Ayr Wellness Inc - AYRWF stock
Company Profile[edit]
Ayr Wellness Inc. (OTC: AYRWF, CSX: AYR-A) is a multi-state cannabis consumer-packed goods company and retailer in the United States. The company engages in the cultivation and manufacture of branded cannabis products. It distributes the tailored products via a chain of owned cannabis retail stores under brand names including AYR, Liberty Health Sciences, and The Dispensary. It also uses third-party stores. Ayr’s portfolio of brands includes Origyn, Kynd, Levia, Wicked, Road Tripper, and Stix Preroll Co. Its pipeline of products comprises marijuana flower, concentrates, cartridges, vapes, seltzers, tinctures, topicals, and edibles. The firm was incorporated in 2019 and has its headquarters in Miami, Florida. Its shares trade on OTC markets under the AYRWF ticker symbol.[1]
Business Operations[edit]
The company is focused on producing and delivering the highest quality cannabis products and customer experience throughout its footprint. It believes that the quality of the final product heavily depends on the quality of the plant. It, therefore, focuses on superior cultivation to grow superior branded cannabis products. Its strategy is to s to vertically integrate through the consolidation of cultivating, producing, distributing, and dispensing cannabis brands and products at scale.
As of June 30, 2022, the company had operations in eight U.S. markets and employed roughly 2,375 people. It operated 72 retail stores, had 11 brands in the national CPG portfolio, 1.2 million total square footage of cultivation and production facilities, and had its products in more than 570 licensed dispensaries across America. Ayr, through its subsidiaries and affiliates, holds, operates, and manages licenses and permits in the States of Arizona, Florida, Massachusetts, Nevada, New Jersey, Ohio, Pennsylvania, and Illinois.
Ayr also owns stores under their previous names before the acquisition, though the company aims to unify its retail footprint under the AYR retail brand. Its retail stores primarily generate income from the sale of cannabis products, with an immaterial portion of income resulting from the sale of other merchandise (such as cannabis accessories).[2]
The company’s flower plant is generated from a smokable part of the cannabis plant. Its concentrates are products that have been refined to extract extraneous components, leaving active compounds, primarily cannabinoids and terpenes. Vapes are devices that are pre-filled with extracted cannabis oils. Its tinctures are alcohol or glycerol-based liquid cannabis extracts. Its topicals are cannabis-infused skin products, such as lotions, creams, and balms. The company, through Herbal Remedies Dispensaries, LLC, operates two licensed retail dispensaries in Quincy, Illinois.[3]
Company and Industry News[edit]
The cannabis industry grossed between $17.5bn and $21.3bn in revenue in 2020. The global cannabis market during the COVID-19 period was estimated to value USD 25,650.4 million in 2021 and is projected to grow to approximately USD 176,005.5 million by 2030 at a CAGR of 23.9%, 2021-2030. The growth rate can be attributed to several factors such as rising consumer awareness and multiple medical applications.[4]
The company released its second quarter financial and operational results for the period ending June 30, 2022, on August 18, 2022. Financial highlights of the second include:
- Revenues, net of discounts for the three months ended June 30, 2022, and 2021, were $110.1 million and $91.3 million, respectively, increasing $18.8 million or 21%.
- Gross profit was $40.3 million compared to $22.3 million, in the same quarter of 2021, an increase of $18 million or 81%. Gross
- Adjusted Gross Profit (non-GAAP) was $57.2 million against $53.1 million in 2021, an increase of $4.1 million or 8%
- Total operating expenses increased by $17.9 million or 38% to $65.1 million compared to $47.2 million in the second quarter of 20121.
- Net loss for the three months ended June 30, 2022, was $38.4 million versus $20.7 million in the same quarter in 2021.
- Ended the quarter with a cash balance of $116.7 million.
- Deployed $17.9 million of capital expenditures in Q2.
The increases recorded in revenues and gross profit were attributed to the firm’s expansion into new states and synergies obtained from acquisitions. Ayr spread its footprint into Illinois, and New Jersey, through the acquisition of Herbal Remedies and GSD. It also had two new dispensaries from the Herbal Remedies acquisition, eleven new dispensaries in Florida, and initiated sales at its Arizona cultivation facility in the quarter.[5]
Leadership[edit]
Management Team[6][edit]
Jonathan Sandelman, Chairman, Chief Executive Officer, and Corporate Secretary
- A 30-year veteran of banking and finance, with a history of generating shareholder value.
- Served as president of Bank of America Securities after building its capital markets businesses through the early 2000s.
- Helped the Bank of America beyond its roots as a consumer and corporate lender.
- Founded and served as CEO of the multi-billion dollar asset manager Sandelman Partners.
Brad Asher, Chief Financial Officer
- He is an accomplished finance and accounting professional.
- Previously served as the controller for Ayr, where he was instrumental in implementing the necessary software and financial controls to drive efficiencies across the company’s portfolio of businesses.
- Was the vice president controller at a global ad-tech company before joining Ayr.
- Started his career at KPMG, where he led teams across multiple sectors.
Jamie Mendola, Head of Strategy and M&A
- Has nearly 20 years of experience as a public and private equity investor.
- Was previously the Founder and Portfolio Manager of Pacific Grove Capital, a hedge fund focused primarily on investments in consumer, cannabis, technology, and payments.
- Received accolades from Institutional Investor as a Hedge Fund Rising Star in 2015 when Pacific Grove was named the best new hedge fund by Hedge Funds Review.
- Before founding Pacific Grove, he was a Partner at Scout Capital, a Principal at Watershed Asset Management, an Analyst at JLL Partners, and an Analyst at J.P. Morgan.
- Received his MBA from the Stanford Graduate School of Business and B.S. in Management from Binghamton University.
Legal Issues[edit]
Lawsuits[edit]
Toronto-based Ayr’s Massachusetts subsidiary, Sira Naturals and Tilt Holdings were fined $295, 000 and $275,000 respectively, payable to the Massachusetts Cannabis Control Commission (CCC) to settle separate allegations of regulatory infractions in 2021. The settlements were both approved on June 17, 2021, according to the legal news website Law360. Sira Naturals was alleged to have flagged off an unlicensed delivery service called Stalk & Beans to deliver cannabis products for unaffiliated businesses under Sira’s license. On top of the fine, Sira Naturals’ Massachusetts license was subjected to a one-year probationary period. Ayr, however, in a news release, said that Sira did not admit to any regulatory violations in reference to the settlement and that it “appreciates the important clarifications that the settlement provides.”[7]
- ↑ Ayr Wellness Inc. Management’s Discussion and Analysis for the Three and Six Months Ended June 30, 2022, and 2021. Page 2. - webfiles.thecse.com. Accessed on 10/22/2022.
- ↑ ir.ayrwellness.com/ Company Overview – AYR Wellness website. Retrieved on 10/22/2022.
- ↑ cnbc.com/quotes/AYRWF?tab=profile – CNBC News.
- ↑ Global Cannabis Market Size & Forecast Report 2021: A $176 Billion by 2030 - Growing Legalization of Medical Cannabis in Various Countries Driving Growth - ResearchAndMarkets.com. Retrieved on 10/22.2022.
- ↑ Ayr Wellness Inc. Management’s Discussion and Analysis for the Three and Six Months Ended June 30, 2022, and 2021. Page 7 and 8. - webfiles.thecse.com. Accessed on 10/22/2022.
- ↑ ayrwellness.com/company-information/management-team. Accessed on 10/23/2022.
- ↑ Cannabis firms Tilt, and Ayr pays nearly $300,000 each in MA settlements – mjbizdaily.com. Retrieved on 10/23/2022.
OTC Symbol: AYRWF | OTC Tier: OTCQX International
