Cresco Labs (CL) Q4 2024 earnings summary

Executive summary

• FY 2024 revenue was $724.3 million, a 6% year-over-year decline, but with a more profitable and sustainable mix and strong brand and retail performance offsetting price compression.

• Adjusted EBITDA grew 15% to $200 million (28% margin), and operating cash flow reached a record $132 million, up 126% year-over-year.

• Net loss for FY 2024 was $60 million, including $66 million in one-time, non-cash charges related to updated 280E tax position.

• Focused on operational excellence, cash generation, and strategic capital deployment, including expansion in core and new markets such as Kentucky.

• Maintained #1 market share in Illinois, Pennsylvania, and Massachusetts, with share growth in Ohio and Florida.

Financial highlights

• Adjusted gross profit margin increased to 52% in FY 2024 from 49% in FY 2023; adjusted gross profit dollars held flat year-over-year despite lower revenue.

• Adjusted SG&A reduced by $29 million in 2024, with Q4 SG&A at $54 million, down 1% year-over-year; adjusted SG&A margin was 29% for FY 2024.

• Q4 revenue was $176 million; Q4 adjusted EBITDA was $42 million (24% of revenue); Q4 operating cash flow was $29 million.

• Free cash flow for FY 2024 was $114 million, up from $5.8 million in FY 2023.

• Net loss for FY 2024 was $(60.5) million, a significant improvement from $(179.9) million in FY 2023.

Outlook and guidance

• Near-term margin pressure expected in Q1 2025 as production scales up in Illinois and Pennsylvania; SG&A to remain relatively flat in Q1, with modest increases as expansion continues in Ohio, Florida, Pennsylvania, and Kentucky.

• Growth initiatives underway, but not expected to materially impact Q1; focus remains on sustainable long-term growth and maximizing core markets.

• Kentucky market expected to contribute meaningfully from 2026 onward; industry analysts project Kentucky market to exceed $228 million by 2028.

• Long-term gross margin target of 50% remains unchanged.

• Anticipated annual cash tax benefit of ~$70 million from revised tax strategy starting 2025.