Cresco Labs (CL) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $180 million, with strong brand and retail performance offsetting price compression and a 2% sequential decline due to Illinois market softness.

• Adjusted EBITDA was $51.3 million (28.5%–29% margin), up 5% year-over-year, driven by operational efficiencies and retail strength.

• Achieved record operating cash flow of $49 million in Q3 and $103 million year-to-date, a 66% increase over the prior year.

• Maintained leading branded market share in Illinois, Pennsylvania, and Massachusetts, and climbed to top three in Ohio.

• Focused on operational excellence, cost control, and strategic reinvestment in core and growth markets.

Financial highlights

• Q3 2024 revenue was $179.8–$180 million, down 2% sequentially and 6% year-over-year, mainly due to Illinois market decline and price compression.

• Adjusted gross profit was $95.3 million (53% margin), up 250 bps year-over-year.

• Adjusted EBITDA was $51.3 million (28.5%–29% margin), up from $49 million (25.7%) in Q3 2023.

• Adjusted SG&A was $53 million, down 6% year-over-year, or 30% of revenue.

• Free cash flow for Q3 was $43.3 million, up from $28.8 million in Q3 2023.

Outlook and guidance

• Q4 revenue expected to decline mid-single digits sequentially due to continued Illinois softness and Ohio's gradual adult-use ramp.

• Gross margins targeted around 50% for Q4; SG&A expected to remain flat.

• Full-year CapEx projected at $35–$40 million, with $20–$25 million planned for Q4 to enhance efficiency and production capabilities.

• Positioned to capture outsized share of $2–$4 billion adult-use market opportunity in coming years, especially in Ohio, Pennsylvania, and Florida.

• Revised tax strategy expected to generate $70 million+ in annual cash benefit starting 2024.