Vireo Growth (VREO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue excluding discontinued operations and New York rose 42.5% year-over-year to $22.5 million, driven by strong performance in Maryland and operational improvements in Minnesota.

• Gross profit margin improved to 54.0% from 46.2% year-over-year, and EBITDA reached $8.1 million, up 185.7%, including a $1.6 million gain on Grown Rogue warrants.

• Maryland retail revenue surged 182% year-over-year, while Minnesota retail grew 7%; wholesale revenue in core markets increased 79%.

• Recently activated recreational wholesale sales in New York, with divestiture process ongoing and flower wholesaling expected in Q3.

• Credit agreement extended to January 2027; all outstanding convertible notes converted, reducing interest expenses and enhancing financial flexibility.

Financial highlights

• GAAP revenue for Q2 2024 was $25.1 million, up 24.3% year-over-year; revenue excluding discontinued operations and NY was $22.5 million, up 42.5%.

• Gross profit for Q2 2024 was $13.6 million, up 45.2% year-over-year; gross margin expanded by 780 bps to 54.0%.

• Operating income reached $5.8 million versus a loss of $1.0 million in Q2 2023; EBITDA margin increased to 32.4% from 14.1%.

• SG&A expenses decreased 6.1% to $7.6 million, representing 30.1% of sales, down from 39.9%.

• Net loss for Q2 2024 was $0.7 million, compared to a net loss of $7.3 million in Q2 2023; net loss per share was $0.00 vs. $0.06.

Outlook and guidance

• Adult-use sales in Minnesota expected to commence in Q1 2025, with preparations underway.

• Management expects improved year-over-year performance as capital improvements and team enhancements support cultivation yields and product quality.

• Focus remains on operational efficiency, prudent capital deployment, and completing the NY divestiture.

• Year-over-year comparisons will become more challenging as the company laps the anniversary of adult-use sales in Maryland.

• Aggressively pursuing a positive outcome from Verano litigation.