Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Trulieve Cannabis Corp (TCNNF, Financial) reported a 3% year-over-year increase in revenue for the third quarter, reaching $284 million, despite challenges from seasonality and Hurricane Helene.
- The company achieved a gross margin of 61%, driven by efficiencies and low cultivation costs, marking an improvement from the previous quarter.
- Adjusted EBITDA improved by 24% compared to last year, reaching $96 million, with an adjusted EBITDA margin of 34%.
- Trulieve expanded its retail network to 215 locations, including 14 new locations in Florida and one in Pennsylvania, enhancing its market presence.
- The company ended the quarter with a strong cash position of $319 million in cash and short-term investments, providing financial flexibility for future growth.
Negative Points
- Trulieve reported a net loss of $60 million for the third quarter, compared to a net loss of $12 million in the second quarter, partly due to campaign support and nonrecurring charges.
- SG&A expenses increased to $149 million, or 52% of revenue, due to new store opening expenses, technology and infrastructure investments, and campaign support.
- The average basket size declined by 3% compared to last year and 6% versus the second quarter, indicating potential wallet pressure on consumers.
- The company faced temporary store closures due to Hurricane Helene, impacting retail operations and contributing to seasonality challenges.
- Trulieve's net loss per share was $0.33, compared to a loss of $0.05 in the second quarter, highlighting ongoing financial challenges.
Q & A Highlights
Q: Kim, what insights have emerged from your efforts to promote the adult-use cannabis market in Florida, and how do they support your confidence in the passage of Amendment 3?
A: Kim Rivers, CEO: We've seen broad support across various demographics and ideologies, emphasizing education and fighting stigma. Notably, figures like former President Trump have endorsed Amendment 3, and we've engaged with many Floridians, receiving encouraging responses.
Q: Can you share any findings from your retail pilot studies in Florida regarding adult-use sales preparation?
A: Kim Rivers, CEO: We've conducted pilot studies and scenario planning to prepare for adult-use sales. Our infrastructure upgrades, like the web 2.0 and SAP systems, position us well to handle increased transactions and maintain service standards.
Q: How have sales in Ohio performed, and what is the current supply-demand balance?
A: Kim Rivers, CEO: Ohio sales have met expectations, with a 35% increase. We've faced some limitations in footprint and product availability, but we're expanding to better serve the market and plan to introduce our brands by year-end.
Q: Have you noticed any changes in consumer behavior in Florida due to the campaign for Amendment 3?
A: Kim Rivers, CEO: No dramatic changes tied to the campaign, but we've observed more pronounced seasonality and increased frequency of visits due to our loyalty program, which has altered buying patterns.
Q: What factors contributed to the improved gross margins, and how do you plan to manage margins in an adult-use scenario?
A: Kim Rivers, CEO: Margin improvements stem from efficiencies in Florida and other markets. We plan to leverage our strong margin position to remain competitive in pricing, ensuring we attract customers from the black market to a regulated environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
