Green Thumb Industries (GTI) Announces Full Year 2018 Revenue of $62.5 Million, 278% Year-Over-Year Growth

Disciplined Capital Allocation Continues to Drive Strategy to Distribute Brands at Scale in 2019

• Fourth quarter revenue of $20.8 million, 21% sequential growth
• Full year adjusted EBITDA of $21.5 million and fourth quarter adjusted EBITDA of $12.4 million

CHICAGO and VANCOUVER, British Columbia, April 09, 2019 (GLOBE NEWSWIRE) -- Green Thumb Industries Inc. (“GTI” or the “Company”) (CSE:GTII) (GTBIF), a leading national cannabis consumer packaged goods company and owner-operator of the high growth national retail chain Riseâ„¢, today reported its financial results for the fourth quarter and full year ended December 31, 2018.  All currency is in U.S. dollars.

Fourth Quarter and Full Year 2018 Highlights

• Revenue: Total revenue for the fourth quarter of 2018 increased 237% year-over-year to $20.8 million. Fourth quarter sequential growth was 21%. Total revenue for 2018 increased 278% year-over-year to $62.5 million.
  
  
• EBITDA: Fourth quarter 2018 EBITDA¹ and Adjusted EBITDA¹, as described in an accompanying financial table, was a loss of $4.8 million and  $12.4 million, respectively. For the year, EBITDA and Adjusted EBITDA was $27.7 million and $21.5 million, respectively, driven primarily by gains in net asset value from strategic investments.
  
  
• Net Income (Loss): Net loss for the fourth quarter 2018 was $3.1 million and full year net loss was $7.7 million.
  
  
• Balance Sheet: At fiscal year-end, current assets totaled $187.3 million and included cash and cash equivalents of $146.0 million. Total debt outstanding was $7.2 million, $1.5 million of which is due within 12 months.
  
  
• Capital Markets: Listed on the Canadian Securities Exchange on June 13^th following the successful completion of the Company’s reverse takeover (“RTO”) of Bayswater Uranium Corporation. Including the RTO and two bought deal financings, the Company raised nearly $250 million.
  
  
• Operations: Increased revenue generation from two states to five states by operationalizing both consumer packaged goods and retail business units, including strong branded products distribution and the opening of seven new Riseâ„¢ stores nationwide. Subsequent to year end, began generating revenue in four additional states for a total of nine revenue-generating markets.
  
  
• Organic Growth: Achieved meaningful wins in competitive licensing processes in Ohio (five retail locations), Maryland (one cultivation), Pennsylvania (12 retail locations) and New Jersey (one production and one retail location) in 2018. Subsequent to year end, the Company won one processing license in Ohio.
  
  
• M&A: Completed and pending strategic acquisitions in 2018 including KW Ventures (Pennsylvania), Integral Associates (Nevada), KSGNF, LLC (Florida) and Compassionate Organics LLC (Boston); added three production facilities and 51 retail locations. Subsequent to year end, GTI completed the acquisitions of Advanced Grow Labs (Connecticut) and For Success Holding Company (Beboe).
  
  
• People: Onboarded over 300 new team members, including several key executive hires, bringing total headcount at year-end to over 500 nationwide. GTI was also named to the Crain's Chicago Business Top Workplaces 2018 list and the MG Retailer magazine Best Places to Work in Cannabis list in 2018.
  
  
• Corporate Governance: During the year, GTI established strong corporate governance policies and continued to build a world-class board of directors, adding three members with diverse backgrounds – Wendy Berger (28 years’ experience in real estate lending, development and investments), Glen T. Senk (ex-CEO of Urban Outfitters, scaled the Anthropologie retail concept) and Wes Moore (CEO of Robin Hood, New York City’s largest poverty-fighting organization).

Management Commentary

“2018 was a momentous year for GTI. In just six months following our RTO in June and in the beginning of 2019, we have expanded the infrastructure for our consumer products and retail businesses to now include 13 production facilities and the ability to open 88 retail locations across 12 states including pending acquisitions.  At the same time, we have built an incredible team that is over 500 strong to support our strategy to distribute brands at scale. With the growth of our branded product distribution, new store openings and adult-use markets coming on line, we are very pleased to have more than tripled our revenues from one year ago both year-over-year and quarter-over-quarter,” said GTI Founder and Chief Executive Officer Ben Kovler.

“Discipline continues to drive how we allocate capital to create long-term shareholder value,” Kovler continued. “We continue to execute against our strategic priorities for 2019: 1) establish a leading brand portfolio through innovation, standardization, and distribution; 2) accelerate retail growth through new store openings and consumer loyalty, and 3) bolster infrastructure with people, process, and technology to deliver sustainable profitable growth.” 

Consumer Packaged Goods Business Development

• Production and distribution of core brands Rythm, Dogwalkers, and The Feel Collection drove the financial performance of GTI’s consumer products business, with 80% retail distribution.
  
  
• Through its Dogwalkers brand, the Company launched an awareness campaign in December with major animal rescue organizations across the country. Each tin of Dogwalkers purchased benefits local animals in need.
  
  
• The Company supported Breast Cancer Awareness Month in October with limited edition “RYTHM for a Cause” vaporizer pens in select states.
  
  
• Subsequent to the quarter, GTI expanded its brand portfolio with the Beboe suite of branded cannabis products through the acquisition of For Success Holding Company. Beboe has an exclusive partnership with Barneys New York for luxury cannabis lifestyle and wellness shop “The High End”, which launched in March 2019.
  
  
• At the end of the fourth quarter, GTI generated revenue by producing and distributing its brand portfolio in four markets: Illinois, Maryland, Pennsylvania, and Massachusetts.  Subsequent to year-end, the Company expanded brand distribution to Nevada and Florida. Throughout 2018, several investments were made in capacity expansion initiatives:
  º In Illinois, GTI finalized the first phased expansion of a production facility which increased capacity by over 60%, ahead of another large planned expansion.
  º In Maryland, the Company is completing an east coast R&D hub for manufactured products and is also building out in-house cultivation, anticipated to be completed in the second quarter.
  º In Pennsylvania, cultivation capacity was quadrupled and is coming online in the second and third quarter of 2019.
  º Subsequent to year end, production capacity will be tripled in Florida, cultivation capacity is being expanded in Massachusetts, and the buildout of the production facility in Northern Nevada was completed and began production and distribution of GTI’s branded portfolio.

Retail Business Development

• Total consolidated retail revenue included contributions from 14 open stores, driven by seven new store openings during the year: two in Maryland, four in Pennsylvania, and one in Massachusetts.
  
  
• Pennsylvania: GTI opened Riseâ„¢ York in partnership with KW Ventures Holdings LLC in October 2018. GTI closed the acquisition of KW Ventures Holdings in January 2019. Riseâ„¢ York is the fourth Riseâ„¢ store operational in the state.
  
  
• Subsequent to the quarter, GTI entered Florida in January 2019 with the opening of Riseâ„¢ Deerfield Beach, its 15^th store nationwide.
  
  
• More than five new store openings are planned for the second quarter 2019 including Riseâ„¢ stores across Ohio, Pennsylvania, and Florida. GTI plans to open 15 to 20 new stores in 2019.

Business Infrastructure Development

During and subsequent to the fourth quarter, through business development and acquisition-related activities, GTI executed on its ‘Enter, Open, Scale’ strategy to expand market presence and scale operations. The Company made significant progress in the following areas:             

• Ohio: Entered the market and scaled national retail operations by winning five retail licenses, and subsequent to year-end, expanded consumer products operations by winning a processing license, allowing the Company to produce and distribute its brands in the state.
  
  
• Florida: In November, closed the acquisition of 100% of the ownership interests of KSGNF, LLC, the holder of a license to operate a cultivation and processing facility and up to 35 retail locations in Florida. Subsequent to the quarter in April, GTI began distributing Rythm-branded flower following approval by the state.
  
  
• Nevada: In November, signed a definitive agreement to acquire 100% of the ownership interests of Las Vegas-based Integral Associates. The acquisition includes three retail locations under the name Essence and two cultivation and processing facilities. Integral Associates also won eight additional retail licenses in both the Reno and Las Vegas areas. 
  
  
• Pennsylvania: In December, scaled existing retail and wholesale operations by winning the ability to open 12 new stores. The state awarded only 23 new licenses after receiving 180 applications.
  
  
• New Jersey: In December, entered the state by winning a license to cultivate and manufacture consumer products as well as operate one retail store, making GTI one of only six of 146 applicants to be awarded a new license in the state.
  
  
• Connecticut: In February 2019, entered through the acquisition of Advanced Grow Labs (“AGL”), one of only four companies in the state licensed to grow and process cannabis. The acquisition also includes controlling interest of one retail store.
  
  
• California and Colorado: In February 2019, entered through the acquisition of For Success Holding Company, the Los Angeles-based creator of the luxury lifestyle suite of Beboe branded cannabis products, which are currently distributed in California and Colorado. Pending acquisition Integral Associates also won one retail license in West Hollywood, which includes a consumption lounge, providing GTI entry into the California retail market.
  
  
• Talent: Broadened depth of executive leadership with key hires Matt Miller, as General Counsel, Kate Denton, as Senior Vice President of Marketing, and Greg Flickinger as Senior Vice President Operations. Miller brings over 22 years of legal and business experience, most recently with his seven-year tenure at Groupon as Vice President, Deputy General Counsel. Denton brings over 15 years of experience in leading and building brands including Kraft Foods and PepsiCo. Flickinger brings over 25 years of experience in operations, supply chain, engineering, and R&D from General Mills, Synder’s-Lance and most recently H.E.B.

Capital Markets and Financing Activities

• In the fourth quarter, GTI closed a bought deal financing transaction and raised $78.8 million, including proceeds from the full exercise of the underwriters’ over‐allotment option.
  
  
• For the year, GTI completed an RTO and two bought deal financing transactions totaling nearly $250 million. The Company intends to use net proceeds from the offerings for business development, including wholesale capacity expansion, strategic initiatives and working capital.

Fourth Quarter and Full Year 2018 Financial Overview (Unaudited)

Total revenue for the fourth quarter of 2018 was $20.8 million, up 237% from $6.2 million for the fourth quarter of 2017 and up 21% from $17.2 million for the third quarter of 2018. For the year, total revenue was $62.5 million, up 278% from $16.5 million in 2017. Fourth quarter and full year revenue growth were driven by both the consumer products and retail businesses, including the expansion of branded product distribution, new store openings, and increased consumer demand.

On a pro forma basis, revenue for the fourth quarter exceeded $44 million. This included revenue from the M&A transactions that closed in first quarter 2019 and those that are currently pending.

In the fourth quarter, GTI generated operating revenue in five markets: Nevada, Illinois, Pennsylvania, Massachusetts, and Maryland. The Company made capital investments related to the build out of new markets in Florida, Nevada, Ohio and New York in anticipation of revenue generation in the first half of 2019.  Subsequent to year end, consumer products revenue began in Nevada and retail revenue in Florida.

Gross profit before biological asset adjustment for the fourth quarter and full year 2018 was $9.7 million or 47%, and $28.5 million or 46%, respectively, as compared to $1.0 million or 17%, and $6.1 million or 37% for the same periods last year. Gross profit after net gains on biological asset transformation for the fourth quarter and full year 2018 was $12.5 million or 60%, and $32.7 million or 52%, respectively, as compared to 26% and 44% for the same periods last year, driven by additional operating scale achieved from revenue growth.

Total operating expenses for the fourth quarter and full year 2018 were $28.0 million and $60.3 million, respectively, as compared to $3.9 million and $11.5 million for the same periods last year. Total operating expenses include general and administrative (“G&A”) expenses, which totaled $26.5 million and $56.4 million for the fourth quarter and for the year. G&A expenses were driven by investments in headcount to support the Company’s growing consumer products and retail businesses, as well as non-cash expenses related to stock-based compensation of $12.6 million for the fourth quarter and $16.2 million for the year.

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