Verano (VRNO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $222.4 million, with gross profit of $114.3 million and adjusted EBITDA of $71 million (32% margin), in line with guidance and driven by wholesale growth offsetting retail pressure.

• Net loss for the quarter was $22 million, primarily due to high income tax expense, interest costs, and a non-cash debt extinguishment.

• Announced accretive M&A to enter Virginia and expand in Arizona, positioning as sole operator in Eastern Virginia and growing the portfolio to 14 states and 150 stores upon closing.

• Launched adult use program in Ohio in August 2024, with additional catalysts expected in Florida, Pennsylvania, and Virginia.

• Focused on long-term growth, operational efficiency, and readiness for adult use transitions in key markets.

Financial highlights

• Revenue: $222.4 million in Q2 2024, up 0.5% sequentially, down 5% year-over-year.

• Gross profit: $114.3 million (51% margin), with margin expansion of 220 basis points year-over-year due to increased wholesale mix.

• Adjusted EBITDA: $71 million (32% margin), up from both the prior quarter and prior year.

• Net loss: $22 million (-10% margin), primarily due to income tax provisions and non-cash debt extinguishment.

• Ended the quarter with $130 million in cash and cash equivalents; total debt: $396 million.

Outlook and guidance

• CapEx guidance for 2024 increased to $90 million–$130 million, driven by Florida expansion and pending acquisitions.

• No specific top-line guidance provided due to acquisition timing uncertainty.

• Focus remains on operating cash flow, with $69 million year-to-date.

• Anticipates DEA rescheduling cannabis to Schedule III, potentially reducing annual tax burden by $80 million.

• Expects revenue tailwinds in 2H 2024 from Ohio adult use launch and potential adult use programs in Florida, Pennsylvania, and Virginia.