Multi-State Marijuana Operator 4Front Posts 31% YoY Lower Q2 Revenue, Sees Net Loss Reduction, Remains Focused On Illinois

4Front Ventures Corp. FFNT FFNTF reported its financial results Wednesday for the quarter ended June 30, 2024. The Arizona-headquartered multi-state operator disclosed revenue of $18.7 million, compared to $27.2 million in the corresponding quarter of the previous year and $18.8 in the previous quarter.

For the second quarter, its Illinois facility reported total revenue of $8.2 million, slightly down from $8.5 million in Q1. This decrease was primarily influenced by heightened competition and inconsistent in-store traffic. At the same time, wholesale revenue in Illinois improved 10%. Meanwhile, Massachusetts showed a positive trend, with total revenue increasing to $8.2 million in Q2 from $8.04 million in Q1. This growth was driven by strong wholesale demand, supply chain stability, and an optimized balance of own and third-party brands.

“As I look back on our second quarter, I am incredibly proud of our team’s execution against our 2024 priorities," stated CEO Andrew Thut. "Despite increased competition and inconsistent foot traffic, our disciplined strategy has kept revenue steady, and our concerted efforts to strengthen our wholesale strategy are paying off with a 10% increase in Illinois and a substantial 31% growth in Massachusetts."

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Q2 2024 Financial Highlights

• Gross profit was $7.34 million, compared to $14.73 million in the same period last year.
• Net loss amounted to $4.87 million, compared to $11.46 million in the second quarter of 2023.
• Adjusted EBITDA was a gain of $2.62 million, compared to $6.67 million in the corresponding period last year.
• As of June 30, 2024, the company had $2.42 million in cash, cash equivalents, and restricted cash. The total debt principal amount as of quarter-end was $67.37 million, with future debt maturities totaling $40.27 million, excluding certain contingent liabilities.

“Our Matteson facility in Illinois is now operational with 12,000 square feet of flowering canopy. We are on track to triple this capacity by mid-Q4," Thut continued. "The strong demand for our flower, evidenced by substantial pre-sale interest and long-term supply contracts, underscores market confidence in our high-quality products. We anticipate a notable rise in wholesale revenue as we ramp up our harvest schedule starting in early September."

Q2 Operational Highlights

• Flagship Matteson, Illinois Facility Now Operational: The opening of 4Front’s flagship facility in Matteson, Illinois marks a pivotal milestone in the company’s expansion efforts within a supply-constrained market. With plants now in place, the facility’s first harvest is scheduled for September 7th, followed by three additional harvests each month: seven in September, nine in October, twelve in November, and stabilizing at fifteen per month. This scale presents a significant opportunity for 4Front-branded wholesale in an Illinois market with limited cultivation capacity and an increasing number of dispensaries opening monthly.

• Retail expansion update: The new store in Norridge is now open and positioned for strong performance. It benefits from a prime location in a large market with an attractive demographic, limited competition, ample parking, and advantageous co-tenancy with other high-traffic retailers. The store has been positively received and has demonstrated consistent week-over-week growth in both customer traffic and average basket size.

• Introduced Crystal Clear Blast to Massachusetts and Illinois markets: This innovative vape product marks a significant advancement in the Company’s commitment to providing top-quality cannabis consumption devices, offering precision control through a unique ‘blast’ button and consistent delivery via a high-flow atomizer.

Price Action

4Front shares closed Wednesday's market session 4.03% higher at $0.062 per share.

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Photo: Courtesy of Artem Avetisyan via Shutterstock