Trulieve Cannabis Corp. Q1 2023 Earnings Call
Relations. Please go ahead.
Thank you.
Morning, and thank you for joining us during today's call Kim Rivers, Chief Executive Officer, and Alex D'amico, Chief Financial Officer will deliver prepared remarks on the financial performance and outlook for truly following their prepared remarks, we will open the call to questions. Steve White President will also be available to answer questions.
This morning, we reported first quarter 2023 results.
Copy of our earnings press release, and Powerpoint presentation may be found on the Investor Relations section of our website Www Dot Trulia dot com.
An archived version of today's conference call will be available on our website later today.
As a reminder statements made during this call that are not historical fact constitute forward looking statements and these statements are subject to risks uncertainties and other factors that could cause our actual results to differ materially from our historical results or from our forecast, including the risks and uncertainties described in the Companys <unk>.
Fillings with the Securities and Exchange Commission, including item one a risk factors of the Companys annual report on Form 10-K for the year ended December 31 2022.
Although the company may voluntarily do so from time to time and undertakes no commitment to update or revise these forward looking statements whether as a result of new information future events or otherwise except as required by law. During the call management will also discuss certain financial measures that are not calculated in accordance with the unit.
I did state generally accepted accounting principles or GAAP, we generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for a truly financial prepared financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures.
To the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on form 8-K that we furnished to the SEC today and can be found in the Investor Relations section of our website.
Lastly at times during our prepared remarks or responses to your questions. We may offer metrics to provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future.
I'll now turn the call over to our CEO Kim rivers, Thanks, Christine and good morning, everyone and thank you for joining US today. We're pleased to report first quarter results and share recent wins as we execute on our strategic plan before we dive into results I'd like to briefly discuss the cannabis industry and the tremendous opportunity set ahead.
Today more than 80% of the U S population resides within states that have adult use and medical cannabis program.
Adoption continues to rise with greater access to regulated and tested products consumers are increasingly turning to cannabis to deliver a variety of experiences including relief from severe and chronic conditions anxiety and salmon pain as well as recreation over the next few years, we expect more statesville in our programs that not only provide access to Canada.
But also create jobs and generate tax revenue barring.
Barring any federal reform U S. Legal cannabis sales are expected to reach over $70 billion by 2030.
Tripling from $26 billion in sales last year.
Turning now to our results first quarter revenue of $289 million was in line with our expectations and historical seasonal performance GAAP gross margin improved to 52% up from 50% in the fourth quarter on top of margin improvement the team delivered a $24 million reduction in SG&A expenses.
Adjusted EBITDA was $78 million or 27% margin, representing our 20 <unk> consecutive profitable quarter as we highlighted during the fourth quarter call. Our near term focus is on cash preservation in generation, while leaning into the strategic priorities that will continue to differentiate <unk> in the years ahead.
For the full year, we are targeting operating cash flow of $100 million, we expect to generate positive free cash flow in 2023.
Cash preservation efforts are geared towards expense reduction and harnessing greater efficiencies across the organization as I mentioned this quarter SG&A was reduced by roughly 20% as we further refined staffing and production levels to more closely align with current traffic and consumption.
Adjustments to procurement processes and rationalization of vendors and duplicative services also contributed to lower expenses. These efforts will be ongoing.
We generate cash through both scale in service since inception, <unk> has invested heavily to build scale in developed world class customer service, both our true competitive differentiators, particularly within the current macroeconomic environment.
Taking a closer look at our scaled operations truly has the largest retail network in legal cannabis was 186 dispensaries. This is supported by over 4 million square feet of production capacity. In addition to having significant capacity and is also flexible we can ramp up or pull back utilization as needed to align with shifting demand trends.
The ability to increase volume significantly and change production mix to match evolving customer preferences is a direct result of the flexibility built into our modular production.
Our data and technology platforms enable quick adjustments to marketplace changes, providing an edge compared to peers.
At various times, we had pivoted due to rapid change for example, with accelerated growth during COVID-19. When we quickly ramped production to meet higher demand and more recently in light of economic conditions value tier products have represented the fastest growing segment.
In response, we have expanded offerings within our value brand roll one product line new launches include larger volume products, such as 28 Gram ground flower and Supersized four five Gram AIDS as well as many pre rolls and <unk> crumble waxes shatter the ability to quickly pivot as a competitive advantage versus peers, who lack sufficient.
City and capital to make impactful changes in this environment.
When the current cycle inevitably turns and consumer preferences shift, we will be able to identify trends and adapt yet again to meet demand.
Given our unique scale in our home state of Florida, there are opportunities to differentiate our position.
Four years ago, we set out to build a state of the art indoor cultivation facility with automation and a unique work floor layout workflow lay out the facility was designed to lower production cost, while allowing higher touches for each plant.
We began ramping production at this facility last summer and we were just beginning to reap the rewards as a strategic asset.
In the first quarter output at the new facility exceeded our plan by 17%.
Even with the outperformance at the new facility inventory in the first quarter was flat as we executed our strategic plan to wind down inventory. This year, we expect the site will be fully planted by the end of Q2 and fully ramped by the end of this year.
Once fully ramped output from the new facility will be the equivalent of roughly 30 legacy design buildings, but with reduced cycle time, and labor costs and lower usage of electricity water and fertilizer.
Lower production costs at the site allow us to pass on a portion of savings to customers while protecting margin.
The new facility comes online we continue to pull back utilization at legacy design sides banking capacity for future use when demand accelerates with these adjustments indoor cultivation capacity represented the majority of our online capacity exiting the first quarter. We believe large scale production of high quality indoor flower is another meaningful differentiator.
Relative to peers moving.
Moving on to our second pillar for cash generation service, we often say actually leave that where customer obsessed we know that providing exceptional customer service on a consistent basis is absolutely required to reinforce loyalty and attract new customers service standards are met through a combination of convenience ease of transaction branded product availability and promotion.
And attentive and knowledgeable staff.
Data and technology are utilized to understand the customer journey and now their feedback that informs our approach clear delineation of brand segmentation and value proposition plays an important role in customer acquisition and retention.
In store customer education programs designed to expand product knowledge and empower the customer can take ownership of their cannabis journey elevate our service success is measured through a variety of metrics, including customer retention first quarter customer retention was 64% companywide and 73% and medical only markets. Later this year, we are re launching.
Our customer loyalty program with enhanced features including a points based rewards program designed to increase brand loyalty and customer retention.
The power of our scale and service was evident during for 'twenty with new record set for transactions and units sold across our branded retail network on for 'twenty. We sold approximately 360000 units and completed over 68000 individual transactions up 10% and 9% respectively from last year our.
<unk> retail and customer service staff wide, ranging wide ranging product assortment depth of inventory and data and technology infrastructure all contributed to our success on for 'twenty.
Alongside initiatives to optimize scale and service, we are making strategic investments to prepare for future growth.
First we are investing in new markets and expansion opportunities within our footprint second we are allocating resources to build out critical infrastructure to provide a stronger foundation for our strategic plan.
Near term growth opportunities, including new market expansion in Georgia, and Ohio in Q2, the launch of adult use sales in Maryland in July and adult use sales in Florida in mid 2025.
We recently celebrated the Grand opening of two medical dispensaries in Georgia. The first operator in the state we plan to open three more this year supported by our production facility in a though the Georgia program is reminiscent of the initial market in Florida, and we look forward to participating in market development and growth in Ohio, We will open our first.
Dispensary soon pending regulatory approvals and Maryland, where truly operated production site and three retail locations. We are preparing for the launch of recreational sales on July 1st.
The adult use opportunity in Florida is the most significant near term catalyst for Trulia, we continue to support smart and states, Florida and adult use ballot initiative.
As of early May the campaign has gathered sufficient raw signatures for inclusion on the November 2024 ballot with 22 million residents and 138 million annual tourists visits we believe Florida will be a top legal cannabis market, reaching $6 billion in annual revenue truly.
Truly outsized leading market share of 40% eclipses. The next three closest competitors at 10% to 12% market share.
Given our leading market share scale and service and ability to quickly flex up production with minimal investment truly is uniquely positioned for this opportunity.
Turning now to our data and technology infrastructure, we are continuing to invest in expanding our capabilities. This year.
Driving improved customer experiences and retention are critical components of our long term strategy and health data collection and analytics capabilities enhance our customer outreach, providing a meaningful competitive edge hyper personalized marketing geo targeting and strategically driven promotional activity are all made possible by our advanced data and technology platform.
Arms. We believe these investments are necessary to remain one step ahead in today's evolving landscape and set the foundation for our future defined by integrated Commerce.
In summary, our team is laser focused on cash preservation in generation as we set the stage for the next phase of accelerated growth with our scale and service operational flexibility and strong balance sheet I'm fully confident in our strategic positioning and our team's ability to unlock the full potential of <unk> with that I'll turn the call over to Alex. Thank you Jim.
Good morning, everyone turning to our results first quarter revenue was $289 million retail results were influenced by continued wallet pressure on consumer behavior.
First quarter GAAP gross profit was $150 million or 52% margin compared to 50% during the fourth quarter. The impact of inventory reduction efforts was more than offset by fewer onetime expenses.
Gross margin will continue to fluctuate quarter to quarter, depending on product and market mix and inventory flow through <unk>.
SG&A expenses in the first quarter were $102 million or 35% of revenue an improvement of $24 million or roughly 20% from $126 million or 42% during the fourth quarter.
SG&A expenses are the result of ongoing efforts to lower core business expenses.
First quarter net loss was $64 million compared to net loss of $77 million in the fourth quarter first quarter loss per share was <unk> 34 cents compared to loss of 41 in the fourth quarter net loss includes noncash impairment charges of $30 million associated with our Massachusetts operations, including $27 million tied to the.
Impairment of dispensary licenses.
Excluding nonrecurring charges first quarter loss per share would have been 11 compared to a loss of <unk> 18 in the fourth quarter.
First quarter, adjusted EBITDA was $78 million or 27% compared to $85 million or 28% during the fourth quarter.
Fourth quarter, adjusted EBITDA reflects optimization efforts to maximize cash preservation and generation.
We ended the quarter with $195 million in cash to leave us well positioned to retire the only near term debt outstanding of $130 million due in June 2024.
<unk> carries a 975% rate and can be repaid without penalty within one year of maturity.
Absent an off cycle cash tax payment cash from operations would have been $47 million. In addition, cash generation would have been even higher if not for the outperformance at our new 750, K indoor facility in.
In 2023, we expect to realize improved operating cash flow through a combination of expense and inventory reduction.
Second quarter results will include two tax payments capital expenditures totaled $14 million in the first quarter. We expect 2023 capital expenditures will be at least 50% lower than 2022.
We plan to open 15 to 20, new dispensaries, and we will keep you up to six stores this year.
Factoring in results quarter to date and limited visibility, we anticipate second quarter revenue will be down low single digits sequentially. While April included strong traffic around the 420 holiday. We expect continued wallet pressure on consumer behavior and strategic promotions to drive inventory reduction will impact revenue and gross margin.
Given the complexity of our business and the timing of various initiatives throughout the year, we expect operational improvements inventory reduction and cash generation will be non linear throughout 2023.
And with that I'll turn the call back over to Ken Thanks, Alex with increasing adoption and expanding state level access the industry as well beyond the tipping point. It is only a matter of when and not as meaningful Federal reform will happen recent activity in Congress has been encouraging two weeks ago, a bipartisan group introduced the state legislation in both the <unk>.
<unk> infinite through a coordinated effort tomorrow, the Senate banking committee and will hold a hearing on safe banking separately in the house representative Nancy May secured a committee debate and vote on the state's Reform Act, we believe that any reform represents a meaningful step in the right direction towards legalization, we continue to advocate for prohibition repeal.
And remain optimistic that eventually change will come tremendous growth opportunities remain ahead for companies that can successfully adapt with an evolving landscapes truly has the strategy scaling service in capital necessary to navigate the current climate, while investing for the future. Thank you for joining us today and as I always say onward.
At this time, Kim rivers, Alex <unk>, and Steve White will be available to answer any questions. Operator, Please open up the call for questions.
We will now begin the question and answer session.
You ask a question you May press Star then one on your telephone keypad.
Youre using a speakerphone please pick up your handset before pressing the keys.
Any time your question has been addressed and you'd like to withdraw your question. Please press Star then two please.
Please limit yourself to one question and one follow up.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Derek <unk> with Canaccord Genuity. Please go ahead.
Yes, hi, good morning.
I wanted to follow up on that on some of the commentary.
On inventory, which is flat quarter over quarter and it appears like that was just mainly driven through some outperformance from Jefferson, but should we expect this inventory to me.
He moved downwards or draw down over the balance of the year and is that.
Going to be a big portion or at least a portion of how you get to positive free cash flow in the back half of the year.
Yeah, Thanks, Derrick and absolutely and again, we were call. It a champagne problem here at true leave and having outperformance at our 750 K facility at Jafco.
We're incredibly pleased with the performance of that facility and I think that it's obviously bodes very well for truly future as it relates to harnessing those efficiencies through the back half of the year is as that facility continues to come online.
Obviously that needs to be balanced with our existing production footprint and will that balancing will continue to occur.
And yes to answer your question directly inventory wind down continues to be a core initiative.
The organization throughout 2023, and we will absolutely be a contributor to cash generation as we continue to execute against those plans and would have been.
More evident in Q1, if not for again the overproduction.
Of higher efficient capacity out of that 750 K building.
Okay. So then in terms of the idle ization of some of the legacy facilities at that.
<unk>.
Is that something that we would expect to happen more in the back half of the year as you get a little bit more comfortable with the production levels and capacity levels and efficiency levels at Jefferson and have you started some of that already.
Yes, we have started that and that actually began in the last quarter or so of last year and we will continue as we're ramping.
<unk>.
Facilities has.
Correspondingly been idled up to our projected output again, we've exceeded that output and so we are of course, making sure that we're comfortable with that as an ongoing trend not only for the existing footprint Thats online, but of course monitoring how the remaining footprint comes online and how that.
How that produces it.
We'll take.
A little while to get that dialed in it's a large facility and there are significant output and said we want to make sure that again, we're confident as it relates to a trend line as.
As we again.
Meter down legacy capacity as a result, but yes that those efforts that balancing effort. If you will will happen throughout 2023.
Okay. That's helpful. And then just one more just on the.
On the SG&A side.
Obviously, there were some significant cost savings.
Should we think about this new level of $102 million.
Inappropriate run rate for.
For the balance of the year or.
Do you think there's more to come on that front.
I think we're always we're happy with being able to $24 million quarter to quarter.
Talked about our annualized cost savings reduction in the core business expenses at year end, we were able to make significant headway on that in the first quarter, we're always assessing our cost structure.
Market dynamics.
Our victory, but yes, I mean, thats something were always assessing we're proud of where we are in Q1 and those savings should carry throughout the year.
Okay, great. Thank you very much.
The next question comes from Matt Mcginley with Needham. Please go ahead.
Thank you.
It's pretty unusual for you to see a quarter to quarter decline from the first quarter, the second quarter, given seasonality and promotion around $4 20.
Two questions on that one is should we assume that you have a modest quarter over quarter declines in revenue throughout 'twenty three.
Youll likely have ongoing price compression.
Really only big offsets that I see are the store growth in the retail units.
As recently as that will convert in Maryland, and Connecticut to adult use sales.
Then too.
Specific to the second quarter.
Our revenue was down quarter over quarter.
How should we expect the EBITDA to trend this quarter look like looks like.
The first quarter or do you have more in terms of the G&A cuts or our gross margin benefits that you may see in this quarter in the second quarter relative to what we saw in the first.
Yeah. Thanks, Matt So I mean look we're in a in an environment, where we're controlling the controllable and that's really the theme of our of our execution focus for 2023.
It's been widely reported obviously there is pricing compression in the market and I think what we're seeing that as a positive is this is the continued resilience of our customer base and the fact that.
We are retaining that base and they are coming back, but what we're also seeing as pressure on category and quite frankly, just wallet pressure and that they are spending less on a per visit basis.
So you know I would say that even with strong traffic.
Im on for 'twenty and is outperforming as it relates to transactions and units sold right.
It's not necessarily the same basket and that we've seen in the past and so I think with that realization in reality.
Sure.
We're again focused on bringing those cost and production down focus on efficiencies.
The plot throughout the platform.
As we as we go into the second quarter and throughout the remainder of the year.
<unk> limited visibility and as I'm sure you can appreciate throughout the remainder of the year. So not here today to say that you know where it will be throughout the remainder of the year.
Certainly I would say for 'twenty is encouraging for us because it was a stress test in terms of us as having the.
The ability to move higher volumes throughout the combined platform.
The company and.
Certainly as we think about again consumer patterns and potentially.
Well, not even potentially with value being the highest growth category currently being able to again handle that volume in those number of units is really.
Important differentiator in our platform and as it relates to margin, Matt. We certainly again, we'll see the benefit of cost savings, particularly as it relates to our cost per gram come through back half of the year is that 750.
K facility continues to ramp.
Again, I think that that's going to be.
Compounded or coupled with our inventory wind down efforts, which will be leaning into and so those things may offset a bit and then of course, we have to overlay consumer preferences. So we.
We need to make sure that we're making in the products and that we're bringing to market and those products that that value proposition that is attractive to today's consumer. So those three things work interchangeably and will have and it will show up right and in margin throughout the year.
Great and then on the comment you get on the Jeffcoat facility ramping with the expectation before we plan to I think you said by the end of the second quarter, and then fully ramped by year end.
Youre, obviously going to believe that that older inventory.
A higher cost basis, when would you expect that peak of that inventory depletion to occur is that something that you have to wait really until the fourth quarter to begin that when it's fully ramped or is that something we should see probably over the next quarter or two.
Yeah.
Higher rate of compression as you kind of worked through the older stuff before the new lower cost inventories as a system.
So not all inventory is the same right. So even though you have a single plant. If you will about the components of that plant and go into many different products and so and those have different velocities and different.
Again consumer absorption rates and so you know.
Even today, we're seeing some.
Benefit from from Jeff co, particularly on the flower side of the business.
The oil inventory.
<unk> will take a bit longer to work through I can't sit here today and give you a prediction again because you have the consumer dynamic that's layered on top of all of this and but you know and Thats why were saying and if you're out throughout 2023.
Obviously, giving you all updates and Youll see it in the numbers as we work through it.
And youre starting to see that now when you look at the table of what we have in raw material versus working progress versus finished goods. So.
That's going to continue to progress not I can't I can't sit here today and give you a definite on it but obviously our goal is to work through as soon as possible. So that we can begin to get full benefit if you will.
I'm, not just coke facility, but it shouldn't be steadily increasing throughout the year.
Great. Thank you.
Yep.
The next question comes from Russell Stanley with Beacon Securities.
Please go ahead.
Good morning, and thank you for taking my question Congrats on the progress on the adult use front end up being.
Florida, I guess I'm thinking about next steps assuming it clears the Supreme Court review I guess, what kind of further investments do you envision making entity you campaign in order to build awareness before before a potential vote in November 24.
Yeah, and we are certainly excited to be at a point, where the signature phase is coming to an end.
The campaign will transition to a more public facing posture.
Which will of course ramp as we get closer to them.
The actual election, which is November of course of next year.
I would say that some of that some of the answer depends of course on investment from peers, and we certainly would welcome and would hope that particularly as other companies.
For example, during this earnings cycle or are talking about how excited they are as it relates to Florida and the opportunity ahead and that now that we've cleared this phase that fix would potentially be interested in and investing in the next in the next part of the campaign Russ but again.
To be determined but certainly we are we are committed.
Continuing to support and get this across the finish line hopefully with some some help from us from the peer set here.
Understood there and maybe if I could a question on.
Sure Joe Congrats on the on the launch there.
You've mentioned Howard how the market is reminiscent of.
Florida is early days just wondering.
Terms of the barriers to accelerating.
Growth for the medical market.
THC content or form factors, what have you I guess, where where are your athletes like with a focus.
In the relatively near term on lobbying for for change your growth there.
Yeah.
We are certainly going to be focused on education and think it's really important for the patients and the state of Georgia, which looked at over 25000 patients that actively have cards today.
And I was able to interact with with some of those during the Grand opening and we have folks who are very interested to get involved and to work alongside them alongside of us as well as the physician community to educate and the legislature around what is needed.
To adequately provide medication to address specific conditions that are already approved.
The state of Georgia and to make it.
Or a more robust and adequate quite frankly program for again for patients who have cards that the legislature has determined that there are particular conditions qualify under the program. So I think that there's going to be efforts on a couple of fronts, but it really is going to be a lot of education and I believe.
<unk>.
The most powerful tool is really those patients coming in and being on the front lines, which I'm very encouraged that that that group is is ready and willing to lean in with us as we as we approach next session.
That's great. Thanks, I'll get back in the queue.
Thanks.
The next question comes from Andrew <unk> with Stifel GMP.
Please go ahead.
Thanks, Good morning, and thanks.
Thanks for taking my questions, maybe just going back to gross margin here and thinking about how that could trend.
For the rest of the year.
Talked about Jeff co outperforming in Q1.
So one would think that maybe that translates to lower than expected production costs.
But you still have some efficient buildings online and you're still wrapping up trustco. So understand there's there's a lot of dynamics here, but wondering if you could give a little bit more detail on where you are maybe with just Jeff go on production costs versus your expectations for Jeff Corwin its at steady state.
You know obviously.
Wouldn't expect that.
Numbers or anything, but maybe in broad strokes.
And the second part of the question is how could this maybe offset or partially offset gross margin pressure from market dynamics.
Yes, I mean again I think that we've got three components of gross margin and so while you have Jeff co that obviously is a positive you also have pressure from our inventory wind down efforts and as well as again, while our pressure on a macro from consumer dynamics. So.
It really is.
Kind of we call it a three dimensional puzzle and it depends on product mix.
There and how velocities are moving through a quarter and as it relates to that product mix.
As well as of course market market dynamics, and quite frankly price compression overall so.
And there will continue I don't I don't want folks to Mishear me. There will we will continue to fight margin pressure throughout this year, but again that is to be expected given the business focus of cash generation and preservation and that is what we're focused on as an organization.
And that is that is the goal for 2023 and winding down that inventory and getting inventory to study state exiting 2023 is a measure of success for us and again margin will will be a metric that is going to flex alongside of those prime goals.
Yeah.
Thanks for that and if I could.
Think about more.
The high level of the $100 million 2023, you'll see off guidance.
I believe you mentioned next quarter, we will have two tax payments correct me, if I'm wrong, but Q3 and Q4 may have one tax payments each as well.
So that sets up for a second half weighted cash flow profile, which I think you also referred to as non linear which makes sense.
But it also seems that it'll CF, mainly to increase from current levels for you to reach the $100 million.
Main drivers.
Could be expense reduction.
And inventory reduction and just wondering if you could compartmentalize the two.
Should we be thinking about kind of like a 50 50 or.
You know above below anything any kind of color there would be helpful.
Sure.
I think that and obviously, we are going to continue to pay our taxes.
On time.
And that's something that we've done historically and that we are.
Going to continued to do in 2023, and we have the deferral because of the hurricane.
Which was realized this quarter and.
We absolutely are going to continue our efforts around expense reduction.
Which we've talked about a little bit and that's going to include core business expense reduction.
Continued effort and focus around streamlining business operations, and as well as rate and that capacity rationalization.
Both.
And on the production and supply chain side.
Side of the business at.
So all of those efforts are going to continue along with again not strategic priority of rationalizing inventory throughout the year to get to a run rate that we are we're comfortable with and accelerating the ability to bring in that lower cost of inventory as a higher part of our.
Our inventory portfolio.
Not prepared to give you a exact number as it relates to splits but both of those efforts are absolutely key.
Key to our business resilience and again, our stated goals of both cash generation and cash preservation.
Thanks for that I'll get back in the queue.
The next question comes from Scott Fortune with Roth Okay.
Please go ahead.
Hey, Good morning. This is Nick on for Scott first question for Mark just looking for some more color on the transaction volume side, you've mentioned for 'twenty volume up which is encouraging.
I'm looking for some of the quarterly cadence overall, and maybe what you're seeing so far in Q2 outside of the 420 holiday. Thank you.
Sure.
Basically as we mentioned certainly for 'twenty was a record breaking as it relates to transactions and units sold again, we did highlight in the prepared remarks that the fastest growing category that were seeing across all markets is value.
And again with value products being the fastest growing segment, certainly transactions and unit rate increasing.
As a result.
Making making additional units in that category, introducing new form factors in that category and having the ability and capability to continue to service an increased number of customers.
In that category, specifically, so and I think natural.
And certainly when we see price compression and looking to continue to grow our steady state. The business volumes, then naturally need to need to come up in that environment and that is certainly what we're continuing to see across the platform.
Okay. Thanks for that color and then second just around Twitter the advertising opportunity there congrats on being the first U S. Canada just talk to me because I was on the platform can you just kind of call out any puts and takes you're seeing from the early campaigns there.
Kind of give us a sense of how youre looking to leverage that platform moving forward.
Yeah, absolutely we've been really encouraged by our initial initial launch and initial results. So much so that we actually expanded.
Into other markets with winter and so we really are looking forward to being able to share more as we've got some some additional months in data sets behind us So look for that probably on the next on the next call Oxley, but certainly as we think about the future of <unk>.
<unk> marketing and the restrictions that we have given the.
The checkerboard and regulations as well as the federal group kind of more traditional channels rate federal restrictions as it relates to traditional TV radio et cetera.
Being able to lean into digital as well as thinking about other potential channels that quite frankly are becoming more and more mainstream.
As we think about how Americans today are absorbing information and utilizing media. So really encouraged is what I can say is strong strong returns and excited about our relationship with Twitter and the opportunity that we've had to expand that relationship.
Great. That's it for me I'll jump back in the queue.
Thanks.
The next question comes from Aaron Grey with Alliance Global partners.
Please go ahead.
Good morning, and thank you for the question just one for me here. So it kind of comes off that last one so just want to talk a little bit more about the <unk>.
<unk> two program I know, it's something that we've talked about in the past and changes that you guys are looking to make as you look to kind of protect your mountain state, particularly in Florida. So just wondering any color in terms of how you feel about the program today.
Improvements, making micro can make as you continue to look to defend your market leadership in Florida, and how potentially these new marketing tactics such as Twitter could then be used in tandem with changes loyalty program. Thank you.
Yes, Thanks, Erin and so we are really excited to be.
Re launching a new loyalty platform in the back half of this year and we.
<unk> had been working on this for quite some time it actually we paused that because we wanted to get further down the road as it relates to our consumer.
Profile roadmap and really defining and more detailed the customer journey.
We can make the program more and.
Focused and personalized and really intuitive for specifics personas that we've been working to build out so.
Really excited and that we are.
Finally.
We are going to be able to launch that officially in the back part of the year.
It will be I think a game changer for us as again, we're able to combine our a.
A bunch of different aspects of our data insights into that platform and really again.
<unk> more directly to our consumer base.
And.
Then of course being able to leverage some different platforms to invite folks to take advantage of that program certainly will be will be something that we're we're also going to be utilizing with that launch so.
More to come but certainly excited to be able to do that in the back half of the year.
Okay, great. Thanks, very much for the call and look forward to more details on that I'll jump back in the queue.
Thank you Sir.
This concludes our question and answer session I would like to turn the conference back over to Christine <unk> for any closing remarks.
Great. Thank you everyone for your time today, we look forward to sharing additional updates during our next earnings call. Thanks, again and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Richard.
Campbell.
Yes.
Thank you Michael for vacation.
Understood.
Thanks.
Sure.
Would it be.
Well.
Thanks again.
Yes.
Good morning.
Right.
Got it.
Good morning.
Okay.
Yes.
Thank you.
Yeah.