Cannabis Company's Optimization Plan Results In Over 50% YoY Increase In Adjusted EBITDA, Q3 Revenue

AYR Wellness Inc. AYR AYRWF reported its third quarter financial results on Thursday for the three months ended Sept. 30, 2023.

“We continued to execute on our optimization initiatives during the quarter, as reflected by another strong period of year-over-year adjusted EBITDA growth and cash flow generation,” said David Goubert, president and CEO of AYR. “We also continued to lay the foundation for AYR’s long-term revenue growth and profitability, bolstered by our recent work to reach agreements with our creditors, which, when fully consummated, will result in the extension of maturities of nearly $400 million of debt in the aggregate by two years."

Q3 Financial Highlights

• Revenue totaled $114.4 million, up from $108.7 million in the prior year’s period and down from $116.7 million in the previous period.
• Gross profit was $48.1 million, up from $45.6 in the third quarter of 2022, and down from $56.6 million in the prior quarter.
• Operating loss was $1.5 million, down from $19.5 million and $4.5 million in the third quarter of last year, and second quarter of 2023, respectively.
• Net loss attributable to Ayr amounted to $19.2 million, compared to $36.1 million in the prior year’s period.
• Adjusted EBITDA came in positive at $28.4 million, up from $18.7 million adjusted EBITDA gain in the prior year’s period, and down from positive adjusted EBITDA of $29.5 million in the previous period.
• Quarterly retail transactions are up 21% year-over-year on a same-store basis.
• Deployed $7 million of capital expenditures and ended the quarter with a cash balance of $72.8 million.
• The company has approximately 76.7 million fully diluted shares outstanding based on a treasury method calculation.

After the quarter ended, Ayr announced that it had entered into agreements to extend the maturity date of its 12.5% senior notes and LivFree Wellness Promissory notes by two years and receive $40 million of new money debt financing.

Outlook

Due to the modest sequential revenue decline in the third quarter, coupled with the temporary cultivation setback in Florida that will impact fourth-quarter revenue by approximately $4-6 million, the company no longer anticipates growth for the second half of 2023 over first-half levels.

Ayr now expects revenue to be essentially flat in the fourth quarter compared to the third quarter and to maintain an adjusted EBITDA margin of 25% in the fourth quarter.

“As we close out the year and look to 2024, we will continue to execute our optimization plan and lay the foundation for future revenue growth,” Goubert continued. “We expect the execution of our objectives to position us for revenue growth, adjusted EBITDA margin expansion, and free cash flow generation in 2024.”

AYRWF Price Action

Ayr’s shares traded 7.5000% higher at $2.15 per share after the market close on Wednesday afternoon.

•  47.10% with $GTBIF
•  40.23% with $TCNNF
•  21.50% with $VFF

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Photo: Courtesy of geralt and Kindel Media by Pixabay