California StateHouse Holdings Reports 10% YoY Revenue Increase As Capital Deficit Grows

Vertically integrated cannabis company StateHouse Holdings Inc. STHZ STHZF reported its financial results for the three-month period ended June 30, 2024. The California-focused company disclosed revenue of $27.8 million, up by 10% from $25.3 million in the second quarter of last year.

"We made substantial progress throughout the quarter, with our innovative product line-ups driving growth and profitability improvements," stated CEO Ed Schmults. "Our new products are clearly hitting the mark with consumers, with a 14% increase in transactions for the second quarter compared with the same period last year. We have continued to deliver improvements to our results, with adjusted gross margin reaching 50.8%, net income of $0.2 million, and Adjusted EBITDA of $4.9 million as a result of the implementation of cost-saving measures across our operations and the launch of over 24 new high-margin products in the past twelve months."

Read Also: In Amsterdam Style, California Senate Moves To Legalize Cannabis Farmers Markets And Cafes

Q2 2024 Financial Highlight

• Net income was $200,000, compared to a net loss of $2.1 million in Q2 2023.
• Gross profit before adjustments for biological assets was $14.1 million in Q2 2024, compared with $12.3 million in Q2 2023.
• Retail revenues were $13.5 million representing 48.5% of total sales for Q2 2024, compared to $13.0 million or 51.3% of total sales in Q2 2023.
• Consolidated adjusted gross margins improved to 50.8% in Q2 2024, compared to 48.6% for Q2 2023.
• Adjusted EBITDA improved to $4.9 million compared with Adjusted EBITDA of $900,000 in Q2 2023.
• Cultivation revenues were $3.6 million, representing 12.9% of total sales for Q2 2024, compared to $1.2 million or 4.7% of total sales in Q2 2023.
• At June 30, StateHouse had approximately $30.6 million in total current assets and a net working capital deficiency of around $156.0 million. This compares to approximately $29.2 million of assets and a capital deficiency of $103.3 million at the end of December 2023.

Get Benzinga's exclusive analysis and the top news about the cannabis industry and markets daily in your inbox for free. Subscribe to our newsletter here. If you're serious about the business, you can't afford to miss out.

Brands And Products

• Over the past twelve months, the company launched 24 new products across 7 brands and introduced more than 40 new in-house developed strain formulations. These new products now represent about 15% of the company's year-to-date sales for 2024.
• Dime Bag, the company's value-oriented flower brand, was the 2^nd most popular based on units sold and the 5^th most popular based on dollars spent in California's competitive flower brand category, year-to-date (per BDSA).
• The company's newest farm product offering for young plant sales, comprised of cuttings, clones and teens has performed exceptionally well with sales growing more than 10X since launch.

"Our focus on both reducing our operating expenses while enhancing the product mix available is working, and I am incredibly pleased with our operational performance throughout the year. The extremely positive customer response we are seeing demonstrates how we are successfully meeting the needs and expectations of today's cannabis consumers,” Schmults said. “This increasing engagement is a testament to the hard work and vision of our incredible team, and I am confident that we will maintain this momentum as we build on our success in the upcoming quarters. Our efforts and the success of our popular brands have firmly established us in California’s vibrant cannabis market, and we look forward to leveraging our expertise as the overall addressable market expands."

Price Action

StateHouse shares closed Thursday market session flat at $0.03 per share.

Read Next

• Greenway Cannabis Co. Doubles Q1 Net Revenue YoY, Highest Adjusted EBITDA Results To Date

Photo: Courtesy of Branding Pot via Shutterstock