Acreage Holdings Reports First Quarter 2020 Results
NEW YORK, June 25, 2020 (GLOBE NEWSWIRE) — Acreage Holdings, Inc. (“Acreage”) (CSE: ACRG.U) (OTCQX: ACRGF) (FSE: 0VZ) today reported financial results for the first quarter of 2020.
FIRST QUARTER FINANCIAL HIGHLIGHTS (UNAUDITED)
- First quarter reported revenue was $24.2 million, an 88% increase compared to the same period in 2019, and a 15% increase compared to the fourth quarter of 2019.
- Pro forma revenue* was $37.6 million, a 65% increase compared to the same period in 2019, and a 17% increase compared to the fourth quarter of 2019.
- Gross margin was 41.1%, a 10 basis point decrease versus the same period in 2019, and a 400 basis point increase compared to the fourth quarter of 2019.
- Recorded a one-time, non-cash pre-tax charge of $196.0 million, or $164.7 million after taxes, which was associated with Acreage’s previously announced strategy to refocus its operations in certain states. This charge was higher than previously guided due primarily to impairments based on current fair market value in certain states and the write down for its services agreement in Maine, which were not initially contemplated.
- Net loss attributable to Acreage was $172 million, while adjusted net income* attributable to Acreage was $14.7 million.
- Pro forma adjusted EBITDA* was a loss of $11.1 million.
*Pro forma revenue, adjusted net loss and pro forma adjusted EBITDA are non-GAAP measures. Please see discussion and reconciliation of non-GAAP measures below.
With the COVID-19 pandemic affecting millions across the U.S., the cannabis industry was faced with yet another significant challenge. Our dispensary and processing and cultivation associates quickly adapted to these changing dynamics ensuring our patients and customers in need were still served with dignity and respect, while maintaining a safe environment for everyone.
Bill Van Faasen, interim Chief Executive Officer of Acreage
Additionally, I am pleased with the reacceleration of our reported and pro forma revenue as our wholesale business continues to ramp and our dispensaries continue to mature.
EARNINGS CALL DETAILS
Acreage will host a conference call with management on Friday, June 26th at 8:30 A.M. Eastern Daylight Time. The call will be webcast and can be accessed at investors.acreageholdings.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software.
ABOUT ACREAGE HOLDINGS, INC.
Headquartered in New York City, Acreage is a vertically integrated, multi-state operator of cannabis licenses and assets in the U.S. Acreage is dedicated to building and scaling operations to create a seamless, consumer-focused branded cannabis experience. Acreage debuted its national retail store brand, The Botanist in 2018 and its award-winning consumer brands, The Botanist and Live Resin Project in 2019.
On June 27, 2019 Acreage implemented an arrangement under section 288 of the Business Corporations Act (British Columbia) (the “Current Arrangement”) with Canopy Growth Corporation (“Canopy Growth”) pursuant to an arrangement agreement dated April 18, 2019, as amended on May 15, 2019 (the “Arrangement Agreement”). On June 23, 2020, Canopy Growth and Acreage entered into an agreement (the “Proposal Agreement”) proposing to amend certain the terms of the Current Arrangement and the Arrangement Agreement (collectively, the “New Arrangement”). Pursuant to the Current Arrangement, Canopy Growth has an option to acquire all of the issued and outstanding shares in the capital of Acreage, with a requirement to do so, upon a change in federal laws in the United States to permit the general cultivation, distribution and possession of marijuana (as defined in the relevant legislation) or to remove the regulation of such activities from the federal laws of the United States (the “Triggering Event”), subject to the satisfaction of the conditions set out in the Arrangement Agreement. Pursuant to the Current Arrangement, upon the occurrence or waiver of the Triggering Event, Canopy Growth will, subject to the satisfaction or waiver of certain conditions to closing set out in the Arrangement Agreement, acquire (the “Acquisition”) each of Acreage’s class A subordinate voting shares (the “Subordinate Voting Shares”) (following the automatic conversion of the Class B proportionate voting shares (“Proportionate Voting Shares”) and Class C multiple voting shares of Acreage into Subordinate Voting Shares) in exchange for the payment of 0.5818 of a common share of Canopy Growth per Subordinate Voting Share (subject to adjustment in accordance with the terms of the Arrangement Agreement), until such time as amended in accordance with the New Arrangement. If the New Arrangement is consummated, among other things, the Subordinate Voting Shares will be exchanged for 0.7 of a Class E subordinate voting share (each whole share being a “Fixed Share”) and 0.3 of a Class D subordinate voting share (each whole share being a “Floating Share”) and the Proportionate Voting Shares will be exchanged for 28 Fixed Shares and 12 Floating Shares. In addition to various amendments to the covenants and restrictions contained in the Arrangement Agreement, the New Arrangement will provide Canopy Growth with (i) an option to acquire all of the issued and outstanding Fixed Shares in exchange for 0.3048 of a common share of Canopy Growth (each whole share, a “Canopy Growth Share”) per Fixed Share, with a requirement to do so, upon a Triggering Event, subject to the satisfaction of the conditions set out in Arrangement Agreement (as amended by the New Arrangement), and (ii) an option, exercisable in Canopy Growth discretion, to acquire the outstanding Floating Shares at the time that it acquires the Fixed Shares, for cash or Canopy Growth Shares, as Canopy Growth may determine, at a price based upon the 30-day volume-weighted average trading price of the Floating Shares on the Canadian Securities Exchange relative to the trading price of the Canopy Growth Shares on the New York Stock Exchange at that time, subject to a minimum of US$6.41 per Floating Share.
For more information about the Current Arrangement and the Acquisition please see the respective information circulars of each of Acreage and Canopy Growth dated May 17, 2019, which are available on Canopy Growth’s and Acreage’s respective profiles on SEDAR at www.sedar.com. For more information about the New Arrangement, please see Acreage’s press release dated June 25, 2020 and the subsequent public filings that may be made by Acreage from time to time in respect thereof, which are available under Acreage’s profile on SEDAR at www.sedar.com. For additional information regarding Canopy Growth, please see Canopy Growth’s profile on SEDAR at www.sedar.com.
*NON-GAAP MEASURES, RECONCILIATION AND DISCUSSION (UNAUDITED)
This release contains tables that reconcile our results of operations reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”) to adjusted results that exclude the impact of certain items identified as affecting comparability (non-GAAP). We use EBITDA, adjusted EBITDA, adjusted net loss attributable to Acreage, managed results of operations, and pro forma results of operations, among other measures, to evaluate our actual operating performance and for planning and forecasting future periods. We believe the adjusted results presented provide relevant and useful information for investors because they clarify our actual operating performance, make it easier to compare our results with those of other companies and allow investors to review performance in the same way as our management. Since these measures are not calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, our reported results as indicators of our performance, and they may not be comparable to similarly named measures from other companies. The tables below reconcile our results of operations in accordance with GAAP to the adjusted results mentioned above:
Due to the Company’s transition from IFRS to U.S. GAAP, certain expenses related to leased assets formerly classified as depreciation and interest expense are now included in EBITDA as a general and administrative expense. The Company’s lease expenses associated with non-finance leases were $2,337 and $1,141 in Q1’20 and Q1’19, respectively.
Managed results of operations are GAAP reported results plus the results of all entities for which we provide operational assistance to through management or consulting services or other agreements. Such entities operate independently and Acreage has no control over their operations. We do not consolidate revenue from these entities due to lack of control.
Pro forma results of operations are managed results, plus the pre-acquisition results for all acquired entities from the beginning of the applicable period presented through the date prior to the acquisition date.
Get ahead of the crowd by signing up for 420 Investor when it becomes available again. It’s the largest & most comprehensive premium service for cannabis investors since 2013.