Mr. Charlie Bachtell reports

CRESCO LABS DEMONSTRATES SUCCESS OF CASH FLOW FOCUSED STRATEGY WITH THIRD QUARTER 2024 FINANCIAL RESULTS

Cresco Labs Inc. has released its financial and operating results for the third quarter ended Sept. 30, 2024. All financial information presented in this release is reported in accordance with United States GAAP (generally accepted accounting principles) and in U.S. dollars, unless otherwise indicated, and is available on the company's investor website.

Third quarter 2024 highlights:

• Third quarter revenue of $180-million;
• Gross profit of $93-million. Adjusted gross profit of $95-million; and an adjusted gross margin of 53 per cent of revenue, a 250-basis-point improvement year over year;
• SG&A (selling, general and administrative) of $57-million. Reduced adjusted SG&A by 6 per cent year over year to $53-million, or 30 per cent of revenue;
• Net loss of $8-million;
• Third quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $51-million, up 5 per cent year over year; and adjusted EBITDA margin of 29 per cent, a 280-basis-point improvement year over year;
• Record third quarter operating cash flow of $49-million and free cash flow of $43-million;
• Retained the No. 1 share position in Illinois, Pennsylvania and Massachusetts and improved to a top 3 position in Ohio.

Management commentary

"Our focus remains the same, win in strategic markets with a brand portfolio consumers love, provide best-in-class retail operations and maintain a relentless pursuit of financial strength. Our Q3 results underline the success of this strategy with $180-million in revenue at 29-per-cent adjusted EBITDA margin and, most importantly, $49-million of operating cash flow, our highest ever.

"So far this year, we've generated $103-million in operating cash flow, enabling us to reinvest in our core, and to explore new markets and growth verticals, all while improving our balance sheet and paying down debt.

"While we're disappointed that the Florida initiative didn't reach the super majority threshold it needed to pass, we still saw substantial bipartisan majority support at 56 per cent for cannabis legalization. For the first time ever, we had two presidential candidates that both supported broad federal cannabis reform. We look forward to working with the incoming administration to follow through on its commitment to developing a commonsense approach to cannabis laws including the passage of SAFE banking, rescheduling and the fact that no one should be arrested for personal cannabis use," said Charlie Bachtell, Cresco Labs chief executive officer and co-founder.

Balance sheet, liquidity and other financial information

As of Sept. 30, 2024, current assets were $312-million, including cash, cash equivalents and restricted cash of $157-million. The company had senior secured term loan debt, net of discount and issuance costs, of $390-million and a mortgage loan, net of discount and issuance costs, of $18-million.

On Oct. 25, 2024, the company repurchased $40-million principal amount of its senior loan and paid $300,000 of accrued interest. There were no prepayment penalties or exit fees due on this repurchase.

Total shares on a fully converted basis to subordinate voting shares were 474,731,040 as of Sept. 30, 2024.

Conference call and webcast

The company will host a conference call and webcast to discuss its financial results on Friday, Nov. 8, 2024, at 8:30 a.m. ET/7:30 a.m. CT. The conference call may be accessed through webcast or by dialling 1-833-470-1428 (U.S. toll-free) or 1-404-975-4839 (U.S. local), providing access code 435112. 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 CPG (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.

We seek Safe Harbor.