TerrAscend (TER) Q2 2024 earnings summary

Executive summary

• Net revenue reached $77.5 million in Q2 2024, up 7.5% year-over-year, with adjusted EBITDA up 21.9% to $15.6 million and margin improving to 20.2%.

• Achieved eighth consecutive quarter of positive cash flow from continuing operations, with free cash flow at $11.7 million and net cash from operations of $13.1 million.

• Closed a $140 million senior secured loan maturing in August 2028, strengthening the balance sheet, refinancing existing debt, and supporting M&A and expansion.

• Maintained number one market share in New Jersey for the first half of 2024, with strong brand performance and doubled wholesale revenue year-over-year.

• Expanded cultivation and retail operations in Maryland and Michigan, opened new dispensaries, and preparing for entry into Ohio.

Financial highlights

• Net revenue for Q2 2024 was $77.5 million, a 7.5% increase year-over-year, driven by wholesale growth in NJ, PA, and MD.

• Wholesale revenue grew 75% year-over-year to $24.4 million, while retail revenue declined 8.7% year-over-year to $53.2 million.

• Gross profit margin was 48.6%, down from 50.2% last year, but improved sequentially.

• Adjusted EBITDA margin improved to 20.2%, up from 17.8% a year ago.

• Net loss from continuing operations narrowed to $6.2 million from $12.9 million a year ago.

Outlook and guidance

• Q3 2024 expected to be flat to slightly down sequentially across the P&L, with gross margins anticipated to remain in the 48%-50% range.

• Continued growth expected in New Jersey and Maryland wholesale, with stable retail in Maryland and Pennsylvania.

• Preparing for adult-use market launch in Pennsylvania in 2025 and expansion into Ohio, leveraging Midwest infrastructure.

• Management plans to use the new $140 million term loan to pursue accretive M&A and geographic expansion.