TerrAscend Corp. TER TRSSF, reported its financial results late Thursday for the first quarter ending March 31, 2022.
First Quarter 2022 Financial Highlights
- Net Sales were $49.7 million as compared to $49.2 million in Q4 2021.
- Gross Profit Margin was 30.5% as compared to 42.3% in Q4 2021.
- Adjusted Gross Profit Margin was 38.4% as compared to 49.8% in Q4 2021.
- Adjusted EBITDA was $3.3 million as compared to $11.9 million in Q4 2021.
- Adjusted EBITDA Margin was 6.6% as compared to 24.2% in Q4 2021.
- Cash and Cash Equivalents totaled $88.4 million as of March 31, 2022.
“While revenue and margins during the first quarter were impacted by the industry-wide vape recall in Pennsylvania and front-loaded operating costs in New Jersey ahead of adult-use, we expect revenue and margin to increase materially in the second quarter and beyond,” stated Jason Wild, executive chairman of TerrAscend. “The strategic decisions and investments we have made over the last three years position us well for substantial growth in each of our four key markets – New Jersey, Pennsylvania, Michigan, and Maryland.
“New Jersey adult-use sales began on April 21st, a significant milestone for TerrAscend and the entire industry. Demand has been strong for our brands and our elevated retail experience. In Pennsylvania, we continue to cultivate the highest quality flower in our history and have introduced new genetics, to which patients have reacted positively,” Wild added.
“In Michigan, Gage has positioned us as a leader in one of the largest cannabis markets in the U.S. Lastly, subsequent to the quarter-end, we announced the acquisition of a medical dispensary in Maryland and 5 dispensaries in Michigan. While remaining focused on organic growth, the dislocation in public and private company valuations should provide attractive M&A opportunities to accelerate growth in a financially disciplined way,” concluded the CEO.
First Quarter 2022 Business and Operational Highlights
- Closed on the acquisition of Gage Growth Corp.
- Appointed Ziad Ghanem as President and COO.
- Appointed Jared Anderson, SVP Finance & Strategy, Charishma Kothari, SVP Marketing, and Charles Oster, SVP Sales.
- Appointed Kara DioGuardi to the Board of Directors.
- Became the first major MSO to expand its e-commerce platform via the proprietary Apothecarium mobile app, available in the Apple App store, with express pick-up and delivery where permitted.
Balance Sheet and Cash Flow
The Company received $23.9 million in proceeds from warrants and options during the quarter while paying $3.3 million to terminate the lease in Frederick, Maryland in preparation for the transition to the new facility in Hagerstown. A payment of $7.0 million was also made for the final earnout related to the acquisition of the State Flower business.
As of May 11th, 2022 there were 318.4 million basic shares outstanding including 252 million common shares, 14 million preferred shares as converted, and 52.4 million exchangeable shares. Capital expenditures were $4.2 million in the quarter, primarily related to the ongoing expansion work at the Hagerstown, Maryland facility.
Cash and cash equivalents were $88.4 million as of March 31, 2022, compared to $79.6 million as of December 31, 2021, providing ample capacity to fund planned organic and inorganic growth initiatives. Cash used from operations was $18.8 million for the three months ended March 31, 2022, mainly driven by working capital as the Company continued to prepare for adult-use sales in New Jersey, as well as $8 million of interest payments.