Trees Q1 Revenue Grows 225% YoY, Reduces Corporate Debt

Trees Corporation TREE released its first-quarter financial results for the three months ended March 31, 2022 revealing revenue of $1.7M, a 225% increase in corporate store retail revenue over the same period in the prior year, delivery of a 31% corporate store retail gross margin.

Q1 Financial & Operational Highlights

• $2.8M of system-wide retail sales, a 369% increase over the same period in the prior year with a 32% system-wide retail gross margin; and

• 267% increase in system-wide count from 3 stores in Q1 2021 to 11 in Q2 2022

• Trees' retail gross margin of 31% for Q1 2022 was down from 36% gross margin recorded in the prior year, reflecting increased price competition led by the entry of multiple value retailers in early 2021 who substantially reduced margins in pursuit of increased market share.

"The Trees team has done an exceptional job in executing on our business plan," stated Jeff Holmgren, president and CFO of Trees, further adding "In recent months Trees has taken giant steps forward to strengthen the balance sheet through substantive debt settlements reducing corporate debt. Trees is well positioned to move forward with confidence as it continues to execute on its growth strategy."

As at March 31, 2022, the company had a cash balance of $210,333 and a net working capital deficit of $3.77 million, a decrease of $3 million from December 31, 2021 to March 31, 2022, largely a result of the use of cash towards operations and growth initiatives and the reclassification of shareholder loans to current in the current period. However, subsequent to March 31, 2022, Trees has been successful in substantially strengthening its balance sheet through the combined initiatives of debt settlement negotiations and a previously announced private placement financing.

Photo: Courtesy of Mackenzie Marco on Unsplash

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