Gold Flora (GRAM) 16 Aug 222022 Q2 Earnings call transcript

Good evening, everyone. Welcome to The Parent Company's Second Quarter 2022 Conference Call for the 3-month period ending June 30, 2022. Listeners are reminded that certain matters discussed in today's conference call or answered that may be given to questions asked could constitute forward-looking statements that are subject to risks and uncertainties relating to The Parent Company's future financial or business performance. Any such forward-looking information is based on certain assumptions and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information, including the risk factors detailed in the parent company's continuous disclosure filings that can be accessed via the U.S. Securities and Exchange Commission website at www.sec.gov or SEDAR at www.sedar.com.

and this call only the and estimates, expectations, in date of plans, provided as projections, this management of is opinions information call date. as speaks the beliefs, of Forward-looking today's of assumptions based on assurance place There not will provide you reliance on forward-looking forward-looking to can that information accurate, be be and no undue should information. by update information, The Parent as applicable of whether new future as or information, expressly Company undertakes law. required such no a forward-looking obligation except events to otherwise, result

addition, certain including call, do references adjusted the In be meaning course may there not to this which may standard comparable during of by non-GAAP company. the similar under also be therefore, presented GAAP not EBITDA, references to have any measures, and, financial to measures

about quarterly non-GAAP measure, For XX-Q, on this reconciliation would that most both including a to and SEDAR. everyone XXXX. and company's adjusted GAAP including like directly recorded call the discussion comparable analysis forward-looking I to being the measures, report August information of remind XX, to is Monday, available financial EBITDA on the and today, SEC's Form website management's refer more please information

like Parent Chief Datcher, Mr. introduce Officer of Mr. Executive The Now Troy would Company. I ahead, to go Please the Datcher.

thanks, and for you, everyone, Thank joining us.

operational I'll Lipsey, occurring the the overview turn appointed & Wholesale, having, to I'll Operations our thanks to provide how During who optimization we're refocus XXXX company. we're at success that business. the Vice will an executing over provide Then Executive on call, an update of our for efforts today's the on Roz is our of President and goals call the newly to

financial our more Officer, will review results Then for open questions. Chief Mike we'll our QX Financial Roz, call the in Following detail. Batesole, XXXX

the profitability of we the Our from strategic entire into drive the at of and is portfolio high-quality on put assets. year, beginning place initiatives value implementing focused organization our

compared efforts our success in coming to XX% our seeing of with news. retail only revenue initial good XXXX from the signs from We're here's QX our of XX% in Now business of omnichannel of QX XXXX.

shift of a this XXXX XXXX. only result QX solid in of QX our X% a compared gross As improved high-quality to to XX% to margins in revenue,

line operations top as move high by volume, away our impacted low the wholesale anticipated, shift has we revenue business. been and As but quality, bulk rationalize from

continue optimization here Looking platform our ahead making to the XX% previous is can percentage in as leader in and sales to The second to a of federal quarter, first-party the quarter. at first-party the our XX% the we're top expect that own profitability from brands with of to future stores. of robust as I'm marketplace. the for California build brands in we we improvements, to the up evolving growth our local, pleased really available increase progress the state navigate our market trends successfully business emerge ensure priority, account

resulted Now pervasive it and here. This in degradation believe the goes consumer-first market. be strongly challenges, imbalance wholesale as impeded the illicit We will that of cannabis variety occurred year us growth. our been industry differentiates which well a pricing supply approach experiencing California market the last what of the late in that industry saying have includes has without which as the the

to new During buy. allows the sales retail first quarter, drive This customers in-store satisfaction growth. we that increase smell omnichannel customer rolled and they experience before out initiatives a to new customer includes

more tables experience new that our have assortment. for We create immersive flower a

optimal our joint, data to each We to menus terpenes roll take customers can mixes a using a store We're dab, a learn to demand real-time new how bar product also workshop. of glaze our where also deliver understand or created curating locations. customer

remove approvals, engagement. note, environment, thoughtful we is deliver Company's of competitive close as That required second a and the storefront will when menu, be and On of in mobile and adult-use our featuring building expansive are ordering frictions forefront combination a XXth Convenience we our customer consider at X Concord, Coastal California. community, coverage bring we'll remain become also with and this Coastal retail dispensary including experiences. end, license bars interactions will of our retail increasingly footprint. intend convenient that in To opening to bud this the any unique app. location it this and and customer retail our we its product of the our receipt brand and California. acquisition premier This retail Coastal the robust a means most we when products Now selections, our locations, attracting quality assortment and of as recently They both customer-curated expand state The third celebrated that serve loyalty, location. only Northern customers a vibrant is California in Upon of virtual well our Parent against and delivering transfer local important location new portfolio. aspects delivery with

to Mirayo a our owned collaboration Curio form partnership fresh Coast or end purchase jarred thrilled company have This products also diligent cultivated signature pleased the premium including of factors partner such to Santana variety exciting a in bring by gummies. with launch extremely vapes selecting right of strains brands, the our as with with are we for brands audiences, Curio the MONOGRAM, us. by Caliva, selection to flower, pre-rolls, Maryland very well East as available into infused Following customers will we're as Maryland. out-of-state and variety and will with agreement other feature of announce build with announce We're the partner first expansion to our for new premier QX, them Curio. to Wellness and marketplace in

broad dispensaries available initially will be brands Our to Curio's state follow. the Far dispensaries, with Dotter at across & distribution to

with brands profitability entered we savings cost on second resonate consumers. plans, our the of retail and accelerating that remains focus our strategy on focus half growth As our omnichannel XXXX, through building

company. look months market. the want discuss products the driven The We and the connections meet cost believe this to I to execute consumers in innovative consumer how they quarters. speaking over over developing welcome At will undertaken Parent this our always data and measures to the the the goal top becoming on and our a to choice reaching and were interactions key building to coming by continue company Company. progress to we are and meaningful you insights I'd with is initiatives to We we the like again call to shop. savings Roz as forward as long who and of our by to term. turn consumer where the Roz, profitability point, for build like

are been million here we Troy. the restructuring and through workforce property, We've payroll the be in approximately million and sale In everyone on to Thank reduction underutilized the the long-term achieved Parent several outstanding which happy have today undertaking speaking have operations, equipment costs through have also settlement accelerate cash in an long-term the represents in $X.X to profitability, The with strategic are To identified Annual with to $X.X organizational work sale exciting sustainable better path Really Company. long-term our we of of litigation. you, the process throughout implementing principally save this $X.X restructuring. initiatives and already generated drive of and savings of expense design efficiencies. to at reductions. and leaseback renegotiation annualized of we optimize XXXX, in of agreements XX% parallel our lease realized approximate million

initiatives is distribution agreement the Our wholesale platform distribution being to such transition activities as enhanced to through recent Nabis.

priorities: building Beyond to Parent The direct brand focus on its Nabis partnership Company and complexity reduces strategic reduction, consumer premier operational cost the experiences. and allows fostering

executing will handle which to We and comprises also prospective extremely locale. our customers. close delivery give products This distribution our delivery on beneficial We're additional new now customers portfolio, center optimization. wholesale and at the introduce company our to this Nabis to current our will us better data decided serve depot Costa to agreement as entire is Mesa efforts also

We Sacramento Culver and have recently our City exited operations.

viewing our and better fewer for manage out so inventory not are as fronts operations locations. themselves, efficiencies by we delivery also our operational We of just achieve can but depots retail store stores operating

a examination including potential measures Additional being outsourcing for cost-saving of thorough capabilities. nonstrategic currently are reviewed,

As than roughly of $XX operating year we Troy full the XXXX. with approximately XXXX mentioned implementation lower million, by measures, reduce these our expect XX% in to earlier, expenses

important are in-store of part improve working initiatives profitability. optimization our our strategy, an on to we are also further cost-savings While

West locations retail needs need the is not in customer Our in consumers satisfaction, same our to the there. of Hollywood reflect meets the Hanford. as the operate a customer customer we ensure in. our that product communities focus locations A they on selection at shop will our With

to this Mike? our engaging financial look are forward get point, developing like our location highlights We customers. customized the based call turn Mike, of the over And who better serving quarter. to the stores discuss in to assortments at of and each we will actively for out I'd the data on

Thanks, good evening, Roz, and everyone.

well in we reminder, a XX% in in our million and financial our in wholesale efforts in a sales mix 'XX. $XX QX noted U.S. be 'XX challenges. with found U.S. revenue. in with or compared 'XX figures consistent successful as SEC. with The the more prepared focus QX revenue XX% totaled was $XX.X profitable $XX.X higher-margin for I'll of retail As of Form we in our dollars. continued more in sales revenue 'XX. our be with results financial of revenue are registrant operations our over $XX.X growing is can as that omnichannel of should the XX% statements All with $XX.X wholesale And shift in only in MD&A our decrease be XX% 'XX. QX report going both million XX-Q. on quarterly are contained it with today our been to Wholesale business revenue the revenue pivot focus sales compared $X.X are on profitable And 'XX QX with pricing million million million retail U.S. million as sales or basis. GAAP statements as such, to to QX accounted QX 'XX QX This compared on sales market has a 'XX net compared our omnichannel The in to XX% QX the

allowance for XX% repurchases of and line gross business. the improved in updating of We $XX.X administrative gross look of or of profit margin $XX.X Total in in marketing. business to million over XX% was million share cash omnichannel 'XX. profit we've the Operator? to result of QX million of included an EBITDA 'XX. I QX to debt and $X.X $X.X and average like $XXX,XXX a 'XX. We Noncash and sales stock-based the million our cash months million the of QX depreciation month $XX.X in million an sharing and sales As now to operations ended a in operator 'XX continued million gross we cash costs, to our turn only million for Since closing $X.X QX to million improvements in retail as higher-margin decreased $X.X expenses for for 'XX to forward and QX per the would questions. compensation, to the $XX invested quarter included and expenses $XX.X $X.X for million in $X.X million categories. and Operating benefits million in or sales product and 'XX Adjusted compared was of salaries and qualifying the general operating million amortization. in loss in to activities equivalents used in $XXX you we million. Q&A integrate progress approximate or loss expenses growth acquisitions, this continue $XXX.X further by bad and to to our in and expenses ahead. in shift With transactions, or to expect million commence cash our QX compared operations, scale XX% see unrestricted in 'XX in pivot, with to QX $X.X X% $XX.X

Instructions]. [Operator

from We will Bobby take from Canaccord. question first our Burleson

is guess as formal gone just the I on the guys what missed to comments, or the you it, cash be, one for update at kind cash you can would level have us want or that in you that of over still? the first have on and release, target balance you you exit this a I So exit And target that may maintain year in you give you're want to that but just press XXXX. not an whether

And to stated year and cash we'd our end on Bobby, question. some that like of investments. barring way, we've course we'll we're Yes, the the along and thanks that's any sheet, year. million so balance $XXX for the the in making with strategic update the throughout opportunistic of publicly those

of investors over year, shared burn a our about staffing last today to you update large reduction which over was As announcements progress one, we a towards quarters. data about course of I'll rest talked depots. tremendous this just the we interested But couple progress we've the cash The to and folks of we've and Nabis; are we'll delivery outsourcing over in highlight savings. is today, the contributor quarter. the the the of the course on in made of the XX% optimized some is the our and of our made underperforming our that, continue second one course employees cutting mention: of We of We the talked two our Bobby, today. some that that to

and have partnerships several standpoint. capabilities optimization make weeks with of next to we load a will of that complexity We the announcements over that lighten some major course found have the cost of that from

announcements potentially to there that outperform talking number could the number given adjusting of maybe for So types lower? could that bit sounds Or about. clarification, you are the lead a little just you're like it investments

terms performance California won't in that Bobby. the macro tell aggressive we aggressive based Yes. just are seeing you, the to marketplace we're addition that making, obviously, I conditions. I'll enough, be it's of off in in target, investments strategic challenges, some in of

that's putting that against pressure objective well. as so And

with So puts looking that for as investments update will like our to have a great but in we're and we at make really we'd strategic that you to position continue we 'XX some have as overcome we some well beyond. us headwinds to progress,

spectrum. your do see assets in forward you're see question in you're to you And operations Great. pulling back California less understanding of business of going on the kind of you jewel the going of commodity forward? is Okay. value crown some the trying second the Obviously, my But the from some market. places. just as where Obviously, what do the then end

our that is an be stated national publicly to builders. We've as organization objective brand

for term. as building brands most of critically valuable our that brands. see our assets the we ones capabilities are so we important And are that long The own success

we so our outlets, that outlets the of our that scale today, a products retail XX front of are have that in consumers. mentioned And we that have, big part getting we

really brands core stated a the earlier our resonating brand that sales. XX% are That's we great all first-party developing we At that end are of day, sales today, As with that indicator mission. that capabilities assets cost. the right of to really consumers. rightful we're to the beneficial we're a complexity off-load of to looking If owner strategy, that be brand-building partners to for have there's own the other that are not and the

Des [Operator Instructions]. Eric We'll Lauriers take question Group. from Craig-Hallum our next Capital from

I on have one last there. a follow-up that

bit California? as Just maybe just brands could the looking sense to distributing we stores? your brands, channel wind-down to of such star a your respect Just only in distributing California of complete you're north only whether are strategy? your expect strategy think a are of overarching a are overarching back us high-level, at in qualitatively, how in wholesale how we should you And you with all you wholesale at give of products kind your or more to amount scaling looking a if certain brand that about operations you're third-parties, wholesale that of

brands. in for our Eric, jump more California they dispensaries want And in be miss California, clear, fill to of any to successful ecosystem. good the products we Well, winning our wholesale our question. beyond a that please thanks We think gaps here. that brands for to distribution we have But to have I thing to Roz, be may in is believe

points data, and being our a lot that collect often the thoughtful, number Eric, them those and bring I dispensaries marketing of using learn our the we to and journey in market, the think helpful take rest consumer terms only it's meaning depots and We're data demand as wholesale, really shapes to innovation, to and the plans. of talk very of While doors. of role from delivery about used we we our

big of hear measure wholesale. especially us the get to wholesale right more going partners. foremost. with and us and in the a things fortunate to be that the going share Nabis great and winning we're can those with Having a enough doing a that way, we of comes to have They They experience, together us coming with think with the lot with that about Roz strategy and to first quarters. dispensaries, was that the allow about are new will experience, to join success to proprietary a We're get she's putting we of part a us great partner Roz partnership right information I how foundation. team. for want pulling work they the smarter retailers you'll experience right doors. deal to that Lipsey certainly to It's have way, with on, in

being just of you'll shotgun ones. in the add? of about want anything it's it as being Roz, not moving who from most is we being it's And approach So forward. and a dispensaries, in the and that hear builders. But be to about part to team Roz big the more brand right

add long-term the we're only to has team these efforts we number really that have significant I'd and think support is relationships I as what looking help Troy access also a to of qualify thing said. accounts to at, us great a strong that accounts

us. I that's So benefit think another added for

helpful. there. very then appreciate I That's Okay. question last for that And me.

immaterial congrats On of this structured? sales just deal of compared I'm signing us be the on going margin assuming mean to also you I sort that a of I sort relatively out that accretive? arrangement just and here. could Curio mean California. overall Could is to where this is help type how your expanding deal, be understand royalty it's

just of structured; on a these guys. more then expect we you there from coming how of and us do it's you over help If deals have guys full hands you your focus of how the in doing sort with California announcements more quarters? already? months two, is understand, and much Or you're these one, of Should could everything

for We've our due heard diligence to is what Thanks We're really time taken deal the find you was trust that built in right our the Curio. that one out-of-state about of state that Wellness excited partner and are previously, me And strategic Eric. our terms with and did important partnership. to first we Curio really Maryland. that for the found consumers. question, the was of principles on our like-minded of at a we organization And And we that's that in folks the we in partner want find be. type is with

addition, brands. they our will values In the the in same share great that a meet delivering quality really of ambitions product

And find to that programs build take how forward. exciting, that a going like we'd around so us partnership blueprint to is to allows a these

place wonderful portfolio level As of get get that but first the having we we're landscape a rich But couple legal the these the And which years. the hands we've deal, say, rush of of to be our states. into our the do cannabis to consumers. is do the royalty-based the deal that year. which next a us of can of across the hear couple a opportunity that of conversations far very course structure course criteria but you I expand deal, other the next course met next over we we the won't front of with the before details always will and What as asset-light consumers' like-minded to deals many we done, in about move a have products extending companies of It brands an over is quarters, into the will the over in about, in from deal. nitty-gritty of some we of execute I'd for get us percentages, help of our no to recreational have announcements us see the We're forward. got has strict talked

we excited So the states of will building of of driver and us. deals foremost, margin can about of the deal, we're types profile a be that blueprint Curio promise about these we're We're first right execute It across excited the And other as about for based revenue off expand. that. and again, the we partnerships. excited

info, that and luck. appreciate of I best

Thank you.

[Operator Instructions].

with The everyone if appreciate questions, more So joining say for are us. to thank quarter to the to everyone thanks this no previous thank of I to you come. and joining Company there your operator, want spend afternoon taking us. A and employees time Big quarters over the Mike afternoon. Parent both I all the for big to Roz for to you just me this efforts

call, And a how we course more with months about During a forward we us the quarters. plans appreciate overview excited we're our our California. that. Thank We position We're better of results to implementing sharing you coming next over plans be builder. you world-class you. talk our stated the those objectives. changes shared brand the to objective in future. of today's to look XXXX details and future And leader our and prospects shared about importantly, Nothing's of be the quarter. to the is will with today. We changed our our We'll again in time

Datcher. you, participation. for call. today's Thank your all Mr. This you Thank concludes

You may now disconnect.