Florida-based Ayr Wellness Inc. (OTCQX: AYRWF) revealed a mixed bag of financial results for the third quarter ending Sept. 30, showing that while the company saw a modest revenue rise, it missed its targets.
The multi-state operator reported revenues of $114.39 million, a 5.2% year-over-year increase, yet falling short of expectations by $5.7 million. The miss is attributed to a combination of aggressive market expansion and uneven sales across its operations.
According to filings, retail revenues showed a 6.1% increase, largely driven by new store openings and acquisitions, expanding the company’s footprint to 86 stores. However, the key metric of same-store sales slightly declined by a percentage point. Wholesale revenues fell by $221,000, or 1.8%, driven by price compression “experienced across all markets” since last year.
The company’s net loss improved to $19.27 million, down from last year’s $34.68 million. The improvement is attributed to its ongoing cost-cutting initiatives, which have been a focal point for the management in recent quarters.
“As only 15 of the 88 dispensaries across our footprint are fully ramped adult-use stores, AYR is well-positioned to take advantage of legislative catalysts in states like Ohio, which voted just last week to legalize adult-use cannabis, as well as Florida and Pennsylvania in the near future,” CEO David Goubert said in a statement. “The conversion of these stores would reflect a 6x increase in our adult-use retail footprint.”
Gross profit rose to $48.13 million, a 5.6% increase, with a slight uptick in the gross profit margin to 42.1%. Total operating expenses were down by 23.8% to $49.58 million. The reduction is mostly due to lower stock compensation and payroll expenses.
The company’s liquidity position appears more robust, with over $20 million generated in operating cash flow during the quarter. At the same time, it used $7 million for capital expenditures and ended the quarter with a cash balance of $72.8 million.
Moreover, adjusted EBITDA rose by 52% over the year to $28.4 million.
“During the quarter, retail transactions were up 18% year-over-year on a same-store basis, largely driven by our initiatives to increase customer acquisition and loyalty,” Goubert said.
Still, he added that those store traffic gains were offset by pricing pressures and cultivation issues in Florida, which are expected to also impact fourth-quarter sales. However, the CEO anticipates a return to normal inventory levels by mid-December.
The company’s moves over the past year, such as the acquisition of a third Ohio dispensary license and expansion of its Florida store count, reflect its aggressive growth strategy in a market poised to see a boon, though building out a framework for the Buckeye State’s new program could take months. The appointment of new board members and executives, alongside partnerships like the one with Kiva Confections, also help its position.
The firm’s also been pretty active in restructuring its debt profile, extending the maturity of debts and securing new financing.
Looking ahead, management’s cautious about its short-term growth prospects, predicting flat revenue in the fourth quarter relative to the third. Still, the company’s optimistic about its long-term trajectory, focusing on revenue growth, margin expansion, and cash flow generation into 2024.
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