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ACREAGE HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
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Commission File Number: 000-56021
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British Columbia, Canada
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98-1463868
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(State or other jurisdiction of incorporation)
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(IRS Employer Identification No.)
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366 MADISON AVENUE, 11TH FLOOR
NEW YORK, NEW YORK, 10017, UNITED STATES
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(Address of principal executive offices, including zip code)
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(646) 600-9181
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(Registrant's telephone number, including area code)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Subordinate Voting Shares, no par value
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ACRGF
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OTC Markets Group Inc.
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Emerging growth company
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x
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(d)
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Exhibits. The following Exhibit is furnished as part of this Current Report on Form 8-K.
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Exhibit No.
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Description of Exhibit
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ACREAGE HOLDINGS, INC.
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Date: August 11, 2020
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/s/ Glen Leibowitz
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Glen Leibowitz
Chief Financial Officer
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•
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Second quarter reported revenue was $27.1 million, a 53% increase compared to the same period in 2019, and a 12% increase compared to the first quarter of 2020.
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•
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Pro forma revenue* was $43.8 million, a 70% increase compared to the same period in 2019, and a 16% increase compared to the first quarter of 2020.
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•
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Pro forma same store sales growth was 46%, the sixth consecutive quarter of double-digit growth. Same store sales growth was driven by strong check and transaction growth.
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•
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Gross margin was 41.4%, a 150 basis point decrease versus the same period in 2019, and a 30 basis point increase compared to the first quarter of 2020. Gross margin was negatively impacted by a $0.6 million inventory write down associated with the closure of Form Factory. Excluding this charge, which will not repeat in future periods, gross margin would have been 43.7%, an 80 basis point increase year over year.
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•
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Net loss attributable to Acreage was $37.2 million, while adjusted net loss* attributable to Acreage was $11.1 million.
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•
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Pro forma adjusted EBITDA* was a loss of $1.4 million.
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Pro forma Bridge
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|||||||||||||||||
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QTD
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YTD
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||||||||||||
US$ (thousands)
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Q2'20
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Q2'19
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FY'20
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FY'19
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||||||||
Reported Revenue
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$
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27,072
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$
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17,745
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$
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51,297
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$
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30,642
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Revenue from Entities under Management or Consulting Agreements*
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|||||||||||||||||
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New England
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5,550
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4,062
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10,206
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8,268
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Mid-Atlantic
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4,042
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1,760
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7,515
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3,322
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Midwest
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5,986
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1,865
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10,025
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3,232
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West
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1,115
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302
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2,329
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916
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Managed Revenue*
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$
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43,765
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$
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25,734
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$
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81,372
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$
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46,380
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Pro forma Adjustments*
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|||||||||
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New England
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—
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—
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—
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932
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Mid-Atlantic
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—
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—
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—
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—
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Midwest
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—
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—
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—
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670
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West
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—
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36
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—
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616
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Pro forma Revenue*
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$
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43,765
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$
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25,770
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$
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81,372
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$
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48,598
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Reconciliation of GAAP to Non-GAAP Measures
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US$ (thousands, except per share amounts)
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Q2'20
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Q2'19
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FY'20
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FY'19
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Net loss (GAAP)
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$
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(44,370
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)
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$
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(49,265
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)
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$
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(266,599
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)
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$
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(80,069
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)
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Income tax expense (benefit)
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3,113
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1,576
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(25,459
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)
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3,798
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Interest expense (income), net
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1,903
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(870
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)
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1,482
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(1,482
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)
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Depreciation and amortization
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1,425
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2,223
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3,492
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3,131
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EBITDA (non-GAAP)*
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$
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(37,929
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)
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$
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(46,336
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)
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$
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(287,084
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)
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$
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(74,622
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)
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Adjusting items:
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(Income) loss from investments, net
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(4
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737
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(238
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(1,990
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)
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Loss on impairment of intangible assets
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—
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—
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187,775
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—
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Loss on notes receivable
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—
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—
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8,161
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—
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Write down of assets held-for-sale
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8,110
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—
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8,110
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—
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Equity-based compensation expense - Plan
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11,302
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15,674
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25,781
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34,555
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Equity-based compensation expense - Plan (CGC Awards)
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7,181
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314
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11,992
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314
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Equity-based compensation expense - other
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1,704
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4,705
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17,151
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4,801
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Canopy Growth transaction costs
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—
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6,250
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—
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6,250
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Other non-recurring expenses
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2,940
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4,096
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9,250
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6,033
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Adjusted EBITDA (non-GAAP)*
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$
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(6,696
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)
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$
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(14,560
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)
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$
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(19,102
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)
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$
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(24,659
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)
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Pro forma Bridge
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QTD
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YTD
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||||||||||||
US$ (thousands)
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Q2'20
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Q2'19
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FY'20
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FY'19
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Adjusted EBITDA*
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$
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(6,696
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$
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(14,560
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$
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(19,102
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$
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(24,659
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)
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Managed/Pro forma Adjustments*
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New England
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2,043
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1,423
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2,928
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2,825
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Mid-Atlantic
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1,648
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607
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3,138
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1,124
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Midwest
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1,136
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(712
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1,079
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(1,515
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West
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436
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(1,158
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(551
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(3,415
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Pro forma Adjusted EBITDA*
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$
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(1,433
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)
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$
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(14,400
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)
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$
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(12,508
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)
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$
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(25,640
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)
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Reconciliation of GAAP to Non-GAAP Measures
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||||||||||||||||
US$ (thousands, except per share amounts)
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Q2'20
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Q2'19
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FY'20
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FY'19
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||||||||
Net loss attributable to Acreage Holdings, Inc. (GAAP)
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$
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(37,192
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)
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$
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(37,541
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)
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$
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(209,146
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$
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(60,918
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)
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Net loss per share attributable to Acreage Holdings, Inc. (GAAP)
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$
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(0.38
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$
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(0.44
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)
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$
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(2.19
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$
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(0.74
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)
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Adjusting items:(1)
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(Income) loss from investments, net
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$
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(3
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)
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$
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557
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$
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(189
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)
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$
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(1,495
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)
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Loss on impairment of intangible assets
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—
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—
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149,187
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—
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Loss on notes receivable
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—
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—
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6,484
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—
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Write down of assets held-for-sale
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6,717
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—
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6,443
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—
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Equity-based compensation expense - Plan
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9,360
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11,850
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20,483
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25,965
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Equity-based compensation expense - Plan (CGC Awards)
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5,947
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238
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9,528
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236
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Equity-based compensation expense - other
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1,411
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3,557
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13,626
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3,607
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Canopy Growth transaction costs
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—
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4,725
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—
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4,696
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Other non-recurring expenses
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2,435
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3,097
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7,349
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4,533
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Tax impact of adjustments above
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243
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(129
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)
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(24,602
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)
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341
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Total adjustments
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$
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26,110
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$
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23,895
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$
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188,309
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$
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37,883
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Adjusted net loss attributable to Acreage Holdings, Inc. (non-GAAP)*
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$
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(11,082
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)
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$
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(13,646
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)
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$
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(20,837
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)
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$
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(23,035
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)
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Adjusted net loss per share attributable to Acreage Holdings, Inc. (non-GAAP)*
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$
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(0.11
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)
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$
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(0.16
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)
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$
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(0.22
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)
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$
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(0.28
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)
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Weighted average shares outstanding - basic and diluted
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98,444
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85,640
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95,688
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82,557
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Weighted average NCI ownership %
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17.18
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%
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24.40
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%
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20.55
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%
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24.86
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%
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Media Contact:
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Investor Contact:
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Howard Schacter
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Steve West
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Vice President of Communications
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Vice President, Investor Relations
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h.schacter@acreageholdings.com
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investors@acreageholdings.com
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646-600-9181
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646-600-9181
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