Acreage Holdings, Inc. (CNSX:ACRG.CN), one of the fastest growing cannabis companies in the U.S., announced that in the first quarter of its fiscal year, it generated revenue of $19.4 million. This represents an increase of 22% over the fourth quarter of its previous fiscal year.

Acreage Holdings, a multi-state cannabis company, reported its first quarter sales on April 16. The company reported sales of $12.1 million for the quarter, an increase of 22 percent from $9.6 million in Q4 2018. These figures were slightly higher than expected, due in part to stronger sales in California and New York, and in spite of the fact that the company was forced to close down its New Mexico operations temporarily, which impacted sales in that state.

Acreage Q1 Revenue Increases 22% Over Q4

Acreage Holdings announces first quarter 2021 results

Revenue was up 58% and adjusted EBITDA* was positive.

NEW YORK, May 10, 2021 (GLOBE NEWSWIRE) – Acreage Holdings, Inc. (Acreage) (CSE: ACRG.A.U, ACRG.B.U), (OTC: ACRHF, ACRDF), a multi-state U.S. cannabis grower and retail operator, today announced its financial results for the first quarter of 2021.

FIRST QUARTER RESULTS (UNAUDITED)

In the first quarter of 2021, Acreage continued to improve its financial performance and make progress on its strategic initiatives. Here are the highlights of the quarter.

  • Consolidated revenues were $38.4 million, up 58% from the same period last year and 22% from the fourth quarter of 2020.
  • Sales at company-owned stores increased 16%, marking the ninth consecutive quarter of double-digit comparable sales.
  • Gross margin reached 53.7%, up 12.6 percentage points from the same period in 2020.
  • Net loss attributable to Acreage was $7.8 million in the first quarter of 2021, an improvement from net loss attributable to Acreage of $172.0 million in the same period of 2020.
  • Adjusted EBITDA* for the first quarter of 2021 was $1.6 million, compared to a loss of $12.3 million for the same period in 2020. This is the first quarter of positive adjusted EBITDA* for the company and confirms management’s refocused strategic plan.

I am very pleased with our financial performance in the first quarter, as we achieved positive adjusted EBITDA for the first time in our history. In addition, our revenue growth accelerated to 58% year-over-year and our gross margin of 53.7% was another company record. All this confirms our revised strategy and we are clearly on the way to better performance.

Peter Caldini, managing director of Acreage

Acreage Q1 Revenue Increases 22% Over Q4

Retail sales for the first quarter of 2021 were $25.8 million, an increase of $8.3 million, or 47%, from the first quarter of 2020. The increase over last year was primarily due to the consolidation of our New Jersey operations in June 2020 and a 16% increase in same store sales. In addition, retail sales increased $0.8 million, or 3%, in the first quarter of 2021 compared to the fourth quarter of 2020.

Wholesale revenues for the first quarter of 2021 were $10.0 million, an increase of $3.5 million, or 53%, from the first quarter of 2020. The increase in wholesale sales over last year was primarily due to increased production capacity associated with the completion of manufacturing facilities in Pennsylvania, Massachusetts and Illinois. This has led to higher profits and an improved product range in the respective markets. In addition, wholesale revenues increased $3.6 million, or 55%, in the first quarter of 2021 compared to the fourth quarter of 2020.

Total gross profit for the first quarter of 2021 was $20.6 million, an increase of $10.7 million, or 107%, from the first quarter of 2020. The increase in gross margin was due to both sales growth and efficiency improvements in our manufacturing facilities. Total gross margin was 53.7%, up 1,260 basis points from total gross margin of 41.1% in the first quarter of 2020.

Consolidated EBITDA* for the first quarter of 2021 was $1.6 million, a significant improvement from the consolidated EBITDA* loss of $249.0 million in the comparable period last year. Adjusted EBITDA* for the first quarter of 2021 was $1.6 million, also a significant improvement from the $12.3 million loss in the first quarter of 2020 and a sequential improvement from the $3.5 million loss in the fourth quarter of 2020. This is the first time the company has reported positive EBITDA* and adjusted EBITDA*, which management believes confirms its refocused strategy. Finally, adjusted EBITDA from core businesses*, which excludes markets where the company has definitive exit agreements and startup businesses such as beverages and CBD, was $3.1 million, indicating that the company’s core markets continue to be negatively impacted by its non-core businesses.

IMPLEMENTATION OF MANAGED SERVICES AGREEMENTS (MSA)

Acreage manages not only the production and cultivation facilities and the retail pharmacies owned by the company but also the activities on behalf of several third parties. For the first quarter of 2021, net revenues for these managed businesses were $16.4 million, an increase of $3.0 million, or 22%, from the first quarter of 2020, primarily due to a 99% increase in same-store sales, somewhat offset by the transition of operations in New Jersey.

In the first quarter of 2021, EBITDA from managed operations was $4.7 million, an increase of $5.5 million compared to an EBITDA loss of $0.8 million in the first quarter of 2020.

BALANCE SHEET AND LIQUIDITY

The company ended the quarter with $45.9 million in cash and pledged cash. Subsequent to the quarter end, the Company completed the previously announced sale of its Florida operations, adding an additional $20 million to the Company’s cash position. In addition, during the first quarter of 2021, the Company extended the $21 million maturity of its $22 million term loan through June 2021 and subsequently filed a registration statement on Form S-1 for the resale of the shares underlying the outstanding warrants held by our investors, which was declared effective by the SEC. The company ensures that sufficient capital is available and continuously monitors profitable opportunities.

STRATEGIC DISCUSSION

The company remains convinced that its refocused strategy is essential to further improve financial performance and shareholder value. The company continues to focus on three key strategic objectives: improving profitability, strengthening the balance sheet and accelerating growth in key markets.

Ensuring profitability : The Company’s focus on improving operational and financial performance has resulted in a significant improvement in profitability from an EBITDA loss of $249.0 million in the first quarter of 2020 to positive EBITDA of $1.6 million in the first quarter of 2021. Management will continue to carefully control costs, improve operational efficiency and accelerate organic growth in core markets to improve profitability going forward.

Strengthening the balance : Strengthening the balance sheet is essential to provide the company with the capital it needs to execute its operational plans and build shareholder confidence. The company has made efforts to ensure that sufficient capital is available when needed. Going forward, the Company will continue to monitor the capital markets and seek debt and equity financing opportunities as needed and beneficial.

Accelerated growth in key markets : Based on past acquisitions and investments, management believes that Acreage is well positioned for future success in several key markets as cannabis regulation continues to evolve. For example, the company already has a presence in key markets such as New York and New Jersey, and expects to benefit in the coming months and years from the recent introduction of adult programs in those states. The company will continue to focus on growth in key markets where it can leverage and expand its established presence.

In the first quarter of 2021, several results were achieved in the context of these strategic objectives:

  • During the quarter, the Company reached a definitive agreement to sell its Florida operations for a total of $60.0 million. At the end of the quarter, the Company completed the sale of its Florida facility. In addition, the Company agreed to sell its dispensary in Powell, Oregon, and its cultivation and processing facility in Medford, Oregon.
  • The company opened its third clinic in Williamstown, New Jersey. It currently operates the maximum number of pharmacies allowed in the State of New Jersey.
  • The company has aggressively continued to complete its New Jersey expansion in Egg Harbor and Sewell, positioning Acreage as the market leader in anticipation of selling to adults in that state. Both plants are on track to complete their current expansion projects by early 2022, which will bring their total production and area to nearly 200,000 square feet.

DETAILS OF THE EARNINGS CONFERENCE CALL

Field will be at 8:30 a.m. Eastern Daylight Time on Tuesday, May 11, for a conference call with management. The conference call will be webcast and will be available at investors.acreageholdings.com. To listen to the live broadcast, please go to the website at least 15 minutes before the conference to register and download and install the necessary audio software.

ABOUT ACREAGE HOLDINGS, INC.

Acreage, based in New York, is the operator of cannabis cultivation and retail operations in the United States in several states, including the national retail brand The Botanist. Acreage’s extensive line of national and regional cannabis products includes award-winning brand The Botanist, well-known brand Tweed, Prime Medical in Pennsylvania and Innocent Edibles in Illinois. Acreage also owns Universal Hemp, LLC, a cannabis subsidiary that distributes, markets and sells CBD products throughout the United States. Since its inception in 2011, Acreage has focused on building and scaling operations to create a seamless, consumer-centric brand experience. For more information, see www.acreageholdings.com.

The 27th. On June 23, 2019, Acreage entered into an agreement under section 288 of the Business Corporations Act (British Columbia) with Canopy Growth Corporation (Canopy Growth), which was subsequently amended on June 23, 2019. September 2020 (amended agreement). Pursuant to the Amended Agreement, upon the occurrence of (or the waiver by Canopy Growth of) a change in United States federal law permitting the general cultivation, distribution and possession of marijuana (as defined in applicable law) or excluding the regulation of such activities from United States federal law (the Trigger Event), Canopy Growth will subject to the satisfaction or waiver of certain closing conditions, acquire all of the issued and outstanding Class E Subordinate Voting Shares (Fixed Shares)3048 shares of Canopy Growth common stock per Fixed Share (after automatic conversion of the Class F Multiple Voting Shares and subject to adjustment in accordance with the terms of the agreement between Acreage and Canopy Growth on April 18, 2019. April 2019, as amended on May 15, 2019 and September 23, 2020).

In addition, Canopy Growth has an option, exercisable in its sole discretion, to acquire all of the issued and outstanding Class D Subordinate Voting Shares (Floating Shares) upon Canopy Growth’s acquisition of the Fixed Shares for cash or Canopy Growth shares, at a price per floating share based on the 30-day volume-weighted average trading price of the floating shares on the CSE relative to the trading price of Canopy Growth shares at the time of the occurrence or cancellation of the triggering event, with a minimum price of $6.41 per floating share.

For more information about the amended agreement, see Acreage’s proxy statement and management information circular dated August 17, 2020 (the Circular) and in Acreage’s and Canopy Growth’s respective information circulars dated August 17, 2019, which are available on Acreage’s and Canopy Growth’s profiles on SEDAR at www.sedar.com and filed with the SEC on EDGAR at www.sec.gov. For more information about Canopy Growth, please visit Canopy Growth’s SEDAR profile at www.sedar.com.

ZUKUNFTSGERICHTETE AUSSAGEN UND INDIKATOREN, DIE SICH NICHT AUF GAAP BEZIEHEN

This press release and each of the documents referred to herein contain forward-looking information and statements within the meaning of applicable Canadian and U.S. securities laws. All statements contained herein that are not historical facts are forward-looking information, including, for greater certainty, statements with respect to the Amended Agreement, including the likelihood of its closing, the occurrence or waiver of the Trigger Event, the fulfillment or waiver of the closing conditions contained in the Agreement and other statements with respect to the proposed transactions with Canopy Growth. Often, but not always, forward-looking statements and information can be identified by the use of words such as anticipates, expects or does not expect, anticipates, estimates, intends, anticipates or does not anticipate, believes, or variations of such words and phrases, or state that certain actions, events, or results may, could, should, or would occur or be expected.

Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that could cause the actual results, performance or achievements of Acreage or its subsidiaries to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements or information in this press release. Risks, uncertainties and other factors associated with forward-looking information may cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including, but not limited to, funding and liquidity risks and the risks discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 December 2020 effective March 25, 2021 and other public filings with the SEC, all of which are available on EDGAR undersec.gov and from Canadian securities regulators, as well as on Acreage’s issuer profile on SEDAR at www.sedar.com. Although Acreage has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as expected, estimated or intended.

Although Acreage believes that the assumptions and factors used in formulating the forward-looking information or statements contained in this press release are reasonable, such information should not be relied upon excessively and there can be no assurance that such events will occur on the dates indicated or at all. The forward-looking information and statements in this press release were made as of the date of this press release, and Acreage assumes no obligation to publicly update such forward-looking information or statements to reflect new information, subsequent events or otherwise, except to the extent required by applicable securities laws.

This press release includes tables of our results under accounting principles generally accepted in the United States of America (GAAP) and adjusted results that exclude the effects of certain items deemed comparable (non-GAAP). We use EBITDA, adjusted EBITDA, adjusted EBITDA from operating activities, adjusted net loss attributable to Acreage and individual store sales performance, among other measures, to evaluate our actual operating performance and to plan and forecast future periods. We believe that the adjusted results presented are relevant and useful information for investors because they reflect our actual operating performance, facilitate comparison of our results with those of other companies and allow investors to analyze performance in the same manner as our management. Because these measures are not calculated in accordance with generally accepted accounting principles, they should not be considered measures of our performance in isolation or as a substitute for our reported results and may not be comparable to similar measures used by other companies. The following tables provide a reconciliation of our GAAP operating results to the adjusted results above:

Neither the Canadian Securities Exchange nor its Regulation Services Provider has reviewed or accepts responsibility for the accuracy or correctness of this publication.

For more information, please contact :

Steve Gertz
Chief Financial Officer
[email protected]
917-893-5300

Steve West
Vice President, Investor Relations
[email protected]
917-893-5300

US GAAP FINANCIAL RATIOS (UNAUDITED)

Acreage Q1 Revenue Increases 22% Over Q4Acreage Q1 Revenue Increases 22% Over Q4

*NON-GAAP KEY FIGURES, RECONCILIATION AND DISCUSSION (UNAUDITED)

This press release includes tables of our results under accounting principles generally accepted in the United States of America (GAAP) and adjusted results that exclude the effects of certain items deemed comparable (non-GAAP). We use EBITDA, adjusted EBITDA, adjusted EBITDA from operating activities, adjusted net loss attributable to Acreage and individual store sales performance, among other measures, to evaluate our actual operating performance and to plan and forecast future periods. We believe that the adjusted results presented are relevant and useful information for investors because they reflect our actual operating performance, facilitate comparison of our results with those of other companies and allow investors to analyze performance in the same manner as our management. Because these measures are not calculated in accordance with generally accepted accounting principles, they should not be considered measures of our performance in isolation or as a substitute for our reported results and may not be comparable to similar measures used by other companies. The following tables provide a reconciliation of our GAAP operating results to the adjusted results above:

Acreage Q1 Revenue Increases 22% Over Q4

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Acreage Q1 Revenue Increases 22% Over Q4Acreage Q1 Revenue Increases 22% Over Q4

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