Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Verano Holdings Corp (VRNOF, Financial) delivered $879 million in revenue and adjusted EBITDA of $264 million for the full year 2024.
- The company strengthened its retail footprint with the addition of 17 new dispensaries across key markets, including high-performing stores in Virginia and Arizona.
- Verano Holdings Corp (VRNOF) achieved its highest annual total in the wholesale segment with $353 million in total wholesale revenue, a 1% gain versus the prior year.
- The company launched innovative new products, such as Extra Savvy 2-gram vape cartridges and Essence J's pre-roll joints, which have become top sellers in their respective markets.
- Verano Holdings Corp (VRNOF) improved retail productivity in the fourth quarter by increasing transactions per headcount by 54% in Florida and 14% in other markets.
Negative Points
- Verano Holdings Corp (VRNOF) experienced a net loss of $342 million for the year, driven by intangible and fixed asset impairments.
- Revenue for the full year decreased by 6% year over year, primarily due to increased competition and pricing compression in key markets like New Jersey and Illinois.
- SG&A expenses increased to $353 million in 2024, representing 40% of revenue, up from 35% in the prior year.
- The company faced challenges with third-party wholesale accounts for nonpayment, impacting wholesale performance.
- Verano Holdings Corp (VRNOF) anticipates new competitive pressure in the Maryland market due to the approval of a large number of new licenses.
Q & A Highlights
Q: How do you anticipate the wholesale line to perform in 2025, considering third-party accounts and SKU rationalization?
A: George Archos, Founder and CEO, stated that they are still holding back some accounts but expect to re-engage by the end of Q2. He anticipates flat to positive growth in wholesale throughout the year, focusing on high-velocity SKUs and new product launches to gain market share.
Q: What are Verano's plans for M&A in 2025, given the acquisitions in Virginia and Arizona last year?
A: George Archos mentioned that M&A is always on the table, and they are constantly looking for opportunities. However, the focus is currently on strengthening the core business, ensuring quality products, and optimizing store performance.
Q: How is Verano approaching the Florida market in 2025, especially regarding pricing and competition?
A: George Archos explained that Florida remains competitive, but Verano has the supply to compete effectively. They are focusing on new patient signups, product launches, and store refreshes to maintain a strong market position.
Q: What are Verano's growth plans for Virginia, considering potential legislative changes?
A: George Archos stated that Virginia is a high priority, with plans to introduce more brands and increase vertical integration. Although adult use legislation might be vetoed, they are preparing for a potential quick transition in 2026.
Q: Are there signs of consolidation among smaller cannabis brands, and how does Verano view this?
A: George Archos noted that consolidation is ongoing, but the pace depends on federal developments, such as Schedule 3 rescheduling. Verano continues to seek attractive M&A deals and is prepared for potential industry consolidation.
Q: How is Verano addressing cost pressures and potential production improvements?
A: George Archos highlighted initiatives like automation, SKU rationalization, and headcount optimization to combat pricing pressures. Verano is focused on cutting costs and enhancing efficiencies across the business.
Q: Will the lower CapEx guide for 2025 translate into improved free cash flow?
A: Brett Summerer, CFO, confirmed that lower CapEx will flow directly into free cash flow, with a focus on store openings and refurbishments. M&A opportunities could impact cash flow, depending on strategic decisions.
Q: Can you elaborate on the 280E tax changes in Pennsylvania and potential savings?
A: Brett Summerer explained that Pennsylvania's decoupling from 280E could result in multimillion-dollar tax savings. Florida presents another significant opportunity for tax savings if similar changes occur.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
