Grown Rogue’s Earnings Call Highlights Expansion and Cost Control

Grown Rogue International ((TSE:GRIN)) has held its Q3 earnings call. Read on for the main highlights of the call.

Grown Rogue International’s recent earnings call reflected a generally positive sentiment, highlighting the company’s adept cost control, robust balance sheet management, and strategic expansion into new markets such as New Jersey and Minnesota. Despite facing pricing pressures in its core markets and operational challenges in New Jersey, the company’s strategic initiatives and financial management suggest a promising outlook.

Strong Cost Control

Grown Rogue has demonstrated impressive cost control, achieving all-in 4-wall production costs of $368 in Michigan and $348 in Oregon. The company is optimistic about reducing indoor production costs to below $200. Additionally, yields have improved by 20% year-over-year, reaching a record 75 grams per square foot.

Balance Sheet Strength

The company has strengthened its financial position by increasing its credit facility by an additional $5 million, bringing the total to $12 million at a sub-8% interest rate. Grown Rogue also maintains a healthy cash balance of over $13 million.

Expansion and Awards

Grown Rogue’s expansion into New Jersey has been marked by success, including winning two awards at the Best-in-Grass competition. Although the New Jersey market has been slower than anticipated, it shows promise for future growth.

Minnesota Expansion Plans

The company plans to expand into Minnesota with a flexible real estate strategy that could potentially double the canopy size to 30,000 square feet. Early product availability is expected in 2027, indicating a long-term commitment to market expansion.

Pro forma Revenue Growth

Grown Rogue reported a 26% year-over-year increase in pro forma revenue, largely driven by contributions from the New Jersey market.

Pricing Pressure in Core Markets

The company continues to face significant pricing pressure in Oregon and Michigan, with no immediate relief expected in these market conditions.

Challenges in New Jersey

In New Jersey, yields are currently lower than expected at 60 grams per square foot, and production costs remain high due to the early stages of operations.

Oregon Market Struggles

Oregon experienced a challenging quarter with significant pricing environment issues, impacting overall revenue despite controlled costs.

Forward-Looking Guidance

CEO Obie Strickler outlined the company’s future strategies, emphasizing continued improvements in production costs and yield enhancements. The company plans to leverage its strong balance sheet to support expansion into Minnesota, aiming for low production costs similar to those achieved in existing markets.

In summary, Grown Rogue International’s earnings call conveyed a positive sentiment, underscored by strategic cost management and expansion initiatives. While challenges persist in pricing and operational areas, the company’s forward-looking strategies and financial health suggest a promising future.