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The call emphasized strong operational and financial momentum across core markets — notably robust gross margins, expanding adjusted EBITDA margins, consistent positive operating and free cash flow streaks, and improved liquidity — while also acknowledging material GAAP net losses, wholesale revenue softness in select states, and the tail of a challenging Michigan exit and some Ohio execution friction. Strategic tailwinds such as federal rescheduling and potential uplisting were highlighted as important upside catalysts.
Management guided Q2 year‑over‑year revenue growth of 2–3% and said they expect "consistent strong gross margin performance," while highlighting upside from federal rescheduling (elimination of 280E), potential retroactive tax relief and a possible uplisting within ~12–24 months; they anchored that guidance to Q1 continuing‑ops results of $65.5M revenue, 52.8% gross margin, $17.4M adjusted EBITDA (26.5% margin), $8.7M operating cash flow (15th consecutive quarter), $7.8M free cash flow (11th consecutive quarter), operating cash flow yield 13.3% and free cash flow yield 10.3%, $39.1M cash, $0.9M capex, ~$24.3M free cash flow in the past four quarters, ~85% of Michigan asset sales completed, Maryland at an annualized ~$75M run rate, no material debt maturing until late‑2028, and a $20–30B psychoactive hemp market — all cited as supporting disciplined M&A activity and improved profitability and balance‑sheet flexibility.
Federal rescheduling of medical cannabis announced — expected elimination of 280E tax burden, potential for improved profitability, stronger balance sheet, lower cost of capital, increased access to institutional capital and potential uplisting to a U.S. exchange; viewed as a transformational upside catalyst for the business.
Net revenue from continuing operations of $65.5 million in Q1 FY2026. While slightly down sequentially versus Q4 ($66.1 million), management reports a return to year-over-year growth across continuing operations.
Gross margin of 52.8% in Q1 versus 52.1% in Q4 — an improvement of ~0.7 percentage points, driven by verticality and operational efficiencies in core markets (New Jersey, Maryland, Pennsylvania).
Adjusted EBITDA from continuing operations of $17.4 million, representing a 26.5% margin in Q1 versus $16.7 million (25.2%) in Q4 — an increase of $0.7 million and ~1.3 percentage points in margin sequentially.
Generated $8.7 million of net cash from continuing operations in Q1 (15th consecutive quarter positive operating cash flow) with operating cash flow yield of 13.3%. Free cash flow was $7.8 million (11th consecutive quarter positive free cash flow) with a free cash flow yield of 10.3%. Cash and cash equivalents increased to $39.1 million from $37.4 million (up ~$1.7 million, +~4.5%).
Notable operational performance: Maryland running at ~ $75 million annualized revenue with high-50s gross margins; New Jersey retail strength including full integration of Union Chill and top-25 store rankings; Pennsylvania delivered YoY revenue growth for the 4th consecutive quarter with multiple Apothecarium locations ranking top statewide and record finished goods/unit sales for TerrAscend SKUs. Brand momentum: Kind Tree and Legend driving growth, Legend vape sales grew 'double digits'.
Approximately 85% of Michigan asset sales completed; liabilities and debt significantly negotiated down; proceeds primarily used to pay down debt; exit now in final stage via receivership to further mitigate liabilities.
G&A reduced to $21.5 million (32.8% of revenue) from $22.8 million (34.4% of revenue) sequentially — a reduction in both absolute dollars (~$1.3 million) and as a percentage of revenue. Capital expenditures were modest at $0.9 million for the quarter.
Good morning. I will be your conference operator today. At this time, I would like to welcome everyone to the TerrAscend First Quarter 2026 Financial Results Conference Call. I will now turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications for introductions. Please go ahead.
Thank you, operator, and good morning. Welcome to the TerrAscend First Quarter 2026 Financial Results Conference Call. Joining us for today's call is Jason Wild, Executive Chairman; Ziad Ghanem, President and Chief Executive Officer; and Alisa Campbell, Senior Vice President of Finance. I'd also like to welcome to the call our newly appointed CFO, Eric Jackson. Our remarks today include forward-looking statements, including statements with respect to the company's outlook, including the company's expected financial results from continuing operations for the first quarter of 2026 and the estimates and assumptions relating thereto, the company's expectations regarding its growth prospects in new and existing markets such as Ohio and New Jersey, its M&A strategy, anticipated timing and benefits regarding the sale of the company's assets in Michigan and the expectations regarding regulatory reform and the potential benefits thereof. Each forward-looking statement discussed in today's call are subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and ...