While Canadian pot companies continue to bleed cash, American multi-state operator Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) has posted growing profits in its latest quarter beating all earnings expectations.
The Florida-based weed retailer reported Monday its third-quarter revenue of US$70.7 million, ahead of Wall Street’s US$65.6 million consensus estimate, and positive adjusted earnings before interest, taxes, depreciation and amortization of US$36.9 million. Net income for the three months ended September 30 came in at US$60 million.
The profitable quarter comes days after a crop of notable Canadian pot stocks like Canopy Growth (TSX: WEED) missed estimates last week, hammering the sector. Canopy shares are down around half on the year, while Trulieve stock is up by a third.
The strong results from Florida’s largest cannabis company might further illustrate the future is greener for operators south of the border.
“The disappointing results in recent quarters from large Canadian-based cannabis companies have weighted on the wider industry,” Trulieve CEO Kim Rivers said in a conference call. “Their financial losses, write-downs and negative revenue trends are causing investors both institutional and retail to increasingly demand better results and shareholder value.”
Rivers was also recently recognized as one of the most influential women in the cannabis industry at the High Times Female 50, which celebrates female executives, activists, scientists, patients and politicians.
“This is Trulieve’s opportunity. Trulieve will stand above the pack,” Rivers said.
— Trulieve (@Trulieve) November 14, 2019
Trulieve continues sunshine state domination
Trulieve’s revenue climbed 22 per cent from the June quarter as the company built its 35th store in the sunshine state.
Florida pot shops also got a boost this in the last quarter when the state gave the green light for the sale of flower products, instead of just concentrates and vapes. Trulieve said that helped some store sales grow by 43 per cent for dispensaries that were open for a year or longer.
Canaccord Genuity analyst Derek Dley said in a note the company held 53 per cent market share for cannabis concentrates and 46 per cent for dry flower in Florida in the last quarter, as reported by Bloomberg News. It also increased its patient count to 214,827, more than 80 per cent of active patients in the state.
The company also operates in California, Massachusetts and Connecticut.
Rivers said that Trulieve has been on a cash raising spree, completing two debt offerings and a property sale-leaseback that leaves the company with around US$100 million in its vault.
Trulieve will have the option of growing by acquisition as Rivers said some cash-strapped rivals have come knocking looking for buyouts.
The company reaffirmed its revenue guidance on the high end of US$240 million for 2019 and US$400 million for 2020, with cash flows up to US$105 million and US$160 for the same years.
GMP Securities analyst Rob Fagan, along with Dley, said Trulieve’s guidance is conservative, according to Barron’s.
Fagan thinks the company’s stock could double to $30. Shares of Trulieve closed up 2.1 per cent Tuesday to $15.26 on the Canadian Securities Exchange.