Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) (FSE: 6CQ), a leading name in the branded cannabis market and operator of Sunnyside dispensaries, has announced its financial results for the third quarter of 2024, showcasing the effectiveness of its cash flow-focused strategy. The company reported significant growth in revenue and operating cash flow, reinforcing its position as a top player in the cannabis industry.
In the third quarter ended September 30, 2024, Cresco Labs achieved impressive financial results, reporting revenue of $180 million. The company generated a gross profit of $93 million, which adjusted for certain factors, increased to $95 million. This resulted in an adjusted gross margin of 53% of revenue, reflecting a year-over-year improvement of 250 basis points. Selling, general, and administrative expenses (SG&A) amounted to $57 million; however, the company successfully reduced its adjusted SG&A by 6% compared to the previous year, bringing it down to $53 million, or 30% of revenue. Despite a net loss of $8 million, Cresco Labs reported an adjusted EBITDA of $51 million, marking a 5% increase year-over-year and resulting in an adjusted EBITDA margin of 29%, which is up by 280 basis points from the prior year. Furthermore, the company achieved record operating cash flow of $49 million and free cash flow of $43 million during this period.
These results underscore Cresco Labs’ commitment to maintaining financial strength while navigating a competitive landscape. The company retained its leading market share in Illinois, Pennsylvania, and Massachusetts and improved its position to within the top three in Ohio.
Cresco Labs is committed to normalizing and professionalizing the cannabis industry through a consumer packaged goods (CPG) approach that focuses on building national brands and enhancing the customer retail experience. The Company cultivates, produces and distributes branded products and has a diverse portfolio which includes brands like Cresco, High Supply, FloraCal, Good News, Wonder Wellness Co., Mindy’s, and Remedi. Operating a national network of dispensaries under the Sunnyside brand, Cresco Labs prioritizes building trust with patients and consumers while providing education and convenience
CEO Charlie Bachtell emphasized the company’s strategic focus on winning in key markets with a beloved brand portfolio and exceptional retail operations. “Our Q3 results underline the success of this strategy with $180 million in revenue at a 29% adjusted EBITDA margin and, most importantly, $49 million of operating cash flow, our highest ever,” he stated.
Bachtell also highlighted the company’s ability to generate $103 million in operating cash flow year-to-date, which enables reinvestment into core operations and exploration of new growth opportunities. Despite setbacks regarding cannabis legalization initiatives in Florida, Bachtell noted significant bipartisan support for cannabis reform at the federal level.
As of September 30, 2024, Cresco Labs reported current assets totaling $312 million, which included cash and cash equivalents amounting to $157 million. The company holds senior secured term loan debt of $390 million and a mortgage loan of $18 million. Notably, on October 25, 2024, Cresco Labs repurchased $40 million of its senior loan without incurring prepayment penalties.
Cresco Labs is poised for future growth as it continues to strengthen its balance sheet while exploring new markets. The company plans to host a conference call on November 8, 2024, at 8:30 AM ET to further discuss its financial results and strategic outlook.
Cresco Labs’ third-quarter performance demonstrates the effectiveness of its cash flow-focused strategy amid an evolving regulatory landscape. With strong revenue growth and record operating cash flow, the company is positioned to capitalize on future opportunities within the cannabis industry while maintaining its commitment to financial discipline and operational excellence.
