Green Thumb Industries Inc. (GTBIF) Q4 2024 Earnings Call Transcript
Ben Kovler
Thanks, Shay. Good afternoon, everyone, and thank you for joining our fourth quarter and year-end 2024 conference call. It’s been an interesting start to the new year as the new administration takes office in DC. There were high hopes for Federal Reform under Biden that did not materialize despite favorable conditions for a change to cannabis regulations.
With the new administration, Trump’s recent picks are not inciting optimism for progress, yet, THC demand is on the rise hitting record highs. As we’ve said from the beginning though, we have set ourselves up to succeed regardless of what does or does not happen at a federal level. Our North Star continues to be the American consumer.
A 2023 study saw that nearly 43 billion Americans reported THC consumption in the last 30 days, which is a new high and makes the s-curve of adoption begin to go vertical. These trends are the lifeblood of our business and the reason we know cannabis in America is big and getting bigger despite the out-of-touch DEA and their goal of limiting access to wellbeing for American and our veterans.
The DEA is clearly asleep at the wheel. But the Green Thumb team is wide awake, focused on the factors we can control to grow our business over the long-term and tuning out the noise. A quick note on the math of pricing pressure. Remember, if pricing is down 20%, the team has to deliver 25% more units to breakeven, and that math is tremendously powerful.
So with that backdrop and in the face of pricing pressure, the Green Thumb team continued to deliver. You would not know if looking at the stock price, which is hovering at a 52-week low, but in the fourth quarter, we achieved record revenue of $294 million. Record adjusted EBITDA of $98 million. That’s a 33% margin, and our full-year 2024 cash flow from operations was $195 million after paying $131 million in taxes.
These numbers are quite an accomplishment to which I credit our team and senior leadership. I have been fortunate to work alongside an incredibly smart and loyal team with leaders who have been together for many years and that consistency and longevity matters.
We win because of the team and we believe in the direction Green Thumb is heading in our bright future ahead for several reasons. First, our focus on cash flow and disciplined capital allocation has been critical to executing our strategy. Our cash flow and balance sheet allow us to sleep well. We ended 2024 with a strong balance sheet that gives us the optionality to maximize shareholder return through thoughtful CapEx, share repurchase programs and strategic M&A.
In 2024, we engineered a historic industry-first, $150 million syndicated bank loan, which helped us retire $225 million in senior secured debt that was due in April 2025. With new financing in place, we delevered our balance sheet, maintained our cash interest expense, and added duration another five years to execute our growth plan. The interesting reality is that is only $150 million of leverage and was just $370 million of EBITDA.
Second, our ability to innovate and evolve rapidly to seize opportunity in a dynamic environment. Today’s most successful companies are masters of reinvention who see both disruption and new trends emerging simultaneously. They move quickly to capitalize on opportunities while others are dangerously complacent. We have tried to model Green Thumb in that way as we do not want to be the ostrich and stick our heads in the sand and miss something. Instead, we focus on what is best for the American consumer because after all, we are the American consumer.
As consumers, we clearly see the trends that can propel Green Thumb forward and we are positioning ourselves to benefit. The changes in alcohol consumption versus cannabis consumption are too dramatic to ignore. We have all discussed the potential harmful effects of alcohol before. And on January 3, the Surgeon General advised the public on the now established link of alcohol and cancer.
It’s no surprise alcohol consumption rates continue to decline, especially with younger generations. Meanwhile, we are seeing more consumers turn to cannabis products as an alternative. Recently, we invested in Agrify, the owner of Señorita, the award-winning best tasting THC beverage on the market. We’ve been in the THC beverage space for years and bringing Señorita into the portfolio of brands is a great example of how we were able to act quickly when something makes sense like THC beverages.
We are excited about our investment in Agrify as we believe tens of millions of Americans will become THC consumers in the coming years who are not today. One example to reach many of these new consumers is the Incredibles partnership with Magnolia Bakery. Not only do we sell these products at dispensaries around the country, but we sell the same product made from hemp on the Incredibles website and by local delivery in 23 markets across the United States through DoorDash. E-commerce and home delivery are changing the game by offering new convenient ways for customers to access product and allowing our brands to reach new markets and consumers.
Turning to our traditional offerings. RYTHM continues to be the premier choice for cannabis consumers across the country, and we are always looking for ways to bring the premium cannabis brand to more consumers. We launched a first of its kind partnership with Chicago’s renowned music venue, The Salt Shed, to showcase the RYTHM lifestyle. The venue hosts around 150 music shows a year, drawing over 600,000 people. In addition to showcasing the RYTHM brand, the partnership includes our new onsite retail experience, RISE at Salt Shed, which offers THC products from Beboe, Incredibles, and Señorita.
In addition, Señorita is the venue’s exclusive THC beverage available for purchase at all venue bars, so you can legally buy the best tasting THC drink on the market at Chicago’s recently awarded best music venue. We are excited to continue exploring the potential of similar concepts to connect even more consumer to our brands through unique experience and quality products.
Lastly, let’s talk about something we all have in common. Sleep, according to the recent Harris Poll, 71% of adults 21 and over wish they slept better. The survey also highlights the popularity of cannabis infused edibles as a sleep aid. Our incredible Snoozzzeberry line is among the nation’s bestselling cannabis products for sleep because we know that when you snooze, you win.
It has been a very busy and productive year over here at Green Thumb. Thanks to each and every one of our 4,800 plus amazing team members who show up every day to work hard and share their passion for the plant. We are right on target doing what we said we would do, maximize the assets we have in place to generate long-term value for our stakeholders.
