Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jushi Holdings Inc (JUSHF, Financial) reported a gross profit margin improvement to 45.4% from 43.6% year-over-year, indicating better cost management and operational efficiencies.
- The company achieved a 73% year-over-year increase in sales in Ohio, showcasing strong growth potential in this market.
- Jushi Holdings Inc (JUSHF) is actively expanding its retail footprint with plans to open seven new stores by mid-2025, representing a 20% increase in its store base.
- The company successfully refinanced its first lien credit facility, which should improve its financial flexibility and support future growth initiatives.
- Jushi Holdings Inc (JUSHF) is implementing a 'seven and seven' program to significantly increase its retail presence, aiming for a 40% increase in store count by mid-2026.
Negative Points
- Revenue for the third quarter decreased to $61.6 million from $65.4 million in the prior year, primarily due to price compression and increased competition.
- The company faced operational challenges in Pennsylvania and Massachusetts, leading to missed sales opportunities and impacting overall performance.
- Jushi Holdings Inc (JUSHF) experienced a net loss of $16 million for the third quarter, although this was an improvement from the previous year's loss.
- The company had to discount products in Virginia due to regulatory changes, which negatively impacted margins by approximately 700 basis points.
- Jushi Holdings Inc (JUSHF) is dealing with affordability challenges among consumers, exacerbated by macroeconomic factors such as inflation and high interest rates.
Q & A Highlights
Q: Can you explain the factors that led to Ohio being a money-losing state despite a 73% increase in sales year-over-year?
A: Jim Cacioppo, CEO - The loss was primarily due to a $700,000 non-cash inventory write-down and increased SG&A expenses related to ramping up operations for new dispensaries. These issues are expected to be resolved moving forward.
Q: What are the expected prices and funding mix for your Ohio acquisitions?
A: Jim Cacioppo, CEO - We are not disclosing specific prices due to competitive reasons. The acquisitions involve a combination of cash and seller notes. We believe we are getting a fair deal and creating EBITDA at a reasonable multiple.
Q: Are there any other non-core assets you are considering selling?
A: Jim Cacioppo, CEO - We continuously evaluate our asset base for potential sales. The focus is on assets that do not contribute to cash flow or margins. We have a history of trading around our asset base to optimize our portfolio.
Q: How is the competition from hemp derivative companies affecting your operations?
A: Jim Cacioppo, CEO - The impact is widespread and difficult to quantify due to the illicit nature of these operations. It is a significant gap in federal regulation, and we are advocating for stricter enforcement to support the legal cannabis industry.
Q: What is the outlook for recreational cannabis legislation in Pennsylvania and Virginia?
A: Jim Cacioppo, CEO - Pennsylvania has active legislative efforts and a supportive governor, making it a potential game-changer for us. In Virginia, the situation is less certain, but we remain hopeful for progress, especially if political changes occur.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
