Release Date: December 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cansortium Inc (CNTMF, Financial) successfully completed its business combination with RIV Capital, expanding its footprint to 42 locations in New York and Florida.
- The company achieved its 12th consecutive quarter of positive cash flow from operations and reported year-over-year revenue growth.
- Integration activities from the RIV Capital transaction have already resulted in $2 million in annualized operating savings, with an additional $2 million in cost savings identified.
- Cansortium Inc (CNTMF) plans to open four new stores in Florida in 2025 to support and expand its footprint.
- The company secured a new senior secured credit agreement, providing access to $25 million in credit lines, supporting strategic growth plans with a strong balance sheet.
Negative Points
- The failure of the Florida adult-use vote means the company must continue to operate in a competitive medical market without the anticipated expansion.
- The Florida market is expected to experience price compression due to increased production and canopy space, which could impact margins.
- Cansortium Inc (CNTMF) faces competition from illicit cannabis markets in New York, particularly in Manhattan, which could affect sales.
- The company has underperformed in per-store sales compared to competitors, indicating room for improvement in sales techniques and product offerings.
- The New York market is overserved with derivative products and underserved in high-quality flower, presenting challenges in meeting market demands.
Q & A Highlights
Q: With the Amendment 3 not passing in Florida, how does that impact your market strategy, and do you anticipate further price compression or consolidation in the market?
A: Robert Beasley, CEO: We did not financially extend in anticipation of Amendment 3 passing, so our internal plans remain unchanged. However, the market may see increased production leading to price compression. We are preparing to become 10-12% more efficient to maintain margins. We expect a competitive environment for two to three quarters, followed by potential M&A activity as excess capacity is absorbed.
Q: How do you plan to compete against the illicit market in New York, and what is the current supply-demand balance at the wholesale level?
A: Robert Beasley, CEO: We plan to outcompete the illicit market by focusing on product offerings and leveraging our locations outside of New York City. The wholesale market is improving, with growing demand driven by social equity programs. We see significant potential in bulk wholesale, which was previously unrecognized.
Q: Can you provide insights into your progress on revenue per store in Florida and how much room there is for improvement?
A: Robert Beasley, CEO: We have underperformed in per-store sales compared to competitors. We are focusing on increasing our product variety and improving sales techniques. We plan to increase same-store sales by 4-6% this year, having increased by 2% last year, and are currently 6-8% below competitors.
Q: What is your capacity in New York, and how are you addressing the quality of flower in the market?
A: Robert Beasley, CEO: We have 20,000 square feet of indoor space and are constructing a 50,000 square foot indoor facility in Buffalo. The market is overserved with derivatives but underserved in high-quality flower. We aim to improve quality and launch a premium brand as Buffalo comes online.
Q: How would you describe your relationship with Hawthorne, and what are their strategic priorities?
A: Robert Beasley, CEO: Hawthorne is committed to staying in the industry and building with us. They are energetic and supportive of our growth plans, including potential M&A. We have aligned goals to grow and strengthen our market position.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
