The Parent Company Q1 Gross Profit Grows 15.8% YoY, Extends Licensing With Carlos Santana Brand

TPCO Holding Corp. GRAM GRAMF announced its financial results for the three-month period that ended March 31, 2023, revealing net sales of $18.1 million, a gross profit of $7.8 million (43% of net sales), a net loss of $16.5 million, an adjusted EBITDA loss of $9.3 million, and $76.1 million in cash and cash equivalents.

Q1 2023 Financial Highlights

• Q1 2023 net sales from continuing operations were $18.1 million (excluding bulk wholesale business which was disposed of during Q4 2022).
• Gross profit from continuing operations grew 15.8% to $7.8 million, or 43% of net sales compared to $6.7 million, or 30% of net sales in Q1 2022.
• Q1 2023 net loss from continuing operations was $16.5 million compared with a Q1 2022 net loss of $33.0 million.
• Adjusted EBITDA loss from continuing operations was $9.3 million in Q1 2023, an 57% improvement from a loss of $21.7 million in Q1 2022. Adjusted EBITDA removes the effects of changes in the fair value of financial instruments, impairment charges, stock-based compensation, and other non-cash items.
• Cash and cash equivalents totaled $76.1 million as of March 31, 2023.

Q1 2023 Operational Highlights

• The company launched a new brand called Cruisers, which combines their successful brands Fun Uncle and DELI.
• It also extended its license agreement with Mirayo by Santana, a premium cannabis product line curated by musician Carlos Santana.
• The company expanded its social equity initiatives through the Social Equity Ventures Brand Success Program, providing mentorship and shelf space to minority-owned brands.
• Additionally, Roz Lipsey was promoted to COO, strengthening the company's senior management team.

"Our strong first quarter results are thanks to the culmination of our team's effort and the momentum we have generated over the past year positioning the Company as a leader in California," said Troy Datcher, CEO and chairman of The Parent Company. "We are just beginning to see the improvement in our profitability as a result of the successful implementation of our strategic plan, as we generated record gross profit and gross margin in the first quarter of 2023. This demonstrates the value of our omnichannel retail platform and its ability to deliver improved margins as well as strengthen our relationship with our customers."

Gold Flora Transaction Update: On February 22, 2023, the company announced a merger with Gold Flora, a leading California cannabis company, in an all-stock deal. The integration analysis has begun, and the combined company is expected to achieve annual cost savings of $20-$25 million through enhanced scale and supply chain optimization. The Company has already achieved approximately $21 million in annualized payroll savings through workforce optimization. 

"2023 is off to a great start and we intend to further accelerate our path to profitability through our proposed transformative merger of equals with Gold Flora. Integration planning is already underway to realize the substantial synergies through our combined platform (...) California has one of the most important cannabis cultures in the world, it is a privilege to operate here, and we look forward to seizing the amazing opportunities achievable as a combined company. Today, we are more excited than ever about the future of our company," Datcher concluded.

Image by Nattanan Kanchanaprat On Pixabay