Missouri legalization impacted Illinois sales.
Jushi Holdings Inc. (CSE: JUSH) (OTCQX: JUSHF) announced its financial results for the first quarter ending March 31, 2023. Total revenue increased 12.9% to $69.9 million over last year’s $61.9 million, but fell sequentially by 9% from $76.8 million. It also missed the Yahoo! Finance average analyst estimate for revenue of $74 million.
Jushi said that the increase in revenue was due to new dispensary openings from build outs and acquisitions. The company acquired Apothecarium and NuLeaf in Nevada during March 2022 and April 2022, respectively, and opened new Beyond Hello dispensaries in Ohio, Pennsylvania, and Virginia in 2022. The increase in retail revenue however, was partially offset by declines in revenue in:
- Illinois, due to the impact of the state of Missouri moving to recreational use
- Pennsylvania due to increased retail competition and lower retail market prices.
The net loss of $12.4 million, was an improvement of $7.3 million over last year’s net loss of $19.8 million in the same time period. The loss per share was ($0.06), which was better than the analyst estimate for ($0.12).
“In the first quarter, our efficiency and cost savings plan resulted in very encouraging improvements to our margins and profitability,” said Jim Cacioppo, Chief Executive Officer, Chairman, and Founder of the Company. “Our aggressive steps to responsibly right size the business, improve efficiencies and manage costs created an approximate 13.0% year-over-year reduction in operating expenses. In April, we further executed against our cost-savings initiatives with the implementation of our new retail labor model which is expected to meaningfully cut our labor hour costs. Additionally, we continue to make upgrades throughout our grower-processor footprint to drive operational efficiencies for further savings throughout the remainder of the year.”
Expenses Trimmed
Operating expenses were trimmed to $32.5 million versus $37.3 million last year, a decrease of $4.9 million, or 13.0% year-over-year. Salaries, wages, and employee-related expenses decreased due to a reduction in the number of employees as the company works to right-size the organization. At the end of March, Jushi had approximately $19.4 million of cash, cash equivalents and restricted cash.
In 2023, the company said it expects capital expenditures for new projects to be approximately $13.0 million, of which approximately $6.0 million is discretionary growth capital, as a substantial amount of its expansion projects in Pennsylvania and Virginia were completed in fiscal year 2022. The company said it had approximately $209.0 million in principal amount of total debt, excluding leases and property, plant, and equipment financing obligations.
Expansion Plans
Mr. Cacioppo continued, “With five state-level vertically integrated operations that are all still ramping up to our desired operating performance, we are increasing our ability to sell-through Jushi-branded products at our own retail network and continuing to grow our wholesale operations. Our wholesale business revenue has nearly doubled year-over-year, while retail sales increased over 7.5% year-over-year. We look forward to the launch of our new high-end flower line, Hijinks, and other innovative product forms across our house of brands to better serve customers and grow profitability of the Company. I would note that our grower-processor operations had significant improvement in gross profit margin fueled by efficiency gains. We realized benefits from cost savings initiatives, ramp-up of new production, and other enhancements made at our Massachusetts, Pennsylvania, and Virginia facilities along with improved retail operating performance.”
Mr. Cacioppo concluded, “In the second quarter, we were pleased to strengthen our capital position with a $20.0 million debt financing to strengthen our balance sheet. Through our cost controls, ramp-up of our grower processors, and our operational discipline our goal is to generate positive operating cash flow for debt pay-downs by the fourth quarter of 2023.” (Full Story)