Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) announced its 2021 fourth quarter and full-year business and financial results.
"Our fourth quarter 2021 results indicate positive momentum, which we will look to carry forward as we begin to implement our strategic and operational realignment initiatives,” Kurt Schmidt, president and CEO of Cronos Group, said. “As we look to 2022, we will continue to realign Cronos Group's organizational structure to match our strategy, with a primary focus on adult-use products and elevating our brands through rare cannabinoids.”
Fourth Quarter 2021 Financial Highlights
- Net revenue of $25.8 million increased by $8.7 million from the prior year's period. The increase year-over-year was primarily driven by continued growth in the adult-use market in Canada and increased sales in the Israeli medical market.
- Gross profit of $1.9 million improved by $16.8 million year-over-year. The improvement year-over-year was primarily driven by increased gross profit in the Rest of World segment as well as a decline in inventory write-downs.
- Adjusted EBITDA came in negative at $27.4 million, and improved by $25.8 million from the same quarter of 2020. The improvement year-over-year was primarily driven by the improvement in gross profit and a decrease in sales and marketing and research and development expenses.
- Capital expenditures of $0.6 million decreased by $10.4 million from the same quarter of last year. The decrease year-over-year was primarily driven by a reduction in construction costs in the ROW segment and a decrease in costs related to the implementation of the Company's enterprise resource planning system.
Full-Year 2021 Financial Highlights
- Net revenue of $74.4 million increased by $27.7 million year-over-year. The increase year-over-year was primarily driven by continued growth in the adult-use market in Canada and increased sales in the Israeli medical market
- Gross profit was negative at $17.5 million, and it improved by $8.3 million year-over-yaer. The improvement year-over-year was primarily driven by a reduction in inventory write-downs and favorable sales mix of our cannabis extract products in the ROW segment.
- Adjusted EBITDA came in negative at $160.5 million, and it decreased by $13.2 million year-over-year. The decrease year-over-year was primarily driven by an increase in sales and marketing expenses, general and administrative expenses, which were primarily due to an increase in the allowance for expected credit losses of $12.0 million, and research and development expenses.
- Capital expenditures of $12.3 million decreased by $23.1 million from 2020. The decrease year-over-year was primarily driven by a reduction in construction costs in the ROW segment and a decrease in costs related to the implementation of the company's ERP system.
Business Updates
Following a careful evaluation of the Company's global supply chain, the company has announced today the planned exit of its Peace Naturals Campus in Stayner, Ontario, Canada.
The Toronto-based company said that it will continue to operate the Peace Naturals Campus with a phased reduction and transition of activities with a planned exit by the end of 2022.
As a result Cronos has incurred a $119.9 million non-cash impairment charge on long-lived assets in the fourth quarter of 2021. In addition, the company expects to incur charges of approximately $4.5 million in connection with the planned exit, all of which impact the ROW segment. T
Cronos Group has also focused on building joint ventures and partnerships with operators, such as Cronos GrowCo, the company's joint venture with leading Canadian large-scale greenhouse operators.
The company intends to obtain a sales license from Health Canada at GrowCo's facility to maintain the company's customer relationships and ability to continue supplying the Canadian market.
“As we continue to execute our asset-light approach and focus on brands and R&D, we will continue to leverage our joint venture with Cronos GrowCo and other contract manufacturing partnerships moving forward,” Schmidt said.
Photo: Courtesy of Nataliya Vaitkevich from Pexels
