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May 8, 2020, 8:08 a.m. EDT

Canadian cannabis company Cronos posts surprise profit but revenue lags estimates

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By Ciara Linnane

Cronos Group Inc. /zigman2/quotes/206842762/composite CRON -0.23% /zigman2/quotes/202715342/delayed CA:CRON -3.16% said Friday it had net income of $75.7 million, or 20 cents a share, in the first quarter, down from $313.9 million, or 33 cents a share, in the year-earlier period. The number was well ahead of the 6 cent loss-per-share consensus of FactSet analysts. Net revenue rose to $8.432 million from $3.004 million, below the $10.5 million FactSet consensus. The Canadian cannabis company said it wrote down $8 million in inventory of dried cannabis and extracts and expects to take further writedowns due to price pressure and the impact of the repurposing of its Peace Naturals Campus. The company rolled out cannabis vaporizer products for the Canadian market in the quarter under the Cove and Spinach brands. It also launched Peace Naturals branded vape devices for the DTC market in Canada. Cronos was not immune to the effects of the coronavirus pandemic which it said has disrupted distribution channels. The company has reduced the number of workers on site to essential ones and implemented additional health and safety practices. "Although the company's production facilities currently remain operational, exemptions for essential businesses and workforces continue to evolve as governmental and health authorities respond to the spread of the virus," it said in a statement. In the U.S., where its Lord Jones products are distributed, bricks-and-mortar retailers have moved online. In Canada, stores have moved to curbside click-and- collect models, reduced store opening hours, or have closed retail entirely. "COVID-19 restrictions differ across jurisdictions, which has resulted in increased uncertainty in forecasting customer demand and sales velocity," said the statement. The company believes it has sufficient inventory to meet current demand. Shares rose 4% premarket, but are down 27% in the year to date, while the ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ -1.84% has fallen 31% and the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.64% has fallen 11%.

/zigman2/quotes/206842762/composite
US : U.S.: Nasdaq
$ 10.91
-0.03 -0.23%
Volume: 2.02M
Jan. 19, 2021 10:48a
P/E Ratio
44.91
Dividend Yield
N/A
Market Cap
$3.89 billion
Rev. per Employee
$37,520
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/zigman2/quotes/202715342/delayed
CA : Canada: Toronto
$ 13.79
-0.45 -3.16%
Volume: 331,848
Jan. 19, 2021 10:33a
P/E Ratio
45.15
Dividend Yield
N/A
Market Cap
$5.07 billion
Rev. per Employee
$49,785
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/zigman2/quotes/204332491/composite
US : U.S.: NYSE Arca
$ 19.46
-0.37 -1.84%
Volume: 1.42M
Jan. 19, 2021 10:47a
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/zigman2/quotes/210599714/realtime
US : S&P US
3,792.30
+24.05 +0.64%
Volume: 665.99M
Jan. 19, 2021 10:48a
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