Mr. Charles Bachtell reports

CRESCO LABS REPORTS FOURTH QUARTER & FULL YEAR 2023 FINANCIAL RESULTS DEMONSTRATING SIGNIFICANT PROFITABILITY AND CASH FLOW IMPROVEMENTS

Cresco Labs Inc. has released its financial and operating results for the fourth quarter and year ended Dec. 31, 2023. All financial information presented in this release is reported in accordance with U.S. GAAP (generally accepted accounting principles) and in U.S. dollars, unless otherwise indicated, and is available on the company's investor website.

Fourth quarter 2023 highlights:

• Fourth quarter revenue of $188-million, excluding the impact from strategic divestitures aimed to drive profitability, down 2 per cent year-over-year;
• Gross profit of $96-million. Adjusted gross profit up 12 per cent year-over-year to $100-million, or 53 per cent of revenue, an 850-basis-point improvement;
• Selling, general and administrative (SG&A) of $57-million. Removed $54-million in annualized adjusted SG&A, reducing adjusted SG&A by 20 per cent year-over-year to $55-million, or 29 per cent of revenue;
• Fourth quarter net income of $5-million;
• Fourth quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) nearly doubled year-over-year to $55-million, or 29 per cent of revenue, a 1,400 bps improvement;
• Retained the No. 1 share position in Illinois, Pennsylvania and Massachusetts.

Fiscal year 2023 highlights:

• Revenue of $771-million;
• Adjusted gross profit of $377-million, or 49 per cent of revenue;
• Driven by the year-of-the-core strategy, adjusted SG&A decreased by $35-million and adjusted EBITDA margin rose by over 200 bps;
• Adjusted EBITDA of $174-million, or 23 per cent of revenue;
• Net loss of $180-million for the full year, which included $151-million of impairment charges;
• Generated $59-million in operating cash flows for the full year, and ended the year with $109-million of cash, cash equivalents and restricted cash.

Management commentary

"I'm proud to share that our Q4 results capped off the year of the core with strong bottom-line growth and margin expansion, nearly doubling our adjusted EBITDA and achieving positive free cash flow for the year. We've set a new standard for ourselves, making this focus on our core part of our DNA moving forward and we're using these wins to fuel our business and capitalize on the many growth catalysts ahead.

"Everything we did in 2023 was designed to prepare us to take advantage of the monumental opportunities ahead, including: maximizing our upcoming adult-use catalysts, capitalizing on our brands and winning with independents, and expanding our retail to provide the consumer with the best cannabis experience possible," said Charles Bachtell, chief executive officer of Cresco Labs.

Balance sheet, liquidity and other financial information:

• As of Dec. 31, 2023, current assets were $278-million, including cash, cash equivalents and restricted cash of $109-million. The company had senior secured term loan debt, net of discount and issuance costs, of $386-million, and a mortgage loan, net of discount and issuance costs of $18-million.
• Total shares on a fully converted basis to subordinate voting shares were 467,871,956 as of Dec. 31, 2023.

Conference call and webcast

The company will host a conference call and webcast to discuss its financial results on Wednesday, March 13, 2024, at 8:30 a.m. Eastern Time (7:30 a.m. Central Time). The conference call may be accessed via webcast or by dialling 1-833-470-1428 (United States toll-free) or 1-404-975-4839 (U.S. local), providing access code 614771. Archived access to the webcast will be available for one year on Cresco Labs' investor website.

About Cresco Labs Inc.

Cresco Labs' mission is to normalize and professionalize the cannabis industry through a consumer packaged goods approach to building national brands and a customer-focused retail experience, while acting as a steward for the industry on legislative and regulatory-focused initiatives. As a leader in cultivation, production and branded product distribution, the company is leveraging its scale and agility to grow its portfolio of brands that include Cresco, High Supply, FloraCal, Good News, Wonder Wellness Co., Mindy's and Remedi, on a national level. The company also operates highly productive dispensaries nationally under the Sunnyside brand that focus on building patient and consumer trust and delivering continuing education and convenience in a wonderfully traditional retail experience. Through year-round policy, community outreach and SEED initiative efforts, Cresco Labs embraces the responsibility to support communities through authentic engagement, economic opportunity, investment, work force development and legislative initiatives designed to create the most responsible, respectable and robust cannabis industry possible.

We seek Safe Harbor.