First Quarter Earnings Reports Show Strong and Improving American Cannabis Industry Fundamentals

The Public Cannabis Company Revenue & Income Tracker, managed by New Cannabis Ventures, ranks the top revenue producing cannabis stocks that generate industry sales of more than US$12.5 million per quarter (C$15.5 million). This data-driven, fact-based tracker will continually update based on new financial filings so that readers can stay up to date. Companies must file with the SEC or SEDAR and be current to be considered for inclusion. Please note that we have raised the minimum quarterly revenue several times as the industry has scaled up, including from US$10.0 million in November 2020, US$7.5 million in June 2020, US$5.0 million in October 2019 and US$2.5 million in May 2019.

44 companies currently qualify for inclusion, with 36 filing in U.S. dollars and 8 in the Canadian currency, which is the same as when we reported a few weeks ago. We added  Gage Growth (CSE: GAGE) (OTC: GAEGF), which reports in American dollars, and removed Auxly Cannabis (TSX: XLY) (OTC: CBWTF), which reports in Canadian dollars. Also, we have left Aphria in the Canadian section for now, but we will remove it when Tilray (NASDAQ: TLRY) reports in July. Additionally, we have left GW Pharma in the American dollar reporting section and will remove it or replace it with its acquirer, Jazz Pharmaceutical (NASDAQ: JAZZ), depending upon how they break out its financial performance.

In May 2019, we added an additional metric, “Adjusted Operating Income”, as we detailed in our newsletter. The calculation takes the reported operating income and adjusts it for any changes in the fair value of biological assets required under IFRS accounting. We believe that this adjustment improves comparability for the companies across IFRS and GAAP accounting. We note that often operating income can include one-time items like stock compensation, inventory write-downs or public listing expenses, and we recommend that readers understand how these non-cash items can impact quarterly financials. Many companies are moving from IFRS to U.S. GAAP accounting, which will reduce our need to make adjustments. Please note that our rankings include only actual reported revenue and not pro forma revenue. We also note that companies with non-cannabis operations must provide segment-level financial reports that detail not only revenue but also operating profit to be included in the tracker.

Since our last update, several companies that report in American dollars provided quarterly financials, including, among the largest revenue-generating companies, Cresco Labs (CSE: CL) (OTC: CRLBF), Ayr Wellness (CSE: AYR.A) (OTC: AYRWF), TILT Holdings (CSE: TILT) (OTC: TLLTF) and Jushi Holdings (CSE: JUSH) (OTC: JUSHF), each of which reported revenue in excess of $40 million during Q1. As we discussed last month, American cannabis operators are scaling very well, with strong revenue growth and improving profitability. The reports over the second part of the month reinforced this view.

American Dollar Reporting – Public Cannabis Company Revenue Tracker

None of the companies currently on the list of leading revenue generators that report in American dollars are scheduled to report financials in June.

On June 1st, Canopy Growth (TSX: WEED) (NASDAQ: CGC) reported a slight decline in revenue sequentially as it narrowly missed analyst expectations for revenue, which had been expected to increase to C$155 million. The company’s adjusted EBITDA was considerably worse than the -C$64 million analysts had forecast at -C$94 million. The report rounded out several others during the month where Canadian LPs missed expectations.

Canadian Dollar Reporting – Public Cannabis Company Revenue Tracker

During June, Fire & Flower (TSX: FAF) (OTC: FFLWF) will report its fiscal Q1, HEXO Corp (TSX: HEXO) (NYSE: HEXO) will report its fiscal Q3 and High Tide (TSXV: HITI) (NASDAQ: HITI) will report its fiscal Q2. According to Sentieo, Fire & Flower revenue is expected to increase 6% sequentially and 99% from a year ago to C$46 million, with adjusted EBITDA of C$1.9 million. HEXO revenue is expected to increase 5% sequentially to C$34.4 million, up 56% from a year ago, with adjusted EBITDA of about $700K. High Tide is expected to generate revenue of C$41.1 million, which would be up 7% sequentially and 100% from a year ago, with adjusted EBITDA of C$4.3 million.

For those interested in more information about companies reporting in June, we publish comprehensive earnings previews for subscribers at 420 Investor, including for Focus List member Fire & Flower.

Visit the Public Cannabis Company Revenue Tracker to track and explore the complete list of qualifying companies. We have recently created a way for our readers to access our library of Revenue Tracker articles. For our readers who are interested in staying on top of scheduled earnings calls in the sector, we have have created and continually update the Cannabis Investor Earnings Conference Call Calendar.

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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