Vext Science (VEXT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $8.4 million, flat sequentially and down from $9.2 million year-over-year, with adjusted EBITDA of $1.1 million and a margin of 12.9%.

• Vertically integrated operations in Arizona and Ohio, focusing on limited license states for sustainable competitive advantage.

• Positioned for growth with the launch of adult-use cannabis in Ohio on August 6, 2024, and expansion opportunities in Kentucky.

• Challenging consumer environment impacted results, but innovative programs and brand strength drove store traffic.

• Board changes include Mark W. Opzoomer appointed as Non-Executive Chairman.

Financial highlights

• Q2 2024 revenue was $8,426,928, down from $9,187,122 in Q2 2023 and up slightly from $8,390,023 in Q1 2024.

• Adjusted EBITDA for Q2 2024 was $1,084,234, with a margin of 12.9%, compared to $1,957,074 (23.3%) in Q2 2023.

• Net loss after taxes for Q2 2024 was $(4,390,035), compared to net income of $535,454 in Q2 2023.

• Cash flow from operations was -$0.6 million in Q2 2024; ended Q2 with $3.4 million in cash.

• FY 2023 revenue was $34.8 million, slightly down from $35.4 million in 2022.

Outlook and guidance

• Management anticipates improved performance in the second half of 2024, driven by Ohio adult-use sales and Arizona operational efficiencies.

• Plans to reach Ohio's dispensary license cap in 2024 upon closing acquisitions and licensing, with all locations operational by Q1 2026.

• Operating expenses expected to increase in Q3 2024 due to Ohio expansion, but decrease as a percentage of revenue as Ohio scales.

• Cash flow from operations expected to trend upward for the remainder of 2024.

• Kentucky market entry anticipated in 2025, with a right of first refusal on a manufacturing facility.