Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Curaleaf Holdings Inc (CURLF, Financial) reported a gross margin expansion of 250 basis points to 50% from the previous quarter, reflecting improved efficiencies in cultivation operations.
- The company generated $65 million in adjusted EBITDA, representing a 21% margin, despite challenges from international and hemp businesses.
- Curaleaf Holdings Inc (CURLF) strengthened its balance sheet by reducing working capital accounts and ending the quarter with $122 million in cash.
- International segment delivered 74% year-over-year growth, with Germany and the UK leading the performance.
- The company successfully launched new products, including Anthem pre-rolls and ACE extraction technology, which have been well-received in the market.
Negative Points
- Total revenue for the first quarter was $310 million, a 6% sequential decline and a 9% decrease compared to the same period last year.
- Domestic revenue declined 8% sequentially due to macro factors such as price compression and normal seasonality.
- Price compression remains a significant headwind across the industry, affecting margins and revenue.
- The company reported a net loss from continuing operations of $55 million or a loss of $0.07 per share.
- Curaleaf Holdings Inc (CURLF) faces potential headwinds from tariffs and consumer demand shifts, which could impact cost structure and profitability.
Q & A Highlights
Q: Can you provide insights into the international growth outlook, particularly in Germany and the UK, and how it might evolve over the next few years?
A: Boris Jordan, Executive Chairman of the Board, explained that while they anticipate continued growth in existing markets like the UK and Germany, the expansion into new countries will significantly influence future growth. They expect to grow from $107 million last year to approximately $170 million this year. However, price compression due to increased product supply from countries like Colombia and Canada is a potential threat.
Q: How should we think about capital expenditures (CapEx) for international markets, given their current contribution to your business?
A: Boris Jordan noted that most CapEx for international markets has already been invested. They anticipate around $20 million in CapEx over the next year and a half, which should suffice to complete their investment cycle in Europe.
Q: What are you observing in New York's wholesale market, especially regarding competition and market dynamics?
A: Boris Jordan highlighted that New York remains a strong and growing market. However, they faced challenges due to illicit cannabis entering the market, which impacted revenues. Recent regulatory actions have curbed this issue, leading to a recovery in wholesale sales.
Q: Can you elaborate on the impact of price compression and how you are addressing it?
A: Ed Kremer, Chief Financial Officer, mentioned that price compression is a significant headwind, particularly in New Jersey, Arizona, and Illinois. They are enhancing sales quality and optimizing operational processes to protect margins, including conducting pricing analyses for market-aligned adjustments.
Q: What are your expectations for revenue growth in the second quarter?
A: Ed Kremer stated that they expect total revenue to increase in the low single digits sequentially from the first quarter, considering macroeconomic factors and ongoing strategic expansions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
