Vext Science ((TSE:VEXT)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Vext Science highlighted a robust performance in Ohio, which significantly contributed to the company’s revenue growth and record adjusted EBITDA. Despite facing challenges in the Arizona market, Vext’s strategic expansion and positive cash flow generation were key positive indicators for the company’s future prospects.
Strong Performance in Ohio
The fourth quarter of 2024 marked a significant milestone for Vext Science, as it was the first full quarter of adult-use sales in Ohio. This resulted in impressive revenue growth of $10.2 million and an adjusted EBITDA of $3.2 million. Ohio operations showed remarkable progress, with a 40% increase in total sales during Q4 2024.
Record Adjusted EBITDA
Vext achieved its highest quarterly adjusted EBITDA in over two years, with a 13% sequential increase to $3.2 million in Q4 2024. For the entire fiscal year, adjusted EBITDA surged by 66% to $9.2 million compared to 2023, underscoring the company’s strong financial performance.
Positive Cash Flow from Operations
The fourth quarter of 2024 was notable for Vext, as it recorded the highest quarterly cash flow from operations in three years, amounting to $4 million. Although there was a 24% decline compared to fiscal 2023, the company still managed to generate $3.3 million in cash flow from operations for the full year.
Expansion in Ohio
Vext is strategically expanding its presence in Ohio, aiming to reach the state’s license cap of eight stores. New locations are set to open throughout 2025 and potentially into early 2026. The acquisition of two dispensaries is nearing completion, promising significant revenue and profitability growth from the state.
Challenges in Arizona Market
The Arizona market posed challenges for Vext, with a 12.6% decline in total statewide sales and a 25% drop in average per store sales. Despite pricing pressures from oversupply and competition, Vext managed to increase its retail sales by 2.4%.
Non-Cash Impairment Charge
Vext recorded a non-cash impairment charge of $2.9 million in Q4 2024 due to winding down joint ventures in Oklahoma and California. This decision was driven by market challenges and oversupply issues.
Increased Inventory Investments
While Vext’s cash flow from operations remained positive, it experienced a decline due to increased inventory investments. These investments were necessary to support the elevated demand for adult-use products in Ohio.
Forward-Looking Guidance
Looking ahead, Vext Science anticipates continued growth from its operations in Ohio, with plans to reach the state’s license cap of eight retail locations by early 2026. The company is also focused on optimizing its operations in Arizona, despite the market challenges. Additionally, Vext aims to eliminate all non-mortgage debt by the end of 2026, maintaining a solid balance sheet with $4.6 million in cash.
In summary, the earnings call for Vext Science reflected a positive sentiment, driven by strong performance in Ohio and record adjusted EBITDA. While challenges persist in the Arizona market, the company’s strategic expansion and positive cash flow generation provide a promising outlook for the future.