Cronos Group Delays Fourth-Quarter Earnings Report

Cronos Group shares fall after the cannabis company says it will delay its fourth-quarter earnings report, which had been scheduled for Thursday.
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Cronos Group (CRON) - Get Report were lower after the Toronto cannabis company said it would delay its 2019 fourth-quarter and full-year earnings report and conference call, which had been scheduled for Thursday.

"The company ... will make a further announcement in a subsequent press release to schedule the date and time of the earnings conference call," Cronos said.

Separately, Cowen on Monday downgraded three other Canadian cannabis companies -- Aurora Cannabis (ACB) - Get Report, Sundial Growers (SNDL) - Get Report, and Tilray (TLRY) - Get Report -- to market perform from outperform "as we grow increasingly cautious on the outlook for cannabis in Canada."

"Headwinds that have plagued the industry (pricing, stories, inventory) do not appear to be fading as anticipated," Cowen said in a research note, "while 2.0 is likely not the elixir that the market was hoping for."

Cannabis 2.0 refers to new-product form factors like edibles and prerolled cannabis cigarettes.

Canopy Growth (CGC) - Get Report "remains our only outperform-rated stock among the Canadian LPs," Cowen said.

"While industry challenges around doors and high quality flower supply are well understood, we now believe that the slower than expected rollout of cannabis 2.0 products will also prove as a headwind to revenues," Cowen said.

Stifel said that Cronos no longer qualifies as a foreign issuer, given its board composition, which necessitates both an accelerated timeline for filling year-end financials (60 days versus 90 days) and a shift from International Financial Reporting Standards to U.S. GAAP

“We regard this news as disappointing but not necessarily shocking,” Stifel said in a note. “Cronos is a growing organization with CFO Jerry Barbato in the role for less than a year and in his first job as a public company CFO. Most important, Cronos has the resources to remedy this situation (C$2 billion in cash on balance sheet) along with the ability to tap the expertise of (tobacco company) Altria (MO) - Get Report Group with its 45% stake in the company."

In November, Cronos reported third-quarter net income of C$788 million, or C$0.53 per share, compared with a loss of C$7 million, or C$0.04, in the year-earlier quarter.

On an adjusted basis, Cronos reported third-quarter losses of $23.9 million compared with $3.2 million a year earlier. Revenue tripled to $12.7 million from $3.8 million. Analysts had expected Cronos to report $14.1 million in revenue for its third quarter.

At last check Cronos shares were down 7.9% at $6.59.