TerrAscend (TSNDF) 9 Nov 232023 Q3 Earnings call transcript

Good evening. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the TerrAscend Third Quarter 2023 Financial Results Conference Call.

Joining us for today's call is Jason Wild, Executive Chairman; Ziad Ghanem, President and Chief Executive Officer; and Keith Stauffer, Chief Financial Officer.Our remarks today include forward-looking statements, including statements with respect to the company's outlook, the company's guidance for fiscal year 2023 and estimates and assumptions relating thereto and the company's expectations regarding its market opportunities, the benefits of its listing on the Toronto Stock Exchange and other financial and operational matters. Each forward-looking statement discussed in today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements.

and these factors Form the Securities at SEC XX-K only Commission no the these to which in of Risk and as from regarding the or company's that the filed revise date SEC we time information appear undertake website of with heading to under Factors Exchange company Additional makes filings the other at statements update in any with on the www.sec.gov today's time, forward-looking and this obligation or available company's are www.terrascend.com.The statements. call speak and the the will non-GAAP during both financial GAAP Also and call, we measures. present on A introduce is you the included would reconciliation now release, Mr. measures our which to can press of GAAP in find today's or Investor SEC like non-GAAP website.I to earnings on site Relations Jason please ahead, Wild, go Mr. Wild.

and everyone, us. evening, thank you joining for Good

was of quarter The XXXX TerrAscend. third a record quarter for

continued consecutive our growth metrics Our several XX% last virtually results posted KPIs. quarters rates exceeded industry-leading XX% the net sequentially of our revenue all we across and momentum sequential of and eighth year-over-year. over and growing quarter at of We as forecast our third in financial the quarter

quarter as to financial our wide to and exceed prices in license even in operating With cash asset and sustainably XX% our Maryland free multiple we below and adjusted be of $XX.X which guidance revenue end, of provided adjusted a deep is The flow net adjusted flow EBITDA for adjusted become company a and challenging of cash XX% extremely results wide.Due million, respectively, quarter. $XX revenue QX. the wide operations this and to recent expenses an net the increased million in give for eclipsed fourth cash and deep, our to and expand that remainder EBITDA margin.All positive. we To fifth limits already wide we quarter to XX% terms. are of have discussions have our differentiated is year. map. further to increase attractive in positive many important million strengthened once representing scale the disciplined opportunities. to our are be expected deep the to XX% us consecutive further states, again, representing expected percentage operations in $XXX XX.X% million.We QX compelling not of and we continuing increase raising in million, into $XX of sequentially are urgency for capitalize our and sequential revenue expenses implies $XX positive from from footprint scale, to XX% deals continuing acquisition revenue in results guidance XXXX a we $X.X Therefore, margins free be margins, The positioned macroeconomic has XXXX resulted full operations flow evaluating this from of as environment free growth year-over-year and additional by add on of cash XX% to and and to also expect XXXX from will positive. confidence open for gross visibility increased look EBITDA. on Margin Importantly, It These our operations rates continuing management flow had an million and to from year to evaluating the stronger improvement multiple QX, is continuing these that operating of conviction led EBITDA net for EBITDA in gross and go to we be attractive XX% our adjusted

will not legal growth As positioned and we for plan without or of from with business. on consistent success us regulatory reform. are guidance, updated keep or reform and cash-generating executing a our evidenced by to The QX our results be absence

rate kind and past revenue years. have industry year-over-year highest the in our XXXX over have industry not been to the expect few we continue.The cannabis that fact, the In growth capital trend markets to

own have However, Stock we paying within the taken materially this our down debt environment, the destiny difficult up-listing into over past by hands interest our reducing our year. and our and Exchange to Toronto expense

in across custody improved narrowed Our from the TSX investors world. increased spreads, listing has institutional increased interest resulted volume, and trading

we it.However, and treated is is are executive be reform from progress While and progress rest dependent and help we judicial through a our the Any built through deliver playing would not but to also branch. this benefit we equally are every to would field business success we business that legislative to change. industry to than branches committed the ensure level assured, supercharge with strong This the reform, and that closer upon on well-deserved believe deserve not we have are we other certainly employees ever. taking effectuated regulatory action immensely just its

In markets. for closing, best.Now, we fact, a to In customers our their be the Ziad turn I'll focus Schedule call so of across III relentless world. provide our cannabis and update planning strategy Ziad? possible team, on and patients the are an over proud desire growth our to to key I'm their

XXXX. upgraded accomplished pride I head far outlook our XXXX and Thank what thus we Jason, share and in our you, Jason, has team into as hello, everyone. your in

Our result results map. and open our in states our particularly lineup wide attractive in of excellence, a and operational are multiple year-to-date our of including financial XXXX factors, QX,

performed well across quarter As this Jason mentioned, all measures. we virtually extremely

market share position. profitable with our September, from on August, we to within side, key highest-quality and our Let XX.X% well to [ as strong the retail New our our #X launched wholesale to In with share the multiple largest we me our Wana be and team's #X brands launches an that as the to slot. product achieved new further are near we made share, #X the in from our obsession months, continued position market the #X achieving wholesale the quarter-over-quarter ] healthy a customers, X.X% coming and cultivation roughly a BDSA, progress, products enabling will The we delivering only market. the XX% recently already market as moved nearly supply Jersey. by Based since term.On to each in have continues Legend increased from business, these January, our an grow state most According state deeper velocity drill which down of position. markets.Starting in attain materially results how confident in doubled us to yields of the we

recent QX.Speaking doors will now also X and We as now the operators acquire M&A is be the Maryland-wise in full of given grow. annual rate signing the Governor currently of a of our adult-use Maryland, to this limits continues stake to so quarter run dispensary existing have far. owned add was and a estimated top $X dispensaries. additional we sales to This results bill first This the getting retail X that our diversely on up by to just with market to to are allow opportunity in a of thrilled and priority is an billion

believe top locations, With of in same top-performing have share in Jersey. the the positions successfully strategy market retail implemented New leveraging are one Maryland state, that the X stores that state. including of in we retail the in full we have the we We

our near to is high-traffic foot by square dispensary new Maryland penetration as new White from of located introduction to This business for expect opened portfolio larger dispensary driven product in our QX of increased doubled X,XXX wholesale be QX. further and our Marsh center.Our We drive partial conveniently Mall, sales as will well than retail once the more QX, across relocated strong extensive state. dispensaries the demand growth brands a

own X from significant flow the in attractive forward.Turning coming margin to we generating in to market demand will New in adult-use, of retail and and expect in be supply Maryland, million spring. people our already proud With then, verticalization state. operation. our Maryland $X.X With are Pennsylvania. improvement the expanding growth thoughtfully to we the On satisfy turn needed steps billion market expect million #X the next optimize Jersey market. going we population it additional structure New side, to are strong taken in PA company, a stores million additional Until X Once market the PA wholesale the have compared Jersey, turns continued sales and portfolio is with cash capacity medical online further This cultivation XX to we and to our similar for a to to adult-use. is become in

capita locations had X% sales X XX% discounting, the basis were entire returned have grew consumption our During from our and by dramatic year-over-year, reduced we These grew growth, to margin wholesale We sequentially and also already Detroit by over growth. product opening the per state-of-the-art improved maintaining pricing, market a despite sequentially driven in our and operating gross margins our Pennsylvania perspective, largest in business below by In is points our focus our country. premium in be Michigan, have at Michigan lower acquired historically QX, XX% planned in the sequentially pricing we early the our XX expansion improved costs EBITDA capacity, XXXX. and also September. portfolio.Today, improvements in and state year-over-year. has challenged resulting reduction X% location that Same-store driven our has incredible optimized from to of increased in Gross the and our $X margin a XX% manufacturing X,XXX achieving with gross profitability. business, a we in sales it on by cultivation business when while costs soon extending locations, and of been cannabis verticality, with operationalizing opportunity billion second lab fully sales, second XX highest eclipsing utilization.In retail an

opportunities unlimited future.I than the the in foundation, and record I I a geographies, positioned we scale update. of retail all more to Now quarter in turn like am and to thrilled state. the which excited the our led now evaluating leadership call performance progress gain over have ever we license made the ourselves further a to with our are built to Keith we how across about have this for we have multiple financial that provide expand would footprint to am In to strong closing,

strongest compared revenue and industry-leading Ziad. year, been quarter that dollars.Net $XX.X SEDAR $XX.X growth and implementation and quarter growth for Good year-over-year last $XX.X million and $XX.X of The across million Thanks, representing in XX.X% and EDGAR growth. both sequential growth in that XX.X% already the million filed driven today period was growth XX.X% compared same previous a Pennsylvania. million Jersey.Wholesale X% in year, U.S. evening, for same-store $XX.X revenue are going quarter the states. stores.In XX% year-over-year of acquisitions driven was QX These growth in New a to in was by today totaled Pennsylvania across as doubling Retail improved a $XX.X improved sequentially In million to X begun our year-over-year Pennsylvania The Pennsylvania, for $XX.X margins the Jersey, previous by a results increased maintained all year-over-year. year, last I'll in on adult-use The rates sequential verticalization we the increase growth representing quarter the plans million In basis was stated portfolio. place was Maryland, third XX.X% Michigan, and second million Maryland during X third in basis reference the cultivation versus The have driven of XX% and over than and newly QX million and XX.X% last our Hagerstown New be broad-based, Maryland, utilization in million I by a to in will quarter a an driven Maryland, and the last everyone. Michigan.Gross certainly in XXX we representing to facility growth for $XX.X sales have by that point was growth to acquired to business and a production and drove the in improvements. in sequential sequential increased The in QX the in our year-over-year by and sequential New of a level. but by QX XX% representing and Jersey, quarter more improvement and results stabilized And $XX.X doubling and revenue we've XX% driven year, XX.X% exiting progress targeted increased margins improvements QX Pennsylvania. nearly margin Maryland sales growth last of XXX and and margin at QX mark driven compared healthiest all in point not optimized the in Jersey, New year-over-year. integrate least, more quarter-over-quarter sustain increase. material a eclipsed XX.X% and were in costs improvement and and third

optimize the expansion now million past third margin quarter compared above into over representing automation expansion revenue million, sequentially quarter leverage.Turning the cash the quarter-over-quarter flow operations results. deliver basis gross the provided margin points million from grew was a for spending Consequently, compared growth quarter, our strong and in driven XX.X% $XX.X with of quarter control our $XX.X from a continuing stock-based as cash excluding was seeing the cash million $XX.X continue is and was XX% EBITDA the operations representing by the which to expense the the QX. cash taking X September entirely free quarters gain to our control mark.General and benefits the in operations led combined XXX we We costs of these second in amortization, to continuing of reduction gross Consequently, are expenses quarter What to XX.X% in as an operating growth primarily flow different a to dispensaries have result of million quarter. to quarter, of were puts and investments. $XX.X million was compensation the the of quarter. of million predominantly loss Cash in quarter line due the or restricted XX% for of number our while top the revenue, balance were million third newly us net of margin growth, actions sequential equivalents, and in 'XX actions XX% net This leverage.GAAP expect in level, operations. of Tight of gross to of enabling $X.X continuing million by fifth including was of $X.X sequential for at operations been margin also cash, XX.X% compared the CapEx flow The depreciation in $XX.X adjusted now compared was positive sequentially QX. operating administrative to cash structure. XX.X% EBITDA consecutive and and tight proud to most from a $X.X sustainable loss XX. million $XX.X $X.X third sheet. quarter, relating of with second spending strong to I'm quarter, Adjusted third million margin for generation. and spending, XX $XX.X the result, margin Net was to continuing in a acquired incorporating Maryland June from

operations. industry. continuing adjusted from representing a EBITDA EBITDA debt During were $XXX from at implies from of 'XX top earlier, XX.X% $XX EBITDA of puts made million the success $X.X million XX% the of net paydown, million year XX% The net margin and in continuing payments to million fee Maryland. to income were payments mentioned Jersey quarter.As and of Jason the adjusted revenue we of during operations net continuing QX, year-over-year guidance the year. million, today, This net tax in New and for made growth dispensary in us XX% cash continuing $XX acquisitions growth operations $X.X our No quarter, full $XX adjusted revenue in for guidance from operations $X margin. EBITDA related to for raised a respectively, of represents representing Translated million guidance adjusted revenue million, the and and the revenue

positive.To sector-leading gross of to to also marks our revenue or revenue summarize, growth revenue XX% margin year-over-year. eighth growth operations cash XX%, free consecutive expect G&A from We quarter continuing exceed and sequential and expenses flow QX of to at below be to continue be

EBITDA has have this I'm approximately run and improved our well. X.Xx over cash improved quarter. pleased metrics positive leverage ratio current run as and to reduced flow by to that our expense several We accomplished consistently our consecutive rate.In these progress This closing, we current our reduced quarters Xx and revenue rate with have interest extremely our debt XX% results XX%. We approximately by P&L successfully approximately

has TerrAscend. This over in quarter strongest years the been at X

by operator adjusted sharing from to for have wide ready remarks. wide fronts.This levels of wide map to turn not deep like now we fundamentals positioned we to look to operating our strategy. We margin continued a as deliver deep, a and strong believe pivoting year margin, over ago. on expense to and capitalize on well are set prepared open and forward achieved all the that gross revenue over We those our a our We I'd EBITDA percent a now the out progress it questions. concludes to with

comes Frederico [Operator we Your and Ladies now Markets. question from ATB session. begin Instructions] the of Capital from you. the gentlemen, Thank first will line Gomes question-and-answer

the great quarter. on Congratulations

your for So, your of of I of wide is enter about entrance you given Maryland touch markets your at in on adult-use? one of just guess into point. are sort and to go comment new that could terms to I those markets the Now what deep just want being Ohio for this with acquisitions? you ready looking expansion, success

Yes, absolutely.

states years. all, thank adult-use other to First open words. of be of over Federico, mean, a and there's of certainly Yes, There's that them. Coast our one I for the states going Ohio also there. was in selling the the attractive out are you along terms East next very lot of couple map, of kind attractive

states we -- we there's type even deeper or wider transformative should and want this we at are said also because us opportunity And even at additionally, wider think to Michigan, Michigan in can once. maybe point So, think knows, And brings more it's go over license that it we X where up Jersey multiple right very large big social go in unlimited in to deeper to and do a much deeper transaction then way have go looking we drive that now by an is a margins and go there. Everybody we further in state even improved we there are where equity investing opportunity. to New into dispensaries.

And then follow-up. a just

your just market how your In that. you think does in the Pennsylvania, performance that strategy to, behind in there. own just And I'm more market? I it guess, operations? of in a changes your that's improvement is your Is terms sustainable? conditions return wondering drivers of much it that PA? Or there growth to improvement related improving for Do

hello, Frederico, Ziad. this is

blocking by result of on by of it launching the the performance was we to COGS the new starting product happened team, really the -- the innovative very state managing was PA everything product, Our in lot quality that blocking positive. tackling continuing a and side, some winning the And of with brands. could partnering put

The We've playbook and competitors state. for it's the really the the is frequency of price a really the way, size, discount customers in price trip. state.The some us. We in basket pressure our after Pennsylvania flat. state a really, of So going maintaining blank seen a the targeted and overall in the in stable command not still is in premium our seeing increasing

dialing our in are lever really in operation. every We

that that outcome and both So retail seen wholesale. was the we've on

we as strategy we're us -- our state mentioned it Pennsylvania, is in as become be results far in much that for we've when As -- remarks, it And it's excited. our recreational. the think our turning I biggest more them, prepared to that positive turns turn it will

again the on quarter. Congrats great

Des from And Lauriers of the comes line Group. from Eric Capital your Craig-Hallum next question

in now fact results mentioned growth quarter. for think this III the remarks, world impressive preparing I in Schedule prepared a with that on your you're Jason, your plans. Congrats you

What current wouldn't could make growth potentially wondering sense would that a how III does Schedule perhaps expand Yes, the that you regulations? under if under bit. change sense plans? make that your Just on

Yes.

that of could before of Schedule there's that. we relatively is of say, good is year. III imminent, part a So, that be end the chance something think the think We it do

We we've that did places taxes whole of tax sort be you we that So, if there's of perspective, we the that, And we're expanding much liability. down could attractive the even chunk extra lot just buyback. of on that benefit debt.We more what liability mean just at we later. tax -- at -- paying and in sooner use doing, rates improvement to we rate. could was extra million the profits.And a and profitability. out use numbers $XX towards be and that stock or in cash the debt some drive the rather saying, should it better be put is with double of to the -- take that a have lower benefit obviously than roughly that, that cash so us there's a be of a because from more go could a this million of pay looking be didn't industry reflecting more about a XXXE such rest debt. more had it big talked then of We business $XX we flow get seem you we capacity if in million would work be when only better just quarter of now have extra so quarter of M&A putting do many that that business, any I sort the putting the -- and interest $XX terms have just think fundamentals credits refinancing That's we you it our and tax could less could once a significantly sort that where have the is and not can of would rescheduling liability, gross on do would that a fact or happen there's all not all towards then many options it the maybe still from of we but the that and don't

That sense. definitely makes

me. for question Next

your going like look wondering forward. plans Just CapEx what

You facility virtually of are aware here. be terms Obviously, M&A expansions CapEx out, plans any uses to of cash of of? coming the great forefront to up in front, other call in states. production a kind other position be just projects there the in seem potential your any But to to on all

progressing that on in ahead the think we're we done. one is I more Keith some past, is pulling about sure facility in of Hagerstown we're that and in A we the now couple that and turning and our making talked full at Eric, we've Maryland were on about Maryland midst really deliberate then steam trigger, here. in everything rooms which

will year, and there, X give wholesale online next our a early supply So, vertically more retail our come us lot further market the grow also margin into to but and and that stores allow business that maximize capacity go in and us there as well.

that, magnitude So order over the by few of million number -- and way, next of the is dollars a months.

needle.And hugely the able back been of hold So, delaying able going XX% word, increase yields. negative additional expansion we've to like sounds maybe to not as move because we've we've the in in to New on been but then in that sort capacity of realized Jersey investing a it

quarter-over-quarter and So, business continue in to really Jersey doubled have. position we we've to the like like and we our good we feel New to QX we're in expect a into wholesale beyond grow -- said continue here, that with to that we capacity

So probably rest is year fully magnitude, our new. later comes that's that of out about and kind project $XX-ish over a of of again, quarters, order it. and built The million, probably it's next footprint few and fairly spread

really any speak maintenance of not there's So to either. CapEx

the for the X things docket us. So, on those are

results. strong the on again Congrats

your of And question Cannacord. line the Yewon comes Kang from next from

stores share for pressure [indiscernible] heading the the program in MSO market quarterly through reported state. is, a that your recently Congrats adult-use the peers see our past X.X with lot a coming about continuing of the Nice market new a based with of starting on be you results. My New have the now question to to guys. into the online, few conversations see on days the on peers strong launch. Jersey and lot market have retail years in And your to

vertical recently? through has how sending of has retail chain be be having might you might of allocation impacted kind internal conversations in wholesale that terms that performance this so retail more impacted accounts? the the your any branded guys you products your of And if versus this And

Keith. is this add Ziad, can Yes, I that. can in. I'm take sure

that state-wide. feel business pressure multiple retail along minimally trend open quarter felt times And all as of we doubling by to in and in the Jersey, business side very offset doors been wholesale we and and the more expected we would nearly So, continue. over we New that QX eventually of in of more the expect the has growth our on that

we So, And on at add is in on too X doesn't this we stores further customers terms here are, like and our part sure business.And the it's of expect the the more that's open, vertical the the to which but what we right and mix, as focusing store maybe doors on high all than in then for but have optimized feel the terms about offset patients. it because and make is we're pressure always well more more second XX%, our by in we make over you to question we how Ziad, of logically our selection sure do wholesale of really point. want go customers patients in

We covered but with our know customers I not both you strategy, come we and right want patients verified cause until Jersey it the and our strategy. in it. Yes. Keith, at I on only think products, to our the in stores wholesale. is quick add, and confirmed have velocity in we New the really continue The thing to

spot. almost prepared remarks, team And and market with at my have everything driven #X share that are tied the market knowing in New by mentioned share #X. we I've Jersey, gained and we now shared we As they Jersey in in not know that get that New will that will Pennsylvania. rest in same Maryland the the team I #X until be being launched same launch adult-use in adult-use regain and team will that

really say is with take product lot the a We'll continue with we the of the in. state and on not every quality are joy, that to mix the So we will of from of excitement, product it and of but it. causing look, it's we'll and we it's to does build a success, it the that work lot learn anything

question And here just a about second guidance. the

sequentially? of past days likely lot that -- promotional pointed in of promotional revenue this But down out you calling the adjusted essentially guess to will the a guidance do that reporting decline also and might historically, to have in has will activity for of any next current [ a I revenues. activities QX at and in the yours TerrAscend's implement this a been by EBITDA result in the move in and all that been have indicated few are peers planning imply sees So come revenue bit this QX? ] EBITDA that adjusted quarter you they at the these flat and QX is

Yes, the our or we out we footprint, -- fourth company limited do a terms comfortable out guidance really like favor the nice that that anything and quarter. of are and good of to like ordinary in have we We of have extra and comfortable our a put for momentum anything Every we in and we are story, the different. feel headwinds with state-by-state guidance tailwinds is promotions having there balance discounting, extra without with it's that.

what that confidence we're in seeing quarter, seeing our Yes, in guidance. our want confirm I being to

on Congrats the quarter again.

Capital Echelon the question your from from Markets. next Andrew Thank you line Semple And of comes

there the QX Congrats on excellent results.

preference grow in back to in a just standpoint? acquisitions? growth I capacity here. retail want Michigan. is markets any potential a your for question actually, state namely opportunities, go organic that Michigan to in Or from you organic Do First to or via see growth the either

because in same-store Last up highlighted we quarter, that the have sales over sales we the up Michigan been saw that momentum. Thanks, Andrew. few last down. to you and Retail Yes. quarters were

But quarter, it's were by store. softer This sales store quarter-over-quarter.

pressure quite more have growing that of opened. under where Some are significantly. our are area stores in stores Others

see of almost we between have Detroit QX, XX QX stores opened incremental and has think adult-use. allowed and an that I

of high. MSA stores of the the sales, growth. to execution on optimizing because maybe that that's close this those are on to profit margin. in is our on we're focus, that the the point retail this And important quarter, dollars at the our the pressure.We work most Michigan program some gross all-time in gross focus purposeful in of despite pressure an are But continue So, drive seeing some store-by-store the and to the

some under has as is multiple thesis one stores generation growing, our contributing to are state we be side it first as taking are stores potential state of the that at some comes license we when state while into pressure, that place. most Michigan, cash So, a our Michigan that to are the conversations M&A went as to big unlimited on and when is, date. that the was due look And

in, fundamentals in Michigan are portfolio. our be scenarios deeper the discussing fixed we and are And cash-generating we of allow state went really to possible in that to our go we now biggest we Michigan. will really one As

strength That's it are helpful since the maybe QX you also results. and notably, to in of which by the over in back what portfolio. any surprised Obviously, amounts you have been the momentum go and recent and of that's feels market want I factor good to increases seen to raised I'm your meaningful that any happened in whether like since behind the guidance we've months. of function well Maryland? as been has -- of the and in hear. elsewhere states, guidance, perhaps Maryland pricing by -- recently twice pricing now pleased just the in wondering as if the increasing a Jersey some And a to has strength New the

it's Keith. Andrew,

to or a and And the then sure But sort first beat can we feel take expectations or of just now So, you on like part I was X well, that be -- cycle. and all, set like think the of make Ziad and and overall, first ago, expectations maybe to year direction. we're I we the in we if cautious can want comment meet pricing. other it

New relative wholesale no, that's So, has the most our in business, got been we arms or And flattish, another. been probably especially -- on We direction has with the around nothing in to Jersey we would where slightly upside to one overall positive. regard say business. have pricing, just the material guidance. Michigan the I stable. Pennsylvania

then And a of we've slight since Maryland New lift in emerging little seen with adult-use solid, maybe Jersey has prices.Anything been pressure to add? in beginning the bit. a

else to nothing No, add.

again. congrats And

from Equities. from comes the Mike question Regan next Excelsior of your And line

Great quarter.

planning that it. mentioned when do is can the But that any any So, XX% to or I you which interest sort every reallocate margins margin the world you're than seeing a margins slightly as anticipate gross the the not sort deduct about changes business getting you enjoys. think you SG&A question have tax XX% a of more currently to to of XXXE for IRS? gross how and Obviously, profit sort different on structure you below mentioned shield, XX% of the see post other so world, in you of

Yes.

take. off will the speak, planning how potentially another there. out that building on of of exactly could that and the we of competition Mike, front moves want will drive to or drive ultimate we're larger to drive not predict I be I It's a comments goal that's may market play the additional think what scenarios Jason's just prices take really kind and things and fuel, think how element hard to earlier, to down that and through. pricing But just may demand moves with would so

So out, certainly that's yes, equation. the all part of I mean, again, it's hard of that gameplay kind to but

is actually run the those stay normal I sort the and in -- sort just XX% it at mentioning, up that the absent And seeing. from the No, sort Michigan's leverage of gross margins can make lower margins higher if volumes, as closer just Or can think margins discussion then gross here we SG&A can higher that XX%, back getting end question where makes overall to have the markets sort the improve margins overall Is the of of at hit as for net level. to you the even sense of terms a rate? was you of day. Michigan -- of the XXXE on quick larger can maybe you well

we optimize And discounting will are severe we to that from the Yes, and And disciplined. But sustainable operators of in doing many Mike, mid-XXs we front. in think as should level, I will driving point level to to Michigan being the margin is continue every to the furnitures a behind we continue in Michigan down unfortunately, perspective. are continue -- that force there the low- this, margin on squeeze extend to a are and stay really will we runway. the burning

count on our will We mix. product

on count long the high will that premium our on the value quality and will and that quality where we be to and We think environment very mid-XXs that brand why will we count margin to our is they we for be. pricing a adjacent it low- time will not a still do combat believe that's to has able to

Clarus the question Securities. Atkinson from Noel comes of line And next from your

echo I sentiment everybody of else's a great quarter. to want just

couple for a Just me. of quick ones

be that can project So, -- about the sense this expansion of million $XX us might but in past, Jersey? you give a of from able production in we've to achieve New you this the talked scale

We'll see the coming. inventory. what was yield. performance we see have by Noel, we what's output our Ziad We that our and volume. by expansion double to capacity of the our XX%, by initially, an of plant. sitting could were see current here. team XX%. far And best see by the We're XX% the the healthy that's the and cheapest Look, increased increasing $X We had spending with project. job Keith to, almost doing mix. wholesale We'll able absolutely a on virtual outstanding the referring We

profile. We see have average, the we'll seen in terpene the THC

XX% will and we the in we'll that us gives XXXX to will in come us and that check. further trend give keep -- in later continue that continue we the supply that all showed confidence to we do the thoughtfully or are do extra of will it it that capacity QX QX. state But demand in and in monitor QX the an we to the and make sure So for balance good will we that the XX% expansion

to portfolio? Ohio Michigan Do visitors have you a significant sense your are of how

carefully. We this monitor We do.

distance few with and a that The We stores, us we us we But when and will brand we Midwest region mentioned saw Actually, Cookies having adding gave and and and feel you border taste. sour announcement business it's our any convenient. the in are very have conversations Ohio a we but sizable launching Gage and the is mix states that have had protection. assume a the not as the having in the partnership and any brands, give together. Ohio result Michigan as because we we can Ohio ache having got or -- excited

the news at at all worrisome was So, us. not

having the see the will we Maryland, ourselves and way in Northeast having Michigan hopefully, that and growing We New and Pennsylvania Midwest have Ohio. having hub a -- we Jersey

we So, feel pretty good.

you multiple through call, New do be Jersey growth about wholesale to heard earnings this guidance in of overall I've QX in here. just your And then just optimism Like improvements implied sort ongoing ongoing and times conservative? consider finally,

and the to Look, trend, budget will want meet trust it known is and -- that budget know legitimate we we not it. have. today the and we is this a can what we beat not want we We not to using we to using we will data, that put feel attempt a

will try we whether bet I going that to think the to bet the to they it take can me at beat will everything challenge will beat me or beat and you we're try and it. you team not, cheesecake, we If it

no Please Wild, Instructions] proceed. questions there further [Operator you. at time. are Mr. Thank this

quarter so to everybody listen here for you, Thank call. third much being conference to our

QX, the much. you in that we've here obviously and are we and that forward progress in even reporting in progress made very very to a look We more QX proud Thank reported of few we months.

you. and Thank participating. concludes that conference our gentlemen, today. for for you Ladies all Thank

You disconnect. may all