Q3 2022 Greenlane Holdings Inc Earnings Call
Good afternoon, and welcome to today's conference call to discuss Green Land Holdings third quarter 2022 financial results.
A press release detailing the financial results for the quarter ended September 32022 was distributed earlier. This morning and is available on the Investor Relations section of the Green Lane website at Investor Dot G N L and dotcom.
As a reminder, today's conference is being recorded a replay of this call as well as a copy of the supplemental earnings slides will be archived on the company's IR website at Investor <unk> G N L and dotcom.
On the call today are <expletive> Kovacevich, Chief Executive Officer, Dr. <unk>, <unk>, Chief Accounting Officer, and Craig Snyder President.
Before we begin Green lane, we'd like to remind listeners that today's prepared remarks may contain forward looking statements and management may make additional forward looking statements in response to the questions received.
These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties and other factors discussed in today's press release. This call also contains time sensitive information that speaks only as of the.
Date of this live broadcast November 15th 2022.
Factors that could cause green lines results to differ materially are set forth in today's press release and in Green <unk> Annual report on Form 10-K for the year ended December 31, 2021 and.
And quarterly report on Form 10-Q for the three months ended September 32022, previously filed with the SEC.
Any forward looking statements made today on this call are based on assumptions as of today and Green Lane assumes no obligation to update these statements as a result of new information or future events.
During today's call Green Lane management May discuss non-GAAP financial measures, including adjusted gross margin adjusted G&A and adjusted EBITDA Green Lane has included a reconciliation of these non-GAAP measures in today's press release, which is available on the Investor Relations section of the company's web site at Investor <unk> <unk>.
<unk> Dot com.
I would now like to turn the call over to Mr. Nick Kovacevich, Chief Executive Officer of Green Lane. Please go ahead Nick.
Hello, everyone and thank you for attending our third quarter 2022 earnings call. We continue to make great progress on our key initiatives setting us up for success in 2023 and beyond However, we believe many of the results from these efforts are lagging indicators and we will not be fully represented in our financial results until several quarters down the road.
Today, we will discuss the results of Q3, but more importantly, also discuss some of our recent accomplishments and how those initiatives will benefit Green lane in the long run.
Liquidity is obviously extremely important in today's macro environment, and we continue to make strong progress on our liquidity initiatives.
First.
We are pleased to update everyone on our previously announced 2022 plan to raise $30 million of non dilutive capital to date, we have brought in over $27 million in accordance with our plan, which includes one disposing of noncore assets such as our interest in <unk> LLC excess financial the sale of our euro.
Our various assets and the sale of our company headquarters building in Boca Raton, Florida to monetizing previously written off inventory.
Three securing a $15 million asset based loan in.
In addition to the progress on our 2022 plan to raise non dilutive capital. We recently announced the closing of a public offering for gross proceeds of $7 $5 million raising capital in this challenging environment is extremely difficult and so we were encouraged to see strong participation from institutional investors in our <unk>.
<unk> offering.
Lastly, as the company looks to exit our packaging business and further streamline our remaining industrial businesses. We believe we can free up meaningful working capital throughout Q4, and 2023 by significantly reducing the overall inventory required to run this business.
We believe we can run a profitable higher margin consumer business with far less inventory on hand.
The success from our previously announced 2022 plan to raise $30 million of non dilutive capital to $7 $5 million investment from the recent public offering combined with our plan to significantly reduce our inventory exposure.
Should position Green line to be properly capitalized well into 2023, where we intend to inflect to profitability.
Other words, we believe we have removed the financing overhang, which will now allow management to focus on executing our business plan and driving growth in the right areas.
Liquidity has been our number one focus while right sizing the business is not far behind.
We're able to make continued progress on cost cutting in Q3 with a couple of notable items being the September reduction in force, which reduces our annual labor expense by approximately $1 $8 million and our exit of the Orange County office lease, which will save the company over $500000 annually.
Our continuing efforts to completely rationalized every aspect of our operations, including plans to exit our packaging business will provide a significantly lower cost model for Green line in 2023, as we transform to a smaller more profitable house of brands business.
We will continue to remain focused on managing liquidity, reducing our expenses and expanding our margins. However by design, we do not expect overall revenue to grow in fact, we expect it to decrease in many areas, especially packaging.
We like many others in our industry are rejecting the revenue at all cost models from the past we believe our company is not being valued on revenue alone and more revenue doesn't necessarily help us achieve our profitability and cash flow goals.
Moreover, we are more focused on finding accretive high margin and sustainable revenues that comport with our strategic plan.
What are we looking for.
Well, one consumer revenue ideally with our own high margin House brands and also with higher margin third party products to.
Two automated revenue either via our new business to business portal website at wholesale Dot Green Lane Dot com via our e-commerce sites like vapor dot com or DTC brand site.
Or via Amazon, Walmart leaf trade and other consumer platform sites and.
And three large customer revenue producing revenue from large msos, who are increasingly adding new cannabis storefront.
For large C store chains with a national presence will move the needle for us in much bigger ways than smaller mom and pop smoke shops in head shops can.
So in summary, not all revenue is created equal and as Greenland continues to work to drive revenue from our more accretive channels. We expect to shed some topline revenue that is not contributing to our overall strategic goals. The main one being profitability.
We are keeping our prepared remarks brief today as we covered a lot in our most recent Q2 earnings call and we are actually live in Las Vegas at the largest annual industry Conference MJ Biz Con.
However, before turning the call over to Dash I would like to point out that as I look to transition my role as CEO over to Craig Snyder by the end of the year.
Green line is in fact moving into a strong position to benefit from what looks to be a turning tide in our cannabis industry.
With President <unk> recent cannabis pardon.
And bind with stellar Democratic midterm performance, which keeps if not expand their control over the Senate the opportunity for federal reform has never felt closer.
Recent positive developments in Maryland in Missouri point to a continued cadence towards federal legality.
If our industry can finally garner long overdue federal Legislative progress, we believe institutional capital will start to pour back into the sector and picks and shovels providers like Green Lane will benefit tremendously.
We believe that the work we have done positions Green lane to be an outsized recipient of any industry windfall due to the strides we have made with one properly capitalizing the business and removing the financing overhang.
To pivoting.
Pivoting into a owned brands consumer model with higher margins and higher value in the form of brand intellectual property and three.
Reducing expenses to allow for a clear path to profitability in 2023.
We can only control what we can control, but I'm extremely proud of the progress we have made to date.
Efforts from our entire Green Lane team and I remain extremely optimistic for the future of our company under Craig's leadership and for the future of our industry in light of the recent political tailwind.
And with that I.
I will now turn the call over to Dash, our Chief Accounting officer to go through the financial performance of the third quarter.
Thanks, Nick.
As we discuss the details of Q3 2022.
I want to Echo the statements earlier with regards to the team's efforts to navigate through the challenges we faced in the third quarter of 2022.
Despite the decline in revenues the company managed its liquidity tightly and during the third quarter ended with a cash balance including restricted cash of $10 2 million.
Increase from Q2 2022 of $1 1 million. This was primarily driven by the company's efforts in its investing activities during the third quarter.
Revenues decreased $12 6 million or 31% to $28 7 million during the third quarter 2022, compared with the prior year.
Third party consumer brand sales decreased $14 3 million and Green Lane brands decreased $3 6 million. This was offset partially by higher crush guard post merger sales of $20 1 million.
The reduction in third party sales is due in part to our strategy to focus on proprietary brands and transition away from lower margin third party brands.
Revenues were down 11.2 million sequentially from Q2, 2022 to $28 7 million.
Gross margin increased to 17% for the three months ended September 32022, compared to 4% for the same period in 2021 exclude.
Excluding write offs of damaged and obsolete inventory associated with post merger and ongoing product rationalization, you said gross margins decreased 1% to 21% versus 22% during the corresponding quarter in 2021.
Sequentially gross margin was 20% in the second quarter of 2022 or 24% excluding inventory write downs.
Salaries benefits and payroll taxes with $7 million during the third quarter down 21% sequentially from $8 8 million in the second quarter of 2022.
General and administrative expenses were $8 5 million during the quarter, including a $2.2 million net gain on the assets sold during the quarter.
Excluding this gain G&A expenses were $10 8 million, a sequential 2% increase from the $10 6 million reported in the prior quarter.
As discussed in October 21st pre announcement, we recorded a goodwill and intangible asset impairment charge aggregating $66 8 million, reflecting a lower market share consistent with reductions that we've seen across the cannabis industry as well as our plans to reduce our product offering to new and existing green named brands and a very small.
But highly accretive subset of our third party brands portfolio.
Excluding the impairment expenses operating expenses, including depreciation and amortization were $17 7 million down 19% from $21 8 million in the prior quarter.
The company's net loss for the third quarter of 2022 with $79 2 million, which included $66 8 million related to the goodwill impairment charge. The net loss in the third quarter of 2021 was $28 7 million and $14 5 million in the second quarter of 2022.
Cash flows used in operating activities for the first nine months of 2022 was $23 5 million to 32 million in the same period of 2021.
Cash flows from investing activities was $12 5 million for the first nine months of 2022 versus an outflow of $14 3 million in 2021 related to acquisitions.
The inflows of $12 5 million in 2022 resulted largely from the disposition of our interest in <unk> and the proceeds from the sale of the company's headquarters in Boca Raton, Florida.
Net cash provided by financing activities. During the first nine months of 2022 with Stevens point 5 million versus $28 9 million in 2021.
These transactions helped offset cash used in operating activities, resulting in positive cash flow of $1 1 million, so the quarter and ending with a cash balance including restricted cash of $10 2 million at September 30th 2022.
During the quarter the company completed the if it's towards improving its financial structure by securing an asset based loan of $15 million, which closed on August 11th.
The company also repaid over $8 million owed towards senior secured Linda as well as an $8 million mortgage in connection with the sale of the company's headquarters as mentioned earlier.
Looking to the company's balance sheet, we sold the company move a significant portion of its inventory in 2022 through to the third quarter of the year with a $19 million decrease in inventory, which was driven by strategic initiatives designed to deplete third party low margin products as well as lower purchases of inventory during the quarter.
As a result of the decrease in revenues.
The company's adjusted EBITDA loss for Q3, 2022 was $11 2 million versus $6 9 million for the third quarter of 2021.
Adjusted EBITDA loss for the nine months ended September 32022 was $24 6 million versus $15 8 million in the same period of 2021.
I'd like to turn the call back over to the operator for Q&A. Thanks, everyone for joining the call.
Ladies and gentlemen, the floor is open for questions. If you have any questions or comments. Please press star one on your Touchtone phone at this time.
First thing started to remove you from the queue should your question to be answered and lastly, we're posing your question. Please pickup your handset if listening on speaker phone to provide optimal sound quality.
Please hold while we poll for questions once again Thats star one question or comment.
Okay. It looks like our first question is coming from Aaron Grey with Alliance Global Partners. Aaron Your line is live.
Don for Aaron Gray, Thank you for the questions.
So my first question.
As with the cost savings initiatives that you spoke about the SG&A levels. The 1.8 from September and then a 500 came from the off in the office.
What SG&A levels do you expect to be at once all the savings are realized and what sales Mark do you believe you'll need to hit to reach profitability and what she EMS would you associate with that.
Hey.
Thanks for the question.
This is Nick speaking Greg is on the line.
As well and we have to ask here as well but.
Look I think cost reductions obviously key.
Key.
We're working as hard as we can to reduce those costs.
When we look out into 2023, that's when we really start to see.
Some some serious reductions and thats going to be driven by the sale of the packaging business because packaging, even though it makes up 20% of our revenue, let's just say.
<unk>.
Well, we take about 55% of our storage space to store those bulky jars right. So.
So.
Upon exiting that business, we're going to be able to reduce significantly in terms of warehouse footprint, we're gonna be able consolidated down.
Two into one one warehouse.
We think we will save another $5 million plus annually with those moves.
So yeah, the rip the risks.
Provided almost 2 million in annual savings just getting out of Cypress.
Office space with another 500, K, but theres much bigger savings coming.
With that final consolidation upon selling packaging.
And then moving into the consumer business. So we havent put a target out there.
In terms of you know.
What we expect it to be win but we will see sort of the full results of that.
Kicking in in the back half of 2023, and I don't know if my.
Colleagues have anything else to add on that question Craig is anything but.
Hopefully, we can provide more color specifically as of now.
We're unable to do that just guiding to.
Those reductions that we put out and sort of back half of the year for them to be fully recognized.
Yes. It is.
Craig I think that the way we've tried to align it is.
One worked through our gross margin net of any.
Which Nick just talked through.
The packaging business will certainly help that more precise and then build SG&A and cost of labor.
To make sure.
That we're reaching profitability and our goal is to try to do that by the midpoint of next year.
So we've tried to work through where we think we're going to be revenue wise gross margin wise.
Any you know and then also work with the SG&A and the labor.
With the divestiture as well to try to do that.
The other things that are in there that are unique.
Is the business itself went through a number of things that went through two acquisitions with ice and da Vinci.
In a contemporary way before the merger and it also acquired a European entity.
Many of those entities required integration and as you probably know integration is a pretty expensive proposition to take place, especially if youre a public company. So we we've worked through what I'll call. It the largest part of that integration.
Move to D 365, the move to one system, whether it be accounting.
Inventory management, so I'd say, we're 80% of the way through those systems.
And that's where a lot of the expenses related to.
Some of the consulting fees and the services, we needed from a tactical perspective, because the traditional businesses didn't have the chops.
Chops to make sure that those alignments and transitions went.
Quickly so the good news there too is there's some hidden things like that on the integration side.
Largely completed and we feel are going to accelerate our case the profitability.
Through the second half of next year.
Helpful. And then my second question regarding the consumer brands business can you speak to the margin outlook, there and maybe break that out between your own brand and the third party brands that any supply chain issues that are making it difficult to keep the business attractive on the margin side.
With a third party brands or is that more due to the use of sub distributors and giving up some margin there.
I'll take the first part of it Nick.
You hit on a good point.
When youre looking at margin as you know, sometimes it's not only the margin, but you have to talk about the channel and what you are selling the product and its the margins can be very different whether you sell it in sub distribution.
Or sell it in the retail segment in some cases, the gross margin can be five to seven X different.
Depending on how you sell it.
I would say in in our house products any product what we've tried to develop we expect to have close to or in excess in an aggregate basis of a 40% margin.
It's been our goal.
So far we.
Haven't seen anything being sourced their manufactured that's going to prevent us from from hitting that goal.
Of course, there's a little bit of tailwind in the logistics side as well where some of the pressure from previous logistic costs have dropped so that's our goal there on the other side I think youre seeing this move to a more what I'll call normalized consumer goods market where.
Companies will be incentivized for their sales in the third party space.
You'll see things like rebates returns.
And MDF funds continue to flow into the market, we're seeing that now and we think that's a net benefit and we're our goal next year is to get margins on an aggregate basis.
Upwards of 25% to 30% that's our goal in this marketplace and we think we can we can do that combining both segments of that business and also working on and making sure that the.
Channels in which we're selling it at are performing well as well.
Okay. The next question is coming from Scott Fortune with Roth Capital Partners. Scott. Please proceed.
Yeah. Good afternoon. Thanks for the questions real quick where are you at with the product rationalization, you've been working on that for a little while here and with that in mind kind of talking about the inventory you mentioned getting inventory down and working out how much more yet to work through kind of old inventory to get that turned to a level that you use.
It's about 19 million they get that town until a level that you like come forward here into 2023.
Yes, I can start with that as an 8-K Scott thanks for the question.
I'll, let Craig give his commentary after mind, but I think.
This is going to be part of our liquidity plan you know we talked about in the prepared remarks.
Able to raise the capital that we did.
And in a very difficult climate.
It speaks a lot of volumes for for what we were able to do as a team and attract institutional capital, but that's obviously not.
The preferred way to fund the company going forward.
Because of the dilution so what we really would like to do and we're going to do.
As we're going to have several initiatives that.
Help us really consolidate our inventory down to that core consumer base, that's going to be somewhere around.
Round literally half of what we have today I mean, I think we can run our consumer business was maybe 20 million in total inventory right.
We're significantly higher than that today now we have packaging inventory that's going to obviously go with the sale of the packaging business right. So that's a big reduction there and we're looking at smarter ways to run our are lower margin.
Our industrial business.
Which would be the <unk> business in the in the energy business right. So.
If we get down to the consumer business because the margins are much higher.
Obviously, we'd like to grow that business and if you grow the business youre going to need more inventory, but you know at our current levels.
We can run this business with far less inventory and produce the same.
If not even more sales and we're producing today with that higher margin.
Margin, so that's really where we're going to get our working capital.
And that's why we're Cobb.
Why we're pretty confident to say.
And we feel like Theres been a financing overhang on the stock for quite some time and people know that we've needed more money. If we were trying to keep our entire business together and keep managing this business with.
$55 million to $60 million of inventory then yeah, we are going to need to raise more capital, but were not doing that we're divesting our packaging business, we're going to reduce the overall amount of inventory that we carry and what that should lead to is cash coming back in to working capital and that's <unk>.
Play out over the course of 2023, so we were able to secure the funds we did with the public offering.
Now, we're able to see some of the fruits of those efforts come into play where we're going to we're going to watch inventories sort of reduce naturally under these initiatives, that's going to bring money back into working capital and it's going to fuel.
US to run the business and invest in the new product areas that you.
I will turn it over to Craig <unk>.
<unk> is a leading today.
And it's going to put us in a very good position.
To be able to get this business back to profitability, which we intend to do.
And in the back half of 2023, so that's my two cents, but again I'll, let Craig comment as he's taking the helm and going to be leaving that 2023 plan.
Great question and thank you.
So you asked about the brand rationalization.
Business had about 173 brands it was working with at the beginning of the year that number is down to about 25.
And even with that rationalization, we retained 95% of the revenue.
That we had previously so it's been a matter of focus.
Assume that the skus, probably decreased by about 60% to 70%.
That process and I think will even go through another SKU rationalization based on colors and variations of that sort so.
The.
He sat less if you will our catalog if you will has gotten much much tighter and much more focused.
In terms of new products, we've got roughly.
Almost three dozen new products set to come out.
<unk> Q4, and the end of next year.
The vast majority of those are proprietary products, probably mid twenty's that will launch.
Part of the goal there to as a kind of dual fault, we've always been a very good leader in that in the high end of the marketplace.
Where we reach the Qantas sewer, they're very high end products and Theyre priced accordingly, I think you'll see us move into the mid segment and even.
Even the approachable segment at the beginning part of the marketplace.
But not sacrifice that for what I'll call. The gets hi utility of the products and the reason for that is.
Many of the people that were the founders that.
And da Vinci that developed these very high end products that meet the kind of sewer market. We're just taking a lot of the technology and the learnings.
The segments. So we can bring.
Products into each segment of the market that are very approachable very affordable and therefore will have.
Products that are in the dinner segment and the mid tier segment and with that segment as well so two fold.
Really making the brand rationalization come down so we have much better focused internally and then for the new products.
Making sure they are focused on higher margins, one, but not only that to that they're hitting in the right segments as well. So we're not concentrated in one segment or the other.
Got it I appreciate the color and then real quick on one mother more for me can.
Can you provide kind of an update on the E. Commerce discussions you are having or kind of in that way. He sees legislation movement could be opening up here, we're seeing a lot more strategic partners come on board in the canvas space, but just kind of your discussions here going moving down to the E Commerce side.
Side of things.
Helpful. Thanks.
Sure.
I think what you see here is one that the Europeans are probably a little bit ahead of us and their acceptance of the product set so we've been able to advance there.
And looking at the partners their Amazon continues to be kind of the lead driver, but there are also other players around the world like flip cart.
And Mercado Libre that play a significant role than we have ebay Walmart as course.
Thanks.
Now as my parish priest says, we pray in our time and got answers and is I think it's the same way with government regulatory legislation.
We are prepared and we are putting all the pieces in place. So that we are ready to go with all our products and to give you. An example of that one of the things we've done with Amazon is apply for our transparency program, which really allows for brand protection around our products that requires for a labeling.
Our securing of the product in which case, we own the buy box in which case would be able to own all the advertising that goes in there and it helps drive the DSR score down which is a good thing.
Because we own we own that particular segment. So we put a tremendous amount of energy into R. R. e-commerce assets not only that the e-commerce platforms, but we also vapor dot com.
Pop it up and vapor shops are going through and have gone through read apps, both from an Seo perspective in it and are going through.
A targeting perspective now from an LTM perspective, so you start to see that hit in the fourth quarter.
Where we're hoping to drive a nice.
Revenue on an AD spend so that will start to kick in probably the end of Q4 and then each of the brand sites.
Whether it's da Vinci or ice or others has gone through their site improvements of metrics. So theres been a lot of kind of foundational groundwork done.
So that we can do.
Some of the acceleration here in the early part of next year.
And that is one of the things related to Aaron's question earlier, that's really important because.
If the product is sold on one of our websites whether it be a brand site, whether it be one of our aggregator sites or whether it be on one of the third party aggregators. The margins there are in much better stead been doing kind of distribution or sub distribution. So that's why also we want to have nice balance across.
Ross kind of those segments of the marketplace.
They are very important to us.
Hope that's helpful I.
I appreciate it thanks, I'll jump back in the queue.
Once again, thanks, Scott any remaining questions. Please press star one on your Touchtone phone once again star one to ask a question or comment next question is coming from Andrew Bond with Jefferies. Your line is live.
Hey, Andrew Bond and the line for Owen Bennett, Thanks for taking our question.
Could you just going back to working with some of the Msos can you give a little more detail on that initiative for the consumer segment have you seen the number of NSO customers or number of NSO doors increase maybe just in terms of your own brands in the last quarter or two not sure. If you can give any exact metrics on that just just how that side.
It is tracking or just general thoughts, especially now given candidates retailers might be looking for more ways to capture additional sales or margin amid industry pressures. Thank you.
Yes, Great question, Andrew Thanks for taking the time to join too.
We appreciate it so I'll start with that one so.
Look.
As you know the Msos have been very busy everybody.
No.
Triaging.
Trying to trying to absorb the shocks we've been feeling in the market right in the Msos are no different.
They're pretty busy doing M&A, and integrations and things like that but they all recognize.
Simultaneously that consumer products is a bit of a problem for them and also a huge opportunity as you pointed out.
What's happening today.
Generally across the board the Msos as is sort of a.
Mortgage board of different.
Purchasing routes right so you'll have.
In some instances right where.
Store managers are procuring online through <unk>.
<unk> trade or through wholesale that green line dot com or through other sites that are out there you'll have.
Store managers that are pulling petty cash out of the register and telling the blood center to go down to the local cash and carry.
Glass district, and by some of these accessories.
Or you'll have.
Folks that do have some enterprise type of relationships, but it's really kind of spread out its scattered.
So these msos are not benefiting from their scale right to get the price.
Breaks that they deserve at the larger scale, they're also not creating a uniform.
<unk> customer experience across their ever growing retail footprints.
So they recognize that and you know what the visibility right. That's the other thing where if you have a bunch of different people purchasing you just don't have visibility into what their what their spend is.
That's the problem that we come in and we're having conversations we are here live in Las Vegas.
Having those conversations with msos about solving that problem for them and it's very well received.
Is it the highest thing on their list.
But they recognize that it is a problem and they recognize that greenlight has a is a wonderful solution that's extremely promising for us and those conversations are going well we're actually.
You know on the precipice of rolling out some comprehensive programs.
For some of these customers and we will hopefully be able to announce that when we do.
Or are the msos ordering from US today sure right are we getting all of their business generally no right because of the dynamics I just spelled out.
We're getting some of that business and you know it.
In terms of the specific Msos, we don't report on that but that's pretty it's pretty broad as we've said in the past we work with most of them in.
In various capacities, but it could be really small I could not be too meaningful but this program that I'm talking about this is resonating really well and again, we're on the precipice of landing. So that's where we're focused on and then as you mentioned right. It's an opportunity and that's one of the reasons that Green line is.
Strategically pivoting into that consumer business. We are always saw that opportunity, obviously, starting our own brands and thats been underway for quite a while but just in this climate you have msos that are under significant pressure everybody that's not.
One of the larger publicly traded msos they are under even more pressure generally right and.
When you come to the cost side of the business.
That's the industrial products right. That's the packaging the co products the energy products, that's all under pressure right. So what a perfect time for green line to be.
Pivoting more into our consumer business, which is an opportunity as you mentioned right.
<unk>.
These msos are seeing margin compression in markets like Illinois, now in and which was just a very strong market not too long ago and end markets like Massachusetts rate. They are actually getting better margins on the accessories on the consumer products.
The Green line offers and so we're going to see them lean in I mean, we saw this happen in Canada right. We know the market in Canada got eroded much more quickly on the retail side and they've really leaned into consumer products Greenland doesn't have a huge presence in Canada.
So we're going to take advantage of that effect when it comes here to the U S.
Coming and so I think.
Moving the business right now from.
Apart of the supply chain, that's going to be coming under more and more increasing.
<unk> pressure.
And that's on the industrial side into.
The consumer side, which becomes.
More accretive.
Revenue and margin opportunity as these current climate dynamics play out is a really smart move on our part right and so we're prepared for that.
Things don't happen fast with especially with large msos.
It's all in the works, it's all underway and again, we're in a very very good position.
Who else is positioned like greenlight to be able to offer the comprehensive solution that we just discussed be able to do it at scale have the relationships already in place.
We're in a phenomenal position.
Do we wish it happened.
Two months ago shore, but we can't control the timing these things take a little bit of time, but we know what the result at the end is going to look like and it's going to be extremely.
Beneficial.
To Green Lane in our financials, but also to our customers right and that's ultimately what.
He's going to lead to a long term successful business is making sure you're adding value and I think the program in the offering.
And the solution that I just laid out is extremely valuable to those msos and that gives us a lot of promise in the future of our business, especially in those channels.
I talked a little a lot there, but Craig I don't if you have anything to add.
But again I think it just speaks to the passion and excitement we have for that opportunity.
How we're going to capitalize on it over the coming.
And quarters.
Yeah, I think it's an opportunity that contemporary early has come up quite a bit.
The the Msos as you're well aware I've been engaged in a lot of M&A and rolling up a number of brands.
And now they're they're really working hard to decide how they're going to run the retail stores.
And even though the end commodity as candidates.
I think they they realized that the goal of each of the stores is driving revenue per square foot driving average order value.
Driving attachment rates are all what I'll consider.
Fundamental or.
Old School site.
Fundamental store metrics. So some of the things that we've worked with them on are things like merchandising.
And placements very closely and if you were at the show this week you'll.
You'll see a lot of work that we've done in the last six months in preparation.
Specifically on merchandising, but I think that's what you see them all moving toward is a model where they have a more consistent look and feel.
Whether it's one brand or multiple brands.
And that driving revenue per square foot is an important part of that metric and we play a role there because we're one of the few that can have the scale and scope of products along with the merchandising to help them out.
Yeah, very helpful detail and insights gents, thanks for laying all that out and I'll pass it on.
Thanks, Andrew appreciate it.
Any final questions. Please indicate so now by pressing star one on your Touchtone phone.
Okay. We have no further questions in queue I'd like to turn the floor back to management for.
For any closing remarks.
Thank you and thank you all for dialing in I know, we're here live in Las Vegas, as I mentioned, the MJ Biz card I know a lot of analysts or he.
Here are traveling and I appreciate you guys, making the time.
Obviously 2022 spent a rough year for the cannabis industry.
The Green line has been making our adjustments setting us up for success in 2023. So we appreciate everybody bearing with us as we're doing that again as I mentioned I think our platform is still unrivaled right. It's nobody's really out there doing what we're doing and offering it at scale like we are so.
Is this industry going away absolutely not more people are consuming cannabis every.
Year than the year prior so the future's bright in that respect and we're positioning the business to get through these tough times, and then to be able to capitalize on those future opportunities.
We feel very good about that so again I appreciate everybody.
Hanging with us through that.
Actually bittersweet for me because it's going to be my last earnings call as CEO .
When I stepped down at the end of the year.
<unk> transitioned to Craig.
It'll be exactly seven years of running a publicly traded company in the cannabis industry.
And that does.
That involves.
US being really backing Kush bottles, the first company to ever.
Have research coverage from analysts.
And I think it was Aaron grey was around at that time and Vivian.
And so thinking back 2016, what it right it's been.
But I'm not done right I'm staying on here at Green Lane, I believe and Craig.
His leadership and his vision for the company and where the company is going really aligns well with his skill set.
So I'm going to stay in a corporate development role and I'll still be involved in these calls but.
Just as my last call here as CEO I want to just issue a very warm thank you to the analysts and investor community.
Supported me supported push bottles and supported Green Lane.
Really appreciate it means the world to me and I look forward to seeing some of you guys here in Las Vegas.
And I do appreciate you guys continuing to support the company as we transition to our new motto as we transition to new leadership in.
The future is very bright and we're excited and again, we're happy to be here, telling the story.
And I hope to see some of you guys around hope everyone has a great rest of your week.
Stay safe good holiday season, and we'll talk to everybody soon thank you.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.