Terrascend Corp. · TSX:TSND
Terrascend — Q3 2024 Earnings Presentation
28 slides from Terrascend's earnings presentation, Nov 6, 2024
Slide 1: 2024 Third Quarter Financial Results
2024 Third Quarter Financial Results November 6, 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: Overview
Overview Jason Wild, Executive Chairman terrascend.com
Slide 6: Q3 2024 Financial Highlights
Q3 2024 Financial Highlights Our core business remained solid during Q3 as we maintained market leadership positions in our key markets, including a #1 market share position in New Jersey $74.2 M 9th Consecutive $1.8 M Net Revenue Quarter of Positive Cash Flow from Cash Flow from Continuing Operatio
Slide 7: Active Pursuit of Greenfield Expansion Opportunities
Active Pursuit of Greenfield Expansion Opportunities Uniquely positioned to enter new markets through attractive M&A, such as Ohio Population Adult-use commenced OHIO 12 Million on August 6th MI PA NJ OH • Targeted approach puts us in a differentiated position to invest MD in the best geographies an
Slide 8: Signed Definitive Agreement to Enter Ohio through Acquisition of a Dispensary
Signed Definitive Agreement to Enter Ohio through the Acquisition of a High-Performing Dispensary • Ohio, early days of implementing adult-use. • Upon closing, TerrAscend’s first entry into 6th state. • Intention is to assemble a leading retail footprint in Ohio by acquiring high-quality stores, jus
Slide 9: Strengthening Balance Sheet is a Priority
Strengthening Balance Sheet is a Priority • Closed on a $140 million senior secured loan. • Matures in August 2028. • Non-dilutive financing bears a coupon of 12.75%. • No warrants or prepayment penalties. • No other material debt maturing until late 2027. • Financing provides flexibility to pursue
Slide 10: Continued Progress With Federal Cannabis Reform
Continued Progress With Federal Cannabis Reform • Encouraged by the upcoming DEA hearing concerning the proposed re-scheduling of cannabis. • Re-scheduling would result in elimination of punitive tax treatment, provide cannabis companies greater access to capital at reduced costs and unlock restrict
Slide 11: First-Ever Stock Buyback Program for Up to $10 Million
First-Ever Stock Buyback Program for Up to $10 Million • In August 2024, commenced first-ever stock buyback program for up to $10 million, demonstrating confidence in the Company’s future and commitment to enhancing shareholder value. • Since August, purchases were made in open market and will conti
Slide 12: Summary
Summary • Organic growth levers in key states, NJ, MD and PA. • Ample greenfield expansion opportunities. • Financial flexibility. • No material debt maturing for the next several years. * Free Cash Flow is a non-GAAP financial measure. Please refer to disclaimer on slide 3 and 4 and Reconciliation
Slide 13: State-by-State Overview
State-by-State Overview Ziad Ghanem, President & Chief Executive Officer terrascend.com
Slide 14: Business Remained Solid Across our Core Markets
Business Remained Solid Across our Core Markets MICHIGAN PENNSYLVANIA Scaled vertical Scaled vertical operations operation with CALIFORNIA including cultivation, large scale cultivation and manufacturing, manufacturing, retail with 20 and 6 medical Population locations, and Population dispensaries 1
Slide 15: New Jersey
#1 New Jersey Market 3Q ’24 Highlights Share • Largest and most profitable market. • According to BDSA, TerrAscend held the #1 market share position through September 2024. Lodi (Dispensary) • Brands hold the top 3 positions in flower, vapes, edibles and concentrates. • In Q3, retail returned to seq
Slide 16: Maryland
Maryland 3Q ’24 Highlights • Wholesale revenue increased 26% sequentially due to expanded capacity, now on a $20 million dollar run rate. • Added capacity also enabled further gross margin improvement - gross margins have doubled to nearly 50% since the end of 2023. Burtonsville (Dispensary) • Retai
Slide 17: Pennsylvania
Pennsylvania 3Q ’24 Highlights • Wholesale revenue grew 59% year-over-year, once again driven by value-oriented Legend brand and expansion into edibles with Valhalla. • Retail declined 11% year-over-year, productivity per store remains healthy and around the state average. • Optimistic Pennsylvania
Slide 18: Michigan
Michigan 3Q ’24 Highlights • Priorities constant on improving operational efficiency and driving gross margin to establish a Harrison solid foundation from which to expand. (Cultivation / Processing & Distribution) • Gross margin remains near 40% year to date. Monitor (Cultivation / Processing) • Cu
Slide 19: Financial Overview
Financial Overview Keith Stauffer, Chief Financial Officer terrascend.com
Slide 20: Third Quarter 2024 Net Revenue
Third ThirdQuarter Quarter2024 Net Revenue 2023 Financial Results QoQ declines in wholesale revenue in New Jersey and retail revenue in Michigan partially offset by wholesale growth of 26% in Maryland Net Revenue Third Quarter 2024 Highlights (in millions, US$) • Revenue: $74.2 million versus $77.5
Slide 21: Gross Profit Margin
Gross Profit Margin Positive trend throughout 2024 driven by improvements in Maryland Third Quarter 2024 Highlights Gross Profit Margin • Gross Profit Margin: 48.8% versus 48.6% in Q2 2024 and 48.0% in Q1 2024 • Positive trend throughout the year was driven by improvements in Maryland 48.8% • Margin
Slide 22: General & Administrative Expenses
General General & Administrative Expenses & Administrative Expenses* Flat QoQ excluding one-time factors* Third Quarter 2024 Highlights General & Administrative Expenses (in millions, US$) • General & Administrative expenses for Q3 2024, $31.6 million, compared to $24.1 million in Q2 2024 $31.6 $5M
Slide 23: Net Loss and Adjusted EBITDA
Net Loss and Adjusted EBITDA* GAAP Net Loss Adj EBITDA* from continuing operations (in millions, US$) (in millions, US$) ($6.2) ($21.4) $15.6 $13.7 Q2 2024 Q3 2024 Q2 2024 Q3 2024 % Rev 20.2% 18.5% GAAP Net Loss: Adjusted EBITDA: • $21.4 million net loss, compared to $6.2 million net loss in • $13.7
Slide 24: Balance Sheet, Cash Flow & Stock Repurchase Program
Balance Sheet, Cash Flow & Stock Repurchase Program • Cash, and cash equivalents, including restricted cash: • $140 million senior secured term loan: • $27.2 million (9/30/24), compared $30.5 million • Coupon rate of 12.75% and a four-year term with (6/30/24) no prepayment penalties and no warrants
Slide 25: ERP System and Fourth Quarter 2024 Expectations
ERP System • Multi-year implementation • Solid IT and financial foundation to enable continued growth, both organically and through M&A • Improved productivity, lower costs, and more effective decision making Fourth Quarter 2024 Expectations • Expect flat to down mid-single digit in revenue sequenti
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 September 30, 2024 and June 30, 2024. For the Three Months Ended September 30, 2024 June 30, 2024 Revenue, net
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 September 30, 2024 and June 30, 2024. For the Three Months Ended September 30, 2024 June 30, 2024 Net cash provided by operating activities- continuing operations $ 1,823 $ 13,129 Capital