Q1 2023 Green Thumb Industries Inc. Earnings Call
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Ladies and gentlemen, Green Thumbs conference call will begin shortly we thank you for your patience.
[music].
Good afternoon, and welcome to Green thumb first quarter 2023 earnings conference call.
At this time all participants are in a listen only mode.
A question and answer session will follow the conclusion.
During the question and answer session.
Would ask for a limit of one question per person.
As a reminder, alive audio webcast of the call is available on the Investor Relations section of Green.
And it will be archived for replay.
I'd like to remind everyone that today's call is being recorded.
I will now turn the call over to Shannon Weaver, Vice President of Communications.
[laughter].
Thank you Betsy good afternoon, and welcome to Green Thumbs first corner of 2023.
I'm here today, with founder and CEO Vancouver, President Anthony to our data and our Chief Financial Officer.
Today's discussion of responses to questions.
Forward looking statements, which are subject to risks and uncertainties that could cause our actual resolved.
From the state.
These redfin uncertainties are detailed in the earnings press release issue today.
The reports filed with the United States Securities and Exchange Commission on Canadian Securities regulator, including the 2022 report.
Okay.
This report along with today's earnings release can be found under the <unk>.
Doctor section of our website.
Green thumb.
Location to update.
Any forward looking statements to reflect events.
That may arise after the damage.
Throughout the discussion greenbaum will refer to non-GAAP financial measures, including EBITDA and adjusted EBITDA.
A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and.
Please note all financial information is provided U S dollars unless otherwise indicated.
Now here is spot.
Good afternoon, everyone and thank you for joining our first quarter 20 twenty-three conference call.
Oh, it off with an overview of our results in some observations on the current state industry.
Might as well dive into the financial and then we'll open the call to questions [noise].
Swimming.
Given that the industry is still feeling pricing compression inflationary pressure on your input costs lack of progress in D. C.
Access to capital we feel good about delivering solid results in the first quarter.
We both of the 249 million in revenue Yup net income was $9.1 billion for four cents per basic.
Sure.
Adjusted EBITDA was $76 million or 31% of revenue and.
More than 300 basis point improvement over here.
In the face of double digit pricing compression expanding margins more than 300 basis points you over your feels pretty good.
Finally, our cash flow from operations was 75.
The most important message like to debate this quarter does that green thumb remain fiscally sound enterprise.
A strong balance sheet, including cash totally $185 million a quarter and.
The management team here appreciates this setup, which gives us the optionality as we continue to execute our longterm growth strategy and a patient and deliberate manner.
As I said before this is a marathon not a sprint and there will always be hurdles to jump.
Luckily our team is quite skilled at navigating challenges.
Remain engaged and excited about the future and our ability to play offense, which with large amounts of cash and time on our side.
At the end of 2022 illegal cannabis industry in the U S reached $26 billion and it's estimated by analysts to grow to 75 billion over the next decade.
Greenville M as in the fortunate position to strategically play this grows opportunity.
We operated attractive states give us access to 50 per cent of the U S adult population.
We don't need to shed any assets are closed facilities bumped future initiatives.
And we have the dry powder in cash flow.
Four options that will create profitable growth and sustainable value.
As both of US has taught us only when the tide goes out do you learn who has been swimming naked.
I am confident that we have a great foundation team and board in place.
Last week, we welcome Ethan Nadelmann, one of the nation's experts on drug policy reform to our board of directors.
He said, it's deep understanding of the candidates industry and passion for our mission make him a perfect fit for our board.
He's in his appointment will further strengthen our corporate governance and we look forward to his contributions to the team.
As we've discussed from the start we have always been disciplined stores are capital and resist gross for growth sick.
Can sleep at night by playing the long game.
We have plenty of runaway from meaningful growth as we scale, our business and our 15 operating states.
All of which have yet to launch adult you sales.
Such as Virginia.
The soda, Maryland.
New York to name a few.
Like I said earlier, we have the capital to invest in expanding our platform in 2023, and we plan to open around 15 retail stores across Virginia, Pennsylvania, Minnesota, Nevada and Florida.
On April 17th we added two new stores rise new hope in Minnesota, and rise Grove City in Pennsylvania, bringing our total store count the 79.
On the production side of the business, we will continue to make investments in our cultivation facilities and our product development.
We are continuously inspired to pursue new an outstanding experiences for our consumers.
For example, if you are.
Pretty rolls on one of the fastest growing categories in cannabis and we recently added show dogs to the dog Walker pack, a new line of infused Canada's pretty rolls.
Like our four legged best friends show dogs are the perfect companion for an elevated journey, it's all about new experiences and even greater heights.
On 420, we launched show dogs in Illinois, and planning to expand to additional markets, including Massachusetts, Maryland, and Nevada later this year.
I'm very proud of our family of brands they range across Canada must value chain.
We have something for everyone from our premium brands to our value brands like country and am Sean.
The latter of which is gaining market share according to beat USA.
Having we sought after value brands is especially important when consumers are trading down during the economic squeeze.
Seeing average tickets down transactions continue to increase in our valued segment.
That's the beauty of a diversified portfolio in action, we want everyone to have access to safe satisfying it personally affordable wellbeing.
It's easy to be passionate about your business. When you know you're contributing to the wellbeing of millions of Americans.
I want to thank our entire team for never losing sight of that.
Each of US every day.
We also will never lose sight of people left behind those incarcerated for cannabis possession.
Black and brown communities that have been disproportionately harmed by the failed war on drugs.
And those struggling to participate in this great American growth story.
But first thing this damn it won't happen overnight, but we will continue to fight the good fight.
Now I'll turn the call over to Anthony to discuss our operations in more detail Anthony.
Good afternoon, everyone. Thanks for joining.
It's been mentioned, we had a solid start to 2023.
Spike continued price depression, as many of our markets along with persistent inflationary pressure.
Was able to deliver close to 250 million of revenue and over $76 million adjusted EBITDA in the first quarter.
There's a lot of January over 75 million cash flow from operations solidifying are strong capital position.
Macro factors remain outside of our control we continue to manage the business using a cautious lens that obsesses over cash flow generation balance sheets stability.
During the quarter. The company continue this aggressive capital spent investing 65 billion across to sleep.
C. P G capex accounted for approximately 80% far spent.
Company continued making substantial progress audits facility investments in New York, New Jersey, Minnesota in Virginia.
All four projects remain on track to open later this year and will provide meaningful commercial opportunities 2024 beyond.
In retail.
He is focused on expanding its overall footprint as we anticipate opening approximately 15 new stores this year.
It's been mentioned, we opened our grocery, Pennsylvania, and new Hope, Minnesota stores in April and I have about a dozen or so additional stores under development in Nevada, Pennsylvania, Virginia, Minnesota in Florida, It should open before you're at.
Throughout the rest of the year. In addition to completing our capital projects. Our team is focused on the following.
Driving operating efficiencies the combat continued pricing and cost pressures.
Given the rate of growth the company experienced 2018.
Does it continue to refine our processes, especially within the C. P G side of our business.
In addition, any revenue growth should provide incremental leveraged our fixed costs infrastructure.
To continue to allocate our resources and capital markets and activities.
The current operating environment, along with Longterm company objectives.
This means focusing on the consumers or innovation and expansion of our product portfolios as well as driving further development or Omnichannel strategy.
Laughs optimize or opportunity in Maryland come July 1st.
As a reminder, we have four stores and an established wholesale business in Maryland.
All excited to celebrate this historic event with our team and you want a green thumb earliest medical cannabis Marcus.
Listen to resign themselves in Maryland, Please come see us in Hagerstown Java.
Spring Orben Plaza.
We'll be sure to have something special, especially for a variety of worst matters.
Kudos to stay for quickly establishing a framework that provide.
Consumers with accessibility to high quality lab tests in Canada products.
In conclusion, while we recognize our industry is experiencing a challenging time, we remain incredibly bullish on our business and the demand for candidates by the consumer.
We never anticipated our grocery linear.
We remain confident in our team and our ability to achieve strong profitable growth.
Long term.
With that I'll turn the call over to Matt to review our financial results.
Thanks to Anthony Oliver at one.
Mentioned, we generated over $248 million in revenue in the first quarter of 2023.
2.4% increase compared to the prior to your corner.
New increase was primarily driven by the operations of the retail segment.
Strong retail performance in the first quarter supported by the commencement of adult you sales in New Jersey, Rhode Island and Connecticut.
With the increase star traffic and are open and operating retail stores, particularly in Virginia, Minnesota in Maryland.
Overall retail revenue increased 9% versus the first quarter of 2022.
Comparable sales increased 6% or the first quarter last year face a 73 stores.
Cpg's gross revenue in the quarter increased 4% versus last year.
Turning to Opex selling general administrative expenses for the first part of it was 8.5 million or.
32.4% of our revenue compared to $68.4 million or 28.2 per cent of revenue for the first quarter of 2022.
SG&A, excluding depreciation amortization, one time transaction costs and stock based com, which we refer to as normalized operating costs approximated 56 million compared to 61 million last year.
Discipline the expense management remains a top priority navigated this challenging environment.
The company generated net income at $9.1 million.04 for basic and diluted share during the quarter.
This compares with net income of $28.9 million.12 for basic and diluted share.
Last year.
Adjusted EBITDA, which excludes non-cash stock based compensation other non operating costs was $76 2 million for 3.7 per cent revenue for the quarter as compared to $67 million or 27.6% of revenue for the first quarter last year.
At quarter at 277.8 million in debt with the majority being the 250 million of senior notes at seven per cent due in April of 2025.
In closing I'm very proud of her execution in the first quarter.
Confident in our ability to execute our strategic plan deliver high quality candidates for patients customers and generate strong returns for our shareholders.
With that I'll open to call the questions operator.
We will now begin the question and answer session.
To ask a question.
Dar one on your Touchtone phone.
If you are using a speaker phone please pick up your handset before pressing the keys.
Is it any time your question has been addressed and you would like to withdraw your question. Please press star. Thank you.
During our Q&A session, we would ask for a limit of one question per person.
At this time, we will pause momentarily to assemble our roster.
The first question today comes from San Luis <unk> with Wedbush Securities.
Ahead.
Hi, good evening, thanks, very much for the question. So it looks like your gross margin definitely came out a little better than expected just given the the sequential improvement and then the an improved interested in the magnitude of the year on your contractions from Matt maybe just a little bit of color on the cost environment, whether or not that is.
Improving it all relative to last year, how we should think about margins you know on a go forward basis using this as a benchmark just trying to reconcile it back some of the commentary that he made previously thank you.
[noise] Hi, Gerald this is Anthony here I'll take it that's a great question. So we're we're pleased with every year over year margin improvement.
The team for their execution, you know as you know, it's hard to predict kind of margins on a quarter to quarter basis, and as we said before you know despite the price depression that we're seeing we've got a number of levers within the business that we can pull to try to.
The impact on the overall profitability. So really what we're doing is we're focusing on the longterm taking your market to market.
And really just focusing on castle generation on a per market basis.
Got it thanks very much for the color I'll pass it on.
The next question comes from me.
<unk> <unk>. Please go ahead.
Thank you, so uhm G&A them, a little bit surprised at the 6 million dollar quarter over quarter bumped and G&A dollars, giving me you didn't add any stores.
56 million in core G&A, the new base to build from that'll that'll then build I guess with with new store growth or was there some spend in the first quarter that that's may not repeat again and that.
Maybe there's something in corporate or what have you that that won't repeat later on.
I understand kind of what the what the big driver a bit of a sequential increase list.
Thanks, Matt, Matt I'll I'll I'll take that so when do we think about <unk>, yes, we're pleased with forms in the first quarter.
Same time, when we look when we look forward you know we're constantly watching the SG&A line in conjunction with top line performance, but we do expect yesterday in a line to grow, especially in the second half of the year. When we're talking about the number of new stores were projected to open which was.
Going to increase that is Shannon a relative base. So once again, we do expect that to increase cover the back half of the year.
And what drove that increase in this corner.
There are there are a number of items math that.
That we can we can point to but a lot of it is really just staying staying disciplined what what were occurring what costs. We are we are willing to take on for the business and how we can manage those funny I go forward basis. So there's there's nothing overly significant that we can point to visit.
Single driver it was like.
Confluence of a series of events.
Okay. Thank you.
The next question comes from Michael Lavery with Piper Sandler. Please go ahead.
Oh.
Thank you have good afternoon.
Would love to get your sense of the industry landscape and how you think.
And what it takes for it to revolve you know obviously price compression is still an issue pretty broadly what my work.
You're in a position to be inquisitive, if you find the right thing but.
[noise] interesting assets, what does it take to get some rationalization in the industry or consolidation just would love to.
Get some of your thoughts of how that might play out and what it would take to see some improvement there.
Sure It might go spend thanks for the question I you know I think you summed it up well, we're seeing pricing depression in the mid double digits depends on which marked as you look at it and they were saying much higher 20% to 30% unit growth year over year across the country. So we're seeing continued demand for the products and we're seeing this capital cycle continues to take shape I I would say for us in the I'm in the environment.
So what brings a lot we understand what's going on out there but.
For for massive transformational emanated from us.
As you go forward certainly there are some things that are interesting. It's been the same strategy for awhile integrating deals as hard close at big deals as hard that was even harder to measure those returns. So we love our portfolio today, we love the states for it in as I tried to say the prepared remarks gross embedded in the portfolio now.
Pulling in massive amounts of capital into our business directly this far cheaper than even these bargain-basement quote unquote emanate prices that are out there because there's hair on the story, so I love to cleanly build a brand new facility in Cottage Grove, Minnesota and understand that investment returns on those are gonna be for a loan or Virginia or Hackettstown New Jersey.
Sensually us buying our own business it much much cheaper than any M&A with less problems cause we we ground up or we know what we're doing we think after this many years.
So that's a little bit how we look at it there's market share for us to take this massive growth out there and we think we're in a position to play offense and initiate things begin to new projects meat product innovations that new investments in the brand that now have national reach to develop that relationship here until the these middle innings with the consumer which is where we should start to see our dial shift as we ski.
Down this capex cycle into the next bill innings of the industry.
Oh, that's a great color. Thank you.
Sure.
The next question comes from Eric and Lori with Craig Hallum. Please go ahead.
Hi, Thanks for taking my question I'm, just wondering if you could comment on some of the working capital changes in the corner that impacted castle from up space.
Well this is Matt I can I can take that one of one of the main things when when you think about cash flow from operations and in the cough.
Order.
Reminder, there's not a a cube want tax payment in the corner. So we did benefit from that and and this quarter, but on the downside to tax payments that will be coming in the second quarter. So when we look forward to the second quarter, we'll see you know it'd be more flat ish cash flow from operations. So when you.
Balance the the.
The two out.
We should be in good shape there.
Thank you.
The next question comes from Andrew personnel with Stifel. Please go ahead.
Hi, good evening, Thanks for taking my questions and congrats on the on the cash generation I'd like to continue to see the theme on that please.
So you know you've talked about a little bit on on on the tax payment here, but wondering about you know other working capital items like your inventory.
You know last quarter U.
[noise] did achieve Ah Ah Ah record breaking number in this quarter you beat it.
Last quarter, you had a working capital dragon attacks payment.
So just wondering if you can parse out you know how did you how did you achieve this.
This impressive cash flow number are there any markets.
To call out here.
You know, where maybe outside contributors or or was this more broad based.
Just wondering if you can break that out that that how'd, you would choose unimpressive number.
So that I can take that this is Matt. So you know what I think.
We're talking about cash cash flow and the the first three months of the year and yes, we we will definitely pleased with the results there and I think a lot of it is really coming from a number of factors, where we didn't see our inventory ballooned in the first quarter. So we've we've made.
[noise] team a line in the sand on inventory that we feel good about the balance sheet. Our accounts receivable also telling the line there and at the same time, we're not inflating artificially inflated obviously.
Our accounts payable or crude expenses to achieve that so I think a lot of it really just comes down to good discipline actions that we're taking to control the finances.
Business and it's nothing really you know one action.
It's a compilation of all the options would take on a daily basis to achieve those results.
Yeah, I was just jumping I I totally agree with what method and Andrea you ask a good question I think.
See where I'm at it's not once it has been part of our East coast, we've been thinking about the cash managing the business as if it's our own cause I think about whether we talk about kashi sugar or Anthony preaches to the team to spend treasury like it's your own it's part of how we operate so we don't have a lot of slippage of cash.
It's unfortunate I'm, taking the first quarter's Matt says the last question would just totally true there's no tax payers, we pay our taxes on time in full when they're due so second quarter left two payments so that won't sell out of bounds without the same thing happened last year, just look at our quarterly cash flows same deal there, but in terms of managing to the cashier industry that stopped for four to six quarters in a row, we've been talking about that east coast with art.
Man publicly and so we're sitting with 188, we'd like our situation. We liked the visibility we have and you know we used to continue to do it but there's not some big revelation of what we're doing is more of an east coast culture, and mentality and we liked it and we want to continue with that sort of a head down execute build a cash and be opportunistic mentality.
I appreciate that I'll go back in the cube.
The next question comes from and Gray with a Lion global partner. Please go ahead.
Hi, Good evening and thank you for the question so for the calories been Ah for the calories been a key theme. So wanting some coming from of how comfortable you feel today, where you stand in terms of in house brands being sold in your stores is there still a lever to be pulled their to increase that for some price inflation.
So do you believe we might start to see more of a C. P. G growth in terms of third party stores I know in terms of the wholesale it's been around you know the low sixties now for the past.
Four quarters now so you know how long we might see some more girlfriend that wholesale side or if we still keep the keep it in house payment police around the burden county. Thanks.
Her Anthony here Great question, So I'll start listing play with the business and they give a little bit more detail you know when you zoom out. So you know Burton county for the quarter not materially different from Q4.
You know do we have any more opportunity there within the business certainly you know the way we look at it again it just comes down to a market to market kind of assessment definitely make but there's definitely we've got some we have some dry powder there if we need it.
You know what I'll also say that you know on a on a C. P. G side look we're working hard to continue to introduce brands that can really stand on their own two feet and sell on any shelf, whether they be ours or someone else's.
So you know we've been talks about the show dogs and some of the other things that we're doing behind the scenes you know that's the hard working for putting it now they hopefully pay big rewards for shareholders in in the future, but we're certainly focused on continuing to kind of drive you know third party CPG distribution. We're gonna continue to do that and then obviously at the same time, we're looking to optimize our.
Our business on a market to market basis Burton County is one of the levers that we used to to affect me do that.
Oh, great. Thanks for the color.
The next question comes from Thai, calling with a capital. Please go ahead.
Hey, Thanks for taking my questions at band I'm curious to get your thoughts on the M&A landscape as things said today, obviously, that's an area where you been very methodical in the past and it's paid off but Ah you're starting to see any actionable opportunities out there given the distress that's emerging and maybe.
Maybe see in somewhere to put that cash mild to work.
Yeah. Thanks for the question.
I said before.
We're out there with let's say, we're talking but we're really focused on our own business and how to drive the highest returns for what we're doing so I wasn't looking for massive transformational every day, we know the difficulties of integration what's associated with that so the bar remain very very hot we have a lot of opportunity within our business to spend our capital York apples or shareholder money into the business.
To buy somebody else's problems theoretical EBITDA and nonexistent cashflow.
Because there are businesses that have that we're talking to everybody. So you guys and there's just so much noise inherent problems all over the place. So we're like our spot listen they were talking I'm trying to help where we can but you know it's not so attractive out there so how to measure the returns of what we do whereas like I said investments in the business, which is why you see our capex.
We're putting our money where our mouth is by investing in the business and we hope we can produce those returns it should benefit all the shareholders. So on the run rate or whatever the EBITA is today, where we can take it into the future. We think that growth this year with the business.
All right I understand.
The table is just.
Spending the equity spending the cash versus the alternatives, we have given the multiple given what's out there and the lack of anything really positive available for sale or even existence makes us while we're doing it makes it is just continue to appreciate the team head down and execute let's go execute into this next level. These middle earnings growth of Canada said the U S. Because.
Really good Formula golf.
The next question comes from Scott fortunate with Wap capital.
Ahead.
Yeah. Good afternoon. Thanks for the questions everything kind of normalization play out here, maybe being can you walk us to the <unk>. The last couple of quarters with the sequential down low fever, and how much of that is seasonal verses kinda industry can <unk> with your current footprint <unk> excuse.
Two Q pick up and how much or let me do the pricing.
Telling you that you've indicated in the market and then on top of that can you provide some white kind of new adult youth markets and runway. There you know with me, Connecticut, and likely Minnesota, and Maryland, turning on here pretty quickly.
Yeah, Hey, Scott Bennett I'll be I'll tell you. Your first question what was round top line right.
[noise], what's gonna happen I mean, yeah, I did grow up more seasonal seasonal or industry challenges and how do you look at.
Playing out as we can easily sounds cute.
Yeah, I I think it's a combo of things I would say you don't expect you to to be in the flat. So, but we have a lot of confidence in the back half of the year, We've got new store openings, we got Maryland adult you're starting on July 1st which is Anthony mentioned was prepared remarks, something we've we've been getting ready for for awhile and we have facilities spacious coming out really.
Tell end of the year that should it back first quarter 24, so all that puts us in a position with the new stores in Maryland to see growth in the back half of the year that somebody yesterday amount was talking about before but yeah. There is seasonal we've seen it over time and you just have to look at which markets ordered and what's happening I understand that again the business is really bottom up as the sum of the parts versus a <unk>.
[noise] macro call and that's why the bottom up we're able to put chips on the table to wear that future growth is coming.
And with that can you provide a little color on the Jersey, Connecticut.
Data turned on.
For my Bad English.
Okay.
Sure, Yes, I'll take that you know look I say that you know are progressing nicely you know.
These are markets that went five the last call I can you know 12 18 months.
You know continue to see nice economics, we haven't seen you know any real deterioration. The step function up is really already happened you know we do have a couple of stores in Connecticut that we have not converted over to a don't use we got one in new Jersey as well. It's still you know 100 per cent medical so we have some kind of a pet.
Once we can figure those out but generally you know, they're they're performing according to plan and you know like I said, a step function up on the top line was really already felt so now it's you know continue to optimize each of the markets themselves.
The color thing.
The next question comes from England Huh.
Please go ahead.
Alright, so what percentage of the industry wide pricing weakness that we're experiencing right now do you think it's coming from the value segment, taking on you know more sure first interest overall industry over supply.
And then where do you guys stand in terms of the value segment as a percentage of revenues and and where are you in terms of Ah I guess Ah roll out across all your markets for your for your value brands.
Sure Some Sunday I'll take that a couple of pieces to that puzzle.
First question you know I mean, that's that's very that's very difficult to measure right. You have a couple of things happening within that you know, yes, we have seen a trade down. However, we've seen you know compression really.
With an all facets of the of the valued curve. So you know how much is really the consumer trading down versus you know other portions and other factors really tough to say you know look this is something we saw earlier.
As quickly as we could to it we've obviously continued to make additional investments into the good rain and shine brands had been mentioned in his prepared remarks, we're seeing nice progress you know according to the to the you know, but yes added that we all look at you know and we're continuing to introduce products not only at the you know at a rhythm a dog Walker brands, but also.
Also at the age shy and good grief brand because we think this is here to stay so you know as the market segmentation really kind of settles you know, which is which is something that we anticipated in the middle East Middle learning to this industry. You know that's probably just gonna continue to happen. So I think it's premature to really guess you know is the value factor how much of that is really impacting.
Overall compression that we're seeing it's difficult to say, but what we're doing is we're making investments into all facets of the value chain. So that worked out well prepared to take you know optimize business today, but also take advantage of the time when perhaps you know the consumers looking to trade up or just write down.
[noise], Okay, and just I guess at the at the unrelated follow up.
I think we've got the bulk of the store openings in the second half of the year. So you can just give it a little bit of color in in terms of you know the.
Quarterly world out there.
Yeah. So you know we've got approximately 15, new stores opening you know we've already open to this quarter. We've got a few more that should turn on and then you know really the balance.
You know anywhere from from 810.
<unk> in the second half of the year, it's hard to guess right now exactly Q3 versus Q4. You know. These are these projects are at various stages of build out you know, they're generally ah well well spaced out.
<unk> it just kind of happened by design.
It just kind of naturally.
You know she'll from here on out you know, we think we've got call at 12 to 13 additional stores and she'd opened up you know through the end of the year.
Great I'll turn it back.
As a reminder, we would ask for a limit of one question okay perfect.
The next question comes from that Bottomley with Canaccord. Please go ahead.
Good evening, everyone. Thanks for taking the questions here just wanted to go back to free cash flow. It's obviously a question a lot of analysts are getting on the imbalance just given you know where valuations are and and perceived sort of access to capital anytime in the near term. So you know I I know if you you look at any individual quarter. It can get you know convoluted with different things that.
Not necessarily relate peered over period, but if you if you take the 75 million that you did given that there's no tax payments there and then compare it to you know to to where there's two tax payments. It seems like you know you got about 150 million of of cash flow, which is similar what you did last year is kind of where it looks like everything's falling assuming a flattening environment or am I trying to put.
You know assessment.
You guys, but just assuming that everything is flat can you talk to this sort of 150 million of of operating cash flows in relation to your P. P. And he spent last year, which I think was about 180 million and then where are you perceive interest payments or cash interest payments over the next 12 months to be just in relation to those two dynamics, which I know people are are are often asking about.
Yeah sure. Thanks Bad good question. So so yeah. The the the Capex, there's a lot to that so we where are the Catholics, who is this year, we spend about 60, so far the first quarter, a little more than that comfortable where we're putting that capital X capital is funded with cash on the balance sheet and as you nicely articulated.
Cash flow from operations Aftertax after interest there.
I as a T of EBITDA they cost real cash. So we expect about you know another hundred for the rest of the year is capex into the business in the projects that we've talked about it.
Who's there, finishing those off and we do not take 24, it looks like twenty-three. It just has 23 is less than 22 is coming off on those big ones. So what do we do with that cap that free cash flow that you articulated to get out of Ah basically like you said a fight environment of 300 is we won Capex. We have that funded we have that well done too we're thinking about the debt.
Yes, we have a low level of death, but it sounds like we're talking about thinking about 257 per cent due in April of 25, and then we look at what other things we could do with the cash whether it's M&A on our own equity certainly looking at things in this environment that could be exciting as we look at a medium and long term plans in the best interest of shareholders. So it's a fortunate spot. So we're in that kind of powder to.
Play with given the balance sheet, we have and the cashier produces but it's important that people understand the tax rate, which you obviously do an interest because interest is real cashing out the window. So we liked the situation of producers cash we have the projects well funded fully funded on the balance sheet. Today. There's this produces the cash and that puts us in a position to wait for a few good things or.
A few good ideas to come along which we're excited about.
Got it appreciate that and just as a.
Follow up but maybe just if we can maybe in contact of last year, if you're able to to tell us what the actual 280 E payments were he was at around 150 million, that's kind of where you are market I'm just not sure. If that's been you know set in the past.
Total tax about last year I'm asking the atmosphere was about 120 plaza cash taxes uncle Sam's Anthony thoughts about our largest financial partner tree because you're also responsible for a big portion of that we've been hesitant to give exact guidance given celebrate depreciation all the capital and all kinds of deduction things, but a significant portion of that could've been saved in cash.
Invest in the business buyback stock M&A anything you name. It 280, he takes away a lot of our cash we take about 120 last year total taxes got it. Thanks.
Thanks, so much.
Sure.
The next question comes from Andrew personnel with people. Okay go ahead.
Alright, Thanks for taking my my follow up question, then I kind of wanted to continue that line from the last question. You know your capex seems to be coming down substantially in 2024, you mentioned thinking about that I'm wondering specifically about share buybacks. If you have any.
Any thoughts about that.
Given where stocks are now and you know where they might go.
The short answer your last question is yes of course, you know prices can get silly, we won't be ready to play offense, if that were to happen, but the business at about 300 was willing. He said 300, maybe it's 120th taxes are total cash interest in mass question last is under $20 million about 18, a year annual which it.
Leaves cash available. So once we cover the capex once we understand the dead or certainly out there thinking about it everything's on the table if that makes sense and we're watching what's going on out there, but we're not in this in a short term gain the stock issue a press release or something like that we're thinking about long term owners of an enterprise and if we could certainly one more of the enterprise. It was a good use.
Company capital that we were covered in the other places it's on the table.
[noise] waiting everything.
This concludes that question and answer session I.
I would like to turn the conference back over to <unk> closing remark.
Thanks, everybody for dialing in great questions and look forward to giving you update on the second quarter in a few months. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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