The Cannabist Company (CBSTF) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $125.2M, up 2% sequentially but down 3% year-over-year, with adjusted EBITDA of $17.5M (14% margin) and a net loss of $13.6M, reflecting operational improvements and cost controls.

• Wholesale revenue grew 24% sequentially, now 15% of total revenue, with margin improvement of 300 basis points, and strategic partnerships expanded to seven markets.

• Corporate restructuring and divestitures in Florida, Arizona, Virginia, and Utah are expected to generate up to $111.5M in gross proceeds and $10M in annual cost savings.

• The company operates 82 retail locations and 26 cultivation/manufacturing facilities across 15 U.S. jurisdictions, with top five markets (CO, MD, NJ, OH, VA) contributing 63% of Q2 revenue and 90% of adjusted EBITDA.

• Adult-use market conversions in Ohio and anticipated in Delaware and Virginia present significant growth opportunities.

Financial highlights

• Q2 2024 revenue: $125.2M, up from $122.6M in Q1 2024, down from $129.2M in Q2 2023.

• Adjusted gross profit: $48.2M; adjusted gross margin: 38.5% in Q2 2024, down from 40.4% in Q2 2023.

• Adjusted EBITDA: $17.5M (14% margin), up from $15.3M (12.5% margin) in Q1, down from $20.3M (15.7% margin) in Q2 2023.

• Net loss: $13.6M in Q2 2024, improved from $34.6M in Q1 2024 and $29M in Q2 2023.

• Cash at quarter end: $22M, down from $44.5M at Q1 2024 and $39.3M at year-end 2023.

Outlook and guidance

• No updated guidance due to pending divestiture closings; outlook expected with Q3 results.

• Management expects continued progress toward profitability and free cash flow, with cost reductions and divestitures supporting performance.

• Targeting adjusted EBITDA margins above 20% long-term with a smaller, more focused footprint.

• CapEx projected at $2–3M per quarter, focused on new store openings and manufacturing enhancements.

• Positive outlook for adult-use transitions in Ohio, Delaware, and Virginia, and growth in mid-Atlantic markets.