Cannabis News for Florda
Ayr Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO), is reporting financial results for the three... Ayr Wellness Reports Second Quarter 2021 Results

Ayr Wellness Inc. (CSE: AYR.A, OTCQX: AYRWF) (“Ayr” or the “Company”), a vertically-integrated cannabis multi-state operator (MSO), is reporting financial results for the three and six months ended June 30, 2021. Unless otherwise noted, all results are presented in U.S. dollars. As of first quarter 2021, the Company is reporting in US GAAP.

Jonathan Sandelman, CEO of Ayr Wellness, said, “In the last 12 months we’ve laid out an ambitious plan for growth – growing our footprint and building our brands on the foundation of being the largest scale producer of high-quality flower in the country. Because everything starts with the plant.”  

“I am incredibly pleased to see those plans becoming reality, with Q2’s exceptional 222% year-over-year growth in revenue and 56% growth over last quarter. We are seizing a massive opportunity to position ourselves to be the best cannabis CPG company in the US. Today our brands are in over 280 stores, up 3 times year-over-year, and they aren’t slowing down. We’re seeing increased demand for our products and accelerating growth in our wholesale business. We plan to continue to invest in the growth of Ayr brands nationally – Kynd premium flower, Origyn Extracts, and our most recently announced acquisition of Levia – and the strategic marketing and operational talent behind them,” Mr. Sandelman continued

“As we double down on our success, we have the opportunity to continue to grow our top line at 100%+ rates year-over-year. We are raising our 2022 revenue target to $800 million, and we are reinvesting in our business to accelerate that growth,” concluded Mr. Sandelman.

Second Quarter and Recent Highlights:

  • Announced proposed acquisition of Cultivauna, LLC, the owner of Levia, a top selling brand of cannabis infused seltzers
  • Announced the proposed acquisition of Herbal Remedies, adding two dispensaries in Illinois; won additional retail license in Bloomington-Normal, Illinois with partner, Land of Lincoln
  • Announced the proposed acquisition of Tahoe Hydroponics Company, LLC (“Tahoe Hydro”), an award-winning cultivator and one of Nevada’s top producers of high-quality flower
  • Hired over 400 new employees across all levels, deepening our bench in marketing, technology and operational professionals focused on driving scalable processes across our regional footprint
  • Florida:
    • Continued improvement in cultivation, leading to a meaningful increase in yield and production, up 50% since closing the acquisition based on grams/sq. ft. harvested
    • Increased retail performance driven by improved quality and availability of a wider selection of strains, and updated product offerings, including the addition of Origyn Extracts and Big Pete’s Cookies brands; transaction count up 40% in July vs. January, average basket size up 38%, and new patients up 27%
    • Since closing on February 25, 2021, the Company has opened eight additional retail locations, bringing total store count to 39, the third largest retail footprint in Florida
    • An additional three stores are expected to open by the end of the third quarter and the Company has sited an additional eight new locations, bringing its year-end Florida dispensary target to 50
    • The Company has begun construction of 20 acres of hoop houses in Florida, expected to be completed this fall
  • Western Region:
    • Revenue at newly opened sixth dispensary in Nevada, the closest dispensary to the Las Vegas airport, has grown to just under $1 million/month after less than six months of operations
    • Completed 20,000 ftprocessing facility expansion outside of Las Vegas and began production in July of manufactured products such as edibles, concentrates and vapes
    • Chandler, AZ production facility came on-line in July, adding 10,000 sq. ft. of cultivation capacity and allowing for the first sale of Ayr products in the wholesale market
    • Arizona retail revenue up nearly 50% year-over-year (on a same store basis) following the approval of adult-use sales in the market
    • Construction of 80,000 sq. ft. Phoenix cultivation expected to be completed in Q4
  • Northeast:
    • Successful launch of Revel and Seven Hills flower in Pennsylvania, both of which sold out during the first week of wholesale product sales
    • Pennsylvania combined retail revenues reached over $1.5 million per month in July after being open for only an average of four months
    • Three additional Pennsylvania dispensaries are scheduled to open later this year, bringing the total to six
    • Acquisition of Garden State Dispensary in New Jersey on track to close in the coming weeks
    • Provisional licenses received for three Adult Use Dispensaries in Greater Boston
    • Selling to 112 of Massachusetts’s 148 adult-use dispensaries, and Ayr remains a leading wholesaler in the state
    • Construction underway on 100,000 ft2 new cultivation and production facility in Milford, MA that is expected to add 75,000 ft2 of new canopy to bring Ayr to the maximum capacity allowed under its Massachusetts license
  • Midwest:
    • Added eighth state, Illinois, to growing footprint with the proposed acquisition of Herbal Remedies Dispensaries and license win by affiliated company, Land of Lincoln, LLC
    • Began production of vape carts, concentrates, RSO, and tinctures as well as Highly Edible gummies at processing facility in Ohio

Second Quarter Financial Highlights ($ in millions, excl. margin items; in US GAAP)

 Q2 20201Q1 2021Q2 2021% Change
Y/Y
% Change
Q/Q
Revenue$28.3 $58.4 $91.3 222%56.1%
Adjusted Gross Profit$18.1 $34.2 $53.1 194%55.2%
Operating Income/(Loss)$(5.4)$(8.4)$(24.9)NMNM
Adj. EBITDA$8.4 $18.4 $27.4 225%48.9%
AEBITDA Margin 29.7% 31.5% 30.0%30 bps-150 bps

For comparison purposes, Q2 2020 has been restated to be consistent with US GAAP. Adjusted EBITDA and Adjusted Gross Profit are non-GAAP measures. See Definition and Reconciliation of Non-GAAP Measures below. For a reconciliation of Operating Loss to Adjusted EBITDA as well as Gross Profit to Adjusted Gross Profit, see reconciliation table appended to this release.

Outlook:
Based on the results to date, management is targeting 3Q21 revenue of approximately $100 million, which reflects growth of over 10% quarter-over-quarter and 211% year-over-year. Adjusted EBITDA on a US GAAP basis is expected to be in line with the second quarter, following accelerated investments in branding, new markets and growth projects.   

The Company is increasing its target for 2022 revenue to $800 million, up from $725 million, and is reiterating guidance for 2022 Adjusted EBITDA of $300 million reflecting substantial investments in growth.

The Company’s expectations for 3Q21 and 2022 are based on US GAAP reporting and subject to the assumptions and risks detailed in the MD&A for the period ending June 30, 2021 as filed on SEDAR.

Ayr Wellness Footprint (Pro-forma)5

 MANJPAOHFLAZNVILTOTAL
Population6.9 M9.2 M12.8 M11.7 M21.9 M7.53.1 M12.6 M85.7 M
Adult Use or MedicalAUAUMedMedMedAUAUAU4 AU/ 3 Med
Est. 2021 Market Size4$1.4 B$1 B$750 M$500 M$1.8 B$1.6 B$1 B$1.3 B$9.4 B
Dispensaries:
Current → YE 2021
2 → 4133 → 639 → 50236258 → 74
Key Retail MarketsGreater BostonCentral NJPittsburgh
Philadelphia
Miami
Tampa
Orlando
PhoenixLas Vegas
Reno
Quincy 
Cultivation-Production:
Current → YE 2022 Sq Ft
50 → 140K30 → 105K83 → TBD9 → 67K300 → 735K10 → 90K72KN/A554 → 1,200K+
Employees52451102001045016054550~1,770
Planned 2021-2022
Cap Exp
$31 M$14 M$23 M$37 M$39 M$5 M<$1M<$1M$150 M

Includes two co-located Adult Use/Medical dispensaries (Somerville and Watertown), one Adult Use-only dispensary in Boston and one Medical-only dispensary in Needham
39 currently open, three are currently under construction or pending OMMU approval
Source: Arcview, MJBiz Daily, Company estimates
BDSA estimate
Including pending transactions in NJ, IL and NV

Notice of Change of Auditor
Following its conversion to U.S. GAAP as a U.S. filer last quarter, on August 16, 2021 the Company has released a ‘Notice of Change of Auditor’ from Canadian mid-cap specialist MNP LLP to the U.S. based firm Marcum LLP, and top U.S. audit firm with a substantial cannabis practice. The Company and MNP have no disagreements or unresolved issues resulting in this change.

Conference Call

Ayr CEO Jonathan Sandelman, Co-COO Jennifer Drake and CFO Brad Asher will host the conference call, followed by a question and answer period.

Conference Call Date: Wednesday, August 17, 2021
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MATTIO Investor Relations at IR@mattio.com.

The conference call will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through September 15, 2021.

Toll-free replay number: (855) 669-9658
International replay number: (412) 317-0088
Replay ID: 7438

Financial Statements
Certain financial information reported in this news release is extracted from Ayr’s Consolidated Financial Statements for the quarter June 30, 2021 and 2020. Ayr files its financial statements on SEDAR and with the SEC. All financial information contained in this news release is qualified in its entirety by reference to such financial statements and MD&A.

Definition and Reconciliation of Non-GAAP Measures

The Company reports certain non-GAAP measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable GAAP measures.

Rather, these are provided as additional information to complement those GAAP measures by providing further understanding of the results of the operations of the Company from management’s perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Company’s financial information reported under GAAP. Non-GAAP measures used to analyze the performance of the Company’s businesses include “Adjusted EBITDA” and “Adjusted Gross Profit.”

The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Company’s operating performances and thus highlight trends in the Company’s core businesses that may not otherwise be apparent when solely relying on the GAAP measures.

Adjusted EBITDA

“Adjusted EBITDA” represents loss from operations, as reported, before interest and tax, adjusted to exclude non-recurring items, other non-cash items, including depreciation and amortization, and further adjusted to remove non-cash stock-based compensation, the accounting for the incremental costs to acquire cannabis inventory in a business combination, acquisition related costs, and start-up costs.

Adjusted Gross Profit

“Adjusted Gross Profit” represents gross profit, as reported, adjusted to exclude the accounting for the incremental costs to acquire cannabis inventory in a business combination, interest, depreciation and amortization, and start-up costs.

A reconciliation of how Ayr calculates Adjusted EBITDA and Adjusted Gross Profit is provided in the tables appended below. Additional reconciliations of Adjusted EBITDA, Adjust Gross Profit and other disclosures concerning non-GAAP measures are provided in our MD&A for the three months ended June 30, 2021.

Forward-Looking Statements

Certain information contained in this news release may be forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are often, but not always, identified by the use of words such as “target”, “expect”, “anticipate”, “believe”, “foresee”, “could”, “would”, “estimate”, “goal”, “outlook”, “intend”, “plan”, “seek”, “will”, “may”, “tracking”, “pacing” and “should” and similar expressions or words suggesting future outcomes. This news release includes forward-looking information and statements pertaining to, among other things, Ayr’s future growth plans. Numerous risks and uncertainties could cause the actual events and results to differ materially from the estimates, beliefs and assumptions expressed or implied in the forward-looking statements, including, but not limited to: anticipated strategic, operational and competitive benefits may not be realized; events or series of events, including in connection with COVID-19, may cause business interruptions; required regulatory approvals may not be obtained; acquisitions may not be able to be completed on satisfactory terms or at all; and Ayr may not be able to raise additional debt or equity capital. Among other things, Ayr has assumed that its businesses will operate as anticipated, that it will be able to complete acquisitions on reasonable terms, and that all required regulatory approvals will be obtained on satisfactory terms and within expected time frames. In particular, there can be no assurance that we will complete the pending acquisitions in or enter into agreements with respect to other acquisitions.

Forward-looking estimates and assumptions involve known and unknown risks and uncertainties that may cause actual results to differ materially. While Ayr believes there is a reasonable basis for these assumptions, such estimates may not be met. These estimates represent forward-looking information. Actual results may vary and differ materially from the estimates.

Assumptions and Risks

Forward-looking information in this subject to the assumptions and risks as described in our MD&A for
June 30, 2021.

Additional Information

For more information about the Company’s 2Q2021 operations and outlook, please view Ayr’s corporate presentation posted in the Investors section of the Company’s website at www.ayrwellness.com.

About Ayr Wellness Inc.

Ayr is an expanding vertically integrated, U.S. multi-state cannabis operator, focused on delivering the highest quality cannabis products and customer experience throughout its footprint. Based on the belief that everything starts with the quality of the plant, the Company is focused on superior cultivation to grow superior branded cannabis products. Ayr strives to enrich consumers’ experience every day through the wellness and wonder of cannabis.

Ayr’s leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrwellness.com.

Company Contact:

Megan Kulick
Head of Investor Relations
T: (646) 977-7914
Email: IR@ayrwellness.com

Media Contact :
Robert Vanisko
VP, Corporate Communications
Email: robert.vanisko@ayrwellness.com

Investor Relations Contact:

Brian Pinkston
MATTIO Communications
T: (703) 926-9159
Email: ir@mattio.com
Email: IR@ayrwellness.com

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Condensed Interim Consolidated Statements of Financial Position
(Expressed in United States Dollars)

 As of
 June 30, 2021 December 31, 2020 
ASSETS 
Current  
Cash$123,835,778 $127,238,165 
Accounts receivable                  6,545,465  3,464,401 
Due from related parties                     176,858  135,000 
Inventory                70,420,029  22,919,605 
Prepaid expenses, deposits, and other current assets                26,194,444  5,270,381 
               227,172,574  159,027,552 
Non-current
Property, plant, and equipment              173,390,686  69,104,080 
Intangible assets              736,447,835  252,357,677 
Right-of-use assets – operating                62,246,968  22,546,256 
Right-of-use assets – finance, net                  4,714,108  877,310 
Goodwill              208,654,940  57,963,360 
Equity investments                     531,316  503,509 
Deposits and other assets                  2,593,798  2,540,674 
Total assets 1,415,752,225               564,920,418 
  
LIABILITIES 
Current 
Trade payables                21,779,266  8,899,786 
Accrued liabilities                15,443,126  8,706,813 
Lease liabilities – operating – current portion                  3,014,313  740,864 
Lease liabilities – finance – current portion                     887,414  125,440 
Purchase consideration payable                     661,383  9,053,057 
Income tax payable                13,982,297  21,379,351 
Debts payable – current portion 7,191,489  8,644,633 
Accrued interest payable – current portion                  1,200,779   
                 64,160,067  57,549,944 
Non-current 
Deferred tax liabilities                80,448,626  14,677,991 
 Lease liabilities – operating – non-current portion 61,566,462  23,474,726 
Lease liabilities – finance – non-current portion                  2,626,397  446,585 
Contingent consideration              129,133,701  22,961,411 
Debts payable – non-current portion                73,464,592  53,587,948 
Senior secured notes – non-current portion 104,334,397  103,652,963 
Accrued interest payable – non-current portion                  2,813,108  3,301,155 
Total liabilities              518,547,350               279,652,723 
  
SHAREHOLDERS’ EQUITY (DEFICIENCY) 
Multiple Voting Shares: no par value, unlimited authorized.
Issued and outstanding – 3,696,486 & 3,696,486 shares, respectively
    
Subordinate, Restricted, and Limited Voting Shares: no par value, unlimited authorized.
Issued and outstanding – 49,110,237 & 28,873,641 shares, respectively
    
Exchangeable Shares: no par value, unlimited authorized.
Issued and outstanding – 6,013,294 & 2,127,543 shares, respectively
    
Additional paid-in capital                  1,174,224,989  524,292,741 
Treasury stock                          (556,899) (556,899)
Warrant reserve                         5,880,211  6,515,753 
Accumulated other comprehensive income                        3,265,610  3,265,610 
Deficit                  (285,609,036) (248,249,510)
Total shareholders’ equity                   897,204,875  285,267,695 
Total liabilities and shareholders’ equity 1,415,752,225               564,920,418 

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in United States Dollars)

Three Months Ended June 30,Six Months Ended June 30,
2021  2020   2021  2020 
    
Revenues, net of discounts$91,251,608 $28,310,633  $149,649,931 $61,863,313 
   
Cost of goods sold excluding fair value items 42,342,374  11,171,189  70,482,988  28,038,945 
Incremental costs to acquire cannabis inventory in a business combination 26,596,051    32,388,441   
Cost of goods sold 68,938,425  11,171,189  102,871,429  28,038,945 
    
Gross profit 22,313,183  17,139,444   46,778,502  33,824,368 
    
Expenses   
General and administrative 25,921,428  9,465,794   41,733,952  18,762,399 
Sales and marketing 1,770,727  409,247   2,514,286  943,845 
Depreciation 434,678  231,261   719,618  390,678 
Amortization 10,630,723  2,998,666   15,262,665  5,997,334 
Stock-based compensation 7,151,806  9,103,459   15,375,351  21,248,761 
Acquisition expense 1,284,607  368,929   4,421,583  497,309 
Total expenses 47,193,969  22,577,356   80,027,455  47,840,326 
    
Loss from operations(24,880,786) (5,437,912)  (33,248,953) (14,015,958)

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Condensed Interim Consolidated Statements of Cash Flows
(Expressed in United States Dollars)

Six Months Ended June 30,
 2021  2020 
Operating activities  
Net loss$    (37,359,526)$    (24,273,981)
Adjustments for: 
Net fair value loss on financial liabilities (11,545,062)                  944,298 
Stock-based compensation             15,375,351                21,248,761 
Depreciation               2,887,083                 1,102,300 
Amortization on intangible assets             19,176,580                 6,757,334 
Share of loss on equity investments                    18,802                      23,139 
Gain on disposal of equity investments (500,000)  
Incremental costs to acquire cannabis inventory in a business combination             32,388,441   
Deferred tax (benefit) expense             (6,192,033)                   179,120 
Amortization on financing costs                  817,432   
Interest accrued                  559,675                    698,204 
Changes in non-cash operations, net of business acquisition: 
Accounts receivable             (3,048,577)                  686,203 
Inventory           (21,617,774) (3,003,987)
Prepaid expenses and other assets                (508,404)                 (956,055)
Trade payables               3,260,181                 3,265,691 
Accrued liabilities             (1,880,372)                   705,985 
Lease liabilities – operating                  712,985                  (105,222)
Income tax payable (14,960,929)                8,203,389 
Cash (used in) provided by operating activities           (22,416,147)               15,475,179 
  
Investing activities 
Purchase of property, plant, and equipment           (31,598,650)               (5,601,523)
Loss on disposal of property, plant, and equipment (57,523)  
Cash paid for business combinations and asset acquisitions, net of cash acquired           (17,776,909)  
Cash paid for business combinations and asset acquisitions, working capital (3,275,139)  
Payments for interests in equity accounted investments                  (46,610)  
Cash received in disposal of equity investment 500,000   
Advances to related corporation (41,858) (73,700)
Cash paid for bridge financing (15,809,779)  
Deposits for business combinations (1,700,000)  
Cash used in investing activities           (69,806,468)               (5,675,223)
 
Financing activities 
Proceeds from exercise of Warrants               5,345,494   
Proceeds from exercise of options 86,248   
Proceeds from equity offering, net of expenses 118,052,400   
Payments of financing costs                (135,998)  
Tax withholding on stock-based compensation awards (28,421,071)  
Repayments of debts payable             (4,300,250)               (1,909,195)
Repayments of lease liabilities – finance (principal portion)             (1,806,595)  
Repurchase of Subordinate Shares   (307,442)
Cash provided by (used in) financing activities             88,820,228                (2,216,637)
 
Net increase in cash             (3,402,387)                7,583,319 
Effect of foreign currency translation    
Cash, beginning of the period 127,238,165  8,403,196 
Cash, end of the period           123,835,778                15,986,515 

Ayr Wellness Inc. (formerly, Ayr Strategies Inc.)
Unaudited Condensed Interim Consolidated Adjusted EBITDA Reconciliation
(Expressed in United States Dollars)

        
 Three Months Ended June 30, Six Months Ended June 30,
 2021202020212020
Loss from operations(24,880,784) (5,437,912) (33,248,951) (14,015,958)
        
Non-cash items accounting for inventory       
Incremental costs to acquire cannabis inventory in business combination26,596,051    32,388,441   
        
Interest212,666  123,590  456,951  240,236 
Depreciation and amortization (from statement of cash flows)14,587,557  4,049,386  22,063,663  7,859,634 
Acquisition costs1,284,607  368,929  4,421,583  497,309 
Stock-based compensation expense, non-cash7,151,806  9,103,459  15,375,351  21,248,761 
Start-up costs11,350,226    2,973,185   
Other non-operating21,121,999  239,352  1,407,954  420,464 
 52,304,912  13,884,716  79,087,128  30,266,404 
        
Adjusted EBITDA (non-GAAP)27,424,128  8,446,804 45,838,177  16,250,446 
        
 Three Months Ended June 30, Six Months Ended June 30,
 2021202020212020
Gross Profit22,313,182  17,139,444  46,778,502  33,824,368 
        
Incremental costs to acquire cannabis inventory in business combination26,596,051    32,388,441   
Interest (within COGS)212,666  123,590  456,951  240,236 
Depreciation and amortization (within COGS)3,565,334  819,459  6,081,380  1,471,622 
Start-up costs (within COGS)404,002    1,584,168   
 30,778,053  943,049  40,510,940  1,711,858 
        
Adjusted Gross Profit (non-GAAP)53,091,235  18,082,493 87,289,442  35,536,226 

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