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What's Behind Green Thumb lndustries' Sizzling Q4 Results

By Keith Speights - Mar 18, 2021 at 6:01AM

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The U.S. multistate cannabis operator fired on all cylinders during the fourth quarter.

Last year, Green Thumb Industries (GTBIF -1.31%) stock skyrocketed over 150%. It's on track for a repeat performance in 2021, with shares up 45% year to date. And the good news keeps on coming for the U.S. multistate cannabis operator.

Green Thumb announced its fourth-quarter results after the market closed on Wednesday. Here are the highlights from the company's Q4 update.

Marijuana leaf with arrow going up.

Image source: Getty Images.

By the numbers

Green Thumb reported revenue of $177.2 million in the fourth quarter, a 134% jump from the $75.8 million reported in the same quarter of the previous year. This result easily beat the average analyst's revenue estimate of $167.2 million.

The company announced Q4 net income of $22.5 million, or $0.11 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, Green Thumb posted a net loss of $14.1 million, or $0.07 per share. This marked the second-consecutive quarter of profitability for the cannabis operator. The company also trounced the consensus analyst earnings estimate of $0.06 per share.

Those weren't the only positive results for Green Thumb in the fourth quarter. The company generated adjusted operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of $65.4 million, up 23% quarter over quarter and 374% year over year. Green Thumb also reported its fourth-consecutive quarter of positive operating cash flow.

Behind the numbers

Green Thumb's brands were solid in 12 states during the fourth quarter. Its gross branded product sales jumped 31% quarter over quarter, thanks mainly to expanded production scale and distribution of the products.

The company's revenue growth was also driven, in part, by the opening of 11 new retail cannabis stores in 2020. Green Thumb's existing stores delivered a strong performance, as well. Comparable-sales growth for its 32 stores open at least 12 months soared 60% year over year. Comparable sales based on 48 open stores jumped 6% quarter over quarter. The company ended the fourth quarter with 51 retail stores in 10 states.

Green Thumb didn't require any accounting smoke and mirrors to achieve its profitability. Total operating expenses rose 14% year over year to $53.2 million. That was significantly lower growth than the company's revenue growth rate -- a perfect formula for increased earnings.

CEO Ben Kovler said, "This was a solid quarter to top off a milestone year for the Green Thumb team." That's a fair assessment. The multistate cannabis operator now appears to be in a good position to consistently generate profits, as well as deliver strong top-line growth.

Looking ahead

The future continues to look bright for Green Thumb. The company is flush with cash after its $156 million stock offering in February. It could have plenty of opportunities to put that cash to use to fuel additional growth.

New Jersey legalized adult-use marijuana last month, and Green Thumb has indicated in the past that it's very interested in expanding into the potentially lucrative market. New York also seems headed toward legalizing recreational pot soon. If it does, Green Thumb will have two major opportunities to keep its tremendous momentum going strong.

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