New Year, New Story for Green Thumb Industries Inc (OTCMKTS:GTBIF)

The new year has come with a new story for Green Thumb Industries Inc (OTCMKTS:GTBIF). Since the turn of the year, investors have been barraged with positive news regarding the company. Little wonder, the stock’s price has more than doubled since December 2018.Interestingly, news of the firm’s further potential is still spreading across the markets. Take a look at the stock’s movement in the last year: GTBIF Daily Chart

Company Profile

Green Thumb Industries Inc. is a national cannabis manufacturer. The firm produces and sells various cannabis products in the United States. Some of its products include vaporizing and dabbing concentrates, edibles, flowers, and topical. GTBIF operates and owns a number of retail cannabis stores using the RISE name and distributes its merchandise using third-party retailers. As at January 2019, the firm was licensed for seventy different retail locations in nine structured U.S. markets. It was established in 2014 and has its head office in Illinois, ChicagoFor more information on the company, visit our previous post here.

Recent Developments

The firm announced on Tuesday that it has signed an agreement to acquire For Success Holding Co., the owner of Beboe-branded cannabis products.The purchase of the Los Angeles-based company will allow Green Thumb to expand its premium products section in accordance with its company's long-term expansion strategy according to Ben Kovler, founder and CEO of Green Thumb.According to online sources, the transaction was fully financed by a stock transaction, although the total transaction value was not disclosed.Beboe is well known for its design aesthetic for both of its products and packaging. Based on this, the New York Times named the brand "The Hermes of Marijuana" in of its articles published in a 2017 article.Some of its products include ice water hash micro-dosing pastilles, rose gold vaporizer pens and a newly launched line of CBD products, which are sold through a direct-to-consumer model.Prior to this, the firm announced its acquisition of Connecticut-based Advanced Grow Labs LLC (AGL) back on January 7, 2019. Advanced Grow Labs is one of four firms within Connecticut approved to grow and process cannabis.The firm owns and operates a forty-one thousand square foot production facility in West Haven with the potential for expansion. In addition, AGL owns a stake in a recently-formed dispensary which will be situated in Westport, making it the only licensed company across the industry in the state. AGL manufactures and produces a very wide range of products to each operating store in the state.

Ben Kolver, CEO and founder was quoted saying, “We continue to execute on GTI’s expansion plans and are thrilled AGL is officially part of the GTI team. AGL is a highly successful company in a limited license state with an excellent leadership team that will continue to be at the helm of this business. We are now solidly positioned in the tri-state area with this entry into Connecticut.”

Financial Performance

As at 2017-year-end, the firm reported total revenue of $16.5 million, a 56.3% increment from the previous year revenue. Even more encouraging is the fact that income reported for the first three quarters of 2018 is already above $40 million.Clearly, the firm is on track to record its highest ever revenue in the last few operating years.However, it is expected that the company continued the pursuit of its expansion strategy would lead to even higher figures in the next year.However, the firm recorded cost of sales of $9.3 million in 2017, a 45% increase from the previous year. This serves as an indicator that the firm may have gained some production efficiency in its sales rose by a much higher percentage between both years.However, sales, general and administrative expenses jumped by a massive 114%, made more worrying by the fact that none of the expenses were nonrecurring in the year.With no major additional income while there were increases in sales and administrative costs and other costs, operating loss for the year was recorded at $4.26 million, a near 50% fall from previous year’s loss of $2.6 million. Net loss for the year was $2.6million.The statement of financial position reveals that the firm is not too highly leveraged. On the books, its total short and long term debt is reported at $16million, leading to stable debt to equity ratio of 0.25. It also has a liquidity ratio of 2.8, which is more than acceptable for the production industry.

Conclusion

GTBIF’s growth strategy is a step in the right direction, although inefficiency leakages must be plugged for shareholder wealth to be maximized.We will be updating our subscribers as soon as we know more. For the latest updates on GTBIF, sign up below!Disclosure: We have no position in GTBIF and have not been compensated for this article.Image courtesy of Pexels