First quarter 2023 record Net Revenue of
$69.4 million, an increase of 42.8%
year-over-year
6th consecutive quarter of
sequential revenue growth and 3rd consecutive quarter of
positive and increasing cash flow from operations
Generated positive free cash flow for the
first time since the first quarter of 2021
Gross profit margin improved 420 basis points
sequentially to 48.8%
Progress continues towards TSX listing upon
shareholder vote on June
22nd
TORONTO, May 11, 2023
/CNW/ - TerrAscend Corp. ("TerrAscend" or the "Company") (CSE: TER)
(OTCQX: TRSSF), a leading North American cannabis operator, today
reported its financial results for the first quarter ended
March 31, 2023. All amounts are
expressed in U.S. dollars and are prepared under U.S. Generally
Accepted Accounting Principles (GAAP), unless indicated
otherwise.
The following financial measures are reported as results from
continuing operations due to the shutdown of the licensed producer
business in Canada, which is
reported as discontinued operations for all of 2022. All historical
periods have been restated accordingly.
First Quarter 2023 Financial Highlights
- Net Revenue was $69.4
million, an increase of 0.6% sequentially and 42.8%
year-over-year.
- Gross Profit Margin was 48.8%, compared to 44.6% in Q4
2022 and 32.1% in Q1 2022.
- Adjusted Gross Profit Margin1 was
49.0%, compared to 45.3% in Q4 2022 and 40.3% in Q1 2022.
- GAAP Net loss from continuing operations was
$19.2 million, compared to
$2.0 million in Q4 2022 and
$13.8 million in Q1 2022.
- EBITDA from continuing operations1 was
$6.1 million, compared to
$30.0 million in Q4 2022 and
$1.1 million in Q1 2022.
- Adjusted EBITDA from continuing operations1
was $12.2 million, compared to
$12.2 million in Q4 2022 and
$4.9 million in Q1 2022.
- Adjusted EBITDA Margin from continuing
operations1 was 17.6%, compared to 17.7% in Q4 2022
and 10.1% in Q1 2022.
- Cashflow provided by (used in) continuing operations was
$8.4 million compared to $7.3 million in Q4 2022 and ($18.8) million in Q1 2022.
- Free cash flow was a positive $5.9 million compared to ($6.9) million in Q4 2022 and ($23.0) million in Q1 2022.
- Cash and Cash Equivalents totaled $32.9 million as of March
31, 2023 as compared to $26.2
million as of December 31,
2022.
"Despite a challenging environment, revenue in the first quarter
increased 42.8% year-over-year, gross margins significantly
improved by 420 basis points sequentially to 48.8% and,
importantly, we generated positive free cash flow of $5.9 million. This was our sixth consecutive
quarter of sequential revenue growth and our third consecutive
quarter with positive and increasing cash flow from operations,"
commented Jason Wild, Executive
Chairman of TerrAscend. "2023 will show substantial revenue growth.
We operate in a number of attractive states that are converting to
adult-use, with Maryland starting
on July 1st. While we
would like to see the industry on stronger footing overall, we do
believe that the distressed environment will present opportunities
for us to acquire assets which could drive significant additional
profitability for the Company."
Financial Summary Q1 2023 and Comparative Periods
All
figures are restated for the Canadian business recorded as
discontinued operations.
(in millions of U.S.
Dollars)
|
|
Q1
2023
|
|
Q4
2022
|
|
Q1
2022
|
Revenue, net
|
|
69.4
|
|
69.0
|
|
48.6
|
Quarter-over-Quarter
increase (decrease)
|
|
0.6 %
|
|
4.2 %
|
|
5.9 %
|
Year-over-Year
increase
|
|
42.8 %
|
|
50.3 %
|
|
-2.2 %
|
|
|
|
|
|
|
|
Gross profit
|
|
33.9
|
|
30.8
|
|
15.6
|
Gross profit
margin
|
|
48.8 %
|
|
44.6 %
|
|
32.1 %
|
|
|
|
|
|
|
|
Adjusted Gross
Profit1
|
|
34.0
|
|
31.3
|
|
19.6
|
Adjusted Gross
Profit Margin %
|
|
49.0 %
|
|
45.3 %
|
|
40.3 %
|
|
|
|
|
|
|
|
General &
Administrative expense
|
|
27.7
|
|
35.2
|
|
21.5
|
Share-based
compensation expense (included in G&A expense above)
|
1.7
|
|
1.6
|
|
3.4
|
G&A as a % of
revenue, net
|
|
39.9 %
|
|
51.0 %
|
|
44.2 %
|
|
|
|
|
|
|
|
Net (loss) income from
continuing operations
|
|
(19.2)
|
|
(2.0)
|
|
(13.8)
|
|
|
|
|
|
|
|
EBITDA from continuing
operations1
|
|
6.1
|
|
30.0
|
|
1.1
|
Adjusted EBITDA from
continuing operations1
|
|
12.2
|
|
12.2
|
|
4.9
|
Adjusted EBITDA
Margin from continuing operations
|
|
17.6 %
|
|
17.7 %
|
|
10.1 %
|
|
|
|
|
|
|
|
Cash (used in) provided
by operations
|
|
8.4
|
|
7.3
|
|
(18.8)
|
1. Adjusted Gross
Profit, Adjusted Gross Profit Margin, EBITDA from continuing
operations, Adjusted EBITDA from continuing operations and Adjusted
EBITDA Margin from continuing operations are non-GAAP measures.
Please see discussion of non-GAAP measures and reconciliation to
Gross Profit (for Adjusted Gross Profit), Net Income/(Loss) (for
Adjusted EBITDA from continuing operations) and Net Revenue (for
Adjusted Gross Profit Margin and Adjusted EBITDA Margin from
continuing operations), the closest comparable GAAP measures, at
the end of this press release.
|
First Quarter 2023 Business and Operational Highlights
- Applied to list common shares on the Toronto Stock Exchange
(TSX), upon completion of a reorganization which is expected to
qualify the Company for listing, subject to shareholder approval at
the Company's annual general meeting scheduled for June 22nd, and subject to TSX
approval.
- Promoted Ziad Ghanem to Chief
Executive Officer.
- Launched Gage branded products in Maryland.
- Partnered with The Hoffman Centers to offer free expungement
services in New Jersey.
- Held grand opening of 18th Michigan retail location at Lemonnade Center
Line.
- Appointed Jeroen De Beijer as
Chief People and Culture Officer.
- Launched adult-use cannabis sales at Cookies Detroit retail
location.
- Closed on acquisition of Allegany Medical Marijuana Dispensary
(AMMD), a high performing and well located dispensary in
Maryland.
- Entered into multi-year agreement to introduce Wana's products
at The Apothecarium retail stores and additional third-party
retailers in New Jersey and
Maryland.
Subsequent Events
- Announced details of internal reorganization in connection with
proposed uplisting to the TSX.
- Expanded partnership with Cookies to cultivate and manufacture
top-shelf genetics in Maryland.
- Increased ownership interest in Cookies Retail Canada Corp to
95% of the issued and outstanding shares.
First Quarter 2023 Financial Results
Net revenue
for the first quarter of 2023 was $69.4
million as compared to fourth quarter of 2022 net revenue of
$69.0, representing 0.6% growth
sequentially and 42.8% growth year over year. The sequential growth
was driven primarily by strong performance in New Jersey and the closing of the Allegany dispensary acquisition in
Maryland, partially offset by
first quarter versus fourth quarter seasonality.
Gross margin for the first quarter of 2023 was 48.8% as compared
to 44.6% in the fourth quarter of 2022 and 32.1% in the first
quarter of 2022. Adjusted gross profit margin, a non-GAAP financial
measure, was 49.0% for the first quarter of 2022 as compared to
45.3% for the fourth quarter of 2022 and 40.3% for the first
quarter of 2022. The 420 basis point sequential improvement in
gross profit margin from the fourth quarter of 2022 to the first
quarter of 2023 was driven by increased yields, optimization of mix
and better utilization of capacity in New
Jersey, Michigan and
Maryland.
General & Administrative (G&A) expenses, excluding
share-based compensation expense, for the first quarter of 2023
were $26.0 million as compared to
$33.6 million in the fourth quarter
of 2022 and $18.1 million in the
first quarter of 2022. Excluding one-time items of $1.9 million in the first quarter primarily
related to SOX implementation and legal settlements, and
$9.9 million in the fourth quarter
mainly related to bad debt, as previously disclosed, G&A
expenses were $24.1 million and
$23.7 million, respectively, with the
modest increase mainly related to the acquisition of the AMMD
dispensary in Maryland. Share based compensation expense in
the first quarter of 2023 was $1.7
million as compared to $1.6
million in the fourth quarter of 2022 and $3.4 million in the first quarter of 2022.
GAAP Net loss from continuing operations in the first quarter of
2023 was $19.2 million compared to $2.0
million in the fourth quarter of 2022 and $13.8 million in the first quarter of 2022.
The increase in net loss of $17.2
million quarter over quarter primarily relates to a
$21.2 million reversal of goodwill
and intangibles impairments in the fourth quarter of 2022 related
to the finalization of the acquisition accounting for
Gage.
Adjusted EBITDA from continuing operations for the first quarter
of 2023, a non-GAAP measure, was $12.2
million, representing a 17.6% margin, compared to
$12.2 million and a 17.7% margin in
the fourth quarter of 2022 and $4.9
million and a 10.1% margin in the first quarter of
2022.
Balance Sheet and Cash Flow
Cash and cash equivalents
were $32.9 million as of March 31, 2023, compared to $26.2 million as of December 31, 2022. Cash provided by operations
was $8.4 million for the first
quarter of 2023 compared to $7.3
million in the previous quarter. The
quarter-over-quarter increase was driven by reduced interest
payments partially offset by an increase in inventory in
Maryland related to the scale up
of the new facility and the preparation for adult use beginning
July 1st. Accrued income tax related to the current quarter
was $7.6 million. No cash
income tax payments were made during the quarter. Capex
spending was $2.5 million in the
first quarter of 2023, primarily related to two store openings in
Michigan, compared to $14.2 million in Q4 2022, primarily related to
completion of the Hagerstown, MD
facility, and $4.2 million in Q1
2022. Free cash flow for the quarter was a positive
$5.9 million compared to ($6.9) million in Q4 2022 and ($23.0) million in Q1 2022.
The Company received $12.7 million
during the quarter related to a factoring with recourse agreement
for employee retention credits. The Company also closed on
the acquisition of AMMD for all cash consideration of $9.6 million.
As of May 10, 2023 there were 351
million basic shares outstanding including 275 million common
shares, 13 million preferred shares as converted, and 63 million
exchangeable non-voting shares. Additionally, there are 65 million
warrants and options outstanding at a weighted average price of
$4.33.
Conference Call
TerrAscend will host a conference call
today, May 11, 2023, to discuss these
results. Jason Wild, Executive
Chairman, Ziad Ghanem, Chief
Executive Officer, and Keith
Stauffer, Chief Financial Officer, will host the call
starting at 5:00 p.m. Eastern time. A
question-and-answer session will follow management's
presentation.
CONFERENCE CALL
DETAILS
|
|
|
Date:
|
Thursday, May 11,
2023
|
Time:
|
5:00 p.m. Eastern
Time
|
RapidConnect
URL:
|
https://emportal.ink/40NjnQ4
|
Webcast:
|
Click Here
|
Dial-in
Number:
|
1-888-664-6392
|
Conference
ID:
|
90703912
|
Replay:
|
416-764-8677 or
1-888-390-0541
Available until 12:00
midnight Eastern Time Thursday, May 25, 2023
Replay Entry Code:
703912#
|
Financial results and analyses are available on the Company's
website (www.terrascend.com) and SEDAR (www.sedar.com).
The Canadian Securities Exchange ("CSE") has neither
approved nor disapproved the contents of this news release. Neither
the CSE nor its Market Regulator (as that term is defined in the
policies of the CSE) accepts responsibility for the adequacy or
accuracy of this release.
About TerrAscend
TerrAscend is a leading North
American cannabis operator with vertically integrated operations in
Pennsylvania, New Jersey, Maryland, Michigan and California and retail operations in
Canada. TerrAscend operates The
Apothecarium and Gage dispensary retail locations as well as scaled
cultivation, processing, and manufacturing facilities in its core
markets. TerrAscend's cultivation and manufacturing practices yield
consistent, high-quality cannabis, providing industry-leading
product selection to both the medical and legal adult-use markets.
The Company owns several synergistic businesses and brands
including Gage Cannabis, The Apothecarium, Ilera Healthcare, Kind
Tree, Legend, State Flower, and Valhalla Confections. For more
information visit www.terrascend.com.
Caution Regarding Cannabis Operations in the United States
Investors should note
that there are significant legal restrictions and regulations that
govern the cannabis industry in the United States. Cannabis remains a Schedule I
drug under the US Controlled Substances Act, making it illegal
under federal law in the United States to, among other
things, cultivate, distribute, or possess cannabis in the
United States. Financial
transactions involving proceeds generated by, or intended to
promote, cannabis-related business activities in the United
States may form the basis for prosecution under applicable US
federal money laundering legislation.
While the approach to enforcement of such laws by the federal
government in the United States has trended toward
non-enforcement against individuals and businesses that comply with
medical or adult-use cannabis programs in states where such
programs are legal, strict compliance with state laws with respect
to cannabis will neither absolve TerrAscend of liability under U.S.
federal law, nor will it provide a defense to any federal
proceeding which may be brought against TerrAscend. The enforcement
of federal laws in the United States is a significant
risk to the business of TerrAscend and any proceedings brought
against TerrAscend thereunder may adversely affect TerrAscend's
operations and financial performance.
Forward Looking Information
This news release contains
"forward-looking information" within the meaning of applicable
securities laws. Forward-looking information contained in this
press release may be identified by the use of words such as, "may",
"would", "could", "will", "likely", "expect", "anticipate",
"believe, "intend", "plan", "forecast", "project", "estimate",
"outlook" and other similar expressions, and include statements
with respect to future revenue and profits. Forward-looking
information is not a guarantee of future performance and is based
upon a number of estimates and assumptions of management in light
of management's experience and perception of trends, current
conditions and expected developments, as well as other factors
relevant in the circumstances, including assumptions in respect of
current and future market conditions, the current and future
regulatory environment, and the availability of licenses, approvals
and permits.
Although the Company believes that the expectations and
assumptions on which such forward-looking information is based are
reasonable, undue reliance should not be placed on the
forward-looking information because the Company can give no
assurance that they will prove to be correct. Actual results and
developments may differ materially from those contemplated by these
statements. Forward-looking information is subject to a variety of
risks and uncertainties that could cause actual events or results
to differ materially from those projected in the forward-looking
information. Such risks and uncertainties include, but are not
limited to, current and future market conditions; risks related to
federal, state, provincial, territorial, local and foreign
government laws, rules and regulations, including federal and state
laws in the United States relating
to cannabis operations in the United
States; and the risk factors set out in the Company's most
recently filed MD&A, filed with the Canadian securities
regulators and available under the Company's profile on SEDAR at
www.sedar.com and in the section titled "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2022 filed with the
Securities and Exchange Commission on March
16, 2023.
The statements in this press release are made as of the date of
this release. The Company disclaims any intent or obligation to
update any forward-looking information, whether, as a result of new
information, future events, or results or otherwise, other than as
required by applicable securities laws.
Definition and Reconciliation of Non-GAAP Measures
In
addition to reporting the financial results in accordance with
GAAP, the Company reports certain financial results that differ
from what is reported under GAAP. Non-GAAP measures used by
management do not have any standardized meaning prescribed by GAAP
and may not be comparable to similar measures presented by other
companies. The Company believes that certain investors and analysts
use these measures to measure a company's ability to meet other
payment obligations or as a common measurement to value companies
in the cannabis industry, and the Company calculates Adjusted Gross
Profit and Adjusted Gross Profit Margin as Gross Profit and gross
profit margin adjusted for certain material non-cash items
including the one-time relief of fair value of inventory on
acquisition, non-cash write downs of inventory, sales returns and
write downs of inventory as a result of a vape recall in
Pennsylvania, and other one-time
adjustments to gross profit that management does not believe are
reflective of ongoing operations. We calculate Adjusted EBITDA from
continuing operations and Adjusted EBITDA Margin from continuing
operations as EBITDA from continuing operations adjusted for
certain material non-cash items such as inventory write downs
outside of the normal course of operations, share based
compensation expense, impairment charges taken on goodwill,
intangible assets and property and equipment, the gain or loss
recognized on the revaluation of our contingent consideration
liabilities, one-time write off of accounts receivable related to
one customer that was deemed uncollectible, loan modification fees
related to the modification of debt, the gain recognized on the
extinguishment of debt, the gain or loss recognized on the
remeasurement of the fair value of the U.S denominated preferred
share warrants, one time fees incurred in connection with our
acquisitions and certain other adjustments management believes are
not reflective of the ongoing operations and performance. Such
information is intended to provide additional information and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. The
Company believes this definition is a useful measure to assess the
performance of the Company as it provides more meaningful operating
results by excluding the effects of expenses that are not
reflective of the Company's underlying business performance and
other one-time or non-recurring expenses.
TerrAscend Corp.
Unaudited Interim Condensed
Consolidated Balance Sheets
(Amounts expressed in
thousands of United States
dollars, except for share and per share amounts)
|
|
At
|
|
|
At
|
|
|
|
March 31,
2023
|
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
32,931
|
|
|
$
|
26,158
|
|
Restricted
cash
|
|
|
606
|
|
|
|
605
|
|
Accounts receivable,
net
|
|
|
8,993
|
|
|
|
22,443
|
|
Investments
|
|
|
2,026
|
|
|
|
3,595
|
|
Inventory
|
|
|
50,810
|
|
|
|
46,335
|
|
Assets held for
sale
|
|
|
14,266
|
|
|
|
17,349
|
|
Prepaid expenses and
other current assets
|
|
|
3,627
|
|
|
|
4,937
|
|
Current assets from
discontinued operations
|
|
|
525
|
|
|
|
571
|
|
|
|
|
113,784
|
|
|
|
121,993
|
|
Non-Current
Assets
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
214,035
|
|
|
|
215,812
|
|
Deposits
|
|
|
740
|
|
|
|
837
|
|
Operating lease right
of use assets
|
|
|
29,951
|
|
|
|
29,451
|
|
Intangible assets,
net
|
|
|
243,759
|
|
|
|
239,704
|
|
Goodwill
|
|
|
95,713
|
|
|
|
90,328
|
|
Other non-current
assets
|
|
|
3,594
|
|
|
|
3,462
|
|
|
|
|
587,792
|
|
|
|
579,594
|
|
Total
Assets
|
|
$
|
701,576
|
|
|
$
|
701,587
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
50,784
|
|
|
|
44,286
|
|
Deferred
revenue
|
|
|
2,740
|
|
|
|
2,935
|
|
Loans payable,
current
|
|
|
51,397
|
|
|
|
48,335
|
|
Contingent
consideration payable, current
|
|
|
4,434
|
|
|
|
5,184
|
|
Operating lease
liability, current
|
|
|
2,314
|
|
|
|
1,857
|
|
Lease obligations under
finance leases, current
|
|
|
535
|
|
|
|
521
|
|
Corporate income tax
payable
|
|
|
34,737
|
|
|
|
23,077
|
|
Other current
liabilities
|
|
|
1,663
|
|
|
|
2,599
|
|
Current liabilities
from discontinued operations
|
|
|
7,468
|
|
|
|
9,111
|
|
|
|
|
156,072
|
|
|
|
137,905
|
|
Non-Current
Liabilities
|
|
|
|
|
|
|
Loans payable,
non-current
|
|
|
146,168
|
|
|
|
145,852
|
|
Operating lease
liability, non-current
|
|
|
31,836
|
|
|
|
31,545
|
|
Lease obligations under
finance leases, non-current
|
|
|
6,614
|
|
|
|
6,713
|
|
Warrant
liability
|
|
|
267
|
|
|
|
711
|
|
Deferred income tax
liability
|
|
|
34,498
|
|
|
|
30,700
|
|
Financing
obligations
|
|
|
10,979
|
|
|
|
11,198
|
|
Other long term
liabilities
|
|
|
15,841
|
|
|
|
15,792
|
|
|
|
|
246,203
|
|
|
|
242,511
|
|
Total
Liabilities
|
|
|
402,275
|
|
|
|
380,416
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
Share
Capital
|
|
|
|
|
|
|
Series A, convertible
preferred stock, no par value, unlimited shares authorized; 12,350
and 12,608 shares outstanding as of March 31, 2023 and
December 31, 2022, respectively
|
|
|
—
|
|
|
|
—
|
|
Series B, convertible
preferred stock, no par value, unlimited shares authorized; 600 and
600 shares outstanding as of March 31, 2023 and
December 31, 2022, respectively
|
|
|
—
|
|
|
|
—
|
|
Series C, convertible
preferred stock, no par value, unlimited shares authorized; nil and
nil shares outstanding as of March 31, 2023 and
December 31, 2022, respectively
|
|
|
—
|
|
|
|
—
|
|
Series D, convertible
preferred stock, no par value, unlimited shares authorized; nil and
nil shares outstanding as of March 31, 2023 and
December 31, 2022, respectively
|
|
|
—
|
|
|
|
—
|
|
Proportionate voting
shares, no par value, unlimited shares authorized; nil and nil
shares outstanding as of March 31, 2023 and December 31,
2022, respectively
|
|
|
—
|
|
|
|
—
|
|
Exchangeable shares,
no par value, unlimited shares authorized; 63,492,038 and
76,996,538 shares outstanding as of March 31, 2023 and
December 31, 2022, respectively
|
|
|
—
|
|
|
|
—
|
|
Common stock, no par
value, unlimited shares authorized; 274,653,743 and 259,624,531
shares outstanding as of March 31, 2023 and December 31,
2022, respectively
|
|
|
—
|
|
|
|
—
|
|
Additional paid in
capital
|
|
|
936,404
|
|
|
|
934,972
|
|
Accumulated other
comprehensive income
|
|
|
1,738
|
|
|
|
2,085
|
|
Accumulated
deficit
|
|
|
(641,517)
|
|
|
|
(618,260)
|
|
Non-controlling
interest
|
|
|
2,676
|
|
|
|
2,374
|
|
Total Shareholders'
Equity
|
|
|
299,301
|
|
|
|
321,171
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
701,576
|
|
|
$
|
701,587
|
|
TerrAscend Corp.
Unaudited Interim Condensed
Consolidated Statements of Operations and Comprehensive
Loss
(Amounts expressed in thousands of United States dollars, except for share and
per share amounts)
|
|
For the Three Months
Ended
|
|
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
Revenue
|
|
|
$
|
69,720
|
|
|
$
|
49,060
|
|
Excise and cultivation
tax
|
|
|
|
(322)
|
|
|
|
(475)
|
|
Revenue,
net
|
|
|
|
69,398
|
|
|
|
48,585
|
|
|
|
|
|
|
|
|
|
Cost of
Sales
|
|
|
|
35,498
|
|
|
|
32,961
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
33,900
|
|
|
|
15,624
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
27,730
|
|
|
|
21,424
|
|
Amortization and
depreciation
|
|
|
|
2,029
|
|
|
|
2,175
|
|
Impairment of property
and equipment
|
|
|
|
335
|
|
|
|
—
|
|
Total operating
expenses
|
|
|
|
30,094
|
|
|
|
23,599
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
|
3,806
|
|
|
|
(7,975)
|
|
Other (income)
expense
|
|
|
|
|
|
|
|
Loss from revaluation
of contingent consideration
|
|
|
|
—
|
|
|
|
119
|
|
Gain on fair value of
warrants and purchase option derivative asset
|
|
|
|
(438)
|
|
|
|
(5,713)
|
|
Finance and other
expenses
|
|
|
|
10,087
|
|
|
|
6,655
|
|
Transaction and
restructuring costs
|
|
|
|
3
|
|
|
|
615
|
|
Unrealized and realized
foreign exchange (gain) loss
|
|
|
|
(31)
|
|
|
|
356
|
|
Unrealized and realized
loss on investments
|
|
|
|
699
|
|
|
|
—
|
|
Loss from continuing
operations before provision from income taxes
|
|
|
|
(6,514)
|
|
|
|
(10,007)
|
|
Provision for income
taxes
|
|
|
|
12,664
|
|
|
|
3,743
|
|
Net loss from
continuing operations
|
|
|
$
|
(19,178)
|
|
|
$
|
(13,750)
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
Loss from
discontinued operations, net of tax
|
|
|
|
(3,591)
|
|
|
|
(2,256)
|
|
Net
loss
|
|
|
$
|
(22,769)
|
|
|
$
|
(16,006)
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation
|
|
|
|
347
|
|
|
|
3,607
|
|
Comprehensive
loss
|
|
|
$
|
(23,116)
|
|
|
$
|
(19,613)
|
|
|
|
|
|
|
|
|
|
Net (loss) income
from continuing operations attributable to:
|
|
|
|
|
|
|
|
Common and
proportionate Shareholders of the Company
|
|
|
$
|
(21,364)
|
|
|
$
|
(14,101)
|
|
Non-controlling
interests
|
|
|
|
2,186
|
|
|
|
351
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss)
income from continuing operations attributable to:
|
|
|
|
|
|
|
|
Common and
proportionate Shareholders of the Company
|
|
|
$
|
(25,302)
|
|
|
$
|
(19,964)
|
|
Non-controlling
interests
|
|
|
|
2,186
|
|
|
$
|
351
|
|
|
|
|
|
|
|
|
|
Net loss per
share
|
|
|
|
|
|
|
|
Net loss per share -
basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.07)
|
|
Discontinued
operations
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.01)
|
|
Net loss per share -
basic
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.08)
|
|
Weighted average number
of outstanding common and proportionate voting shares
|
|
|
|
267,211,093
|
|
|
|
211,126,932
|
|
|
|
|
|
|
|
|
|
Net loss per share -
diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
$
|
(0.08)
|
|
|
$
|
(0.07)
|
|
Discontinued
operations
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.01)
|
|
Net loss per share -
diluted
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.08)
|
|
Weighted average number
of outstanding common and proportionate voting shares, assuming
dilution
|
|
|
|
267,211,093
|
|
|
|
211,126,932
|
|
TerrAscend Corp.
Unaudited Interim Condensed Consolidated
Statements of Cash Flows
(Amounts expressed in thousands
of United States dollars, except
for share and per share amounts)
|
For the Three Months
Ended
|
|
|
March 31,
2023
|
|
|
March 31,
2022
|
|
|
Operating
activities
|
|
|
|
|
|
|
|
Net loss from
continuing operations
|
|
$
|
(19,178)
|
|
|
$
|
(13,750)
|
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
|
Non-cash write downs
of inventory
|
|
|
797
|
|
|
|
1,073
|
|
|
Accretion
expense
|
|
|
4,763
|
|
|
|
(1,337)
|
|
|
Depreciation of
property and equipment and amortization of intangible
assets
|
|
|
4,771
|
|
|
|
4,642
|
|
|
Amortization of
operating right-of-use assets
|
|
|
454
|
|
|
|
487
|
|
|
Share-based
compensation
|
|
|
1,713
|
|
|
|
3,356
|
|
|
Deferred income tax
expense
|
|
|
1,446
|
|
|
|
(1,134)
|
|
|
Gain on fair value of
warrants and purchase option derivative
|
|
|
(438)
|
|
|
|
(5,713)
|
|
|
Gain on disposal of
fixed assets
|
|
|
307
|
|
|
|
—
|
|
|
Revaluation of
contingent consideration
|
|
|
—
|
|
|
|
119
|
|
|
Loss on derecognition
of right of use assets
|
|
|
205
|
|
|
|
—
|
|
|
Release of
indemnification asset
|
|
|
—
|
|
|
|
(25)
|
|
|
Unrealized and
realized foreign exchange (gain) loss
|
|
|
(31)
|
|
|
|
356
|
|
|
Unrealized and
realized loss on investments
|
|
|
699
|
|
|
|
—
|
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
Receivables
|
|
|
773
|
|
|
|
(2,656)
|
|
|
Inventory
|
|
|
(4,969)
|
|
|
|
3,755
|
|
|
Prepaid expense and
other current assets
|
|
|
1,203
|
|
|
|
985
|
|
|
Deposits
|
|
|
97
|
|
|
|
(593)
|
|
|
Other
assets
|
|
|
(131)
|
|
|
|
571
|
|
|
Accounts payable and
accrued liabilities and other payables
|
|
|
6,882
|
|
|
|
(11,151)
|
|
|
Operating lease
liability
|
|
|
(473)
|
|
|
|
(271)
|
|
|
Other
liability
|
|
|
(14)
|
|
|
|
(437)
|
|
|
Contingent
consideration payable
|
|
|
—
|
|
|
|
(324)
|
|
|
Corporate income tax
payable
|
|
|
11,773
|
|
|
|
4,869
|
|
|
Deferred
revenue
|
|
|
(195)
|
|
|
|
395
|
|
|
Net cash (used in) /
provided by operating activities- continuing
operations
|
|
|
10,454
|
|
|
|
(16,783)
|
|
|
Net cash (used in)
operating activities- discontinued operations
|
|
|
(2,020)
|
|
|
|
(2,064)
|
|
|
Net cash (used in) /
provided by operating activities
|
|
|
8,434
|
|
|
|
(18,847)
|
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
Investment in property
and equipment
|
|
|
(2,497)
|
|
|
|
(3,812)
|
|
|
Investment in
intangible assets
|
|
|
(14)
|
|
|
|
(106)
|
|
|
Principal payments
received on lease receivable
|
|
|
111
|
|
|
|
156
|
|
|
Receipt of convertible
debenture payment
|
|
|
738
|
|
|
|
-
|
|
|
Deposits for property
and equipment
|
|
|
—
|
|
|
|
(6,058)
|
|
|
Deposits for business
acquisition
|
|
|
—
|
|
|
|
(602)
|
|
|
Payments made for land
contracts
|
|
|
(308)
|
|
|
|
—
|
|
|
Cash portion of
consideration paid in acquisitions, net of cash of
acquired
|
|
|
(9,611)
|
|
|
|
24,716
|
|
|
Net cash (used in) /
provided by investing activities- continuing
operations
|
|
|
(11,581)
|
|
|
|
14,294
|
|
|
Net cash (used in)
/provided by investing activities- discontinued
operations
|
|
|
—
|
|
|
|
(381)
|
|
|
Net cash (used in) /
provided by investing activities
|
|
|
(11,581)
|
|
|
|
13,913
|
|
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
Transfer of Employee
Retention Credit
|
|
|
12,677
|
|
|
|
—
|
|
|
Proceeds from options
and warrants exercised
|
|
|
81
|
|
|
|
23,925
|
|
|
Loan principal
paid
|
|
|
(1,204)
|
|
|
|
—
|
|
|
Capital contributions
paid to non-controlling interests
|
|
|
(1,884)
|
|
|
|
(227)
|
|
|
Payments of contingent
consideration
|
|
|
—
|
|
|
|
(6,630)
|
|
|
Payments made for
financing obligations
|
|
|
(157)
|
|
|
|
—
|
|
|
Net cash provided by
financing activities- continuing operations
|
|
|
9,513
|
|
|
|
17,068
|
|
|
Net cash provided by
financing activities- discontinued operations
|
|
|
(115)
|
|
|
|
—
|
|
|
Net cash (used in)
/provided by financing activities
|
|
|
9,398
|
|
|
|
17,068
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents and restricted cash during the
period
|
|
|
6,251
|
|
|
|
12,134
|
|
|
Net effects of foreign
exchange
|
|
|
523
|
|
|
|
(3,369)
|
|
|
Cash and cash
equivalents and restricted cash, beginning of the
period
|
|
|
26,763
|
|
|
|
79,642
|
|
|
Cash and cash
equivalents and restricted cash, end of the period
|
|
$
|
33,537
|
|
|
$
|
88,407
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure with respect to cash flows
|
|
|
|
|
|
|
|
Income taxes (refund
received) paid
|
|
$
|
(551)
|
|
|
$
|
8
|
|
|
Interest
paid
|
|
$
|
2,456
|
|
|
$
|
8,271
|
|
|
Lease termination fee
paid
|
|
|
—
|
|
|
$
|
3,300
|
|
|
Non-cash
transactions
|
|
|
|
|
|
|
|
Equity and warrant
liability issued as consideration for acquisition
|
|
$
|
750
|
|
|
$
|
294,800
|
|
|
Shares issued for
liability settlement
|
|
$
|
593
|
|
|
$
|
22
|
|
|
Accrued capital
purchases
|
|
$
|
555
|
|
|
$
|
56
|
|
|
|
|
For the Three Months
Ended
|
(in thousands of
U.S. Dollars)
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Revenue, net
|
|
69,398
|
|
69,041
|
|
48,585
|
|
|
|
|
|
|
|
Gross profit
|
|
33,900
|
|
30,798
|
|
15,624
|
Add the impact
of:
|
|
|
|
|
|
|
Relief of fair value of
inventory upon acquisition
|
|
—
|
|
—
|
|
1,806
|
Non-cash write downs of
inventory
|
|
—
|
|
—
|
|
1,894
|
Other one time
adjustments to gross profit
|
|
94
|
|
453
|
|
238
|
Adjusted Gross
Profit
|
|
33,994
|
|
31,251
|
|
19,562
|
Adjusted Gross
Profit Margin %
|
|
49.0 %
|
|
45.3 %
|
|
40.3 %
|
|
|
For the Three Months
Ended
|
(in thousands of
U.S. Dollars)
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Revenue,
net
|
|
69,398
|
|
69,041
|
|
48,585
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(22,769)
|
|
$
(12,522)
|
|
$
(16,006)
|
Net Loss Margin
%
|
|
-32.8 %
|
|
-18.1 %
|
|
-32.9 %
|
Loss from discontinued
operations
|
|
3,591
|
|
10,572
|
|
2,256
|
Loss from continuing
operations
|
|
(19,178)
|
|
(1,950)
|
|
(13,750)
|
|
|
|
|
|
|
|
Add (deduct) the
impact of:
|
|
|
|
|
|
|
Provision for income
taxes
|
|
12,664
|
|
14,819
|
|
3,743
|
Finance
expenses
|
|
7,875
|
|
12,046
|
|
6,605
|
Amortization and
depreciation
|
|
4,771
|
|
5,046
|
|
4,525
|
EBITDA from
continuing operations
|
|
6,132
|
|
29,961
|
|
1,123
|
Add (deduct) the
impact of:
|
|
|
|
|
|
|
Relief of fair value
upon acquisition
|
|
—
|
|
—
|
|
1,806
|
Vape recall
|
|
—
|
|
—
|
|
1,894
|
Share-based
compensation
|
|
1,713
|
|
1,638
|
|
3,356
|
Impairment of goodwill
and intangible assets
|
|
—
|
|
(20,158)
|
|
—
|
Impairment of property
and equipment and loss on disposal of fixed assets
|
|
334
|
|
241
|
|
—
|
Loss on lease
termination and derecognition of ROU asset
|
|
205
|
|
1,162
|
|
—
|
Loss (gain) from
revaluation of contingent consideration
|
|
—
|
|
(1,250)
|
|
119
|
Restructuring and
executive severance
|
|
—
|
|
45
|
|
—
|
Legal
settlements
|
|
—
|
|
623
|
|
—
|
Other one-time
items
|
|
1,358
|
|
998
|
|
1,974
|
Bad debt expense write
offs in Michigan
|
|
—
|
|
9,941
|
|
—
|
Loan modification
fees
|
|
—
|
|
2,507
|
|
—
|
Employee Retention
Credits Transfer Fee
|
|
2,235
|
|
(9,440)
|
|
—
|
Gain on extinguishment
of debt
|
|
—
|
|
(4,153)
|
|
—
|
(Gain) loss on fair
value of warrants and purchase option derivative asset
|
|
(437)
|
|
32
|
|
(5,713)
|
Indemnification asset
release
|
|
—
|
|
—
|
|
(25)
|
Unrealized and realized
loss on investments
|
|
699
|
|
(34)
|
|
—
|
Unrealized and realized
foreign exchange loss (gain)
|
|
(31)
|
|
99
|
|
356
|
Adjusted EBITDA from
continuing operations
|
|
$
12,208
|
|
$
12,212
|
|
$
4,890
|
Adjusted EBITDA
Margin from continuing operations
|
|
17.6 %
|
|
17.7 %
|
|
10.1 %
|
SOURCE TerrAscend