• Sales. Total gross sales (before excise taxes) grew 20% QoQ to $256Mn, driven by growth in B2B sales of cannabis in Canada (branded rec, domestic med, and international were stable), seasonal and organic gains in the alcohol drinks unit, and a rebound in CC Pharma. Of the $42Mn in gross sales seq growth, those three units, respectively, added $9Mn, $22Mn, and $9Mn. Wellness was up $2Mn QoQ. Management noted the domestic B2B ramp in the May qtr was not a “new norm”.
• Profitability: Adjusted gross margins Improved seq from 27.4% to 34.8%, with gains across all four divisions, most notably in drinks (38% to 53%); cannabis also improved to 36.5% from 33.2%. Despite a $6Mn seq increase in recurring cash SGA to $67Mn, adj EBITDA margins increased seq from 5.4% to 12.8%.
• Balance sheet and cash flow: Reductions in convertible debt and use of the at the market equity facility, helped to lower net debt to $61Mn (Cash $261Mn; financial debt $322Mn). Net debt is manageable at 0.1x sales (fiscal 4Q24 annualized) and 2x EBITDA. Reported FCF (different from the company metric of adj FCF) for 4Q24 was +$21Mn vs. negative $25Mn in 3Q24, mainly due to improved earnings trends and working capital.