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$VRNOF Earnings - My Takeaways:
1. Strong headline numbers on their first ever qtrly report. Total revs in 2020 up ~200% on PF basis and +247% for Verano standalone and +134% for AltMed (FL) standalone. Mostly organic per my understanding
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1. Strong headline numbers on their first ever qtrly report. Total revs in 2020 up ~200% on PF basis and +247% for Verano standalone and +134% for AltMed (FL) standalone. Mostly organic per my understanding
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2. Margins were very impressive. 63% PF GMs and 48% PF EBITDA margins. Looks like Verano standalone EM was 45% and AltMed was 53.5% in 2020. These are $TCNNF level margins with a more diversified footprint. EBITDA recon. looked fairly clean to me. There were some ??s on that...
3. Core states: IL, FL, AZ, NJ, PA, OH, MD. Company executing on capacity expansions in most of these states and deepening retail footprint throughout. Recent M&A and commentary suggests they aren't done in AZ and PA. I anticipate they will acquire cultivation in PA before YE
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4. Company says they are taking a balanced approach across retail and wholesale. $VRNOF started off focusing on cultivation because it is "the harder part" and cultivation expansions suggest it will continue to be a focus
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5. I like to see MSOs investing in cultivation because the ROIC is high and is an important leading indicator of sales growth
6. Company generated $53MM in FCF in 2020 after spending $98MM on capex - impressive. Ramp in revs/profits in 2021 should see FCF increase in 2021...
6. Company generated $53MM in FCF in 2020 after spending $98MM on capex - impressive. Ramp in revs/profits in 2021 should see FCF increase in 2021...
7. Same-store daily transaction growth +60%; basket +14%. Company also opened 12 disp in 4Q which should start to hit productivity in 1H21, driving revenue
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8. I estimate the 7 announced M&A deals = $60-65MM of in-place EBITDA. Big headline values but accretive + strategic. Total dilution from deals is ~4% (there is a cash component as well). Not bad.
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9. Company is debt-free, which represents another opportunity. As cost of debt comes down for the industry, $VRNOF well positioned to lever up the balance sheet to enhance returns
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10. Overall, a strong report. The metrics suggest $VRNOF has one of the better operations (if not the best?) in US cannabis, and continues to invest for the future. As of today's close, stock trading ~11x 22 EBITDA, making it the cheapest of the top tier group.
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11. $VRNOF just went public so not surprising more ppl aren't talking about them. Their Zen Leaf disp have a really nice aesthetic, they have a growing set of owned brands, and are active on social media...
12. Likely to see margin pressure as cultivation ramps but I anticipate this one will re-rate higher as the market gets to know the company better. If we don't get decrim. bill and/or uplisting, this group could trade on relative value, and $VRNOF seems to offer one of the best.
