Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Verano Holdings Corp (VRNOF, Financial) reported a revenue of $210 million, with a gross profit of $100 million and an adjusted EBITDA of $54 million, indicating a strong financial performance.
- The company successfully reduced SG&A expenses by $5 million compared to the prior year, despite executing multiple product launches and new store openings.
- Verano Holdings Corp (VRNOF) has strategically expanded its retail footprint by opening new dispensaries in Florida and Connecticut, and plans further expansions in Ohio and Connecticut.
- The company has implemented cutting-edge automation technology, resulting in increased efficiency and productivity across its operations.
- Verano Holdings Corp (VRNOF) has made significant progress in regaining market share in Florida, maintaining the number two market share position in the state.
Negative Points
- The company experienced a 5% decrease in revenue compared to the prior year, primarily due to price compression, discount activity, and increased competition.
- Wholesale revenue decreased by 8% year-over-year, impacted by the pause of wholesale operations in Massachusetts and increased competition in New Jersey.
- Verano Holdings Corp (VRNOF) reported a net loss of $12 million for the quarter, compared to a net loss of $5 million in the first quarter of 2024.
- The company faced challenges with accounts receivable, leading to a strategy of placing holds on certain wholesale customers, which impacted short-term revenue.
- The competitive environment remains challenging with sustained price compression, affecting smaller operators and leading to potential consolidation in the industry.
Q & A Highlights
Q: How far along is Verano Holdings in refining third-party retail relationships, and is there potential to resume sales to previously cut-off stores?
A: George Archos, CEO, stated that Verano is currently selling to creditworthy parties and feels comfortable with the current base. There is potential to resume sales to some accounts by the end of Q2, as they have been working on payment plans with these accounts. The company expects increased revenue in wholesale operations in the latter half of the year.
Q: What is the outlook for improved margins in the back half of the year, and is the 30% EBITDA margin target still achievable?
A: Rich Tarapchak, CFO, mentioned that the company expects to return to historical margins as the year progresses. The first quarter was impacted by one-time items, and they are confident in achieving historical margin levels moving forward.
Q: How has the joint venture model worked for Verano, and are there opportunities for expansion in states like New Jersey and Connecticut?
A: George Archos, CEO, indicated that joint ventures have been successful, particularly in Connecticut and New Jersey. There are more opportunities for expansion, and the company is optimistic about partnering with social equity holders in various states to enhance success.
Q: How is Verano progressing with its operations in Virginia, and what are the expectations for adult-use legalization?
A: George Archos, CEO, noted that Virginia has been a successful acquisition with modest growth in the medical market. The company anticipates adult-use legalization in the near future, which would be a significant catalyst for Verano. Wholesale operations are also progressing well.
Q: What is driving the modest increase in CapEx guidance, and are there new opportunities being pursued?
A: George Archos, CEO, explained that the increase in CapEx is focused on maintaining and enhancing product quality. The company is investing in its facilities and moving some stores to better locations, which is expected to yield positive returns.
Q: How is the competitive environment affecting smaller operators, and is there any notable consolidation?
A: George Archos, CEO, acknowledged that smaller operators are feeling the pressure, with some consolidating or exiting the market. Verano is focused on maintaining efficiency and competitiveness, anticipating long-term success despite current pricing pressures.
Q: What was the impact of the 420 holiday on sales, and were there any changes in consumer behavior?
A: George Archos, CEO, stated that while 420 is a significant week for sales, it does not result in a substantial increase for the quarter. The holiday helps attract new customers, but sales typically drop off in the weeks following.
Q: What is the cash flow outlook for the year, considering tax payments and upcoming maturities?
A: Rich Tarapchak, CFO, explained that significant tax payments were made in Q1, with similar payments expected in Q2 and Q3. The company plans to generate stronger cash flow in the latter half of the year and is considering paying down an additional $50 million of debt.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
