Slide 1: 2023 Fourth Quarter and Full Year Financial Results
2023 Fourth Quarter and Full Year Financial Results March 14, 2024 Terrascend.com TSX: TSND | OTCQX: TSNDF
Slide 2: Executive Leadership Speakers
Executive Leadership Speakers Jason Wild Ziad Ghanem Keith Stauffer Executive Chairman President & Chief Financial Officer Chief Executive Officer p. 2
Slide 3: Disclaimer: Forward-Looking Information
Disclaimer Forward-Looking Information This presentation contains “forward-looking information” within the meaning of applicable securities laws, including the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of
Slide 4: Disclaimer: Definition and Reconciliation of Non-GAAP Measures
Disclaimer Definition and Reconciliation of Non-GAAP Measures In addition to reporting the financial results in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company reports certain financial results that differ from what is reported under GAAP. Non-GAAP
Slide 5: Company Overview
Company Overview Jason Wild, Executive Chairman terrascend.com
Slide 6: FY and Q4 2023 Financial Highlights
FY and Q4 2023 Financial Highlights Full Year 2023 Q4 2023 $317.3 M $86.6 M 6th Consecutive FY Net Revenue Q4 Net Revenue Quarter of Positive Cash Flow from Continuing Operations +28.0% YoY +25.5% YoY $31.1 M FY 2023 Cash Flow from 50.3% 48.2% Continuing Operations FY Gross Profit Margin Q4 Gross Pr
Slide 7: Federal Reform and State-Level Reform
Federal Reform • Important tax deductions • Significantly greater profitability • Greater access to institutional banking and lending • Lower cost of capital • Historic mention of Cannabis at State of the Union address State-Level Reform • Governor of Pennsylvania has endorsed adult-use program • As
Slide 8: Taxes and Debt
Taxes and Debt Tax Reform: • Initiated a comprehensive evaluation in early 2023 • Based on legal interpretations, changed tax position related to the applicability of IRS section 280E • Will amend returns, with expected refunds of approximately $26 million Refinancing: • Working through a competitiv
Slide 9: Driving Operational Excellence within Current Footprint
Driving Operational Excellence within Current Footprint MICHIGAN PENNSYLVANIA Scaled vertical Scaled vertical operations including operation with large CALIFORNIA cultivation, manufacturing, retail scale cultivation and manufacturing, with 19 locations, and 6 medical and exclusive brand dispensaries
Slide 10: Ample Greenfield Opportunity
Ample Greenfield Opportunity Ample greenfield opportunity of attractive new markets to enter, for example, Ohio Population OHIO 12 Million Adult-use on the horizon MI PA NJ OH • Similar to successful expansion into Maryland, sights are now MD set on entering Ohio prior to commencement of Adult Use.
Slide 11: In Summary
In Summary • Grew business to new levels and at the highest rate among public companies in the industry • Strengthened operational performance • Blazed new trail by being first plant-touching US operator to list on the TSX • Played leadership role in case filed against the US attorney general • Went
Slide 12: Business Overview
Business Overview Ziad Ghanem, President & Chief Executive Officer terrascend.com
Slide 13: New Jersey
#2 New Jersey Market 4Q ’23 Highlights Share • Largest and Most Profitable Market • According to BDSA, Market Share Position at Virtual Tie for #2 Lodi (Dispensary) • 17.5% market share, compared to #3 position in Q3 • High Cultivation Yields, Low-Cost Structure, Leading Brands and Retail Experience
Slide 14: Maryland
Maryland 4Q ’23 Highlights • Early Days of Adult-Use • Adult-use began July 1, 2023 • According to MJBiz Factbook, market size expected to reach $2.1 billion annually by 2027 • Fully Vertically Integrated Herbiculture (Dispensary) • State-of-the-art cultivation facility Blue Ridge • 4 retail locatio
Slide 15: Pennsylvania
Pennsylvania 4Q ’23 Highlights • Market Overview • Population of 12 million • Current medical market size already over $1.2B • According to BDSA, expected to be over $2B adult-use market by 2028 • Retail and Wholesale Growth • Retail and wholesale revenue grew for the second consecutive quarter Proc
Slide 16: Michigan
Michigan 4Q ’23 Highlights • Market Overview • Largest US market per capita • #2 market size at over $3 Billion Harrison (Cultivation / Processing & Distribution) • Focused on Margin and Profitability Monitor • Substantially improved gross margins since (Cultivation / Processing) acquiring the busin
Slide 17: Financial Overview
Financial Overview Keith Stauffer, Chief Financial Officer terrascend.com
Slide 18: Fourth Quarter and Full Year 2023 Net Revenue
Fourth Quarter2023 Third Quarter and Financial Full Year 2023 Net Revenue Results YoY increases driven by strong market share in New Jersey, launch of adult-use and acquisition of 4 retail dispensaries in Maryland, and retail sales growth in Michigan Wholesale Retail FY Net Revenue Q4 Net Revenue (i
Slide 19: Gross Profit Margin
Gross Profit Margin Improvement driven by adult-use and yield improvements in New Jersey, operational scale up and going vertical in Maryland, various margin optimization efforts in Michigan, and cost optimizations in Pennsylvania FY Gross Profit Margin Q4 Gross Profit Margin +360bps YoY 50.3% 48.2%
Slide 20: General & Administrative Expenses
General & Administrative General & Administrative Expenses* Expenses* 790 basis point annual reduction as a percentage of revenue driven by across-the-board efforts to optimize our cost structure and drive positive cash flow from operations FY General & Administrative Expenses* Q4 General & Administ
Slide 21: GAAP Net Income (Loss)
GAAP Net Income (Loss) FY GAAP Net Loss Q4 GAAP Net Loss from continuing operations from continuing operations (in millions, US$) (in millions, US$) ($82.3) ($2.0) ($299.4) ($41.8) FY 2022 FY 2023 Q4 2022 Q4 2023 FY GAAP Net Loss: Q4 GAAP Net Loss: • $82.3 million net loss, inclusive of a $58.0 mill
Slide 22: Adjusted EBITDA
Adjusted EBITDA* Year-over-year increase reflects growth in revenue and improvements in gross margin while maintaining G&A relatively flat year-over-year Adj EBITDA* Adj EBITDA* (in millions, US$) (in millions, US$) +77% YoY +61% $68.8 YoY $19.6 $38.8 $12.2 FY 2022 FY 2023 Q4 2022 Q4 2023 % Rev 15.7
Slide 23: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • Cash, and cash equivalents, including restricted cash: • $25.3 million (12/31/23), compared to $28.5 million (9/30/23) • Q4 2023 net cash provided by continuing operations: • $9.4 million, 6th consecutive quarter of positive cash flow from continuing operations • Q4 202
Slide 24: Taxes
Taxes • After initiating a comprehensive evaluation in early 2023, and based on legal interpretations, TerrAscend has changed its tax position as it relates to applicability of Internal Revenue Code Section 280E. • This has resulted in the reclassification of $59.2 million of tax liabilities, as of
Slide 25: First Quarter 2024 Expectations
First Quarter 2024 Expectations • Expects typical seasonal trends to impact revenue. • Anticipates a 5-7% decline sequentially resulting in YoY growth of around mid-to-high teens. • EBITDA growth of 20-25% YoY. p. 25
Slide 26: Thank You
Thank You terrascend.com
Slide 27: Appendix – Reconciliation of Non-GAAP Measures
Appendix – Reconciliation of Non-GAAP Measures The table below reconciles net loss to EBITDA from continuing operations and Adjusted EBITDA from continuing operations for the quarters ended December 31, 2023 and December 31, 2022 and the years ended December 31, 2023 and December 31, 2022. p. 27
Slide 28: Appendix – Reconciliation of Non-GAAP Measures
Appendix – Reconciliation of Non-GAAP Measures The table below reconciles Free Cash Flow for the quarters ended December 31, 2023 and December 31, 2022 and the years ended December 31, 2023 and December 31, 2022. For the Three Months Ended For the Year Ended December 31, December 31, December 31, De