8-K: Planet 13 Announces Preliminary Q4 and Full Year 2023 Financial Results, Reports Positive Adjusted EBITDA

Planet 13 Holdings Inc. released unaudited preliminary financial results for Q4 and full year 2023, highlighting positive adjusted EBITDA despite a challenging market.

Summary

• Planet 13 Holdings Inc. has released its preliminary, unaudited financial results for the fourth quarter and full year ended December 31, 2023.
• The company reported a total revenue of $23.0 million for Q4 2023, a decrease of 7.5% compared to $24.8 million in Q4 2022.
• Full-year revenue for 2023 was $98.5 million, down 5.8% from $104.6 million in 2022.
• Gross profit for Q4 2023 was $11.0 million, a 2.8% increase from $10.7 million in Q4 2022.
• The full-year gross profit was $44.8 million, a decrease of 6.6% from $48.0 million in 2022.
• Operating expenses decreased significantly in Q4 2023 to $18.1 million, a 60.5% decrease from $45.9 million in Q4 2022.
• However, full-year operating expenses increased by 17.1% to $94.8 million from $80.9 million in 2022.
• The company reported a net loss of $14.3 million for Q4 2023 and $73.6 million for the full year 2023.
• Adjusted EBITDA was positive at $1.3 million for Q4 2023 and $1.9 million for the full year 2023.
• As of December 31, 2023, Planet 13 had $17.4 million in total cash and $0.9 million in total debt.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the achievement of positive adjusted EBITDA and improved gross margins, despite revenue declines. The company's expansion plans and strong cash position also contribute to the positive outlook.

Positives

• The company achieved positive adjusted EBITDA for both the quarter and the full year.
• Gross profit margin improved significantly in the fourth quarter.
• Operating expenses were substantially reduced in the fourth quarter.
• Planet 13 maintains a strong cash position and low debt.
• The company is expanding its operations with a new location in Illinois and planned acquisitions and expansions in Nevada and Florida.

Negatives

• Total revenue decreased by 7.5% in Q4 2023 and 5.8% for the full year compared to the previous year.
• The company experienced a net loss of $14.3 million in Q4 2023 and $73.6 million for the full year.
• Full-year operating expenses increased by 17.1% compared to the previous year.
• Full year gross profit decreased by 6.6% compared to the previous year.

Risks

• The preliminary financial results are unaudited and subject to change.
• The cannabis industry faces ongoing price compression and a challenging macroeconomic environment.
• The company's expansion plans are subject to regulatory approvals and market conditions.
• The company operates in a sector where cannabis is legal at the state level but remains illegal under U.S. federal law.

Future Outlook

Planet 13 aims to capitalize on the potential of adult-use cannabis in Florida and increase efficiency in core states to drive growth in operating cash flow and shareholder value. They are also working towards closing the acquisition of VidaCann and opening a consumption lounge in Las Vegas.

Management Comments

• Larry Scheffler, Co-CEO, stated that he is pleased to report a solid quarter with solid revenue performance and positive Adjusted EBITDA, driven by gross margin expansion and strong cost controls.
• Bob Groesbeck, Co-CEO, mentioned that Planet 13 is well capitalized to continue executing its announced growth plan in Florida and Nevada and that the new Illinois location, the VidaCann acquisition, and the Las Vegas consumption lounge are set to drive the next leg of growth.

Industry Context

The announcement comes amid a challenging macroeconomic environment and continued cannabis price compression, which is affecting the broader cannabis industry. Planet 13's focus on cost control and expansion in key markets aligns with strategies employed by other cannabis companies to navigate these challenges.

Comparison to Industry Standards

• While Planet 13's revenue declined year-over-year, the company's ability to achieve positive adjusted EBITDA is a positive sign, especially when compared to other cannabis companies that are still struggling with profitability.
• Companies like Curaleaf and Trulieve, which are also multi-state operators, have reported varying results, with some showing revenue growth but also facing challenges with profitability.
• Planet 13's focus on a unique retail experience and brand building is similar to strategies employed by companies like Green Thumb Industries, which also emphasizes a strong brand portfolio.
• The company's 9% market share in Nevada is a strong position, but it will need to continue to innovate and expand to compete with larger players in the industry.

Stakeholder Impact

• Shareholders may view the positive adjusted EBITDA and expansion plans favorably.
• Employees may benefit from the company's growth and expansion.
• Customers will have access to new locations and products.
• Suppliers may see increased demand for their products.
• Creditors may be reassured by the company's strong cash position and low debt.

Next Steps

• Planet 13 plans to release its complete financial results for the fourth quarter and full year 2023 on March 13, 2024.
• The company will host a conference call on March 13, 2024, to discuss the financial results and provide business highlights, strategy, and outlook.
• Planet 13 is working towards closing the acquisition of VidaCann and opening a consumption lounge at the Las Vegas SuperStore.

Key Dates

Keywords

cannabis, financial results, adjusted EBITDA, revenue, gross profit, operating expenses, net loss, market share, expansion, Planet 13