Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TerrAscend Corp (TSNDF, Financial) maintained its #1 market share position in New Jersey, with top positions in multiple product categories.
- The company reported its ninth consecutive quarter of positive cash flow from continuing operations and its fifth consecutive quarter of positive free cash flow.
- TerrAscend Corp (TSNDF) announced a strategic entry into the Ohio market through the acquisition of a high-performing dispensary.
- The company successfully closed a $140 million non-dilutive debt financing, providing financial flexibility for future growth.
- TerrAscend Corp (TSNDF) initiated a $10 million stock buyback program, reflecting confidence in its future and commitment to enhancing shareholder value.
Negative Points
- Net revenue for the third quarter decreased to $74.2 million from $77.5 million in the previous quarter, primarily due to declines in New Jersey and Michigan.
- The company reported a net loss from continuing operations of $21.4 million, a significant increase from the $6.2 million loss in the previous quarter.
- Wholesale revenue in New Jersey declined due to increased competition and a decrease in average order size.
- Retail revenue in Pennsylvania declined by 11% year-over-year, indicating challenges in maintaining growth in this market.
- Adjusted EBITDA from continuing operations decreased to $13.7 million from $15.6 million in the previous quarter, driven by lower revenue.
Q & A Highlights
Q: How does TerrAscend view its valuation and capital allocation strategy, considering the current market conditions and M&A opportunities?
A: Jason Wild, Executive Chairman, stated that the company sees its stock as a compelling value and is weighing this against other opportunities for cash use. They are being opportunistic in looking for the best uses for their cash, including deals like the recent Ohio acquisition.
Q: Can you provide insights into the Q4 guidance and expectations for market performance?
A: Ziad Ghanem, President and CEO, explained that the Q4 guidance does not include the Ohio acquisition due to uncertain approval timelines. They expect similar performance across states, with growth in Maryland and stable retail in New Jersey, while Pennsylvania faces pricing pressure. The guidance is flat to slightly down, but they aim to exceed it.
Q: What are the new capabilities expected from the Boonton expansion, and how significant are the facility expansions in Boonton and Hagerstown for growth?
A: Keith Stauffer, CFO, mentioned that the Boonton expansion will include new edibles and concentrate capabilities. The expansions are expected to drive growth similar to Maryland's 26% sequential growth, with potential for significant increases in wholesale business and market share.
Q: Why did the EBITDA performance not meet the previous guidance, and what are the plans to resume top-line growth?
A: Keith Stauffer clarified that the guidance was for sequential performance, and the EBITDA decline was due to a 4% revenue drop. Ziad Ghanem added that growth levers include wholesale in New Jersey and Maryland, with optimism for Pennsylvania's potential recreational market in 2025. M&A and transformative deals are also key growth strategies.
Q: What is TerrAscend's strategy for acquisitions in Ohio, and how does it view the Florida market post-vote?
A: Jason Wild confirmed active pursuit of mom-and-pop acquisitions in Ohio, focusing on high-performing dispensaries. Regarding Florida, they are exploring entry opportunities, expecting more favorable prices following the recent vote outcome.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
