Inside Green Thumb’s 2023 Earnings: Growth and Challenges

The TDR Three Key Takeaways:

1. Green Thumb Industries reported a 7% increase in revenue for Q4 and a 4% increase for the full year 2023, reflecting steady financial growth.
2. The company demonstrated prudent capital management, evidenced by share repurchase programs and disciplined investment in expansion.
3. The use of “Adjusted EBITDA” highlights a need for scrutiny as these figures may not fully represent the company’s financial health.

Green Thumb Industries Inc. (CSE: GTII, OTC: GTBIF) has released its financial figures for the fourth quarter and the entire year ending December 31, 2023. The company, a notable player in the national cannabis consumer packaged goods market and operator of RISE Dispensaries, has shared these results following U.S. generally accepted accounting principles (GAAP) with all figures presented in U.S. dollars.

For the fourth quarter of 2023, Green Thumb announced a revenue of $278 million, marking a 7% increase compared to the same period last year. The company concluded the quarter with $162 million in cash. The GAAP net income reported for the fourth quarter was $3 million, equating to $0.01 per basic and diluted share. Noteworthy is the Adjusted EBITDA which stood at $91 million, representing 33% of the revenue, alongside a cash flow from operations totaling $71 million. In this period, Green Thumb expanded its footprint by opening seven new RISE Dispensaries, six in Florida and one in New York, and engaged in significant financial activities including the purchase of $25 million of senior debt and $15 million of the company’s Subordinate Voting Shares under its share repurchase program.

For the full year of 2023, the company reported a total revenue of $1.1 billion, a 4% increase from the previous year. The cash flow from operations for the year was notably higher, with a 42% increase from the prior year, amounting to $225 million. The annual GAAP net income was reported as $36 million, or $0.15 per basic and diluted share. The Adjusted EBITDA for the year was $326 million or 31% of the total revenue, marking a 5% increase from the previous year. Additionally, the company purchased $40 million of its Shares during the year and maintained a robust balance sheet to support future growth.

On February 28, 2024, Green Thumb’s Board of Directors approved an increase in its share repurchase program by $50 million, elevating the total remaining repurchase capability to about $60 million.

My Take as an Analyst

Green Thumb Industries has demonstrated financial growth in the fourth quarter and throughout 2023, evidenced by increased revenues and strong operational cash flows. The expansion of RISE Dispensaries indicates strategic growth in key markets. However, a critical analysis must note the use of “Adjusted EBITDA,” a non-GAAP measure, which can present a cautionary picture. The reliance on adjusted figures may mask underlying financial conditions by excluding certain expenses that are deemed non-recurring or not core to the business. Although these adjustments are common practice, they should be viewed critically as they may not represent the company’s financial performance in its truest form.

On a positive note, the company has a solid balance sheet and has shown prudent capital allocation through its share repurchase program, highlighting confidence in its future prospects. However, Green Thumb needs to continue focusing on improving its GAAP net income and maintaining disciplined investment to ensure sustainable growth. The company’s strategic expansions and capital management strategies seem to be on the right path, but vigilance in operational efficiency and market positioning will be crucial to its ongoing success.