CannTrust 3rd Q F2018 Rundown – Sept 30, 2018

Well ain’t you a pleasure to review!! Positive EBITDA, FG inv growth, strong sales growth, Nice Production to Sales delta.  Rogers and Ravensdale will be finding work pretty quickly given these results.


Open up the Fins and MDA and follow along.




An increase of 39% to $12.6 million [comparable to Tilray!!]

  • Grams sold of flower dropped 14% QoQ but price per gram went up 16% to $8.77 = $3.5 million
  • Extract went up to a new record of 699 kgs up 17% with price dropping less than 1% to $8.89 = $6.2
  • Hello wholesale…267 kgs at $6.40 = $1.7 million
  • Other up $1 million to $1.2 million


Gross Margin:

TRST 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18
applied new accounting policy
Gross Margin without IFRS 80.9% 23.4% 61.9% 50.7% 69.3%

Note: They had a change in GM format which bumped QoQ by 9%. I have also adjusted Q3F17 to reflect new format.

Looks like the one time events have worked their way through the system and GM is bouncing back.  I doubt it’ll get back to the pure medical GM of last year, but in the see of GM decreases I’ll gladly take it. Their GM tucks in right behind ACB for lasts Q [but ACB does not include depreciation in their number, whereas TRST does.]  So we have a new leader in the clubhouse, and given CGC earnings release and Tilray backsliding [both in the 30% range]… crown TRST!!

FVI per gram sold dropped dramatically to $3.83 from $8.24 last Q. FVI plus Production costs was $9.1 million versus revenue of $12.6 million, so they are leaving profit in for @ sale versus @ harvest.

[TRST, unfortunately, does not provide a lot of narrative QoQ.  So analysis will be light.]


Operating Expenses:

 Trend Analysis

trst sga trend 2

Peer Analysis

trst peer sga

TRST bucking the trend here too!!  Total OPEX decreased QoQ.  Yes, decreased!!


CannTrust 12 Month 12 Month Trailing % 30/09/2018   30/06/2018  
Revenue $36,462 12,589 9,050
Marketing and Promotion $10,076 27.63% $4,318 34.30% 2,743 30.31%
General and Admin $16,211 44.46% $4,497 35.72% 4,394 48.55%
Aggregate $26,287 72.09% 8,815 70.02% 7,137 78.86%
SBC $7,338 20.13% $1,514 12.03% $1,343 14.84%


Marketing and Promotion went up by 4% as % of sales, as they launched 4 brands. B but G&A came down 13% despite rising in absolute terms.  Each G&A expense reduced as % of sales QoQ.
SBC also retreated as % of sales and TRST remains the lowest on TTM basis in peer group.


Amortization was up as more M&E was put in production and ended the month at $1.8 million an increase of $0.8.


Operating Expenses came in at a $11.5 million or 91% of sales versus $8.6 million or 95% of sales last Q.


Net Operating Profit before IFRS Voodoo came in at negative $2.8 million an improvement from negative $4.0 million last Q.


Net Income Adjusted for IFRS voodoo came in at negative $3.4 million and decrease from negative $2.2 million last Q. The slide is due to Other Income reducing from $2.0 million [not sure if they re located that into revenue this Q, as I had unaccounted for revenue in this range].

Breakeven Sales and EBITDA

Trend Analysis

trst be trend

Peer Analysis


TRST 30-Sep-17 31-Dec-17 31-Mar-18 30-Jun-18 30-Sep-18
Sales $6,140 $6,983 $7,840 $9,050 $12,589
Gross Margin without IFRS $4,969 $1,634 $4,853 $4,588 $8,719
Opex $4,672 $4,805 $10,968 $8,579 $11,494
Net Op Profit without IFRS -$414 -$3,171 -$6,115 -$3,991 -$2,775
Adj EBITDA $1,227 -$1,667 -$1,356 -$1,583 $558
Implied B/E Sales $5,773 $20,534 $17,719 $16,922 $16,596
Sales Gap to B/E Sales -$367 $13,551 $9,879 $7,872 $4,007
Sales Gap to B/E EBITDA -$1,516 $7,124 $2,191 $3,123 -$806
Sales for B/E EBITDA $4,624 $14,107 $10,031 $12,173 $11,783

POSITIVE Adj EBITDA of $0.6 million was a very nice surprise improving from a deficit of $1.6 million last Q.   the boost on Gross Margin and expense control was the reason.

Breakeven Sales for Net Operating Profit improved modestly. While Breakeven Sales to EBITDA has been achieved!!!

 Balance Sheet items of note:

  • Cash and marketable securities dropped $13 million but remains at $86 million.
  • Inventory saw a strong increase
    • All FG inventory levels increased, meaning they are processing more than they are selling.
      • FG Cannabis saw a strong increase of $3.9 million to $5.7 million
      • FG Extracts inv also increase substantially by $2.1 million to $4.8 million
    • WIP Inv also increase in both Flower and Extracts
      • Extracts increased by $9.4 million to $13.5 million
      • Bud increased $0.7 million to $17.5 million
    • Inventory delta was also strong with produced of 4,978 kgs [last Q estimated yield of bios was 7,105 kgs but it may bridge Q ends] versus sold of 1,364 kgs. Leaving a positive delta of 3,614 kgs
  • Biological assets decreased $6.0 million
    • Estimated yield of Bios was 6,703 kgs or 58% of yield at Q end a drop of 6% QoQ
    • Note: It’ll take me awhile to dial in this stat. I have calls into ACB to understand it on their books.  Looks like I have to knock on some new doors at TRST to get this figure.
  • PPE was up $4.5 million
  • Nothing really of too much note on Liabilites and Equity.


Folks, you may have noticed a perked-up writing style on this rundown.  I have to say this rundown was breath if fresh air.


That’s all I got.
















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