the Company's Hagerstown facility in Maryland.
Balance Sheet and Cash Flow
Cash and cash equivalents were $26.2 million as of December 31, 2022, compared to $34.2 million as of September 30, 2022. Cash flow from operations grew significantly to a positive $7.3 million for the fourth quarter of 2022 compared to a positive $1.5 million in the previous quarter as a result of the Company's continued focus on improving cash flow from operations. Capex spending was $13.5 million in the fourth quarter of 2022, primarily related to final payments for the Company's new Hagerstown, MD cultivation and processing facility, which was completed and became operational in the third quarter of 2022.
During the fourth quarter of 2022, the Company completed a $45.5 million financing with Pelorus Equity Group and paid down $30 million of its $55 million term loan with Chicago Atlantic, refinancing the remaining balance of $25 million. The Company also made a $5 million paydown on its Pennsylvania term loan during the quarter.
As of March 15, 2023 there were 350 million basic shares outstanding including 273 million common shares, 13 million preferred shares as converted, and 64 million exchangeable shares. Additionally, there are 66 million warrants and options outstanding at a weighted average price of $4.29.
Conference Call
TerrAscend will host a conference call today, March 16, 2023, to discuss these results. Jason Wild, Executive Chairman, Ziad Ghanem, President and Chief Operating Officer, and Keith Stauffer, Chief Financial Officer, will host the call starting at 5:00 p.m. Eastern time. A question-and-answer session will follow management's presentation.
Date: |
Thursday, March 16, 2023 |
Time: |
5:00 p.m. Eastern Time |
RapidConnect URL: |
|
Webcast: |
|
Dial-in Number: |
1-888-664-6392 |
Conference ID: |
95181103 |
Replay: |
416-764-8677 or 1-888-390-0541 Available until 12:00 midnight Eastern Time Thursday, March 30, 2023 Replay Entry Code: 181103# |
Financial results and analyses are available on the Company's website (www.terrascend.com) and SEDAR (www.sedar.com).
The Canadian Securities Exchange ("CSE") has neither approved nor disapproved the contents of this news release. Neither the CSE nor its Market Regulator (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.
About TerrAscend
TerrAscend is a leading North American cannabis operator with vertically integrated operations in Pennsylvania, New Jersey , Michigan and California , licensed cultivation and processing operations in Maryland and licensed production in Canada . TerrAscend operates The Apothecarium and Gage dispensary retail locations as well as scaled cultivation, processing, and manufacturing facilities in its core markets. TerrAscend's cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use markets. The Company owns several synergistic businesses and brands, including Gage Cannabis, The Apothecarium, Ilera Healthcare, Kind Tree, Prism, State Flower, Valhalla Confections, and Arise Bioscience Inc. For more information, visit www.terrascend.com .
Caution Regarding Cannabis Operations in the United States
Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute, or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable US federal money laundering legislation.
While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve TerrAscend of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against TerrAscend. The enforcement of federal laws in the United States is a significant risk to the business of TerrAscend and any proceedings brought against TerrAscend thereunder may adversely affect TerrAscend's operations and financial performance.
Forward Looking Information
This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information contained in this press release may be identified by the use of words such as, "may", "would", "could", "will", "likely", "expect", "anticipate", "believe, "intend", "plan", "forecast", "project", "estimate", "outlook" and other similar expressions, and include statements with respect to future revenue and profits. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management's experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.
Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these statements. Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, current and future market conditions; risks related to federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in the United States relating to cannabis operations in the United States; and the risk factors set out in the Company's most recently filed MD&A, filed with the Canadian securities regulators and available under the Company's profile on SEDAR at www.sedar.com and in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on March 16, 2023.
The statements in this press release are made as of the date of this release. The Company disclaims any intent or obligation to update any forward-looking information, whether, as a result of new information, future events, or results or otherwise, other than as required by applicable securities laws.
Definition and Reconciliation of Non-GAAP Measures
In addition to reporting the financial results in accordance with GAAP, the Company reports certain financial results that differ from what is reported under GAAP. Non-GAAP measures used by management do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. The Company believes that certain investors and analysts use these measures to measure a company's ability to meet other payment obligations or as a common measurement to value companies in the cannabis industry, and the Company calculates Adjusted Gross Profit and Adjusted Gross Profit Margin as Gross Profit and gross profit margin adjusted for certain material non-cash items including the one-time relief of fair value of inventory on acquisition, non-cash write downs of inventory, sales returns and write downs of inventory as a result of a vape recall in Pennsylvania, and other one-time adjustments to gross profit that management does not believe are reflective of ongoing operations. We calculate Adjusted EBITDA from continuing operations and Adjusted EBITDA Margin as EBITDA from continuing operations adjusted for certain material non-cash items such as inventory write downs outside of the normal course of operations, share based compensation expense, impairment charges taken on goodwill, intangible assets and property and equipment, the gain or loss recognized on the revaluation of our contingent consideration liabilities, one-time write off of accounts receivable related to one customer that was deemed uncollectible, loan modification fees related to the modification of debt, the gain recognized on the extinguishment of debt, the gain or loss recognized on the remeasurement of the fair value of the U.S denominated preferred share warrants, one time fees incurred in connection with our acquisitions and certain other adjustments management believes are not reflective of the ongoing operations and performance. Such information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company believes this definition is a useful measure to assess the performance of the Company as it provides more meaningful operating results by excluding the effects of expenses that are not reflective of the Company's underlying business performance and other one-time or non-recurring expenses.
At |
At |
|||||||
December 31, 2022 |
December 31, 2021 |
|||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ |
26,158 |
$ |
79,642 |
||||
Restricted cash |
605 |
— |
||||||
Accounts receivable, net |
22,443 |
12,495 |
||||||
Investments |
3,595 |
— |
||||||
Inventory |
46,335 |
36,093 |
||||||
Assets held for sale |
17,349 |
29,052 |
||||||
Prepaid Expenses and other current assets |
4,937 |
5,029 |
||||||
Current assets from discontinued operations |
571 |
10,178 |
||||||
121,993 |
172,489 |
|||||||
Non-Current Assets |
||||||||
Property and equipment, net |
215,812 |
112,053 |
||||||
Deposits |
837 |
1,977 |
||||||
Operating lease right of use assets |
29,451 |
29,561 |
||||||
Intangible assets, net |
239,704 |
168,425 |
||||||
Goodwill |
90,328 |
90,326 |
||||||
Indemnification asset |
— |
3,969 |
||||||
Other non-current assets |
3,462 |
3,135 |
||||||
579,594 |
409,446 |
|||||||
Total Assets |
$ |
701,587 |
$ |
581,935 |
||||
Liabilities and Shareholders' Equity |
||||||||
Current Liabilities |
||||||||
Accounts payable and accrued liabilities |
$ |
44,286 |
27,923 |
|||||
Deferred revenue |
2,935 |
1,071 |
||||||
Loans payable, current |
48,335 |
8,325 |
||||||
Contingent consideration payable, current |
5,184 |
9,982 |
||||||
Operating lease liability, current |
1,857 |
1,171 |
||||||
Lease obligations under finance leases, current |
521 |
22 |
||||||
Corporate income tax payable |
23,077 |
9,621 |
||||||
Other current liabilities |
2,599 |
— |
||||||
Current liabilities from discontinued operations |
9,111 |
8,072 |
||||||
137,905 |
66,187 |
|||||||
Non-Current Liabilities |
||||||||
Loans payable, non-current |
145,852 |
171,163 |
||||||
Contingent consideration payable, non-current |
- |
2,553 |
||||||
Operating lease liability, non-current |
31,545 |
30,573 |
||||||
Lease obligations under finance leases, non-current |
6,713 |
181 |
||||||
Warrant liability |
711 |
54,986 |
||||||
Deferred income tax liability |
30,700 |
14,269 |
||||||
Financing obligations |
11,198 |
— |
||||||
Other long term liabilities |
15,792 |
13,069 |
||||||
242,511 |
286,794 |
|||||||
Total Liabilities |
380,416 |
352,981 |
||||||
Commitments and Contingencies |
||||||||
Shareholders' Equity |
||||||||
Share Capital |
||||||||
Series A, convertible preferred stock, no par value, unlimited shares authorized; 12,608 and 13,708 shares outstanding as of December 31, 2022 and December 31, 2021, respectively |
— |
— |
||||||
Series B, convertible preferred stock, no par value, unlimited shares authorized; 600 and 610 shares outstanding as of December 31, 2022 and December 31, 2021, respectively |
— |
— |
||||||
Series C, convertible preferred stock, no par value, unlimited shares authorized; nil and 36 shares outstanding as of December 31, 2022 and December 31, 2021, respectively |
— |
— |
||||||
Series D, convertible preferred stock, no par value, unlimited shares authorized; nil and nil shares outstanding as of December 31, 2022 and December 31, 2021, respectively |
— |
— |
||||||
Proportionate voting shares, no par value, unlimited shares authorized; nil and nil shares outstanding as of December 31, 2022 and December 31, 2021, respectively |
— |
— |
||||||
Exchangeable shares, no par value, unlimited shares authorized; 76,996,538 and 38,890,571 shares outstanding as of December 31, 2022 and December 31, 2021, respectively |
— |
— |
||||||
Common stock, no par value, unlimited shares authorized; 259,624,531 and 190,930,800 shares outstanding as of December 31, 2022 and December 31, 2021, respectively |
— |
— |
||||||
Additional paid in capital |
934,972 |
535,418 |
||||||
Accumulated other comprehensive income (loss) |
2,085 |
2,823 |
||||||
Accumulated deficit |
(618,260) |
(314,654) |
||||||
Non-controlling interest |
2,374 |
5,367 |
||||||
Total Shareholders' Equity |
321,171 |
228,954 |
||||||
Total Liabilities and Shareholders' Equity |
$ |
701,587 |
$ |
581,935 |
||||
For the years ended |
|||||||||||||
December 31, |
December 31, |
December 31, |
|||||||||||
Revenue |
$ |
249,258 |
$ |
201,076 |
$ |
139,118 |
|||||||
Excise and cultivation tax |
(1,429) |
(6,866) |
(6,966) |
||||||||||
Revenue, net |
247,829 |
194,210 |
132,152 |
||||||||||
Cost of Sales |
146,325 |
81,708 |
46,461 |
||||||||||
Gross profit |
101,504 |
112,502 |
85,691 |
||||||||||
Operating expenses: |
|||||||||||||
General and administrative |
115,588 |
75,107 |
60,763 |
||||||||||
Amortization and depreciation |
9,658 |
5,533 |
3,886 |
||||||||||
Impairment of intangible assets |
140,727 |
3,633 |
343 |
||||||||||
Impairment of goodwill |
170,357 |
5,007 |
— |
||||||||||
Impairment of property and equipment |
1,089 |
312 |
6 |
||||||||||
Research and development |
— |
— |
136 |
||||||||||
Total operating expenses |
437,419 |
89,592 |
65,134 |
||||||||||
(Loss) income from operations |
(335,915) |
22,910 |
20,557 |
||||||||||
Other (income) expense |
|||||||||||||
(Gain) loss from revaluation of contingent consideration |
(1,061) |
3,584 |
18,709 |
||||||||||
Gain on extinguishment of debt |
(4,153) |
— |
— |
||||||||||
(Gain) loss on fair value of warrants and purchase option derivative asset |
(58,523) |
(57,904) |
110,518 |
||||||||||
Finance and other expenses |
35,893 |
27,849 |
7,427 |
||||||||||
Transaction and restructuring costs |
1,445 |
3,111 |
1,129 |
||||||||||
Loss on lease termination |
— |
3,278 |
— |
||||||||||
Unrealized and realized foreign exchange loss |
712 |
4,654 |
159 |
||||||||||
Unrealized and realized gain on investments |
(43) |
(6,192) |
(533) |
||||||||||
(Loss) income from continuing operations before provision from income taxes |
(310,185) |
44,530 |
(116,852) |
||||||||||
Provision for income taxes |
(10,783) |
28,877 |
10,769 |
||||||||||
Net (loss) income from continuing operations |
$ |
(299,402) |
$ |
15,653 |
$ |
(127,621) |
|||||||
Discontinued operations: |
|||||||||||||
Loss from discontinued operations, net of tax |
(25,949) |
$ |
(9,518) |
$ |
(14,635) |
||||||||
Net (loss) income |
$ |
(325,351) |
$ |
6,135 |
$ |
(142,256) |
|||||||
Foreign currency translation |
738 |
(6,485) |
2,875 |
||||||||||
Comprehensive (loss) income |
$ |
(326,089) |
$ |
12,620 |
$ |
(145,131) |
|||||||
Net (loss) income from continuing operations attributable to: |
|||||||||||||
Common and proportionate Shareholders of the Company |
$ |
(303,959) |
$ |
12,629 |
$ |
(139,204) |
|||||||
Non-controlling interests |
$ |
4,557 |
$ |
3,024 |
$ |
(3,052) |
|||||||
Comprehensive (loss) income from continuing operations attributable to: |
|||||||||||||
Common and proportionate Shareholders of the Company |
$ |
(330,646) |
$ |
9,596 |
$ |
(142,079) |
|||||||
Non-controlling interests |
$ |
4,557 |
$ |
3,024 |
$ |
(3,052) |
|||||||
Net (loss) income per share |
|||||||||||||
Net (loss) income per share - basic: |
|||||||||||||
Continuing operations |
$ |
(1.24) |
$ |
0.07 |
$ |
(0.93) |
|||||||
Discontinued operations |
(0.11) |
(0.05) |
(0.10) |
||||||||||
Net (loss) income per share - basic |
$ |
(1.35) |
$ |
0.02 |
$ |
(1.03) |
|||||||
Weighted average number of outstanding common and proportionate voting shares |
244,351,028 |
181,056,654 |
149,740,210 |
||||||||||
Net (loss) income per share - diluted: |
|||||||||||||
Continuing operations |
$ |
(1.24) |
$ |
0.06 |
$ |
(0.93) |
|||||||
Discontinued operations |
(0.11) |
(0.05) |
(0.10) |
||||||||||
Net (loss) income per share - diluted |
$ |
(1.35) |
$ |
0.01 |
$ |
(1.03) |
|||||||
Weighted average number of outstanding common and proportionate voting shares, assuming dilution |
244,351,028 |
208,708,664 |
149,740,210 |
||||||||||
For the Twelve Months Ended |
||||||||||||||||
December 31, |
December 31, |
December 31, |
||||||||||||||
Operating activities |
||||||||||||||||
Net (loss) income from continuing operations |
$ |
(299,402) |
$ |
15,653 |
$ |
(127,621) |
||||||||||
Adjustments to reconcile net (loss) income to net cash used in operating activities |
||||||||||||||||
Non-cash write downs of inventory |
9,082 |
4,941 |
— |
|||||||||||||
Accretion expense |
9,740 |
4,273 |
5,232 |
|||||||||||||
Depreciation of property and equipment and amortization of intangible assets |
22,624 |
12,789 |
8,337 |
|||||||||||||
Amortization of operating right-of-use assets |
1,980 |
1,074 |
4,184 |
|||||||||||||
Share-based compensation |
12,162 |
14,941 |
10,475 |
|||||||||||||
Deferred income tax expense |
(35,299) |
(1,245) |
(11,970) |
|||||||||||||
(Gain) loss on fair value of warrants and purchase option derivative |
(58,523) |
(57,904) |
110,518 |
|||||||||||||
Revaluation of contingent consideration |
(1,061) |
3,584 |
18,709 |
|||||||||||||
Impairment of goodwill and intangible assets |
311,084 |
8,640 |
343 |
|||||||||||||
Impairment of property and equipment |
1,089 |
312 |
6 |
|||||||||||||
Loss on derecognition of right of use assets and lease termination |
1,163 |
3,278 |
— |
|||||||||||||
Release of indemnification asset |
3,973 |
4,504 |
— |
|||||||||||||
Forgiveness of loan principal and interest |
— |
(1,414) |
— |
|||||||||||||
Fees for services related to NJ licenses |
— |
— |
7,500 |
|||||||||||||
Gain on extinguishment of debt |
(4,153) |
— |
— |
|||||||||||||
Bad debt expense |
9,941 |
— |
— |
|||||||||||||
Employee Retention Credits recorded in other income |
(9,440) |
— |
— |
|||||||||||||
Debt modification fees expensed |
2,507 |
— |
— |
|||||||||||||
Unrealized and realized foreign exchange loss |
712 |
4,654 |
159 |
|||||||||||||
Unrealized and realized (gain) loss on investments |
(43) |
(6,192) |
(533) |
|||||||||||||
Changes in operating assets and liabilities |
||||||||||||||||
Receivables |
2,862 |
(3,209) |
(4,039) |
|||||||||||||
Inventory |
676 |
(18,508) |
(8,091) |
|||||||||||||
Prepaid expense and other current assets |
856 |
(1,649) |
(5) |
|||||||||||||
Deposits |
3,666 |
— |
— |
|||||||||||||
Other assets |
711 |
(726) |
(442) |
|||||||||||||
Accounts payable and accrued liabilities and other payables |
(12,103) |
2,820 |
7,631 |
|||||||||||||
Operating lease liability |
(1,314) |
(663) |
(2,972) |
|||||||||||||
Other liability |
(9,941) |
3,750 |
— |
|||||||||||||
Contingent consideration payable |
(410) |
(11,394) |
(56,527) |
|||||||||||||
Corporate income tax payable |
14,598 |
(6,938) |
11,358 |
|||||||||||||
Deferred revenue |
428 |
467 |
(196) |
|||||||||||||
Net cash used in operating activities- continuing operations |
(21,835) |
(24,162) |
(27,944) |
|||||||||||||
Net cash used in operating activities- discontinued operations |
(4,288) |
(7,653) |
(9,027) |
|||||||||||||
Net cash used in operating activities |
(26,123) |
(31,815) |
(36,971) |
|||||||||||||
Investing activities |
||||||||||||||||
Investment in property and equipment |
(39,631) |
(39,835) |
(43,784) |
|||||||||||||
Investment in intangible assets |
(2,261) |
(376) |
(842) |
|||||||||||||
Principal payments received on lease receivable |
515 |
677 |
118 |
|||||||||||||
Distributions of earnings from associates |
— |
469 |
153 |
|||||||||||||
Investment in NJ partnership |
— |
(50,000) |
— |
|||||||||||||
Deposits for business acquisition |
(1,065) |
— |
(1,389) |
|||||||||||||
Payments made for land contracts |
(1,271) |
— |
— |
|||||||||||||
Cash portion of consideration paid in acquisitions, net of cash acquired |
16,227 |
(42,736) |
739 |
|||||||||||||
Net cash used in investing activities- continuing operations |
(27,486) |
(131,801) |
(45,005) |
|||||||||||||
Net cash used in investing activities- discontinued operations |
(93) |
(620) |
(885) |
|||||||||||||
Net cash used in investing activities |
(27,579) |
(132,421) |
(45,890) |
|||||||||||||
Financing activities |
||||||||||||||||
Proceeds from options and warrants exercised |
24,342 |
30,785 |
7,287 |
|||||||||||||
Loan principal paid |
(42,221) |
(4,500) |
(48,893) |
|||||||||||||
Loan modification fees paid |
(4,977) |
— |
(2,250) |
|||||||||||||
Proceeds from loans payable, net of transaction costs |
43,419 |
766 |
196,348 |
|||||||||||||
Tax distributions to NJ partners |
(1,539) |
— |
— |
|||||||||||||
Capital contributions (paid) received (to) from non-controlling interests |
(7,550) |
(53) |
393 |
|||||||||||||
Payments of contingent consideration |
(6,630) |
(18,274) |
(90,657) |
|||||||||||||
Payments made for financing obligations |
(1,125) |
— |
— |
|||||||||||||
Proceeds from private placement, net of share issuance costs |
— |
173,477 |
71,023 |
|||||||||||||
Net cash provided by financing activities- continuing operations |
3,719 |
182,201 |
133,251 |
|||||||||||||
Net cash provided by financing activities- discontinued operations |
— |
— |
155 |
|||||||||||||
Net cash provided by financing activities |
3,719 |
182,201 |
133,406 |
|||||||||||||
Net (decrease) increase in cash and cash equivalents and restricted cash during the year |
(49,983) |
17,965 |
50,545 |
|||||||||||||
Net effects of foreign exchange |
(2,896) |
2,451 |
(481) |
|||||||||||||
Cash and cash equivalents and restricted cash, beginning of year |
79,642 |
59,226 |
9,162 |
|||||||||||||
Cash and cash equivalents and restricted cash, end of year |
$ |
26,763 |
$ |
79,642 |
$ |
59,226 |
||||||||||
Supplemental disclosure with respect to cash flows |
||||||||||||||||
Income taxes paid |
$ |
9,917 |
$ |
37,060 |
$ |
11,204 |
||||||||||
Interest paid |
$ |
26,840 |
$ |
21,171 |
$ |
1,955 |
||||||||||
Lease termination fee paid |
$ |
3,300 |
$ |
- |
$ |
- |
||||||||||
Non-cash transactions |
||||||||||||||||
Shares issued- Canopy USA arrangement |
$ |
55,520 |
$ |
- |
$ |
- |
||||||||||
Equity and warrant liability issued as consideration for acquisition |
$ |
338,739 |
$ |
34,427 |
$ |
- |
||||||||||
Notes receivable settled for business acquisition |
$ |
- |
$ |
- |
$ |
3,032 |
||||||||||
Promissory note issued as consideration for acquisitions |
$ |
10,000 |
$ |
8,839 |
$ |
- |
||||||||||
Shares issued for liability settlement |
$ |
264 |
$ |
- |
$ |
- |
||||||||||
Shares issued for compensation of services |
$ |
- |
$ |
- |
$ |
3,750 |
||||||||||
Accrued capital purchases |
$ |
2,187 |
$ |
450 |
$ |
4,544 |
||||||||||
The table below reconciles Gross Profit and Adjusted Gross Profit for the quarters ended December 31, 2022, September 30, 2022, and December 31, 2021:
For the Three Months Ended |
For the Year Ended |
|||||||||||||||||||
(in millions of U.S. Dollars) |
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||||||||||||||
Revenue, net |
45,947 |
66,243 |
69,041 |
194,210 |
247,829 |
|||||||||||||||
Gross profit |
22,551 |
31,131 |
30,798 |
112,502 |
101,504 |
|||||||||||||||
Add the impact of: |
||||||||||||||||||||
Relief of fair value of inventory upon acquisition |
1,735 |
415 |
— |
3,465 |
2,770 |
|||||||||||||||
Non-cash write downs of inventory |
— |
— |
— |
449 |
5,894 |
|||||||||||||||
Vape recall |
— |
— |
— |
— |
2,965 |
|||||||||||||||
Other one time adjustments to gross profit |
— |
107 |
453 |
— |
798 |
|||||||||||||||
Adjusted Gross Profit |
24,286 |
31,653 |
31,251 |
116,416 |
113,931 |
|||||||||||||||
Adjusted Gross Profit Margin % |
52.9 |
% |
47.8 |
% |
45.3 |
% |
59.9 |
% |
46.0 |
% |
||||||||||
The table below reconciles net loss from continuing operations to EBITDA from continuing operations and Adjusted EBITDA from continuing operations for the quarters ended December 31, 2022, September 30, 2022, and December 31, 2021:
For the Three Months Ended |
For the Year Ended |
|||||||||||||||||||
December 31, 2021 |
September 30, 2022 |
December 31, 2022 |
December 31, 2021 |
December 31, 2022 |
||||||||||||||||
Revenue, net |
45,947 |
66,243 |
69,041 |
194,210 |
247,829 |
|||||||||||||||
Net loss |
$ |
(5,927) |
$ |
(310,985) |
$ |
(12,522) |
$ |
6,135 |
$ |
(325,351) |
||||||||||
Add (deduct) the impact of: |
||||||||||||||||||||
Loss (income) from discontinued operations |
4,773 |
10,424 |
10,572 |
9,518 |
25,949 |
|||||||||||||||
Provision for income taxes |
6,940 |
(34,033) |
14,819 |
28,877 |
(10,783) |
|||||||||||||||
Finance expenses |
5,987 |
10,093 |
12,046 |
24,121 |
39,059 |
|||||||||||||||
Amortization and depreciation |
3,511 |
6,560 |
5,046 |
12,789 |
22,624 |
|||||||||||||||
EBITDA from continuing operations |
15,284 |
(317,941) |
29,961 |
81,440 |
(248,502) |
|||||||||||||||
Add (deduct) the impact of: |
||||||||||||||||||||
Relief of fair value upon acquisition |
1,735 |
415 |
— |
3,465 |
2,770 |
|||||||||||||||
Non-cash write downs of inventory |
— |
— |
— |
449 |
5,894 |
|||||||||||||||
Vape recall |
— |
— |
— |
— |
2,965 |
|||||||||||||||
Share-based compensation |
1,548 |
2,705 |
1,638 |
14,941 |
12,162 |
|||||||||||||||
Impairment of goodwill and intangible assets |
— |
331,242 |
(20,158) |
8,640 |
311,084 |
|||||||||||||||
Impairment of property and equipment and loss on disposal of fixed assets |
56 |
(81) |
241 |
312 |
1,089 |
|||||||||||||||
Loss on lease termination and derecognition of ROU asset |
3,278 |
— |
1,162 |
3,278 |
1,162 |
|||||||||||||||
(Gain) loss from revaluation of contingent consideration |
932 |
36 |
(1,250) |
3,584 |
(1,061) |
|||||||||||||||
Restructuring costs and executive severance |
90 |
427 |
45 |
816 |
472 |
|||||||||||||||
Legal settlements |
— |
— |
623 |
1,590 |
623 |
|||||||||||||||
Other one-time items |
3,583 |
1,311 |
998 |
6,070 |
5,207 |
|||||||||||||||
Bad debt expense write offs in Michigan |
— |
— |
9,941 |
— |
9,941 |
|||||||||||||||
Loan modification fees |
— |
— |
2,507 |
— |
2,507 |
|||||||||||||||
Employee retention credits |
— |
— |
(9,440) |
— |
(9,440) |
|||||||||||||||
Gain on extinguishment of debt |
— |
— |
(4,153) |
— |
(4,153) |
|||||||||||||||
Gain on fair value of warrants and purchase option derivative asset |
(14,189) |
(5,497) |
32 |
(57,904) |
(58,523) |
|||||||||||||||
Indemnification asset release |
613 |
— |
— |
4,504 |
3,973 |
|||||||||||||||
Unrealized and realized gain on investments |
— |
(234) |
(34) |
(6,192) |
(43) |
|||||||||||||||
Unrealized and realized foreign exchange loss |
228 |
586 |
99 |
4,654 |
712 |
|||||||||||||||
Adjusted EBITDA from continuing operations |
$ |
13,158 |
$ |
12,969 |
$ |
12,212 |
$ |
69,647 |
$ |
38,839 |
||||||||||
Adjusted EBITDA Margin from continuing operations |
28.6 |
% |
19.6 |
% |
17.7 |
% |
35.9 |
% |
15.7 |
% |
||||||||||
SOURCE TerrAscend
For more information regarding TerrAscend: Keith Stauffer, Chief Financial Officer, [email protected], 855-837-7295
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