By Arshreet Singh
(Reuters) - U.S. cannabis producer Green Thumb Industries (OTC:GTBIF) Inc beat fourth-quarter revenue estimates on Tuesday, on the back of legalization of adult-use in New Jersey, but price compression caused adjusted net income to halve from a year earlier.
New Jersey gave out licenses to existing medical cannabis operators, including Green Thumb, in April for the sale of recreational pot. The state is poised to become one of the largest adult-use cannabis markets on the East Coast.
Green Thumb, which is one of the top three U.S. weed producers by market value, said total revenue for the quarter rose 6.4% to $259.3 million from $243.6 million last year, beating analysts' expectation of $256.8 million.
On an adjusted basis, the company's net income was $12 million, or 5 cents per share, almost half from a year earlier, hurt by lower prices and higher costs related energy, labor and raw materials. Analysts expected a profit of 6 cents per share, according to Refinitiv.
"Inflation is creating higher costs, so it puts pressure on the margin," Chief Executive Officer Ben Kovler told Reuters in an interview. He added cannabis industry was battling a fall in prices even amid decades-high inflation, calling it a "double whammy".
Same-store sales - which account for sales in stores open for more than a year - in the quarter rose 3.4% from a year earlier, driven by new stores and increased footfall in established locations.
Kovler sees capital expenditures to be over $100 million for 2023, down from over $200 million over the last few years, as "access to capital and cannabis has become severely restricted".
Established in 2014, Green Thumb has operations across 15 U.S. markets, with 18 manufacturing facilities and 77 open retail locations.
Medical cannabis has been legalized in 36 states while 17 states now allow adult use, according to the National Conference of State Legislatures.