Cronos Group Inc. (TSXV:CRON) reported a 636% surge in sales in 2017 along with net income that more than doubled
SmallCapPower | May 3, 2018: Cronos Group Inc. (TSXV:CRON) (NASDAQ:CRON) Monday reported a 636% YoY jump in sales to $4.1 million for FY 2017 compared to $0.6 million for FY 2016. The Company sold 577 kg of dry flower equivalence (based upon a 5 g equivalence factor for oil) generating revenue of $1.9 million in domestic direct-to-consumer sales, $1.5 million in wholesale sales to other Canadian Licensed Producers, and $0.6 million in international sales. The huge growth in revenue was driven by the inclusion of Peace Naturals’ results in the Company’s financial results after its acquisition, ramping up production in 2017 which in turn increased sales, as well as the expansion of its international reach, thereby increasing its customer base and related product demand.
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Cronos Group CEO Mike Gorenstein said, “We are building Cronos Group with a focus on the long-term and 2017 set the foundation for the explosive growth we have already started realizing in 2018. We are extremely proud of all that our team has accomplished and look forward to a year of rapid increases in sales, commencing distribution in new markets, further developing disruptive intellectual property and launching new iconic brands.”
Cronos Group reported total operating expenses of $9.3 million for FY 2017 vs. $4.1 million for FY 2016, a 126% increase. This was due to an increase in professional and consulting fees for services rendered in connection with various strategic initiatives, the consolidation of the results of operations of Peace Naturals for the full year 2017, and the vesting of stock options issued to employees and non-employees. The Company’s net income came in at $2.5 million for FY 2017 vs. $1.2 million for FY 2016. For FY 2017, Cronos Group reported a 353% jump in comprehensive income to $1.8 million vs. $0.4 million for FY 2016.
Recently, Cronos Group announced that it has entered into four strategic joint ventures for production and selling of cannabis – MedMen Canada Inc. (with MedMen Enterprises USA), Cronos Australia (with NewSouthern Capital), Cronos Israel (with Kibbutz Gan Shmuel), and Indigenous Roots (with Canadian First Nations).
Cronos Group is the first licensed cannabis producer to be listed on NASDAQ under the trading symbol ‘CRON’. In March 2018, the Company changed its ticker symbol on the TSXV from ‘MJN’ to ‘CRN’. Cronos Group trades at a market capitalization of $1.41 billion on the TSXV with price-to-book multiple of 16.91x. However, Cronos Group stock fell more than 8% after the announcement of results despite impressive surge in Company’s top as well as bottom line.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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