Cronos Group Inc. (CRON), a constituent in the munKNEE Pure-Play Pot Stock Index, yesterday reported markedly improved Q3 financials for the period ending September 30, as follows:

Q3 Financial Highlights (All figures are in U.S. Dollars and compared to the previous quarter)

• Revenue: increased 30.6% to $20.4M
• Gross Profit (Loss) ($): reduced from $(15.8)M to $(730)K 
• Gross Profit (Loss) (%): improved to (4)% from (101)%
• SG&A (incl. R&D): increased 22.1% to $49.8M
• Net Profit (Loss): improved to $77.8M from $(178.5)M 
• Net Profit (Loss) per Share: improved to $0.21 from $(0.48)
• Adj. EBITDA Profit (Loss): improved 6.0% to $(46.8)M
• Cash on Hand: declined 5.9% to $842,567M

Operational Highlights

• Strategic and Organizational Update

  • the Company is in the process of realigning its business around its brands by:

    • centralizing functions under common leadership to increase efficient distribution of resources, improve strategic alignment and eliminate duplicative roles and costs;
    • evaluating the Company’s global supply chain and performing product reviews, and pricing and distribution optimization in order to reduce fixed expenses and reduce complexity; and
    • implementing an operating expense target to optimize cash deployment for activities such as margin accretive innovation and U.S. adult-use market entry
  • with the goal to deliver $20 to $25 million in initially identified savings across operating expense categories in 2022, primarily driven by savings in sales and marketing, general and administrative, and research and development.
• Brand and Product Portfolio
  • launched new high potency cultivars, Atomic Sour Grapefruit and Cocoa Bomba, in select markets in Canada to further solidify the Company’s strength in the dried flower category in the Canadian adult-use cannabis market.
  • launched its first cultured cannabinoid product, SPINACH FEELZ™ Chill Bliss 2:1 THC|CBG gummy utilizing the distinctive “S” shape with a proprietary coating designed to provide a sour and sweet flavor profile and plans to produce a variety of other cannabis products that will prominently feature rare cannabinoids, designed to deliver unique and enhanced experiences made possible through proprietary blends of rare cannabinoids alongside more common cannabinoids, like THC and CBD.

• Global Supply Chain

  • Cronos GrowCo, the Company’s joint venture in Canada has begun selling to Canadian license holders in the wholesale market.

  • In addition, the Company has begun purchasing dried flower from Cronos GrowCo, marking a milestone in the evolution of the Company’s Canadian cannabis supply chain.

• Intellectual Property Initiatives

  • Achieved the final productivity target in respect of cannabigerolic acid (“CBGA”) under its strategic partnership with Ginkgo Bioworks Holdings, Inc. (NYSE:DNA).

Managements Comments

Kurt Schmidt, President and CEO, said:

• “...Cronos Group is now current with the filing of our financial reports [and], as we move forward, we are committed to improving our internal controls and financial reporting practices...
• ...We have determined that now is the right time to realign the business around our brands by centralizing functions under common leadership, managing expenses and prioritizing our investments in innovation. Through this realignment, our goal is to position Cronos Group to be able to successfully assemble a portfolio of best-in-class brands, products and intellectual property, while preserving the financial flexibility to make additional strategic investments in our R&D and brand pipeline as we innovate and evolve with our consumers’ wants and needs.
• In parallel, we continue to set our sights on additional long-term opportunities in the U.S. cannabis market and believe this realignment will lay important groundwork to support that effort once federally permissible.
• We remain focused on building long-term value for shareholders by continuing to build Cronos Group into a leading global brand-led, consumer-focused cannabis company.”

Stock Performance

While the Cronos stock price is DOWN -77.7% from its high in 2021 it is UP +13% from its low last year but remains weak, DOWN -9.9% YTD.