Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) announced its 2024 third-quarter business results on Tuesday.
"Our results this quarter demonstrate that our long-term strategy is working," said Mike Gorenstein, chairman, president and CEO. "With record net revenue and a disciplined approach to operating expenses, Cronos operates more efficiently and effectively than ever before, and we anticipate long-term margin improvement."
Q3 2024 Financial Highlights
- Net revenue totaled $34.3 million, up by $9.5 million year-over-year, driven by higher cannabis flower and extract sales in Canada, Israel, and international markets, including Australia, Germany and the UK.
- Gross profit was $3.6 million, representing a slight decrease of $0.4 million, impacted by inventory-related adjustments from the Cronos GrowCo transaction.
- Net income totaled $7.3 million compared to a net loss of $1.6 million in the prior year's period.
- Adjusted gross profit was $10.7 million, representing an increase of $6.8 million, reflecting stronger cannabis sales and excluding one-time adjustments from the Cronos GrowCo consolidation.
- Adjusted EBITDA came in negative at $6 million, representing an improvement of $9.2 million compared to the same quarter of last year, driven by higher revenue, improved gross profit, and reduced administrative expenses.
Read Also: Cronos Cannabis Company Slashes Losses, Reports Highest Quarterly Net Revenue In Q1 2024
Cronos GrowCo Transaction
Cronos announced an expansion of Cronos Growing Company Inc. in June. Cronos, which owns 50% of the company, said at the time that the investment would be funded by an additional credit facility provided by Cronos. The company is also intending to assist GrowCo's expansion of its purpose-built cannabis facility to address the increased global market demand for high-quality cannabis flower.
In relation to the transaction:
- Cronos expanded its board representation and began consolidating Cronos GrowCo's financial results from July 1, 2024.
- Cronos invested $51 million to fund Cronos GrowCo's cultivation and processing expansion.
- The new supply agreement gives Cronos the option to purchase up to 80% of Cronos GrowCo's production from the expanded facility, prior to the commencement of sales from the facility.
Cost Savings And Growth Outlook
The company has set an operating expense savings target of $5 to $10 million for 2024, focusing on reductions in general and administrative, sales, marketing, and R&D costs.
Cronos said it remains focused on profitable and sustainable growth, despite the consolidation of Cronos GrowCo's results, which could impact future performance.
CRON Price Action
Cronos' shares traded 7.6142% higher at $2.12 per share during the pre-market session on Tuesday morning.
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