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Ayr Wellness Reports Second Quarter 2021 Results
- Q2 Revenue up 222% Y/Y to $91.3 Million, up 56% sequentially
- Q2 Adjusted EBITDA of $27.4 million on a US GAAP basis, up 225% Y/Y and 49% sequentially
- US GAAP Operating Loss of $24.9 Million Included Non-Cash, One-Time Expenses, and Non-Operating Adjustments totaling $52.3 Million
- Increasing 2022 Revenue Target to $800 Million, with $300 Million of AEBITDA Reflecting Substantial Investments in Growth
- Company Provides 3Q21 Guidance for a targeted $100 Million in Revenue, up Over 211% Y/Y and 10% Q/Q, with Adjusted EBITDA Flat Sequentially Over Q2
- Announced Three Proposed Acquisitions, Including Levia, the Leading Branded Cannabis Beverage Company, Adding Illinois as Eighth State and Significantly Expanding Cultivation Capacity in Nevada
NEW YORK, Aug. 16, 2021 (GLOBE NEWSWIRE) — Ayr Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO), is reporting financial results for the three and six months ended June 30, 2021. Unless otherwise noted, all results are presented in U.S. dollars. As of first quarter 2021, the Company is reporting in US GAAP.
Jonathan Sandelman, CEO of Ayr Wellness, said, “In the last 12 months we’ve laid out an ambitious plan for growth – growing our footprint and building our brands on the foundation of being the largest scale producer of high-quality flower in the country. Because everything starts with the plant.”
“I am incredibly pleased to see those plans becoming reality, with Q2’s exceptional 222% year-over-year growth in revenue and 56% growth over last quarter. We are seizing a massive opportunity to position ourselves to be the best cannabis CPG company in the US. Today our brands are in over 280 stores, up 3 times year-over-year, and they aren’t slowing down. We’re seeing increased demand for our products and accelerating growth in our wholesale business. We plan to continue to invest in the growth of Ayr brands nationally – Kynd premium flower, Origyn Extracts, and our most recently announced acquisition of Levia – and the strategic marketing and operational talent behind them,” Mr. Sandelman continued.
As we double down on our success, we have the opportunity to continue to grow our top line at 100%+ rates year-over-year. We are raising our 2022 revenue target to $800 million, and we are reinvesting in our business to accelerate that growth.
Jonathan Sandelman, CEO of Ayr Wellness
Second Quarter and Recent Highlights:
- Announced proposed acquisition of Cultivauna, LLC, the owner of Levia, a top selling brand of cannabis infused seltzers
- Announced the proposed acquisition of Herbal Remedies, adding two dispensaries in Illinois; won additional retail license in Bloomington-Normal, Illinois with partner, Land of Lincoln
- Announced the proposed acquisition of Tahoe Hydroponics Company, LLC (“Tahoe Hydro”), an award-winning cultivator and one of Nevada’s top producers of high-quality flower
- Hired over 400 new employees across all levels, deepening our bench in marketing, technology and operational professionals focused on driving scalable processes across our regional footprint
- Continued improvement in cultivation, leading to a meaningful increase in yield and production, up 50% since closing the acquisition based on grams/sq. ft. harvested
- Increased retail performance driven by improved quality and availability of a wider selection of strains, and updated product offerings, including the addition of Origyn Extracts and Big Pete’s Cookies brands; transaction count up 40% in July vs. January, average basket size up 38%, and new patients up 27%
- Since closing on February 25, 2021, the Company has opened eight additional retail locations, bringing total store count to 39, the third largest retail footprint in Florida
- An additional three stores are expected to open by the end of the third quarter and the Company has sited an additional eight new locations, bringing its year-end Florida dispensary target to 50
- The Company has begun construction of 20 acres of hoop houses in Florida, expected to be completed this fall
- Western Region:
- Revenue at newly opened sixth dispensary in Nevada, the closest dispensary to the Las Vegas airport, has grown to just under $1 million/month after less than six months of operations
- Completed 20,000 ft2 processing facility expansion outside of Las Vegas and began production in July of manufactured products such as edibles, concentrates and vapes
- Chandler, AZ production facility came on-line in July, adding 10,000 sq. ft. of cultivation capacity and allowing for the first sale of Ayr products in the wholesale market
- Arizona retail revenue up nearly 50% year-over-year (on a same store basis) following the approval of adult-use sales in the market
- Construction of 80,000 sq. ft. Phoenix cultivation expected to be completed in Q4
- Successful launch of Revel and Seven Hills flower in Pennsylvania, both of which sold out during the first week of wholesale product sales
- Pennsylvania combined retail revenues reached over $1.5 million per month in July after being open for only an average of four months
- Three additional Pennsylvania dispensaries are scheduled to open later this year, bringing the total to six
- Acquisition of Garden State Dispensary in New Jersey on track to close in the coming weeks
- Provisional licenses received for three Adult Use Dispensaries in Greater Boston
- Selling to 112 of Massachusetts’s 148 adult-use dispensaries, and Ayr remains a leading wholesaler in the state
- Construction underway on 100,000 ft2 new cultivation and production facility in Milford, MA that is expected to add 75,000 ft2 of new canopy to bring Ayr to the maximum capacity allowed under its Massachusetts license
- Added eighth state, Illinois, to growing footprint with the proposed acquisition of Herbal Remedies Dispensaries and license win by affiliated company, Land of Lincoln, LLC
- Began production of vape carts, concentrates, RSO, and tinctures as well as Highly Edible gummies at processing facility in Ohio
Second Quarter Financial Highlights ($ in millions, excl. margin items; in US GAAP)
¹For comparison purposes, Q2 2020 has been restated to be consistent with US GAAP. Adjusted EBITDA and Adjusted Gross Profit are non-GAAP measures. See Definition and Reconciliation of Non-GAAP Measures below. For a reconciliation of Operating Loss to Adjusted EBITDA as well as Gross Profit to Adjusted Gross Profit, see reconciliation table appended to this release.
Based on the results to date, management is targeting 3Q21 revenue of approximately $100 million, which reflects growth of over 10% quarter-over-quarter and 211% year-over-year. Adjusted EBITDA on a US GAAP basis is expected to be in line with the second quarter, following accelerated investments in branding, new markets and growth projects.
The Company is increasing its target for 2022 revenue to $800 million, up from $725 million, and is reiterating guidance for 2022 Adjusted EBITDA of $300 million reflecting substantial investments in growth.
The Company’s expectations for 3Q21 and 2022 are based on US GAAP reporting and subject to the assumptions and risks detailed in the MD&A for the period ending June 30, 2021 as filed on SEDAR.
Ayr Wellness Footprint (Pro-forma)⁵
¹Includes two co-located Adult Use/Medical dispensaries (Somerville and Watertown), one Adult Use-only dispensary in Boston and one Medical-only dispensary in Needham
²39 currently open, three are currently under construction or pending OMMU approval
³Source: Arcview, MJBiz Daily, Company estimates
⁵Including pending transactions in NJ, IL and NV
Notice of Change of Auditor
Following its conversion to U.S. GAAP as a U.S. filer last quarter, on August 16, 2021 the Company has released a ‘Notice of Change of Auditor’ from Canadian mid-cap specialist MNP LLP to the U.S. based firm Marcum LLP, and top U.S. audit firm with a substantial cannabis practice. The Company and MNP have no disagreements or unresolved issues resulting in this change.
Ayr CEO Jonathan Sandelman, Co-COO Jennifer Drake and CFO Brad Asher will host the conference call, followed by a question and answer period.
Conference Call Date: Wednesday, August 17, 2021
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MATTIO Investor Relations at IR@mattio.com.
The conference call will be broadcast live and available for replay here.
A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through September 15, 2021.
Toll-free replay number: (855) 669-9658
International replay number: (412) 317-0088
Replay ID: 7438
Certain financial information reported in this news release is extracted from Ayr’s Consolidated Financial Statements for the quarter June 30, 2021 and 2020. Ayr files its financial statements on SEDAR and with the SEC. All financial information contained in this news release is qualified in its entirety by reference to such financial statements and MD&A.
Definition and Reconciliation of Non-GAAP Measures
The Company reports certain non-GAAP measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable GAAP measures.
Rather, these are provided as additional information to complement those GAAP measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under GAAP. Non-GAAP measures used to analyze the performance of the Company’s businesses include “Adjusted EBITDA” and “Adjusted Gross Profit.”
The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the GAAP measures.
“Adjusted EBITDA” represents loss from operations, as reported, before interest and tax, adjusted to exclude non-recurring items, other non-cash items, including depreciation and amortization, and further adjusted to remove non-cash stock-based compensation, the accounting for the incremental costs to acquire cannabis inventory in a business combination, acquisition related costs, and start-up costs.
Adjusted Gross Profit
“Adjusted Gross Profit” represents gross profit, as reported, adjusted to exclude the accounting for the incremental costs to acquire cannabis inventory in a business combination, interest, depreciation and amortization, and start-up costs.
A reconciliation of how Ayr calculates Adjusted EBITDA and Adjusted Gross Profit is provided in the tables appended below. Additional reconciliations of Adjusted EBITDA, Adjust Gross Profit and other disclosures concerning non-GAAP measures are provided in our MD&A for the three months ended June 30, 2021.
Assumptions and Risks
Forward-looking information in this subject to the assumptions and risks as described in our MD&A for
June 30, 2021.
For more information about the Company’s 2Q2021 operations and outlook, please view Ayr’s corporate presentation posted in the Investors section of the Company’s website at www.ayrwellness.com.
About Ayr Wellness Inc.
Ayr is an expanding vertically integrated, U.S. multi-state cannabis operator, focused on delivering the highest quality cannabis products and customer experience throughout its footprint. Based on the belief that everything starts with the quality of the plant, the Company is focused on superior cultivation to grow superior branded cannabis products. Ayr strives to enrich consumers’ experience every day through the wellness and wonder of cannabis.
Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrwellness.com.
Head of Investor Relations
T: (646) 977-7914
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