Fire & Flower Holdings Corp.

Q1 2023 consolidated revenue was $43.1 million, up from $40.9 million a year ago, a 5.3% increase. Consolidated gross profit was $12.5 million versus $12.2 million last year, and consolidated gross margin was 28.9% versus 29.7%. Consolidated SG&A was $14.7 million, down 3% year over year, and consolidated adjusted EBITDA was negative $1.8 million versus negative $2.3 million, a 21% improvement. Free cash flow was negative $5.2 million versus negative $8.7 million. For guidance, management said digital revenue should remain around a $3 million quarterly run rate, wholesale/logistics should improve as Pineapple Express costs roll off, and consolidated positive adjusted EBITDA should be reached on a run-rate basis toward the end of the next quarter. They also said they continue to pursue financing opportunities and acquisitions, with co-located Circle K stores expected to bring the total to between 5 and 10 co-located stores plus a couple more corporate stores over the next 12 months.

Stéphane Trudel framed the quarter as evidence that Fire & Flower’s simplified, tech-enabled retail model is working in a very competitive Canadian market. He emphasized growth from Spark Perks, Hifyre, and the new Spark Marketplace app, while also stressing that the company is using cost cuts, store rationalization, and acquisitions to move toward positive free cash flow. His tone was constructive and confident, with repeated emphasis on disciplined expansion and consolidation.

John Chou highlighted the main financial improvements: revenue of $43.1 million, gross profit of $12.5 million, gross margin of 28.9%, SG&A of $14.7 million, and adjusted EBITDA of negative $1.8 million. He noted retail revenue of $32.2 million, wholesale/logistics revenue of $7.9 million, and digital revenue of $3 million, with retail gross margin at 25.9% and digital gross margin at 96%. He also said free cash flow improved to negative $5.2 million, debt stood at $13.9 million at quarter-end, and the company reduced capital expenditures and is in discussions with parties around financing needs.

Analysts focused on retail gross margin sustainability, store footprint plans, the timing of positive adjusted EBITDA, acquisition appetite, and the Couche-Tard warrants. Management said retail margin gains are being driven by member pricing, better product mix, and more flex/high-demand products, while also acknowledging macro pricing pressure in Canada. On EBITDA timing, they said the business should be on a run-rate path to positive adjusted EBITDA toward the end of Q2; on store growth, they expect 5 to 10 co-located Circle K stores plus a couple more corporate stores over the next 12 months; and on acquisitions, they said they are active and looking for 5- to 10-store deals that are immediately accretive.