Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Planet 13 Holdings Inc (PLNH, Financial) reported a 5% sequential increase in total retail revenue, reaching $28.7 million.
- The company achieved a 25% sequential improvement in revenue from its neighborhood superstore, driven by contributions from Florida operations.
- Gross margin improved to 51.9% in Q3 2024, up from 50.1% in Q2 2024, due to increased sales of own-branded products and operational efficiencies.
- The company moved up to the third position in branded sales in Nevada and ranked second in edibles portfolio sales, led by Haha Gummies.
- Planet 13 Holdings Inc (PLNH) has a strong cash position with $29.5 million, which is expected to cover upcoming debt maturities and planned capital expenditures.
Negative Points
- The Las Vegas Superstore experienced a decline in traffic and average spend, mirroring a 3% drop in city visits and a 7% decrease in average spend.
- The company anticipates flat or slightly down revenue in Q4 2024 across all markets except Florida, due to seasonal slowdowns and store closures from hurricanes.
- Adjusted EBITDA decreased to $1.3 million in Q3 2024 from $3.2 million in Q2 2024, driven by lower operating leverage in Florida and Nevada.
- The Florida market faced challenges with product quality during the summer, impacting revenue, although improvements are underway.
- Increased competition and pricing pressure in California and Nevada markets continue to challenge retail performance.
Q & A Highlights
Q: Can you provide an update on the performance in California during the quarter?
A: Dennis Logan, Chief Financial Officer: California's revenue was down about $110,000 quarter-over-quarter and $350,000 year-over-year due to pricing pressure at both retail and wholesale levels. Despite this, we continue to sell 100% of the product from our Coalinga cultivation facility. Bob Groesbeck, CEO, added that the introduction of Haha branded gummies into the wholesale market has been positively received, and there are plans for potential collaborations to drive traffic to the retail location.
Q: What is the status of the Nevada dispensary acquisition, and what are the expected revenue contributions?
A: Dennis Logan, Chief Financial Officer: We are waiting for the transfer of interest approval from the CCB, expecting to close the acquisition by the end of January. The dispensary, located across from the Palms, is expected to generate $2 to $2.5 million per quarter, similar to our other Nevada neighborhood stores.
Q: With the Florida adult-use initiative not passing, what are the next steps and potential impacts on your operations there?
A: Bob Groesbeck, CEO: The initiative can potentially be revisited in two years unless legislative action is taken sooner. Despite the setback, we see opportunities to continue building our store network in Florida, as some competitors may slow down due to over-leverage. We remain optimistic about the medical market and future adult-use potential.
Q: How are you approaching potential new markets, particularly those that are currently medical-only?
A: Dennis Logan, Chief Financial Officer: Our focus remains on Florida and Illinois, with no immediate plans to enter other medical-only markets. We believe Florida offers the most robust opportunity, and we are concentrating our resources there and in our existing markets.
Q: What is your stance on the 280E tax issue, and how does it affect your financial strategy?
A: Dennis Logan, Chief Financial Officer: We have filed amended returns for 2020 to 2023, potentially leading to a $35 million tax refund, though the IRS is expected to contest this. We are monitoring federal developments, including potential rescheduling and banking reforms, which could impact the 280E situation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
