Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) says it’s on track to hit revenue estimates for 2021, though on the lower end, as sales inch up and losses mount.
In its latest earnings report released Tuesday, for the period ended Sept. 30, the firm says revenue inched up 2 per cent to a record US$317 million, from US$312 million in the previous quarter.
Gross margins on weed sales are reported at 45.6 per cent, compared to 49.6 per cent from the last one.
Retail sales made up the bulk of revenues, growing almost 2 per cent to US$224 million, and wholesale went up about 3 per cent to US$92 million.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) went down 15 per cent to US$71 million from US$84 million, while the adjusted EBITDA margin was 22.5 per cent, compared with 27.0 per cent in the prior quarter.
The change reflects “lower gross margin and higher SG&A (selling, general and administrative) expense related to increased headcount in support of new store openings, higher travel costs, and marketing in support of new product rollouts.”
Last year, adjusted EBITDA was US$42 million, and the 69 per cent year-over-year increase is mainly attributed to revenue growth.
But net losses ballooned to US$59 million this period, a 507-per-cent increase from US$9 million, with more expenses and not enough other income to offset them.
“Third quarter 2021 income tax expense included certain discrete items totaling $10.6 million related to the write-off of certain California net operating losses and the year-to-date accrual for late tax payments,” the firm continued.
Compared to the same period last year, the company said a higher operating income was primarily offset by $42 million of higher tax expense, $25 million of higher other expense and $8 million of higher interest expense.
By the end of the quarter, Curaleaf had opened 109 pot shops.
Cash on hand at the end of the period totalled US$317 million, and there were US$342 million of outstanding debt net of unamortized debt discounts.
“While we faced some transient headwinds during the quarter, we continued to execute well against our strategic initiatives, prioritizing growth and gaining market share,” said Boris Jordan, Curaleaf executive chairman.
“As a result, we remain on track to achieve our US$1.2 to US$1.3 billion annual revenue guidance, albeit at the lower end of the range, representing growth of over 90 per cent.”
He added that strategic mergers and acquisitions remain “key pillars” of the firm’s growth plan.
Company stock dipped nearly 4 per cent Tuesday to C$12.30 on the Canadian Securities Exchange.