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Jun 30, 2023
Cronos Q2 2023 Earnings Report
Cronos faced dynamic market conditions while reducing costs and improving cash flow.
Key Takeaways
Cronos Group reported a decrease in net revenue compared to Q2 2022, primarily due to lower cannabis flower sales in Israel and an adverse price/mix in Canada. However, the company improved its net income and adjusted EBITDA through cost reduction efforts and improved balance sheet management. They are discontinuing net revenue guidance due to market turbulence.
Net revenue decreased by $2.6 million compared to Q2 2022, mainly due to lower cannabis flower sales in Israel and an adverse price/mix in Canada.
Gross profit decreased by $1.2 million compared to Q2 2022, driven by lower cannabis flower sales in Israel and an adverse price/mix shift in Canada.
Adjusted EBITDA improved by $0.7 million from Q2 2022, driven by decreases in general and administrative expenses and research and development expenses.
The company exited its U.S. hemp-derived CBD operations.
Forward Guidance
Cronos anticipates that the net change in cash, defined as the sum of cash and cash equivalents and short-term investments, for the last six months of fiscal year 2023 will decline by less than $5 to $10 million. This is an improvement to the previous guidance of declining less than $25 million in the remaining nine months of fiscal year 2023. The Company maintains its expectation that the net change in cash will be positive in 2024.
Positive Outlook
- Relatively consistent foreign exchange and interest rates
- The general economic conditions and regulatory environment in the markets in which Cronos participates will not materially change
- Timely receipt of interest and principal payments on the GrowCo senior secured credit facility
- Anticipated interest income of approximately $20 to $25 million for the last six months of fiscal year 2023
- Steady gross margin profile
Challenges Ahead
- Turbulent market conditions beyond previous expectations in the markets in which we operate
- Increasing political unrest and stagnant patient growth in Israel
Historical Earnings Impact
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Avg. Return Before/After Earnings
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