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Cronos Group Inc. (Nasdaq: CRON) (TSX: CRON) announced its Q3 2024 business results today for the period ending September 30th, 2024.
Q3 Financial Highlights
All financial information is provided in U.S. dollars in comparison to the preceding quarter.
Net Revenue excluding Cronos GrowCo: UP 8.0% to $29,996M
Net Revenue of Cronos GrowCo: $4,268M
Total Net Revenue: UP 23.4% to $34,264M
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Canada: UP 21.3% to $24,067M
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Israel: UP 5.4% to $7,259M
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Other Countries: UP 185.5% to $2,938M
Cost of Sales: UP 44.0% to $30,341M
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as a % of net revenue: UP to 88.6% from 75.9%:
Gross Profit: DOWN 42.7% to $3,611M
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as a % of net revenue: DOWN to 10.5% from 22.7%
SG&A Exp.: UP 8.1% to $19,350M
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as a % of net revenue: DOWN to 57.0% from 65.0%
Net Profit (Loss): Loss declined 16.4% to $(7,324)M from $(11,051)M
Adj. EBITDA: Increased 45.5% to $(6,019)M
Cash on Hand/Short-term Investments: UP 1.6% to $862,034M
Q3 Business Update and Operational Highlights
On June 20 the Company made an additional investment in Cronos Growing Company (Cronos GrowCo) of a $51 million ($70 million CAD) secured non-revolving credit facility to fund the expansion of Cronos GrowCo’s cultivation and processing facilities, and began consolidating Cronos GrowCo’s results as of July 1, 2024 (Q3).Spinach®In Q3 2024, Spinach® was the top-selling cannabis brand in Canada according to Hifyre and held:
the number one position in the edibles category with a 17.25% market share;
the number one flower brand with a 6.0% market share;
the number 4 brand in the vape category with a 6.4% market share;
the number 8 brand in the pre-roll category with a 2.7% market share, and its infused pre-rolls are expected to be key to future growth for both Cronos and the industry, which is why the company is committed to evolution and innovation of the pre-roll portfolio.
PEACE NATURALS®
In Israel, PEACE NATURALS® continues to be a top-performing brand with a record volume of sales in Q3 2024.
In Germany and the UK, the Company is experiencing strong traction in PEACE NATURALS® with the expansion of Cronos GrowCo expected to enable Cronos to execute on these growth opportunities and others as they become available.
Management Commentary
Mike Gorenstein, Chairman, President, and CEO, said:
“.Our results this quarter demonstrate that our long-term strategy is working. With record net revenue and a disciplined approach to operating expenses, Cronos operates more efficiently and effectively than ever before, and we anticipate long-term margin improvement.
Our consolidation of Cronos Growing Company has further strengthened our supply chain, which we anticipate will lead to improved margins and allow us to meet the increasing global demand for high-quality cannabis.
With an industry-leading balance sheet, we are well-positioned to expand into new legal markets and drive future growth opportunities.
As international demand continues to rise, particularly in markets like Germany, the UK, and Australia, the investments we’ve made in our infrastructure and global partnerships are paying off.
In the third quarter, our award-winning Spinach® brand rose to become the best-selling cannabis brand in the Canadian adult-use market and our Peace Naturals® brand held a top spot in the Israeli medical market. Our brands’ market share out-performance represents our relentless commitment to quality, innovation, and bringing differentiated products to the global cannabis market.
The progress we’ve made reinforces our leadership in key categories and markets, and we remain focused on continuing to innovate and bring premium products to consumers.”
Guidance and Outlook
The Company reiterates its previously announced operating expense savings target of $5 to $10 million on a standalone basis in 2024 and, as such, excludes the impact of the consolidation of Cronos GrowCo’s results into the Company’s financial statements.
Stock Performance
Cronos Group’s stock price has remained stable throughout 2024 and is only UP 2.4% YTD.
