Cronos Group Inc. (Nasdaq: CRON) (TSX: CRON) announced its Q1 2024 business results last week for the period ending March 31st, 2024.

Q1 Financial Highlights

All financial information is provided in U.S. dollars in comparison to the preceding quarter.

• Net Revenue: up 5.9% to $25.3M
  • Canada: up 5.6% to $18.9M 
  • Israel: up 28.0% to $6.4M 
• Cost of Sales: down 0.5% to $20.8M
• Gross Profit: up 136.8% to $4.5M
• Gross Margin: up to 18% from 16%
• Net Loss: down to $(2.5)M from $(45.2)M
• Adj. EBITDA: Increased by 27.7% to $(10.7)M
• Cash on Hand/Short-term Investments: down 0.7% to $855.1M

Q1 Operational Highlights

Brand and Product Portfolio

• Spinach^® is the number two overall brand in Canada, driven by top three positions in the edibles, vape, and flower categories.
  • In the edibles category, the Spinach^® brand held a 14.4% market share in Q1 2024, according to Hifyre.
  • The Spinach^® brand became the number one flower brand in Canada, with a 6.5% market share in Q1 2024, according to Hifyre.
  • The Spinach^® brand was ranked third in the vape category in Q1 2024, holding an 7.6% market share, according to Hifyre, and continues to be the number one rare cannabinoid vape brand by market share, with products that feature cannabinol (CBN), cannabigerol (CBG), and cannabichromene (CBC), holding four spots in the top five market share among rare cannabinoid vapes.
  • Spinach^® was ranked ninth in the pre-roll category with 2.3% market share, according to Hifyre.
• Lord Jones^® sales across the vape, edible and pre-roll categories Lord Jones^® products continue to gain traction in their respective categories.
  • Lord Jones^® Hash Fusions pre-rolls rose to be the number one hash infused pre-roll in Q1 2024, according to Hifyre. 
  • In January 2024, Cronos launched a Lord Jones^® live resin vape product.
  • In February 2024, Cronos launched a new edible product in the chocolate category.

Global Supply Chain

• In Israel, the Company is growing share there under the PEACE NATURALS^® brand

Management Commentary

Mike Gorenstein, Chairman, President, and CEO, said:

“Cronos achieved its highest quarterly net revenue from continuing operations on record at $25.3 million...[which] are a testament to our global team's commitment to excellence, innovation and their ability to adapt to changing market conditions..."

Guidance and Outlook

• The Company reiterates its previously announced operating expense savings target of $5 to $10 million in 2024 primarily driven by savings in general and administrative, and research and development. 
• Cronos anticipates that the net change in cash, defined as the sum of cash and cash equivalents and short-term investments will be positive in 2024.
• The fiscal year 2024 guidance assumes:
  • a slight moderation in interest rates;
  • limited impacts to their operations, facilities and business in Israel due to the Israel/Hamas war;
  • limited deterioration in foreign exchange rates;
  • the general economic conditions and regulatory environment in the markets in which Cronos participates will not materially change;
  • timely receipt of interest and principal payments on the senior secured credit facility with Cronos GrowCo;
  • anticipated interest income of approximately $40 to 50 million in fiscal year 2024;
  • year-over-year gross margin improvement;
  • and meeting their target for reducing our operating expenses by $5 to $10 million.

Stock Performance

Cronos Group's stock price was up 25.4% in Q1 (January, February, March), went up 8.8% between then and the release of the Q1 report on May 9th before slipping by 2.8% the following day. The stock is now up 32.5% YTD.

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