Replies to post #1458 on Green Thumb Industries Inc (GTBIF)

[Tduggylolz]

volume hasnt even hit yet, hope everyone brought there helmets

[FUNMAN]

3 Things You'll Really Like About Green Thumb Industries' Q1 Results

There wasn't much not to like about the cannabis operator's Q1 performance.

By: Keith Speights

https://www.fool.com/investing/2020/05/15/3-things-youll-really-like-about-green-thumb-indus.aspx

Let's face it, this includes 90 days of rec in ILL. Every Q won't see jumps like this. The jumps will be more modest as additional stores open. But it was very nice nonetheless. - FUNMAN

May 15, 2020 at 7:00AM

Make no mistake about it: It's been a tough year so far for Green Thumb Industries (OTC:GTBIF) shareholders. The stock plunged more than 60% at one point and is still down 18% year to date. But the rebound that started in mid-March could now accelerate.

Green Thumb Industries announced its first-quarter results after the market closed on Thursday. Here are three things you'll really like about the cannabis company's Q1 update.

1. Soaring revenue

GTI announced revenue in Q1 of $102.6 million, a year-over-year jump of 267.6% and a quarter-over-quarter increase of 35.4%. This year-over-year growth even topped the company's strong performance in the fourth quarter of 2019. The cannabis operator generated revenue in 12 states during the first quarter, but two of them -- Illinois and Pennsylvania -- were especially important growth drivers.

Illinois, GTI's home state, opened its adult-use recreational marijuana market at the start of the year. CEO Ben Kovler said that the company enjoyed "strong consumer demand" during the quarter despite the impact of the COVID-19 pandemic in the latter part of Q1.

GTI's growth wasn't just from its newly opened stores, though. In the 14 stores that were open for at least 12 months, sales jumped more than 75% year over year. Same-store sales in the 33 stores that were open in both the fourth quarter of 2019 and the first quarter of 2020 increased by 24% quarter over quarter.

2. Strong EBITDA growth

Sure, Green Thumb Industries posted a net loss in Q1 of $4.2 billion, or $0.02 per share, but this reflected significant improvement from the previous quarter. And the company continued to report good news with its earnings before interest, taxes, depreciation, and amortization (EBITDA).

GTI reported EBITDA for the first quarter of $20.3 million. This reflected strong growth from EBITDA of $7.8 million in the previous quarter and was much better than the EBITDA loss of $10.4 million in the prior-year period.

The company announced Q1 adjusted operating EBITDA of $25.5 million. That's nearly double GTI's adjusted operating EBITDA of $13.8 million in the previous quarter. The company recorded an adjusted operating EBITDA loss of $2.1 million in the first quarter of 2019.


3. Bright prospects ahead

While GTI delivered positive results in the first quarter, perhaps the most encouraging news for investors is that the future prospects for the marijuana stock look even brighter.

One reason for optimism about GTI's growth is the new stores that the company has opened. During the first quarter, GTI opened two new stores in Illinois and one new store in Pennsylvania. These additions bring the total number of stores in each state to seven and 10, respectively.

Since the end of the first quarter, the company has opened a new store in Ohio and another one in Nevada. GTI now has 44 stores across the U.S. that are open and holds licenses to open another 52 retail cannabis stores.

But is there a reason to worry about the COVID-19 pandemic? Probably not. Cannabis stores have been declared essential businesses in many states. And in the important Illinois market, cannabis sales continued to grow in April despite lockdowns due to the coronavirus outbreak.

As the states in which GTI operates relax stay-at-home restrictions, the company's sales should improve even more.

[FUNMAN]

Green Thumb: Hitting It Out Of The Park
May 18, 2020 12:12 PM ET

To see all of the charts and graphics, read the article here:

https://seekingalpha.com/article/4348491-green-thumb-hitting-out-of-park?utm_medium=email&utm_source=seeking_alpha&mail_subject=gtbif-green-thumb-hitting-it-out-of-the-park&utm_campaign=rta-stock-article&utm_content=link-0

Summary

Green Thumb reported very strong Q1 2020 results that saw revenue surging 35% to surpass $100 million.

Solid growth was driven by new store openings, 50%+ comparable sales growth, and expanding distribution of its branded products.

We think GTI remains one of the best growth stories in the sector due to its excellent track record and solid financial profile.

Introduction

Green Thumb Industries (OTCQX:GTBIF) delivered another solid quarter with quarterly revenue surpassing the $100 million mark for the first time. The company has been consistently executing on its organic growth strategy and the company is conservatively financed. Consistent with our 2020 call, we continue to believe GTI is one of the best-managed cannabis operators.

2020 Q1 Review

Green Thumb reported 2020 Q1 results on May 14, and it was a very strong quarter with both top-line growth and improving profitability. Revenue came in at $103 million and grew 35% sequentially, driven by impressive organic growth and new store openings. Same-store sales grew by a whopping 75% among the 14 stores that have been open for more than a year. GTI saw sales volume increase substantially across its network of retail stores and it also saw its branded product sales grew substantially by 21% gross and 13% net as distribution channels continue to expand to 700 retail stores.

GTI has been able to maintain healthy gross margins as it continues to ramp up production and open new stores. Compared to LPs in Canada and other U.S. MSOs, GTI has one of the most consistent executions on margin which indicates management's ability to control costs during the expansionary phase. At the end of the quarter, GTI had 42 retail stores open across 10 states including 3 three stores in Illinois and Pennsylvania. It subsequently opened two more stores in Ohio and Nevada bringing its total to 44.

One of the most closely watched metrics for cannabis investors has been cash flow. GTI leads the industry in generating a positive operating cash flow of $27 million in Q1. The positive operating cash flow was helped by an increase in adjusted EBITDA to $26 million or 25% of revenue. GTI also only spent $13 million on capital expenditures and this amount as a percentage of revenue has been trending down over the last four quarters, indicating a slowdown in new capital investments and maturing of its asset profile.

GTI has a clearly-defined growth strategy that is based on branded consumer products, in-house cultivation, and retail strategy. It has so far been very successful in expanding organically as demonstrated by its unparalleled record of license application success rate. It also exhibited constraints and prudence in its M&A strategy as it avoided expensive deals that carried a high level of antitrust risks. We've seen most megadeals fall apart and the acquirer has suffered significant setbacks in most cases. Notable companies that pursued such a strategy include MedMen (OTCQB:MMNFF), Acreage (OTCQX:ACRGF), and Harvest Health (OTCQX:HRVSF). GTI's patience and thoughtful approach to growth is paying off as capital dried up for cannabis companies and investors focus on profitability and financial stability. We think GTI's strategy will continue to lead to its outperformance due to its self-sufficient funding model and visible path to growth. It is licensed to operate a total of 96 stores so there remains a long runway for additional organic growth. The recent surge in comparable sales is also an indication of cannabis' recession-proof characteristic which should garner premium valuation multiples in the market.

Valuations

GTI has been one of the top performers among U.S. cannabis operators. Despite the negative macro environment and investor apathy towards cannabis stocks, GTI managed to stay positive in 2020 so far. We think GTI's strong Q1 and its conservative financing strategy has limited its downside risk and should continue to support its near-term performance. GTI has a market cap of $1.9 billion and trades at an EV/Sales of 4.8x. Importantly, GTI also reported meaningful adjusted EBITDA of $25.5 million in Q1 which implies an EV/EBITDA (Q1 annualized) of 19x. The multiple is conceivable for a high-growth consumer branded products company. For reference, Constellation Brands (STZ) trades at 13x, Monster (MNST) trades at 23x, and Coca-cola (KO) trades at 17x EV/LTM EBITDA. While these companies are far larger, more global, and have established brands, we think they provide a helpful reality check for what GTI could aspire to obtain in the future.

Looking Ahead

We think GTI's Q1 2020 results demonstrated the resilience and growth potential of its business model, especially in the face of the current pandemic. The company crossed several milestones in Q1 including $100 million in quarterly revenue, 25% EBITDA margin, and substantial positive operating cash flow. Given its momentum and execution track record, we think the company will likely continue to outperform its peers. Its visible organic growth strategy based on a successful product strategy and new retail store openings should support continued revenue growth and margin expansion due to operating leverage and economy of scale. In summary, we think GTI remains one of the best cannabis stocks in the U.S. market.