CHICAGO–()–Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) (FSE: 6CQ) (“Cresco Labs” or the “Company”), one of the biggest vertically built-in multi-state hashish operators within the United States, at this time launched its unaudited monetary outcomes for the third quarter ended September 30, 2020. All monetary info introduced on this launch is in U.S. {dollars}, until in any other case famous.

Management Commentary

Cresco Labs entered the third quarter firing on all cylinders achieving record levels of revenue, profitability, and cash flow. We remain the number one operator in the industry focused on, and delivering results in, the wholesale distribution of branded products. Our retail is outperforming, and we are generating substantial operating leverage,” mentioned Charles Bachtell, Co-founder and CEO of Cresco Labs. “Comparing Q1 to Q3, we increased revenue by $87 million while keeping SG&A flat. The investments we made to support growth are paying off, and as a result our profitability has grown dollar for dollar with gross profit. Because of the decisions we’ve made, the changes we’ve managed through and the hard work devoted by our team over the last 12 months, Cresco Labs has substantiated itself within the very top tier of the industry and confirmed the value that is driven by our differentiated strategy. This is a unique story of strategic breadth, depth and execution. As we look toward our next phase of growth, it’s rinse and repeat – the playbook will be applied to more states and, again, we will achieve meaningful, material market positions.”

Third Quarter 2020 Financial Highlights

Operating Results

  • Revenue for the third quarter of 2020 was $153.Three million, an absolute improve of over $59.zero million or a 63% improve over Q2’20 income. Wholesale development was pushed by a rise in harvests from expanded capability in Illinois and Pennsylvania with robust development in California. Retail development was pushed by robust sequential same-store development and two new retailer openings in Illinois.
  • Operational Gross Profit1 as a Percentage of Revenue was 53% within the quarter as in comparison with 47% within the prior quarter pushed by elevated effectivity in our expanded Illinois and Pennsylvania services.
  • Adjusted EBITDA1was $46.4 million, a rise of 182% sequentially pushed primarily from greater income, elevated operational gross revenue throughout our largest markets and robust SG&A management which dropped dramatically as a proportion of income.
  • Net Income2was $4.9 million, which consists of unrealized positive aspects and losses on mark-to-market devices that fluctuate till obligations are settled, modifications in truthful worth of organic belongings, curiosity expense and tax expense.
  • Net Cash Provided by Operating Activities was $17.Eight million, in comparison with $9.9 million utilized in Q2. The improve in money offered by working actions was pushed by elevated working leverage throughout the enterprise because the Company scales.

Shares Outstanding

Total shares on a totally transformed foundation have been 380,035,735 as of September 30, 2020.

Conference Call and Webcast

The Company will host a convention name and webcast to debate its monetary outcomes and present traders with key enterprise highlights on Wednesday, November 18, 2020, at 8:30am Eastern Time (7:30am Central Time). The convention name could also be accessed by way of webcast or by dialing 866-688-4235 (409-216-0711 for worldwide callers) and offering convention ID 9237505. Archived entry to the webcast can be accessible for one yr on the Cresco Labs’ investor relations website.

Consolidated Financial Statements

The monetary info reported on this press launch is predicated on unaudited administration ready monetary statements for the three months ended September 30, 2020. The Company expects to file its unaudited interim consolidated monetary statements on SEDAR by November 18, 2020. All monetary info contained on this press launch is certified in its entirety just about such monetary statements. While the Company doesn’t count on there to be any materials modifications between the knowledge contained on this press launch and the unaudited interim consolidated monetary statements it recordsdata on SEDAR, to the extent that the monetary info contained on this press launch is inconsistent with the knowledge contained within the Company’s monetary statements, the monetary info contained on this press launch shall be deemed to be modified or outmoded by the Company’s filed monetary statements. The making of a modifying or superseding assertion shall not be deemed an admission for any functions that the modified or outmoded assertion, when made, constituted a misrepresentation for functions of relevant securities legal guidelines. Further, the reader ought to confer with the extra disclosures within the Company’s audited monetary statements for the yr ended December 31, 2019, beforehand filed on SEDAR.

Cresco Labs references sure non-IFRS monetary measures all through this press launch, which is probably not akin to comparable measures introduced by different issuers. Please see the “Non-IFRS Financial Measures” part on the finish of this press launch for extra detailed info.

About Cresco Labs Inc.

Cresco Labs is one of the biggest vertically-integrated multi-state hashish operators within the United States. Cresco Labs is constructed to change into an important firm within the hashish trade by combining essentially the most strategic geographic footprint with one of the main distribution platforms in North America. Employing a consumer-packaged items (“CPG”) strategy to hashish, Cresco Labs’ home of manufacturers is designed to fulfill the wants of all shopper segments and consists of some of essentially the most acknowledged and trusted nationwide manufacturers together with Cresco, Remedi and Mindy’s, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Cresco Labs’ nationwide dispensary model, is a wellness-focused retailer designed to construct belief, training and comfort for each present and new hashish customers. Recognizing that the hashish trade is poised to change into one of the main job creators within the nation, Cresco Labs has launched the trade’s first nationwide complete Social Equity and Educational Development (SEED) initiative designed to make sure that all members of society have the talents, information and alternative to work in and personal companies within the hashish trade. Learn extra about Cresco Labs at www.crescolabs.com.

Non-IFRS Financial Measures

Operational gross revenue, EBITDA and Adjusted EBITDA, web of impression of organic belongings, are non-IFRS measures and would not have standardized definitions underneath IFRS. The Company has offered these non-IFRS monetary measures, which aren’t calculated or introduced in accordance with IFRS, as supplemental info and along with the monetary measures which can be calculated and introduced in accordance with IFRS. These supplemental non-IFRS monetary measures are introduced as a result of administration has evaluated the monetary outcomes each together with and excluding the adjusted objects and believes that the supplemental non-IFRS monetary measures introduced present further perspective and insights when analyzing the core working efficiency of the enterprise. These supplemental non-IFRS monetary measures shouldn’t be thought of superior to, as an alternative to or as an alternative choice to, and ought to solely be thought of along side, the IFRS monetary measures introduced herein. Accordingly, the Company has included beneath reconciliations of the supplemental non-IFRS monetary measures to essentially the most instantly comparable monetary measures calculated and introduced in accordance with IFRS.

Forward Looking Statements

This press launch accommodates “forward-looking information” throughout the which means of relevant Canadian securities laws and might also include statements which will represent “forward-looking statements” throughout the which means of the protected harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking info and forward-looking statements are usually not consultant of historic details or info or present situation, however as an alternative characterize solely the Company’s beliefs relating to future occasions, plans or targets, many of which, by their nature, are inherently unsure and outdoors of the Company’s management. Generally, such forward-looking info or forward-looking statements will be recognized by the use of forward-looking terminology similar to, ‘may,’ ‘will,’ ‘should,’ ‘could,’ ‘would,’ ‘expects,’ ‘plans,’ ‘anticipates,’ ‘believes,’ ‘estimates,’ ‘projects,’ ‘predicts,’ ‘potential’ or ‘continue’ or the detrimental of these types or different comparable phrases. The Company’s forward-looking statements contain identified and unknown dangers, uncertainties and different elements which can trigger the Company’s precise outcomes, efficiency or achievements to be materially completely different from any future outcomes, efficiency or achievements expressed or implied by the forward-looking statements, together with however not restricted to these dangers mentioned underneath “Risk Factors” within the Company’s Annual Information Form dated April 28, 2020, and different paperwork filed by the Company with Canadian securities regulatory authorities; and different elements, many of that are past the management of the Company. Readers are cautioned that the foregoing record of elements is just not exhaustive. Because of these uncertainties, you shouldn’t place undue reliance on the Company’s forward-looking statements. No assurances are given as to the longer term buying and selling worth or buying and selling volumes of Cresco Labs’ shares, nor as to the Company’s monetary efficiency in future monetary durations. The Company doesn’t intend to replace any of these elements or to publicly announce the end result of any revisions to any of the Company’s forward-looking statements contained herein, whether or not consequently of new info, any future occasion or in any other case. Except as in any other case indicated, this press launch speaks as of the date hereof. The distribution of this press launch doesn’t suggest that there was no change within the affairs of the Company after the date hereof or create any responsibility or dedication to replace or complement any info offered on this press launch or in any other case.

1 See “Non-IFRS Financial Measures” on the finish of this press launch for extra info relating to the Company’s use of non-IFRS monetary measures. Adjusted EBITDA is introduced web of impression of organic belongings.

2 Net revenue consists of quantities attributable to non-controlling pursuits.

 
Cresco Labs Inc.
Unaudited Financial Information and Non-IFRS Reconciliations
(All quantities expressed in hundreds of U.S. Dollars)
 
Unaudited Consolidated Statements of Operations
For the Three Months Ended September 30, 2020, June 30, 2020 and September 30, 2019
 

For the Three Months Ended

($ in hundreds)

9/30/2020

 

6/30/2020

 

9/30/2019

Revenue

$

153,298

 

$

94,256

 

$

36,207

 

Cost of gross sales – manufacturing prices

 

(74,148

)

 

(60,835

)

 

(23,369

)

Gross revenue earlier than truthful worth changes

 

79,150

 

 

33,421

 

 

12,838

 

 
Realized modifications in truthful worth of stock offered

 

(72,560

)

 

(41,774

)

 

(22,908

)

Unrealized acquire on modifications in truthful worth of organic belongings

 

78,041

 

 

77,822

 

 

30,910

 

Gross revenue

 

84,631

 

 

69,469

 

 

20,840

 

GP%

 

55.2

%

 

73.7

%

 

57.6

%

Expenses:
Selling, basic and administrative

 

46,763

 

 

45,186

 

 

25,474

 

Depreciation and amortization

 

5,800

 

 

5,358

 

 

991

 

Total bills

 

52,563

 

 

50,544

 

 

26,465

 

 
Gain (loss) from operations

 

32,068

 

 

18,925

 

 

(5,625

)

 
Other (expense) revenue:
Interest expense, web

 

(11,319

)

 

(9,597

)

 

(1,094

)

Other (expense) revenue, web

 

(2,983

)

 

(740

)

 

2,714

 

Income from funding in affiliate

 

(134

)

 

24

 

 

35

 

Total different expense (revenue), web

 

(14,436

)

 

(10,313

)

 

1,655

 

Income (loss) earlier than revenue taxes

 

17,632

 

 

8,612

 

 

(3,970

)

Income tax expense

 

(12,690

)

 

(13,312

)

 

(4,624

)

Net revenue (loss) 1

$

4,942

 

$

(4,700

)

$

(8,594

)

 
1 Net revenue (loss) consists of quantities attributable to non-controlling pursuits.
Cresco Labs Inc.
Summarized Consolidated Statements of Financial Position
As of September 30, 2020 and December 31, 2019
     
  September 30, 2020   December 31, 2019
($ in hundreds)   (Unaudited)   (Audited)
Cash and money equivalents  

$

57,689

 

$

49,102

Other present belongings  

 

199,405

 

 

110,236

Property and gear, web  

 

180,649

 

 

155,839

Intangible belongings, web  

 

195,953

 

 

94,206

Goodwill  

 

451,632

 

 

137,719

Other non-current belongings  

 

121,321

 

 

69,452

Total belongings  

$

1,206,649

 

$

616,554

     
Total present liabilities  

 

243,731

 

 

150,169

Total long-term liabilities  

 

221,294

 

 

143,762

Total shareholders’ fairness  

 

741,624

 

 

322,623

Total liabilities and shareholders’ fairness  

$

1,206,649

 

$

616,554

Cresco Labs Inc.
Unaudited Revenue and Gross Profit Metrics
For the Three Months Ended, September 30, 2020, June 30, 2020 and September 30, 2019
 

For the Three Months Ended

($ in hundreds)

9/30/2020

 

6/30/2020

 

9/30/2019

Revenue

$

153,298

 

$

94,256

 

$

36,207

 

Cost of gross sales – manufacturing prices1

 

(74,148

)

 

(60,835

)

 

(23,369

)

Realized modifications in truthful worth of stock offered

 

(72,560

)

 

(41,774

)

 

(22,908

)

Unrealized acquire on modifications in truthful worth of organic belongings

 

78,041

 

 

77,822

 

 

30,910

 

Gross revenue

$

84,631

 

$

69,469

 

$

20,840

 

Cultivation prices expensed underneath IAS 412

 

(3,934

)

 

3,951

 

 

2,075

 

Net impression of truthful worth of organic belongings

 

(5,481

)

 

(36,048

)

 

(8,002

)

Expansion, relaunch and rebranding prices3

 

2,693

 

 

4,616

 

 

2,157

 

COVID-19 associated bills

 

846

 

 

1,887

 

 

 

Fair worth markup for acquired stock

 

1,843

 

 

 

331

 

 

 

 

Operational gross revenue (Non-IFRS)

$

80,598

 

$

44,206

 

$

17,070

 

Operational GP%

 

52.6

%

 

46.9

%

 

47.1

%

 
1 Production (cultivation, manufacturing, and processing) prices associated to merchandise offered in the course of the interval.
2 Costs can be capitalized underneath IAS 2 and don’t replicate value of stock offered within the interval.
3 Costs associated to non-recurring third-party product prices, start-up prices, and samples/reductions to develop footprint and relaunch in sure markets.
Cresco Labs Inc.
Unaudited Reconciliation of Net Income to Adjusted EBITDA
For the Three Months Ended, September 30, 2020, June 30, 2020 and September 30, 2019
 
For the Three Months Ended
($ in hundreds)

9/30/2020

 

6/30/2020

 

9/30/2019

Net revenue (loss)1

$

4,942

 

$

(4,700

)

$

(8,594

)

Depreciation and amortization

 

10,831

 

 

9,626

 

 

3,287

 

Interest expense, web

 

11,319

 

 

9,597

 

 

1,094

 

Income tax expense

 

12,690

 

 

13,312

 

 

4,624

 

Earnings earlier than curiosity, taxes, depreciation
and amortization (EBITDA) (Non-IFRS)

$

39,782

 

$

27,835

 

$

411

 

 
Expansion, relaunch and rebranding prices2

 

2,693

 

 

4,616

 

 

2,157

 

COVID-19 associated bills

 

956

 

 

2,648

 

 

 

Other expense (revenue), web

 

2,983

 

 

740

 

 

(2,714

)

(Loss) acquire from funding in affiliate

 

134

 

 

(24

)

 

(35

)

Fair worth markup for acquired stock

 

1,843

 

 

331

 

 

 

Cultivation prices expensed underneath IAS 413

 

(3,934

)

 

3,951

 

 

2,075

 

Adjustments for acquisition and different non-core prices

 

4,424

 

 

5,205

 

 

4,709

 

Management incentive compensation (share-based)

 

3,033

 

 

7,207

 

 

4,487

 

Adjusted EBITDA (Non-IFRS)

$

51,914

 

$

52,509

 

$

11,090

 

 
Net impression of truthful worth of organic belongings

 

(5,481

)

 

(36,048

)

 

(8,002

)

Adjusted EBITDA (non-IFRS), web of impression of organic belongings

$

46,433

 

$

16,461

 

$

3,088

 

 
1 Net revenue (loss) consists of quantities attributable to non-controlling pursuits.
2 Costs associated to non-recurring third-party product prices, start-up prices, and samples/reductions to develop footprint and relaunch in sure markets.
3 Costs can be capitalized underneath IAS 2 and don’t replicate value of stock offered within the interval.
Cresco Labs Inc.
Unaudited Summarized Consolidated Statements of Cash Flows
For the Three Months Ended, September 30, 2020, June 30, 2020 and September 30, 2019
 
For the Three Months Ended
($ in hundreds)

9/30/2020

6/30/2020

9/30/2019

Net offered by (utilized in) working actions

$

17,770

 

$

(9,881

)

$

(6,160

)

Net money (utilized in) offered by investing actions

 

(12,147

)

 

14,888

 

 

(33,556

)

Net money (utilized in) offered by financing actions

 

(18,869

)

 

(2,227

)

 

52,774

 

Effect of overseas forex change price modifications on money

 

(1,005

)

 

(288

)

 

 

Net (lower) improve in money and money equivalents

 

(14,251

)

 

2,492

 

 

13,058

 

Cash and money equivalents and restricted money, starting of interval

 

73,868

 

 

71,376

 

 

68,694

 

Cash and money equivalents and restricted money, finish of interval

$

59,617

 

$

73,868

 

$

81,752

 

 

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