Executive Summary

Mixed print: Net revenue fell to $74.2M (down 4% q/q; down 17% y/y) with gross margin edging up to 48.8%, but GAAP net loss widened on one‑time non‑cash items; adjusted EBITDA margin compressed to 18.5% from 20.2% in Q2 .
Cash discipline intact but softer: ninth straight positive operating cash flow and fifth straight positive free cash flow, though OCF/FCF stepped down to $1.8M/$1.5M from $13.1M/$11.7M in Q2 .
Balance sheet actions/catalysts: closed $140M senior secured term loan (12.75% coupon; 2028 maturity; no warrants/prepayment) and initiated a $10M buyback; signed a definitive agreement to enter Ohio—an incremental growth vector .
Drivers: sequential revenue decline tied to NJ wholesale and MI retail softness, partly offset by 26% q/q Maryland wholesale growth and continued margin improvement in MD toward ~50% .

What Went Well and What Went Wrong

What Went Well
- Maintained #1 New Jersey market share; gross margin improved to 48.8% (up vs 48.6% in Q2, 48.0% in Q1) with Maryland margin nearly doubling vs end‑2023 to ~50% .
- Cash generation streak continued: ninth consecutive quarter of positive operating cash flow; fifth of positive free cash flow .
- Strategic progress: closed $140M term loan on favorable structural terms (no warrants/prepay), authorized $10M buyback, and signed a definitive agreement to enter Ohio via acquisition; “Our consistent positive cash flow generation supports our ability to execute our growth strategy, which includes aggressive pursuit of M&A.” — Jason Wild, Executive Chairman .
What Went Wrong
- Top‑line softness: net revenue declined to $74.2M (from $77.5M in Q2), driven by NJ wholesale and MI retail, partially offset by +26% q/q MD wholesale .
- Profitability pressure: adjusted EBITDA fell to $13.7M (18.5% margin) from $15.6M (20.2%) in Q2; GAAP net loss widened to $(21.4)M versus $(6.2)M in Q2 .
- OpEx mix: G&A rose to $31.6M (vs $24.1M in Q2); excluding stock comp and Q2 one‑offs (bad debt reversal/insurance recovery), management indicated G&A was flat q/q, but reported leverage deteriorated to 42.6% of revenue .

Financial Results

Sequential trend (oldest → newest)

Metric	Q1 2024	Q2 2024	Q3 2024
Net Revenue ($M)	$80.6	$77.5	$74.2
Gross Profit ($M)	$38.7	$37.7	$36.2
Gross Profit Margin %	48.0%	48.6%	48.8%
G&A ($M)	$28.0	$24.1	$31.6
GAAP Net Loss – Continuing Ops ($M)	$(14.9)	$(6.2)	$(21.4)
Net loss per share – diluted ($)	$(0.06)	$(0.03)	$(0.08)
EBITDA from continuing ops ($M)	$8.7	$18.6	$6.6
Adjusted EBITDA ($M)	$16.2	$15.6	$13.7
Adjusted EBITDA Margin %	20.1%	20.2%	18.5%
Net Cash from Ops – Continuing ($M)	$13.3	$13.1	$1.8
Free Cash Flow ($M)	$10.5	$11.7	$1.5

Year-over-year comparison (Q3)

Metric	Q3 2023	Q3 2024
Net Revenue ($M)	$89.2	$74.2
Gross Profit ($M)	$47.8	$36.2
G&A ($M)	$29.3	$31.6
GAAP Net Loss – Continuing Ops ($M)	$(8.4)	$(21.4)
Net loss per share – diluted ($)	$(0.04)	$(0.08)

Selected balance sheet and capital actions

Item	Q2 2024	Q3 2024
Cash & equivalents incl. restricted ($M)	$30.5	$27.2
Senior Secured Term Loan	Closed $140M; 12.75% coupon; 2028 maturity; no warrants/prepayment	Seasoned through quarter; used to refinance; same terms
Share Repurchase	Announced Aug 20: up to $10M	Repurchased 107,400 shares for $133k; ~$9.87M remaining
Basic Shares O/S (as of Nov 5, 2024)	—	~369M; plus 44M warrants/options (WA price $3.78)

KPI highlights (Q3)

MD wholesale revenue +26% q/q; MD gross margin “nearly 50%” vs ~25% at end‑2023 .
NJ maintained #1 market share (BDSA) through Q3; sequential weakness centered in NJ wholesale; MI retail declined .
9th straight quarter of positive OCF; 5th straight quarter of positive FCF .

Notes on non‑GAAP: Adjusted EBITDA declined q/q primarily on lower revenue; GAAP net loss increased on multiple one‑time non‑cash accounting items totaling ~$13M (bad‑debt reversal/gain on lease termination in Q2, stock‑comp accounting change, loss on debt extinguishment, derivative fair value loss) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue/overall P&L	Q3 2024	“Flat to slightly down across the P&L sequentially” (provided on Q2 call)	No formal update in Q3 press release	Maintained qualitatively
Gross Margin %	Q3 2024	48–50% range (Q2 call)	No formal update in Q3 press release; actual Q3 was 48.8%	In line with prior commentary
Other items (OpEx, tax rate, segment guidance, dividends)	—	Not provided	Not provided	—

No explicit numeric revenue/EPS guidance was furnished in the Q3 8‑K/press release .

Earnings Call Themes & Trends

Note: A Q3 2024 earnings call transcript was not available in our repository. We therefore tracked narrative evolution using Q1 and Q2 call transcripts and Q3’s press release.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Regulatory/legal (DEA rescheduling; Boies lawsuit)	Q1: Optimism; rescheduling seen as “groundbreaking”; refunds expected ~$26M; Boies oral arguments May 22 . Q2: 92% of DEA comments favorable; Boies case could reach Supreme Court in 2025 .	Looking forward to upcoming DEA hearing and Boies oral arguments .	Progressing
M&A/Ohio entry	Q1: Intend to enter Ohio expeditiously; target early adult‑use window . Q2: Pricing stable; expect to close at least one deal near‑term .	Signed definitive agreement to enter Ohio via dispensary acquisition .	Advancing
New Jersey performance	Q1: Top‑3 share; mix shift to wholesale; exploring retail expansion . Q2: #1 share per BDSA; retail stabilized; Boonton expansion planned .	Maintained #1 share; NJ wholesale softness pressed revenue .	Stable retail; choppy wholesale
Maryland growth/margins	Q1: +22% seq wholesale; doubling capacity; margin improving . Q2: Wholesale more than doubled YoY; expansion completed .	+26% q/q wholesale; margin ~50% vs ~25% end‑2023 .	Improving
Balance sheet/financing	Q1: Refinancing in process . Q2: $140M term loan closed; reclass to long‑term; removed going‑concern .	Term loan seasoned; buyback in place; small repurchases .	Strengthened
ERP/operations	—	Completed multi‑year ERP implementation, enabling efficiency and scaling .	New positive
Taxes/280E refunds	Q1: Expect ~$26M refunds . Q2: Received $8.4M; ~$22M remaining .	2020 statute of limitations expired—remove $8.4M uncertain tax position .	Progressing

Management Commentary

Strategic posture: “Our consistent positive cash flow generation supports our ability to execute our growth strategy, which includes aggressive pursuit of M&A.” — Jason Wild, Executive Chairman .
Market positions: “We maintained leading positions in our key markets, including the #1 market share position in New Jersey.” — Jason Wild .
State performance: “Grew wholesale revenue in Maryland by 26% quarter‑over‑quarter… [and] nearly doubled gross margin in Maryland from 25% at the end of 2023 to nearly 50% in the third quarter of 2024.” .
Capital structure/uses: Closed $140M term loan (12.75%, due Aug‑2028, no warrants/prepayment) and authorized up to $10M buyback; small initial repurchases in Q3 .
Regulatory outlook: Looking forward to DEA rescheduling process and Boies lawsuit oral arguments; equal‑treatment advocacy continues .

Q&A Highlights

A Q3 2024 call transcript was not available. Q2 Q&A themes included:

New Jersey dynamics: BDSA methodology update supported #1 share; retail stabilized; Boonton facility expansion approved .
Ohio timing/valuation: Pricing unchanged; aim to be in market within first 1–3 months of adult‑use .
SG&A leverage: Targeting ~30% SG&A ex‑stock comp through cost actions, independent of M&A .
Gross margin framework: 48–50% expected range near‑term (context for Q3 actual) .

Estimates Context

S&P Global consensus estimates for Q3 2024 (revenue/EPS/EBITDA) were unavailable due to access limits at the time of request; therefore, beat/miss analysis to consensus could not be performed. Values retrieved from S&P Global were unavailable at time of access limit, so no estimate figures are included.*

Key Takeaways for Investors

Margin resilience amid volume softness: Gross margin ticked up to 48.8% despite revenue declines, supported by Maryland mix/margin gains; watch sustainability as NJ wholesale normalizes .
Cash flow streak intact but smaller: OCF/FCF remained positive but fell versus Q2; monitor Q4 recovery trajectory and working capital cadence .
OpEx optics: Reported G&A surged q/q (42.6% of revenue) largely due to absence of Q2 one‑offs; underlying G&A said to be flat—evidence of cost control should show up in Q4/Q1 .
Balance sheet de‑risking: 2028 maturity stack with no warrants/prepayment enhances flexibility; however, 12.75% coupon keeps interest expense elevated—watch adjusted EBITDA to interest coverage .
Ohio as near‑term growth option: Signed definitive agreement to enter the state; expect incremental retail platform with synergy potential alongside Michigan .
Regulatory catalysts: DEA rescheduling path and Boies lawsuit could materially alter tax/financing landscape; any progress may be multiple‑expanding catalysts for the group .
Capital returns: $10M buyback authorized with initial purchases—provides downside support/opportunistic deployment pending M&A .

Sources: TerrAscend Q3 2024 Form 8‑K and press release (Exhibit 99.1) ; Q2 2024 8‑K/press release and earnings call transcript ; Q1 2024 8‑K/press release and earnings call transcript .

TerrAscend Corp. (TSNDF)·Q3 2024 Earnings Summary