Cannabis Watch: Green Thumb Industries rallies as profit doubles
Green Thumb Industries Inc. managed to double its profit as it continues to scale up its legal cannabis business in the U.S., the company said.
Shares of Green Thumb Industries
CEO Ben Kovler told MarketWatch the company has mostly avoided the price pressure pitfalls of the California market with only one location on Pasadena, as it works to grow its businesses elsewhere.
While investors can’t buy Green Thumb stock on Robinhood because it’s a U.S.-based plant-touching company, the company has issued stock on the Canadian Securities Exchange and it also raises capital through debt offerings.
“There’s differentiation among U.S. operators,” Kovler said. “You want to invest in management teams you can trust. We continue to lead with our numbers and let the results speak for themselves.”
Asked about Virginia’s new Republican governor-elect Glenn Youngkin and whether he’ll hamper the legal cannabis business in the state, Kovler said no one is against jobs or tax revenue, which cannabis will provide. Virginia’s legal cannabis law went into effect in July, and the state is currently crafting regulations to allow for more dispensaries to operate.
“We think we’ll see positive momentum in Virginia,” he said. “Officials there are working on it.”
Looking ahead, Kovler said it’s harder to predict the company’s quarter-by-quarter performance so it doesn’t offer specific performance targets. Its business is affected by factors beyond its control such as when New Jersey will award licenses for adult use cannabis sales or developments on the federal level, he said.
Longer-term trends remain favorable, however, as the legal cannabis industry grows from about $25 billion annual sales in the U.S. now to $75 billion in the next decade.
For now, Green Thumb Industries pays about 7% of its cash generation toward servicing its debt -– the lowest figure among its competitors, he said.
The Chicago and Vancouver-based cannabis company said it earned $20.2 million, or 8 cents a share, up from net income of $9.64 million, or 4 cents a share, in the year-ago quarter.
Revenue increased by 49% to $234 million. Adjusted Ebitda jumped 52.6% year-over-year to $81 million.
The revenue figure matched analyst estimates, but adjusted Ebitda fell short by about $2 million on higher expenses.
Alliance Global Partners analyst Aaron Grey said Green Thumb “continued its consistent performance with a quality quarter amid a more challenging backdrop.”
The company maintained its growth despite pricing pressure as it focuses on Connecticut, New Jersey, New York and Virginia, he said.
“With $286 million cash on the balance sheet, we look for the company to remain prudently active on the M&A front as the company targets attractive limited license markets, while also investing behind existing markets,” Grey said