StateHouse Reports Second Quarter 2024 Financial Results

 StateHouse Holdings Inc (CSE: STHZ) (OTCQB: STHZF), a California-focused, vertically integrated cannabis company, today announced its financial results for the three-month period ended June 30, 2024 (“Q2 2024”), as well as provided additional business updates. The unaudited condensed interim consolidated financial statements for Q2 2024, as well as the corresponding management’s discussion and analysis, will be available for download from the Company’s investor website, statehouseholdings.com, and on the Company’s SEDAR+ profile. Unless otherwise indicated, all dollar amounts in this press release are denominated in U.S. currency.

Q2 2024 Financial Highlights

• Q2 2024 net revenues increased 10% to $27.8 million, compared with $25.3 million in Q2 2023.
  • Retail revenues were $13.5 million representing 48.5% of total sales for Q2 2024, compared to $13.0 million or 51.3% of total sales in Q2 2023. 
  • Branded wholesale and manufacturing revenues were $10.7 million, representing 38.5% of total sales for Q2 2024, compared to $11.2 million or 44.0% of total sales in Q2 2023.
  • Cultivation revenues were $3.6 million, representing 12.9% of total sales for Q2 2024, compared to $1.2 million or 4.7% of total sales in Q2 2023.
• Gross profit before adjustments for biological assets¹ was $14.1 million in Q2 2024, compared with $12.3 million in Q2 2023.
• Consolidated adjusted gross margins improved to 50.8% in Q2 2024¹, compared to 48.6% for Q2 2023.
• Q2 2024 net income was $0.2 million, compared to a net loss of $2.1 million in Q2 2023.
• Adjusted EBITDA¹ improved to $4.9 million in Q2 2024 compared with Adjusted EBITDA¹ of $0.9 million in Q2 2023.

Management Commentary

“We made substantial progress throughout the quarter, with our innovative product line-ups driving growth and profitability improvements,” said Ed Schmults, Chief Executive Officer of StateHouse. “Our new products are clearly hitting the mark with consumers, with a 14% increase in transactions for the second quarter compared with the same period last year. We have continued to deliver improvements to our results with adjusted gross margin reaching 50.8%, net income of $0.2 million and Adjusted EBITDA of $4.9 million, as a result of the implementation of cost saving measures across our operations, as well as the launch of over 24 new high-margin products in the past twelve months.”

Mr. Schmults concluded, “Our focus on both reducing our operating expenses while enhancing the product mix available is working, and I am incredibly pleased with our operational performance throughout the year. The extremely positive customer response we are seeing demonstrates how we are successfully meeting the needs and expectations of today’s cannabis consumers. This increasing engagement is a testament to the hard work and vision of our incredible team, and I am confident that we will maintain this momentum as we build on our success in the upcoming quarters. Our efforts and the success of our popular brands have firmly established us in California’s vibrant cannabis market, and we look forward to leveraging our expertise as the overall addressable market expands.”

Brands and Products Highlights

• Over the past twelve months, StateHouse launched 24 new cannabis products across 7 brands and introduced more than 40 new in-house developed strain formulations. These new products now represent about 15% of the Company’s year-to-date sales for 2024.
• The Company’s sales team has refined and upgraded several product lines to enhance visual merchandising, including the roll out of the new Dime Bag Cartridge and All-In-One hardware during the second quarter of 2024. Dime Bag All-In-Ones are the top selling vape product line across StateHouse’s retail platform.
  • Dime Bag, the Company’s value-oriented flower brand, has performed extremely well as the 2^nd most popular based on units sold and the 5^th most popular based on dollars spent in California’s competitive flower brand category, year-to-date (per BDSA).
• The Company’s newest farm product offering for young plant sales, comprised of cuttings, clones and teens has performed exceptionally well with sales growing more than 10X since launch.

Operations Update

Total revenue in Q2 2024 was $27.7 million, a 3.6% increase compared to Q2 2023, due to a 14% increase in transactions period over period. The Company has continued to generate strong gross profit before biological asset adjustments¹ with a gross profit of $14.1 million or 50.8% of total revenue.

The Company’s targeted retail strategy has increased customer traffic by 18% with total new customer traffic growing 9% for the first half of 2024, compared to 2023. The STASH, loyalty program has reached over 316,291 members as of August 28, 2024, with online sales increasing by 17% in the first half of 2024 compared with 2023. Buy Online, Pickup in Store (“BOPIS”) sales have more than doubled in the first half of 2024 compared with 2023.

StateHouse’s cannabis cultivation revenue for the second quarter was up 203.5% compared with the same period in 2023, primarily as a result of the Company successfully increasing yields and producing high-quality product that achieves a premium in the bulk market. Cultivation operations have achieved a 36% increase in pounds of flower produced in Q2 compared with the same period in 2023, largely driven by the installation of supplemental CO2 in all the Company’s flowering ranges in Q2 2024. StateHouse is further exploring additional innovation at its cannabis cultivation operations, including trialing various form factors, spectra, and intensities of inter-canopy and beneath canopy lighting. These trials indicate that with additional improvements to the Company’s lighting approach there is the potential to further increase yields.