NEW MJ NEWS

Verano Announces Fourth Quarter and Full Year 2023 Financial Results

Verano Holdings Corp. (Cboe CA: VRNO) (OTCQX: VRNOF) (“Verano” or the “Company”), a leading multi-state cannabis company, today announced its financial results for the fourth quarter and full year ended December 31, 2023, which were prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).

Fourth Quarter and Full Year 2023 Financial Highlights

For the Three Months Ended,

For the Year Ended,

($ in thousands)

December 31, 2023

September 30, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Revenues, net of Discounts

$

237,189

$

240,088

$

225,927

$

938,452

$

879,412

Gross Profit

117,610

133,220

103,336

475,206

423,062

Income (Loss) from Operations

(11,143

)

40,288

(206,977

)

93,357

(161,131

)

Net Loss Attributable to Verano Holdings Corp. & Subsidiaries

(72,579

)

(17,842

)

(216,110

)

(112,719

)

(269,164

)

Adjusted EBITDA2

73,376

89,349

78,713

304,871

323,567

Fourth Quarter 2023 Financial Highlights

Revenue of $237 million, an increase of 5% year-over-year, and decrease of 1% versus the prior quarter.

Gross profit of $118 million or 50% of revenue.

SG&A expense of $86 million or 36% of revenue.

Net loss of $(73) million or (31)% of revenue.

Adjusted EBITDA2 of $73 million or 31% of revenue.

Net cash provided by operating activities of $32 million.

Capital expenditures of $10 million.

Free cash flow1 of $23 million.

Full Year 2023 Financial Highlights

Revenue of $938 million, an increase of 7% year-over-year.

Gross profit of $475 million or 51% of revenue.

SG&A expense of $332 million or 35% of revenue.

Net loss of $(113) million or (12)% of revenue.

Adjusted EBITDA2 of $305 million or 32% of revenue.

Net cash provided by operating activities of $110 million.

Capital expenditures of $36 million.

Free cash flow1 of $73 million.

Management Commentary
“I’m incredibly proud of our performance in 2023, highlighted by key wins across all aspects of the business,” said George Archos, Verano Founder and Chief Executive Officer. “As excitement and anticipation builds in the industry, 2024 has the potential to be a game-changing year, and Verano is well positioned to continue capitalizing on growth opportunities both in the current regulatory environment and from any state or federal reform. While we’ve never been dependent on legislation to drive sustained growth, with adult use imminent in Ohio, on the horizon in Florida and Pennsylvania, and the growing anticipation of a federal rescheduling decision, there is limitless potential for Verano. I’m thankful for all that our team accomplished in 2023, and believe the sky is the limit for what we can achieve in 2024 and beyond.”

Fourth Quarter 2023 Financial Overview

Revenue for the fourth quarter 2023 was $237 million, up 5% from $226 million for the fourth quarter 2022, and down 1% from $240 million for the third quarter 2023. The increase in revenue for the fourth quarter 2023 compared to the fourth quarter 2022 was driven primarily by strength from wholesale adult use sales in New Jersey, in addition to growth in Maryland and Florida retail.

Gross profit for the fourth quarter 2023 was $118 million or 50% of revenue, up from $103 million or 46% of revenue for the fourth quarter 2022, and down from $133 million or 55% of revenue for the third quarter 2023. The increase in gross profit for the fourth quarter 2023 compared to the fourth quarter 2022 was driven primarily by increased vertical mix and revenue growth.

SG&A expense for the fourth quarter 2023 was $86 million or 36% of revenue, up from $81 million or 36% of revenue for the fourth quarter 2022, and flat with $86 million or 36% of revenue for the third quarter 2023.

Net loss for the fourth quarter 2023 was $(73) million, or (31)% of revenue, versus a loss of $(216) million in the fourth quarter 2022, and $(18) million for the third quarter 2023. The decrease in net loss for the fourth quarter 2023 compared to the fourth quarter 2022 was due to a $229 million impairment charge in the prior year period. Excluding the impacts from impairments, net loss for the fourth quarter 2023 was primarily driven by the increase in provision for income taxes as the Company increased income from operations versus the fourth quarter 2022.

Adjusted EBITDA2 for the fourth quarter 2023 was $73 million or 31% of revenue.

Net cash provided by operating activities for the fourth quarter 2023 was $32 million, up from $29 million for the fourth quarter 2022.

Capital expenditures for the fourth quarter 2023 were $10 million, up from $9 million for the fourth quarter 2022.

Free cash flow1 for the fourth quarter 2023 was $23 million, up from $20 million for the fourth quarter 2022.

Full Year 2023 Financial Overview
Revenue for full year 2023 was $938 million, up 7% from $879 million for full year 2022. The increase in revenue for full year 2023 compared to full year 2022 was driven by a full year’s adult use contribution from New Jersey in addition to adult use launches in Connecticut and Maryland.

Gross profit for full year 2023 was $475 million or 51% of revenue, up from $423 million or 48% of revenue for full year 2022. The increase in gross profit for full year 2023 compared to full year 2022 was driven primarily by increased vertical mix and revenue growth.

SG&A expense for full year 2023 was $332 million or 35% of revenue, down from $357 million or 41% of revenue for full year 2022. The decrease in SG&A expense was driven primarily by a decrease in stock based compensation.

Net loss for full year 2023 was $(113) million, or (12)% of revenue, down from $(269) million for full year 2022. The decrease in net loss for full year 2023 compared to the full year 2022 was due to a $229 million impairment charge in the prior year period. Excluding the impacts from impairments, net loss for the full year 2023 was primarily driven by the increase in provision for income taxes as the Company increased income from operations versus the full year 2022.

Adjusted EBITDA2 for full year 2023 was $305 million or 32% of revenue.

Net cash provided by operating activities for full year 2023 was $110 million, up from $94 million for full year 2022.

Capital expenditures for full year 2023 were $36 million, down from $119 million for full year 2022.

Free cash flow1 for full year 2023 was $73 million, up from $(25) million for full year 2022.

2024 Guidance

The Company issued first quarter 2024 revenue guidance of a 5-7% decline versus the prior year period as the growing dispensary count in New Jersey continues to normalize.

Fourth Quarter 2023 Operational Highlights

Expanded the Company’s retail footprint across key markets by opening the following new dispensaries:

MÜV locations in Apopka, Satellite Beach and North Miami-Biscayne, Florida;

and Zen Leaf Newington, a social equity joint venture dispensary, raising the Company’s Connecticut retail footprint to four locations statewide.

Commenced trading on Cboe Canada, elevating the Company’s capital markets strategy and presence on a senior exchange with a global platform that spans 26 markets.

Introduced Savvy Threads, a non-plant-touching e-commerce extension of the Company’s Savvy brand featuring limited-edition, artist-driven streetwear available for sale and delivery to all 50 states.

Announced the Company’s participation in a coalition of industry stakeholders as a plaintiff challenging the legality of the federal government’s intervention in legal intrastate cannabis commerce under the Commerce Clause and Controlled Substances Act.

Launched reimagined (the) Essence brand combining bespoke graphic art and terpene-rich full-spectrum products, including the new (the) Essence Nectar line, across core markets.

Subsequent Operational Highlights

Expanded the Company’s retail footprint across key markets by opening the following new dispensaries:

MÜV Yulee in Northeast Florida, raising the Company’s current statewide retail footprint to 74 dispensaries;

and in Pennsylvania, opened the Company’s largest nationwide dispensary, Zen Leaf Abington, and Zen Leaf Norristown – both situated in prime Philadelphia area locations – elevating Verano’s statewide footprint to 18 affiliated dispensaries.

Current operations span 13 states, comprised of 138 dispensaries and 14 production facilities with more than one million square feet of cultivation capacity.

Balance Sheet and Liquidity
As of December 31, 2023, the Company’s current assets were $394 million, including cash and cash equivalents of $175 million. The Company had a working capital deficit of $(18) million and total debt, net of issuance costs, of $446 million.

The Company’s total Class A subordinate voting shares outstanding was 344,074,096 as of December 31, 2023.

Conference Call and Webcast
A conference call and webcast with analysts and investors is scheduled for February 29, 2024 at 8:30 a.m. ET / 7:30 a.m. CT to discuss the results and answer investor and participant questions.

Investors and participants can register in advance for the call by visiting: https://conferencingportals.com/event/sxTSCKLn

After registering, instructions will be shared on how to join the call for those who wish to dial in.

On February 29, 2024, the live webcast can be accessed via the following link: https://events.q4inc.com/attendee/601934273

The live and archived webcast will be available on the Events and Presentations page of the Company’s investor relations website at investors.verano.com.

_________________________
1 Free cash flow is a non-U.S. GAAP financial measure. It is derived from U.S. GAAP net cash provided by operating activities, which is also its most directly comparable U.S. GAAP financial measure, and is defined in this news release in the section below titled “Non-U.S. GAAP Financial Measures.” The reconciliation of free cash flow to U.S. GAAP net cash provided by operating activities is set forth below in the tables included in this news release.
2 Adjusted EBITDA is a non-U.S. GAAP financial measure. It is derived from EBITDA, another non-U.S. GAAP financial measure, and is defined in this news release in the section below titled “Non-U.S. GAAP Financial Measures.” The most directly comparable U.S. GAAP financial measure to adjusted EBITDA is net income (loss). The reconciliation of adjusted EBITDA to U.S. GAAP net income (loss) is set forth below in the tables included in this news release.

Non-U.S. GAAP Financial Measures
Verano uses non-U.S. GAAP financial information to evaluate the performance of the Company. The terms “EBIT,” “EBITDA,” “adjusted EBITDA,” and “free cash flow” do not have any standardized meaning prescribed within U.S. GAAP and therefore may not be comparable to similar measures presented by other companies. Accordingly, this non-U.S. GAAP financial information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

The Company calculates EBIT as net income (loss) before interest expense and income tax expense; EBITDA as net income (loss) before interest expense, income tax expense, depreciation, and amortization; adjusted EBITDA as net income (loss) plus net interest expense, income tax expense, depreciation and amortization and also excludes certain one-time extraordinary items; and free cash flow as net cash provided by operating activities less capital expenditures. The calculations of the non-U.S. GAAP financial measures used in this news release and the reconciliations to the most comparable U.S. GAAP financial numbers are included in the tables below.

Management believes that this non-U.S. GAAP financial information is useful as a supplement to comparable U.S. GAAP financial information because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP information to supplement their GAAP results. Management reviews these non-U.S. GAAP financial measures on a regular basis and uses them, together with financial measures included in the Company’s financial statements, to evaluate and manage the performance of the Company’s operations. These measures should be evaluated only in conjunction with the comparable U.S. GAAP financial numbers reported by the Company.

About Verano
Verano Holdings Corp. (Cboe CA: VRNO) (OTCQX: VRNOF), one of the U.S. cannabis industry’s leading companies based on historical revenue, geographic scope and brand performance, is a vertically integrated, multi-state operator embracing a mission of saying Yes to plant progress and the bold exploration of cannabis. Verano offers a superior cannabis shopping experience in medical and adult use markets under the Zen Leaf™ and MÜV™ dispensary banners and produces a comprehensive suite of high-quality, regulated cannabis products sold under its diverse portfolio of trusted consumer brands including Verano™, MÜV™, Savvy™, BITS™, Encore™, and Avexia™. Verano’s active operations span 13 U.S. states, comprised of 14 production facilities with over 1,000,000 square feet of cultivation capacity. Learn more at www.verano.com.

Contacts:
Investors
Verano
Julianna Paterra, CFA
VP, Investor Relations
julianna.paterra@verano.com

Media
Verano
Steve Mazeika
VP, Communications
steve.mazeika@verano.com
312-348-4430

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans, strategies, or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “future”, “scheduled”, “estimates”, “forecasts”, “projects,” “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. Forward-looking statements involve and are subject to assumptions and known and unknown risks, uncertainties, and other factors which may cause actual events, results, performance, or achievements of the Company to be materially different from future events, results, performance, and achievements expressed or implied by forward-looking statements herein, including, without limitation, the risk factors described in the Company’s annual report on Form 10-K for the year ended December 31, 2023 to be filed subsequent to a date hereof with the U.S. Securities and Exchange Commission at www.sec.gov. The forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information or forward-looking statements that are contained or referenced herein, except as may be required in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice regarding forward-looking information and statements.

Financial Information Tables
The following tables include select financial results and the reconciliations of the non-U.S. GAAP financial measures to the respective most directly comparable U.S. GAAP financial measures for the presented periods.

VERANO HOLDINGS CORP.
Highlights from Unaudited Consolidated Statements of Operations
($ in Thousands)

For the Three Months Ended,

For the Year Ended,

December 31, 2023

September 30, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Revenues, net of Discounts

$

237,189

$

240,088

$

225,927

$

938,452

$

879,412

Cost of Goods Sold, net

119,579

106,868

122,591

463,246

456,350

Gross Profit

117,610

133,220

103,336

475,206

423,062

Gross Profit %

50

%

55

%

46

%

51

%

48

%

Operating Expenses

Selling, General and Administrative

85,709

86,316

81,038

331,928

356,569

Loss on Impairment of Investment in Associates

6,571

6,571

Loss on Impairment of Intangibles – Goodwill

37,931

113,031

37,931

113,031

Loss on Impairment of Intangibles – License

5,113

116,151

5,113

116,151

Total Operating Expenses

128,753

92,887

310,220

381,543

585,751

Income (Loss) from Investments in Associates

(45

)

(93

)

(306

)

1,558

Income (Loss) from Operations

(11,143

)

40,288

(206,977

)

93,357

(161,131

)

Other Income (Expense), net:

Loss on Disposal of Property, Plant and Equipment

(568

)

(234

)

(408

)

(1,123

)

(157

)

Gain on Deconsolidation

9,560

Gain on Previously Held Equity Interest

14,103

Loss on Debt Extinguishment

(7,987

)

(663

)

(7,987

)

Interest Expense, net

(14,708

)

(15,166

)

(15,349

)

(59,793

)

(49,431

)

Other Income, net

2,057

2,145

14,083

4,594

31,640

Total Other Income (Expense), Net

(13,219

)

(13,255

)

(9,661

)

(56,985

)

(2,272

)

Income (Loss) Before Provision for Income Taxes and Non-Controlling Interest

(24,362

)

27,033

(216,638

)

36,372

(163,403

)

Provision for Income Tax (Expense) Benefit

(48,295

)

(44,797

)

528

(149,091

)

(105,470

)

Net Income (Loss) Attributable To Non-Controlling Interest

(78

)

78

291

Net Loss Attributable to Verano Holdings Corp. & Subsidiaries

(72,579

)

(17,842

)

(216,110

)

(112,719

)

(269,164

)

VERANO HOLDINGS CORP.
Highlights from Unaudited Consolidated Balance Sheets
($ in Thousands)

December 31,

December 31,

2023

2022

Cash and Cash Equivalents

$

174,760

$

84,851

Other Current Assets

219,436

233,424

Property and Equipment, Net

509,877

525,905

Intangible Assets, Net

1,086,146

1,180,766

Goodwill

231,291

269,088

Other Long-Term Assets

105,808

102,021

Total Assets

$

2,327,318

$

2,396,055

Total Current Liabilities

$

412,188

$

386,645

Total Long-Term Liabilities

670,421

667,860

Total Shareholders’ Equity

1,244,709

1,341,550

Non-Controlling Interest

Total Liabilities and Shareholders’ Equity

$

2,327,318

$

2,396,055

VERANO HOLDINGS CORP.
Segmented Revenue By State (Unaudited)

For the Three Months Ended,

For the Year Ended,

Net Retail Sales by State

December 31, 2023

December 31, 2023

($ in thousands)

Florida

$

59,695

$

221,957

Illinois

29,299

123,040

New Jersey

26,337

126,876

Arizona

15,626

67,061

Pennsylvania

12,587

55,010

Maryland

10,875

28,594

Connecticut

8,862

29,673

Nevada

7,097

29,158

Ohio

5,868

25,152

Massachusetts

2,984

12,628

West Virginia

1,625

5,777

Other

4,264

16,500

Total Net Retail Sales

$

185,119

$

741,426

For the Three Months Ended,

For the Year Ended,

Wholesale Sales by State

December 31, 2023

December 31, 2023

Gross

Net1

Gross

Net1

($ in thousands)

New Jersey

$

24,049

$

15,511

$

99,928

$

51,291

Illinois

19,227

11,027

79,204

45,858

Connecticut

14,204

10,342

54,584

42,011

Maryland

8,444

5,384

28,273

19,357

Pennsylvania

7,476

3,781

29,168

15,903

Arizona

7,084

2,575

25,989

9,888

Nevada

2,924

845

10,359

2,963

Ohio

1,857

914

7,816

3,693

Massachusetts

1,640

809

6,967

3,249

West Virginia

1,665

882

5,528

2,793

Other

20

20

Total Wholesale Sales

$

88,570

$

52,070

$

347,836

$

197,026

1Net of intercompany eliminations

VERANO HOLDINGS CORP.
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Non-U.S. GAAP)

For the Three Months Ended,

For the Year Ended,

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

($ in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Net Cash Provided by Operating Activities

$

32,349

$

29,036

$

109,710

$

94,347

Purchase of property, plant, and equipment

(9,827

)

(9,454

)

(36,330

)

(119,174

)

Free Cash Flow

$

22,522

$

19,582

$

73,380

$

(24,827

)

VERANO HOLDINGS CORP.
Reconciliation of Net Loss to EBITDA (Non-U.S. GAAP)

For the Three Months Ended,

For the Year Ended,

December 31, 2023

September 30, 2023

December 31, 2022

December 31, 2023

December 31, 2022

($ in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Net Loss Attributable to Verano Holdings Corp. & Subsidiaries

$

(72,579

)

$

(17,842

)

$

(216,110

)

$

(112,719

)

$

(269,164

)

Interest Expense, net

14,708

15,166

15,349

59,793

49,431

Income Tax Expense (Benefit)

48,295

44,797

(528

)

149,091

105,470

Depreciation and Amortization – COGS

18,417

18,384

18,580

73,851

78,120

Depreciation and Amortization – SG&A

17,157

16,882

16,578

67,282

63,267

Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization (EBITDA)

$

25,998

$

77,387

$

(166,131

)

$

237,298

$

27,124

VERANO HOLDINGS CORP.
Reconciliation of Net Loss to EBIT (Non-U.S. GAAP) and Adjusted EBITDA (Non-U.S. GAAP)

For the Three Months Ended,

For the Year Ended,

December 31, 2023

September 30, 2023

December 31, 2022

December 31, 2023

December 31, 2022

($ in thousands)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Net Loss Attributable to Verano Holdings Corp. & Subsidiaries

$

(72,579

)

$

(17,842

)

$

(216,110

)

$

(112,719

)

$

(269,164

)

Interest Expense, Net

14,708

15,166

15,349

59,793

49,431

Income Tax Expense

48,295

44,797

(528

)

149,091

105,470

Earnings Before Interest, Taxes (EBIT)

$

(9,576

)

$

42,121

$

(201,289

)

$

96,165

$

(114,263

)

COGS Add-backs:

Depreciation and Amortization – COGS

18,417

18,384

18,580

73,851

78,120

Acquisition, Transaction and Other Non-operating Costs

695

20,804

Employee Stock Compensation

970

625

2,231

2,669

8,003

SG&A Add-backs:

Depreciation and Amortization – SG&A

17,157

16,882

16,578

67,282

63,267

Acquisition, Transaction and Other Non-operating Costs

595

617

1,043

2,177

22,224

Employee Stock Compensation

3,281

4,062

2,599

10,561

31,051

Impairment – Goodwill & License

43,044

229,182

43,044

229,182

Acquisition Adjustments and Other Income (Expense), net

(512

)

6,658

9,094

9,122

(14,821

)

Adjusted EBITDA

$

73,376

$

89,349

$

78,713

$

304,871

$

323,567

Net Loss Margin

(31) %

(7) %

(96) %

(12) %

(31) %

Adjusted EBITDA Margin

31

%

37

%

35

%

32

%


MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Green Thumb Industries Inc.(GTBIF) Early Warning Report in Connection with an Internal Distribution of Shares

Early Warning Report in Connection with an Internal Distribution of Shares of…

$MDBX 2015 First Quarter Financial Results

Medbox Reports 2015 First Quarter Financial Results Medbox, Inc. (MDBX), a leading…

$ERBB UPDATE: ZaZZZ Network Fires Up

UPDATE: ZaZZZ Network Fires Up New Website Will Provide Location Owners, Customers,…

Neptune Wellness Solutions Inc. (NEPT) Announces Partnership With The Kraft Heinz Company to Distribute its Product

Neptune Wellness Solutions Inc. Announces Partnership With The Kraft Heinz Company to…