Terra Tech Corp. Third Quarter 2019 Earnings Call

Terra Tech Corp. (TRTC)

Revenue from continuing operations increased 131% versus the third quarter in 2018

Revenue from continuing and discontinued operations increased 66% versus the third quarter in 2018

IRVINE, CA / ACCESSWIRE / November 12, 2019Terra Tech Corp. (OTCQX:TRTC) (“Terra Tech” or the “Company”), a vertically integrated cannabis-focused agriculture company, today announced its financial results for the period ended September 30, 2019.

Derek Peterson, Chief Executive Officer of Terra Tech, commented, “In the first nine months of 2019, the cannabis industry experienced unprecedented volatility that has impacted operators’ ability to raise capital and has also led to regulatory challenges affecting the whole industry. As we look toward 2020, building shareholder value remains our primary goal and we are committed to adapting to the changing market in order to maximize our revenue growth. With these goals in mind, we are entering a new phase of our development by entering into an Agreement and Plan of Merger with OneQor Pharmaceutical (“OneQor”), which will immediately position us as one of the most innovative players in the Cannabidiol (CBD) market, as well as cannabinoid research and product development. CBD is becoming an integral part of several industries including health and beauty. OneQor has assembled a team of world-class scientists focused on the development, manufacturing, and delivery of proprietary over-the-counter pharmaceutical products to established suppliers and consumer brands. We are excited they have chosen to merge with us and believe this pivot in our strategic direction will optimize shareholder returns.”

Financial Update

  • For the three months ended September 30, 2019, we generated revenues from continuing operations of $7.61 million, compared to $3.29 million for the three months ended September 30, 2018, an increase of $4.31 million or 131.0 percent. The increase was primarily due to increased Cannabis revenues due to our Dispensary year-over-year growth of $2.75 million or 152.5 percent due to an additional store opening in early 2019, increased customer traffic, improvements in store operational standards and enhanced product assortment. Also driving the increase over prior year is the development of cultivation and production operations, which accounted for $1.27 million of the increase.
  • Under GAAP standards, the Company was not permitted to record the top line revenue for the discontinued operations. During the course of the quarter, the Company has been operating the discontinued operations and will continue to operate them until the State of Nevada approves the transfer of the cannabis permits. The actual quarterly revenue including the discontinued operations was $11.76 million, compared to $7.08 million for the three months ended September 30, 2018, an increase of $4.68 million or 66.0%.
  • Our gross margin percentage for the three months ended September 30, 2019 was 50.6 percent, compared to 33.2 percent for the three months ended September 30, 2018. The increase in gross margin percentage was attributable to the Cannabis segment, which had $4.06 million and $0.69 million gross profit, or 55.4 percent and 32.8 percent gross margin, for the three months ended September 30, 2019 and 2018. The Cannabis segment gross margin improvements were due to an increase of higher margin private label sales, lower cost of goods from vendor negotiations and price optimization on top selling items.
  • Selling, general and administrative expenses for the three months ended September 30, 2019 were $11.0 million, compared to $9.51 million for the three months ended September 30, 2018, an increase of $1.49 million or 15.7 percent.
  • The net loss attributable to Terra Tech for the period ending September 30, 2019 was $14.34 million, or $0.13 per share, compared to a net loss of $11.63 million, or $0.16 per share, for the three months ended September 30, 2018.
  • The Company had $1.85 million in cash as of September 30, 2019, compared with $7.2 million as of December 31, 2018.
  • Stockholders’ equity for the period ending September 30, 2019 amounted to approximately $91.21 million compared to approximately $94.87 million as of December 31, 2018.

Conference Call

The company will also host a conference call on Tuesday, November 12, 2019 at 4:30 PM Eastern.

Dial-In Number: 1-857-232-0157

Access Code: 422095

Derek Peterson, Chairman and CEO of Terra Tech Corp., will be answering shareholder questions at the end of the call. Should you have questions during or prior to the conference call please send an email to [email protected] with TRTC Question in the subject line. Mr. Peterson will answer as many questions as time will allow.

For those unable to participate in the live conference call, a replay will be available at https://www.smallcapvoice.com/trtc/. An archived version of the webcast will also be available on the investor relations section of the company’s website.

To be added to the Terra Tech email distribution list, please email [email protected] with TRTC in the subject line.

About Terra Tech

Terra Tech Corp. (OTCQX:TRTC) operates through multiple subsidiary businesses including: Blüm, IVXX Inc., Edible Garden, and MediFarm LLC. Blüm’s retail and medical cannabis facilities provide the highest quality medical cannabis to patients who are looking for alternative treatments for their chronic medical conditions as well as premium cannabis to the adult-use market in Nevada and California. Blüm offers a broad selection of cannabis products including; flowers, concentrates and edibles through its multiple California and Nevada locations. IVXX, Inc. is a wholly-owned subsidiary of Terra Tech that produces cannabis-extracted products for regulated cannabis dispensaries throughout California and dispensaries in Nevada. The Company’s wholly-owned subsidiary, Edible Garden, cultivates a premier brand of local and sustainably grown hydroponic produce, sold through major grocery stores such as ShopRite, Walmart, Ahold, Aldi, Meijer, Kroger, Stop & Shop and others nationwide. Terra Tech’s MediFarm LLC subsidiaries are focused on medical and adult-use cannabis cultivation and permitting businesses throughout Nevada.

For more information about Blüm Retail Stores visit: http://letsblum.com
Visit us on Facebook @ https://www.facebook.com/terratechcorp/timeline
Follow us on Instagram @letsblum
Follow us on Twitter @terratechcorp
For more information about Edible Garden visit: http://www.ediblegarden.com/
Visit Edible Garden on Facebook @ https://www.facebook.com/ediblefarms?fref=ts

Cautionary Language Concerning Forward-Looking Statements

Certain statements contained in this communication regarding matters that are not historical facts, are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These include statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future, and, therefore, you are cautioned not to place undue reliance on them. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Terra Tech undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA. Such forward-looking statements are based on our expectations and involve risks and uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements due to a number of factors, including, but not limited to, risks relating to the completion of the merger between Terra Tech and OneQor, including the satisfaction of closing conditions and expected restructuring-related cash outlays, including the timing and amount of those outlays. New factors emerge from time to time and it is not possible for us to predict all such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. These risks, as well as other risks associated with the combination, will be more fully discussed in our reports with the SEC. Additional risks and uncertainties are identified and discussed in the “Risk Factors” section of Terra Tech’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed from time to time with the SEC. Forward-looking statements included in this release are based on information available to Terra Tech as of the date of this release. Terra Tech does not undertake any obligation to update such forward-looking statements to reflect events or circumstances after the date of this release.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except for Shares and per-Share info)

 
 Three Months Ended  Nine Months Ended 
 
 September 30,  September 30, 
 
 2019  2018  2019  2018 
 
            
Total revenues
 $7,607  $3,293  $17,789  $13,480 
Cost of goods sold
  3,757   2,201   8,901   8,922 
 
                
Gross profit
  3,850   1,092   8,888   4,558 
 
                
Selling, general and administrative expenses
  11,004   9,513   31,649   26,005 
Impairment of assets
  171      681    
(Gain) / Loss on sale of assets
  72      (893)   
(Gain) / Loss on interest in joint venture
  5,949   439      439 
 
                
Loss from operations
  (13,346)  (8,860)  (22,549)  (21,885)
 
                
Other income (expense):
                
Interest expense, net
  (1,768)  (2,710)  (8,420)  (11,063)
Other income/loss
  (6)     76    
 
                
Total other income (expense)
  (1,774)  (2,710)  (8,344)  (11,063)
 
                
Income (Loss) from continuing operations
  (15,120)  (11,570)  (30,893)  (32,948)
Income (Loss) from discontinued operations, net of tax
  633   6   1,282   (579)
 
                
NET INCOME (LOSS)
  (14,487)  (11,564)  (29,611)  (33,527)
 
                
Less: Income (Loss) attributable to non-controlling interest from continuing operations
  (143)  (5)  (57)  (24)
Less: Income (Loss) attributable to non-controlling interest from discontinued operations
     70      272 
 
                
NET LOSS ATTRIBUTABLE TO TERRA TECH CORP.
 $(14,344) $(11,629) $(29,554) $(33,775)
 
                
Income / ( Loss) from continuing operations per common share attributable to Terra Tech Corp. common stockholders – basic and diluted
 $(0.14) $(0.16) $(0.30) $(0.48)
Net Loss per common share attributable to Terra Tech Corp. common stockholders – basic and diluted
 $(0.13) $(0.16) $(0.29) $(0.49)


TERRA TECH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except Shares)

 TERRA TECH CORP. AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS 
 (in thousands, except Shares) 
 
 September 30,  December 31, 
 
 2019  2018 
 
 (Unaudited)    
 ASSETS 
 
      
Current Assets:
      
Cash
 1,858  7,193 
Accounts receivable, net
  1,445   1,199 
Notes receivable
  450    
Inventory
  4,738   1,045 
Prepaid expenses and other assets
  707   707 
Current assets of discontinued operations
  1,087   1,366 
 
        
Total current assets
  10,285   11,510 
 
        
Property, equipment and leasehold improvements, net
  43,502   31,195 
Intangible assets, net
  16,290   18,466 
Goodwill
  35,173   35,172 
Other assets
  10,529   895 
Other investments
  5,000   12,450 
Assets of discontinued operations
  9,027   10,400 
 
        
TOTAL ASSETS
 129,806  120,088 
 
        
 LIABILITIES AND STOCKHOLDERS’ EQUITY 
LIABILITIES:
        
Current liabilities:
        
Accounts payable and accrued expenses
 9,632  6,211 
Short-term debt
  921    
Current liabilities of discontinued operations
  3,248   690 
 
        
Total current liabilities
  13,801   6,901 
 
        
Long-term liabilities:
        
Long-term debt, net of discounts
  15,040   18,313 
Long-term lease liabilities
  9,342    
Long-term liabilities of discontinued operations
  414    
Total long-term liabilities
  24,796   18,313 
 
        
Total liabilities
  38,597   25,214 
 
        
COMMITMENTS AND CONTINGENCIES (Note 15)
        
 
        
STOCKHOLDERS’ EQUITY:
        
Preferred stock, convertible series A, par value 0.001:
      
100 shares authorized as of September 30, 2019 and December 31, 2018; 12 shares issued and 8 shares outstanding as of September 30, 2019 and 12 shares issued and outstanding as of December 31, 2018
Preferred stock, convertible series B, par value 0.001:
      
41,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 0 shares issued and outstanding as of September 30, 2019 and December 31, 2018
Common stock, par value 0.001:
  115   82 
990,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 115,217,155 issued and 112,908,747 outstanding as of September 30, 2019 and 81,759,415 shares issued and outstanding as of December 31, 2018
Additional paid-in capital
  258,262   236,543 
Treasury stock (2,308,408 shares of common stock, 4 shares of preferred stock convertible series A)
  (808)   
Accumulated deficit
  (172,308)  (142,754)
 
        
Total Terra Tech Corp. stockholders’ equity
  85,261   93,871 
Non-controlling interest
  5,948   1,003 
 
        
Total stockholders’ equity
  91,209   94,874 
 
        
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 129,806  120,088 

Revenue & Gross Profit Breakdown
Continuing & Discontinued Operations
(in thousands)

 
 Three Months Ended September 30  Nine Months Ended September 30 
 
       Variance vs. 2018        Variance vs. 2018 
 
 2019  2018  $-Amt  %  2019  2018  $-Amt  % 
Revenue
                        
Continuing Operations
 $7,607  $3,293  $4,314   131.0% $17,789  $13,480  $4,309   32.0%
Discontinued Operations
  4,154   3,790   364   9.6%  11,701   10,936   765   7.0%
Total Revenue
  11,761   7,083   4,678   66.0%  29,491   24,417   5,074   20.8%
 
                                
Gross Profit $
                                
Continuing Operations
 $3,850  $1,092  $2,758   252.5% $8,888  $4,558   4,330   95.0%
Discontinued Operations
  2,158   1,880   278   14.8%  6,038   5,208   830   15.9%
Total Gross Profit $
  6,008   2,973   3,035   102.1%  14,927   9,767   5,160   52.8%
 
                                
Gross Profit %
                                
Continuing Operations
  50.6%  33.2% 17.4%pts       50.0%  33.8% 16.2%pts     
Discontinued Operations
  51.9%  49.6% 2.4%pts       51.6%  47.6% 4.0%pts     
Total Gross Profit %
  51.1%  42.0% 9.1%pts       50.6%  40.0% 10.6%pts     


CONTACT:

Philip Carlson
KCSA Strategic Communications
[email protected]
212-896-1238

SOURCE: Terra Tech Corp.

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