Q2 2023 Green Thumb Industries Inc Earnings Call

Speaker 1: Ladies and gentlemen, Green Thumb's conference call will begin shortly. We thank you for your patience.

Ladies and gentlemen, Green thumb conference call will begin shortly we thank you for your patience.

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Speaker 1: Good afternoon and welcome to Green Thumb's second quarter twenty twenty three earnings conference call.

Good afternoon, and welcome to Green from second quarter 2023 earnings Conference call.

Speaker 1: At this time, all participants are in a listen-only mode.

At this time all participants are in a listen only mode.

Speaker 1: A question and answer session will follow the conclusion of formal remarks.

A question answer session will follow the conclusion of our formal remarks.

Speaker 1: During the question and answer session, we would ask for a limit of one question per person.

During the question and answer session.

Ask for a limit of one question per person.

Speaker 1: As a reminder, a live audio webcast of the call is available on the Investor Relations section of Green Thumb's website and will be archived for replay.

As a reminder, a live audio webcast of the call is available on the Investor Relations section of Green Thumbs website and will be archived for replay.

Speaker 1: I'd like to remind everyone that today's call is being recorded.

I'd like to remind everyone that today's call is being recorded.

Speaker 1: I will now turn the call over to Shannon Weaver, Vice President of Communications. Please go ahead.

Speaker 3: Thank you, Betsy. Good afternoon and welcome to Greenstone's second quarter 2023 earnings call. I'm here today with founder and CEO Ben Kobler, President Anthony Giorgata, and Chief Financial Officer Matt Baughman.

Speaker 3: Today's discussion and responses to questions may include forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

Speaker 3: These risks and uncertainties are detailed in the earnings press release issued today, along with the reports filed with the United States Securities and Exchange Commission and Canadian securities regulators, including the 2022 annual reports filed on 4-10K.

Speaker 3: This report, along with today's earnings release, can be found under the investors section of our website.

Speaker 3: Green Thumb assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Throughout the discussion, Green Thumb will refer to non-GAAP financial measures, including EBITDA and adjusted financial statements.

Speaker 3: A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and SEC and SEEDR final.

A reconciliation of non-GAAP financial measures. The most directly comparable GAAP measures is included in our earnings press release and a P. C and C. Are finally, please note all financial information is provided in U S dollars unless otherwise indicated.

Speaker 3: Please note all financial information is provided in US dollars unless otherwise indicated. Thanks everyone.

Thanks, everyone and now here's Ben.

Speaker 4: Thank you, Shannon. Good afternoon, everyone, and thank you for joining our second quarter 2023 conference call. I'll lead off with an overview of our results and some observations on the current state of the industry.

Thank you Shannon.

Good afternoon, everyone and thank you for joining our second quarter 2023 conference call.

I'll lead off with an overview of our results and some observations on the current state of the industry.

Speaker 4: Anthony will discuss our operations, Matt will dive into the financials, and then we'll open the call to questions.

Anthony will discuss our operations, Matt will dive into the financials and then we'll open the call to questions.

Speaker 4: Reflecting on the cannabis industry and the economy as a whole, not much has changed since our last call. Inflation continues to dampen consumer spending, pricing pressure is still with us, and there has not been any meaningful action on the federal front.

Reflecting on the cannabis industry and the economy as a whole not much has changed since our last call.

Inflation continues to dampen consumer spending pricing pressures still with us and there has not been any meaningful action on the federal front.

Speaker 4: So, given the environment, we feel pretty good about our second quarter performance. We posted 252 million in revenue.

So given the environment, we feel pretty good about our second quarter performance, we posted $252 million in revenue.

Speaker 4: which was up slightly from the first quarter and kept us on pace to exceed another $1 billion in revenue for the full year 2023.

Which was up slightly from the first quarter and kept us on pace to exceed another $1 billion in revenue for the full year of 2023.

Speaker 4: Gap net income was $13 million or $0.05 per basic and diluted share in the quarter.

GAAP net income was $13 million or five cents per basic and diluted share in the quarter.

Speaker 4: adjusted EBITDA with $76 million or 30% of revenue.

Adjusted EBITDA was 76 million or 30% of revenue.

Speaker 4: For the quarter, cash flow from operations was 18 million after paying Uncle Sam $52 million.

For the quarter cash flow from operations was $18 million after paying uncle, Sam $52 million.

Speaker 4: Importantly, six months cash flow from operations was $93 million, up from $40 million in the comparable six month period of 2022.

Importantly, six months cash flow from operations was $93 million up from $40 million in the comparable six months period of 2022.

Speaker 4: This cash flow gives us the confidence to continue to play offense.

This cash flow gives us the confidence to continue to play offense as we ended the quarter with a strong balance sheet and $149 million in cash.

Speaker 4: as we ended the quarter with a strong balance sheet and $149 million in cash.

Speaker 4: We believe our cash flow generation, coupled with a strong balance sheet, is one of our most significant competitive advantages. Right now, expensive capital is...

We believe our cash flow generation, coupled with a strong balance sheet is one of our most significant competitive advantages right now expensive capital as a problem for most industries, but it is especially deadly for the cannabis sector, which is blocked from traditional capital sources.

Speaker 4: but it is especially deadly for the Canada sector, which is blocked from traditional capital sources and saddles it.

And saddled with a punitive tax structure.

Speaker 4: At Green Thumb, we have been able to navigate a path to profitability while remaining fiscally strong. Since our founding, our intense focus on generating cash and investing and spending it like it's coming from our own pockets has been our team's not-so-secret, secret sauce.

At Green thumb, we have been able to navigate a path to profitability, while remaining fiscally strong since our founding our intense focus on generating cash and investing and spending it like it's coming from our own pockets. It's been our teams not so secret secret sauce.

Speaker 4: This gives us the ability to execute our long-term growth strategy in a patient and deliberate manner.

This gives us the ability to execute our long term growth strategy in a patient and deliberate manner.

Speaker 4: We not only sleep well at night, but we also wake up early excited about the opportunity in front of us.

We not only sleep well at night, but we also wake up early excited about the opportunity in front of us.

Speaker 4: And there's a lot to be excited about. This quarter we opened six new RY stores in New Hope, Minnesota, Grove City in Philadelphia, Pennsylvania, Bristol and Danville in Virginia, and Las Vegas, Nevada.

And Theres a lot to be excited about.

This quarter, we opened six new rise stores in new Hope, Minnesota growth City in Philadelphia, Pennsylvania, Bristol in Danville, and Virginia, and Las Vegas, Nevada.

Speaker 4: Now we are in an even better position to expand our brand awareness in these key markets.

Now we are in even better position to expand our brand awareness in these key markets opening new stores the challenging process with timelines that are hard to predict and we are proud of our team for their tenacity on this front we.

Speaker 4: Opening new stores is a challenging process with timelines that are hard to predict and we are proud of our team for their tenacity on this front. We now have a total of 84 locations supported by 18 manufacturing facilities and we plan to open several more stores this year.

We now have a total of 84 locations supported by 18 manufacturer manufacturing facilities and we plan to open several more stores this year.

Speaker 4: This is all part of our long-term strategy that continues to unfold, which includes building brands that resonate with America.

This is all part of our long term strategy that continues to unfold, which includes building brands that resonate with Americans.

Speaker 4: We see these lifestyle aspirational brands as key to our long-term growth.

We see these lifestyle aspirational brands is key to our long term growth.

Speaker 4: Over the last 12 months, we have made capital investments of approximately $240 million to position ourselves to grow.

Over the last 12 months, we have made capital investments of approximately 240 million to position ourselves to grow.

Speaker 4: This all plays out against our original strategy to enter open and scale with disciplined capital allocation.

This all plays out against our original strategy to enter open scale with disciplined capital allocation.

Speaker 4: We are also excited about the July 1 commencement of adult use sales in Maryland, where we have four dispensaries and a healthy wholesale business.

We are also excited about the July one commencement of adult use sales in Maryland, where we have four dispensaries and a healthy wholesale business.

Speaker 4: If Maryland follows the pattern of adult use sales in other states, it should be a nice lift in that market.

If Maryland follows the pattern of adult use sales in other states there should be a nice lift in that market.

Speaker 4: We have made real progress in the quarter in executing our growth strategy and have a long runway of opportunity ahead. Legal US cannabis sales in the US is now a $28 billion industry growing to an estimated 75% in the US.

We have made real progress in the quarter in executing our growth strategy and have a long runway of opportunity ahead.

U S cannabis sales in the U S is only $28 billion industry.

Going to an estimated $75 billion over the next decade.

Speaker 4: Now that's a new record with regulated sales accounting for over $7 billion in the second quarter.

That's a new record with regulated sales accounting for over $7 billion in the second quarter.

Speaker 4: But it's very important to know that that number does not include the sizable gray market of untested unregulated products such as Delta-8 and hemp derived THC. And if you're curious what I'm talking about, take a look at the video I'm going to show you.

But it's very important to note that that number does not include the sizeable grey market of untested unregulated products, such as Delta eight and hemp derived THC.

And if you're curious what I'm talking about take a walk in lower Manhattan.

Speaker 4: Despite that, our 15 operating states are among the most attractive in the nation and offer access to 50% of the US population.

Despite that our 15 operating states are among the most attractive in the nation and offer access to 50% of the U S population. So.

Speaker 4: So we believe we are in a terrific position to keep growing profitably and sustainably.

So we believe we are in a terrific position to keep growing profitably and sustainably.

Speaker 4: While there are very few sectors without looks as compelling as cannabis, there's no denying that the industry is going through growing pains right now.

While there are very few sectors with outlooks as compelling as cannabis there's no denying that the industry is going through growing pains right now.

Tide continues to recede.

Speaker 4: For some time now, I've stopped speculating on what government officials, many of whom have passed their expiration dates, will do to lift punitive taxes and make some headway on safe banking practices or let us list on a U.S. exchange.

For some time now I've stopped speculating on with government officials, many of whom have passed their exploration dates will do to lift punitive taxes and make some headway on safe banking practices or let us list on a U S exchange.

Speaker 4: I've stopped trying to predict when some states, notably New York, will get their cannabis program in working order. All I can say is that we stand on our record for clear, not wishful thinking, and feel good knowing our business is positioned to withstand old guard politicians who have failed to facilitate needed action in cannabis reform.

Stop trying to predict when some states, notably New York, we'll get their cannabis program in working order.

All I can say is that we stand on our record for clear not wishful thinking.

Good knowing our business is positioned to withstand old guard politicians, who have failed to facilitate needed action and candidates for corn.

Speaker 4: Above all, we never lose sight of our mission to provide consumers with safe, high-quality products that improve their well-being and help them live more comfortably in this ever-chaotic world.

Above all we never lose sight of our mission to provide consumers with safe high quality products that improve their wellbeing and help them with more comfortably in this ever chaotic world.

Speaker 4: Along the same line, we will never stop advocating for justice for the many people who have suffered the failed War on Drugs. You may not be familiar with the

Along the same line, we will never stop advocating for justice for the many people who have suffered from the failed war on drugs.

May not be familiar with the case of Allan Russell Mr.

Speaker 4: Mr. Russell is currently serving a life sentence with no parole in Mississippi for his possession of 1.5 ounces of cannabis.

Mr. Russell is currently serving a life sentence with no parole and Mississippi for his possession of 1.5 ounces of candidates.

Speaker 4: That's an amount we sell every day legally in our stores across the country.

That's an amount we sell everyday legally in our stores across the country.

Speaker 4: He is just one of the estimated 40,000 Americans who today are incarcerated for cannabis defense.

He is just one of the estimated 40000 Americans, who today are incarcerated for cannabis defenses, even state after state legalized its use.

Speaker 4: even as state after state legalized its use.

Speaker 4: And the damage that this causes extends far beyond the person in prison. It affects their families and their communities, many of which

And the damage that this causes extends far beyond the person in prison it affects their families and their communities.

Any of which are black and brown.

Speaker 4: So our Green Thumb team will never stop focusing our efforts on this devastating injustice.

Our green thumb team will never stop focusing our efforts on this devastating in justice.

Speaker 4: Now, I'll turn the call over to Anthony for his thoughts on the second quarter. Anthony?

Now I'll turn the call over to Anthony for his thoughts on our second quarter Anthony.

Speaker 5: Thanks, Ben. And good afternoon, everyone. Thanks for joining us.

Thanks, Dan and good afternoon, everyone. Thanks for joining us.

Speaker 4: As you just heard, the company had a respectable print in the second quarter. Even with continued price compression and persistent inflationary pressure, we generated over 250 million of revenue and approximately 76 million in adjusted EPT-A.

As you just heard the company had a respectable print in the second quarter, even with continued price compression and persistent inflationary pressure, we generated over $250 million of revenue and approximately $76 million and adjusted EBITDA.

Speaker 4: In addition, despite making over $52 million in tax payments to our state and federal partners, we generated $18 million in cash flow from Operation...

In addition, despite making over 52 million in tax payments to our state and federal partners, we generated $18 million in cash flow from operations.

Speaker 4: cash flow generation and balance sheet stability remain the name of the game for green time.

Cash flow generation and balance sheet stability remain the name of the game for Green Dot.

Speaker 4: During the quarter, we invested 64 million across our CPG and retail.

During the quarter, we invested 64 million across our CPG and retail fleet.

Speaker 4: bringing our year-to-date spend to $129 million.

Bringing our year to date spend to $129 million.

Speaker 4: We anticipate spending an additional 90 to 100 million in capex over the third and fourth quarter highlighting our confidence in our team, our brands, and investment opportunities.

We anticipate spending an additional $90 million to $100 million in capex over the third and fourth quarter, highlighting our confidence in our team our brands and investment opportunities.

Speaker 4: During the quarter, in addition to CPG facility investments in New York, New Jersey, Minnesota, and Virginia, we opened six new stores and continued setting the foundation for the additional six to eight stores in Nevada, Florida, and New York we anticipate opening before your end. These are recent highlights of New York Public Television Gardner's

During the quarter. In addition to CPG facility investments and New York, New Jersey, Minnesota and Virginia.

We opened six new stores and continued setting the foundation the additional six to eight stores in Nevada, Florida, and New York, We anticipate opening before year end.

Another recent highlight was our thanks <expletive> campaign.

Speaker 4: sarcastic commemoration of Richard Nixon's signing of the Controlled Substances Act in 1970.

Sarcastic commemoration of Richard Nixon signing of the controlled substances Act and 1970.

Speaker 4: This act effectively initiated the failed war on drugs and decades of harm on communities of color.

This act effectively initiated the field warrant drugs and decades of pharma communities of color.

Speaker 4: Our goal for the campaign was to educate our patients and customers on the impact from the failed war on drugs and the state of cannabis today.

Our goal for the campaign with educate our patients and customers on the impact from the sale of war on drugs and the state of candidates today.

Speaker 4: We are proud of the campaign's success as our team, patients, and customers are incredibly excited to support this very important awareness project.

We are proud of the campaign successes our team patients and customers are incredibly excited to support this very important awareness project.

Speaker 4: Looking ahead to September , on September 9th and 10th, across the street from our Rise Dispensary in Mundelein, Illinois, Green Thumb will host the Miracle in Mundelein, a first-of-its-kind two-day cannabis... A

Looking ahead to September on September 9th and 10th across the Street from a rise suspensory, an underlying Illinois, Greenbaum, who host the mirror one month line.

Our first of its kind to day candidate centric music Festival.

Speaker 4: We have an incredible lineup that includes Cypress Hill, J-Rad, Stephen Marley, Lettuce, Action Bronson, and other great artists.

We have an incredible lineup that includes Cypress Hill, J Red Steven morally, let us action Bronson and other great artists.

Speaker 4: We have a number of attendee packages still remaining for those who want to make history with.

We have a number of attendees package is still remaining for those who want to make history with us.

Speaker 4: The story is just a short ride north from the O'Hare Airport, and the vibe will be something extraordinary.

George just a short ride to work from the O'hare Airport and the buyer will be something extraordinary.

Speaker 4: On our last call, I highlighted some of our strategic initiatives for the balance of 2023. Stay in blue driving.

On our last call I highlighted some of our strategic initiatives for the balance of 2023.

They include driving operating efficiencies proper resource allocation, both micro and macro and a successful, Maryland adult use launch.

Speaker 4: Proper resource allocation, both micro and macro, and a successful Maryland adult use launch.

Speaker 4: I'm excited to report that the team's work in Maryland is off to a strong start. And rest assured we are continuing to optimize our opportunity within the market.

I'm excited to report that the team's work in Maryland is off to a strong start.

And rest assured we are continuing to optimize our opportunity within the market.

Speaker 4: On another note, we want to call out the increased activity we are seeing of unregulated cannabis and farm bill compliant and non-compliant cannabis products.

On another note we wanted to call out the increased activity, we are seeing of unregulated candidates and farm Bill compliant and Noncompliant, Kansas products.

Speaker 4: most within the industry know many of these products lack testing basic standards and utilize questionable...

Within the industry now many of these products lack testing basic standards and utilized questionable inputs and.

Speaker 4: In addition to posing consumer safety risks, we're also monitoring the impact these activities could have on future industry growth prospects and subsequent regulatory response.

In addition to posing consumer safety risk. We're also monitoring the impact these activities could have on future industry growth prospects and subsequent regulatory response.

Speaker 4: In conclusion, while we recognize our industry continues to experience regulatory, political, and industry-related headwinds, we remain incredibly bullish on our business and our team's ability to navigate these turbulent waters. As we've said before, the star of the team is the team, and we have a special one. With that,

In conclusion, while we recognize our industry continues to experience regulatory political and industry related headwinds, we remain incredibly bullish on our business and our team's ability to navigate these turbulent waters.

We've said before the star of the team is the team and we have a special one.

With that I'll turn the call over to Matt to review our financial results.

Thanks, Anthony and good afternoon, everyone.

Speaker 6: generated over $252 million in revenue in the second quarter of 2023. A 1% decrease... in revenue in 2020. In 2020. In 2020. In 2020.

We generated over $252 million in revenue in the second quarter of 2023, 1% decrease compared to the prior year quarter.

Speaker 6: While total units sold increased during the period, total revenue declined due to price

Well until units sold increased during the period total revenue declined due to price compression.

Speaker 6: Continued unit growth in key markets as well as revenue generated from six new stores opened in the second quarter helped offset some of the effects of pricing.

Continued unit growth in key markets as well as revenue generated from six new stores opened in the second quarter helped to offset some of the effects of price compression.

Speaker 6: Overall, retail revenue decreased 2% versus second quarter of 2020.

Overall retail revenue decreased 2% versus second quarter of 'twenty two.

Speaker 6: Second quarter comfortable sales decreased 3% for the second quarter last year on a base of 70.

Second quarter comparable sales decreased 3% for the second quarter last year on a base of 76 stores.

Speaker 6: and were packaged goods, gross revenue increased 13% versus the prior year quarter. Gross profit for the second quarter was 125.2.

Consumer packaged goods gross revenue increased 13% versus the prior year quarter.

Gross profit for the second quarter was $125 3 million or 49, 6% revenue compared to $125 8 million or 49, 5% of revenue for the second quarter of last year.

Speaker 6: compared to $125.8 million or 49.5% of revenue for the second half of the year.

Speaker 6: The effect of price compression was more than offset by cost of goods sold management and verticality.

The effect of price compression was more than offset by cost of goods sold management and for the county.

Speaker 6: Turning to Hobbax, selling general administrative expense for the second quarter was 84.2 million or 33.4% of revenue. Compared to 63.5 million or 25% of revenue last.

Turning to Opex, selling general and administrative expense for the second quarter was $84 2 million or 33, 4% of revenue compared to $63 5 million or 25% of revenue last year.

Speaker 6: Test DNA exclude depreciation, amortization, one-time transaction costs.

SG&A, excluding depreciation amortization and onetime transaction costs.

Speaker 6: and stock-based comp, which we refer to as normalized operating costs, approximated 57.

Stock based comp, which we refer to as normalized operating costs approximated 57 million compared to $56 million in Q1 and $57 million in the second quarter of 2022.

Speaker 6: a pair of the 56 million in Q1 and 57 million in the second quarter of 20.

Speaker 6: The sequential increase in total expenses primarily reflected costs associated with opening new spaces.

The sequential increase in total expenses, primarily reflected costs associated with opening new stores.

Speaker 6: We continue to carefully manage our costs as we navigate this challenging environment.

We continued to carefully manage our costs as we navigate this challenging environment.

Speaker 6: The company generated net income at 13.4 million for 5 cents per basic and delivered share.

The company generated net income of $13 4 million or <unk> <unk> per basic and diluted share during that.

Speaker 6: This compares the net income to $24.4 million, or $0.11 per basic and $0.10 per diluted share with of flash mods.

This compares to net income of $24 4 million or <unk> 11 per basic and 10 cents per diluted share reported last year.

Speaker 6: Second quarter last year benefited from an acquisition related non-cash for value credit, which did not occur in the past.

Second quarter of last year benefited from an acquisition related non cash fair value credit, which did not occur in the current period.

Speaker 6: Adjusting EBITDA, which excludes non-cash, stock-based compensation, and other non-operated costs, was $75.8 million, or 30% of revenue for the quarter, as compared to $78.7 million, or 31% of revenue for the second quarter last year.

Adjusted EBITDA, which excludes noncash stock based compensation and other non operating costs were $75 8 million or 30% of revenue for the quarter as compared to $78 7 million or 31% of revenue for the second quarter of last year.

Speaker 6: We ended the second quarter with a strong balance sheet, including cash of 149 million and working capital of 166 million while paying more than 52 million in tax payments during the quarter. In summary, we're pleased with our second quarter performance and execution.

We ended the second quarter with a strong balance sheet, including cash of 149 million and working capital of $166 million, while paying more than $52 million in tax payments during the quarter.

In summary, we're pleased with our second quarter performance and execution within this current market environment.

We will continue to focus on execution on our stated goals.

Speaker 6: Thank you for your support and confidence as we look forward to updating you next.

Thank you for your support and confidence as we look forward to updating you next quarter.

Speaker 6: With that, I'll open the call to your questions. Operator.

With that I'll open the call to your questions operator.

We will now begin the question and answer session.

Speaker 1: To ask a question, you may press star then 1 on your touch tone phone.

To ask a question you May Press Star then one on your Touchtone phone.

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Speaker 1: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We ask that you limit yourself to 30 seconds.

Is it any time your question has been addressed and you would like to withdraw your question. Please press Star then two.

We ask that you limit yourself to one question.

Speaker 1: At this time, we will pause them materially to assemble our roster.

At this time, we will pause momentarily to assemble our roster.

Speaker 1: The first question today comes from Eric Delaurier with Greg Hallum. Please go ahead.

The first question today comes from Eric <unk> with Craig Hallum. Please go ahead.

Speaker 7: Great, thank you for taking my question. My question is just on the CapEx outlook beyond the end of the year here to the extent that you can provide it. I know previously you mentioned that you do expect CapEx to decline in 2024, but just given the sort of, I think it was 90 to 100 million expectation for the second half, just any sort of indication you can give us for 2024, albeit early, would be great. Thank you.

Great. Thank you for taking my question.

My My question is just on the Capex outlook.

Beyond the end of the year here to the extent that you can provide it I know previously you mentioned that you do expect capex to decline in 2024, but just given the sort of.

It was $90 million to $100 million expectation for the second half just any sort of indication you can give us for 2024, albeit early would be great. Thank you.

Speaker 4: Eric, a great question, Anthony here. So...

Eric Great question Anthony here so.

Speaker 4: You know, we'll say it this, obviously we've invested quite a bit in CAPEX over the last 12 months. We've got a healthy kind of cutering, Q4 spend ahead of us.

You know what we'll say is this obviously we've we've.

We've invested quite a bit in capex over the last 12 months, we've got a healthy kind of Q3 and Q4 spend ahead of us.

Speaker 4: You know, come to say how much we're going to spend in 24, but goes without saying it's going to be expected to be materially less than the this year. You know, we're near the end of our capital cycle. And, you know, the reality is we'll probably have war visibility on that over the coming quarters. We kind of finish up budgeting exercises for 2024.

Tough to say, how much where to spend in 'twenty four but it goes without saying, it's going to we expect to be materially less than that this year.

You know, we're we're nearing the end of our capital cycle.

And the reality is we'll probably have more visibility on that over the coming quarters, we kind of finish up budgeting exercises for off for 2024.

Thank you.

Speaker 1: The next question comes from Erin Gray with Alliance. Please go ahead.

The next question comes from Aaron Grey with Alliance. Please go ahead.

Speaker 7: Hi, good evening and thanks for the question. So just want to touch a bit on the wholesale nice to see that growth sequentially and you over here there. Any additional color you can provide maybe geographically on the states that primarily contributes to wholesale growth, it was more broad based. And then also at the brand level, whether or not it was more from your premium brands or some of your value oriented brands. Thank you.

Hi, good evening and thanks for the question.

So I just wanted to touch on the wholesale nice to see that growth.

Sequentially and year over year there.

Any additional color you can provide maybe geographically on the states that had primarily contributed to the wholesale growth was more broad based and then also at the brand level, whether or not it was more from your premium brands are some of your value oriented brands. Thank you.

Speaker 4: Sure, Aaron, I'll take that question. I'm here again.

Sure Aaron I'll take that question.

Do you have any here again, so let's start with the I guess the second question was related to kind of brands that we're seeing kind of either strength or lack thereof was that it.

Speaker 4: So let's start with, I guess the second question was related to kind of brands that we're seeing kind of either strength or lack thereof. Was that it?

Speaker 7: Yeah, just on the wholesale growth, what might have driven it geographically and then also by brand. So what drove it geographically different states or and different brands, whether it be rhythm and shine or otherwise?

Yeah, just on the wholesale growth what might have driven a geographically and then also by brand, but what drove it geographically different states or and different brands, whether it be rhythm anshan or otherwise.

Speaker 4: Yeah, so look, I mean, one of the things that we've continued to see is a bit of a trade down by the consumer. So that's led to, you know, certainly sizable strength within the InShine portfolio. But, you know, across the board, we feel pretty good about kind of all the brand performance across the board. In terms of market, you know, the softness really continues to be felt in those markets that are experiencing kind of price compression.

Yeah. So look I mean, one of the things that we've continued to see is a bit of a trade down by the consumer. So that's led to you know certainly sizeable strength within the <unk> portfolio, but across the board, we feel pretty good about kind of all the brand performance across the board in terms of market you know the softness really continues to be felt in those markets.

We are experiencing kind of price compression you know those markets generally have a lot more competition on the wholesale side of the business.

Speaker 4: Those markets generally have a lot more competition on the wholesale side of the business. So to call out places where it continues to be a bit challenging, you've got Nevada, you've got Massachusetts, and a few others. Place where there's strength, we feel like we're making solid progress and a number of our important kind of Eastern markets, PA, New Jersey, and then obviously with Maryland turning on, we feel like we've got some opportunity there as well.

So to call out you know places where continues to be a bit challenging you've got Nevada, Massachusetts.

And a few others, you know place where their strength.

We feel like we're making solid progress in a number of our important kind of eastern markets.

A new Jersey.

And then obviously with Marilyn turning on we feel like we've got some opportunity there as well.

Alright, thanks, very much for the color, there and I'll jump off the queue.

Yeah.

Speaker 1: The next question comes from Andrew Parthenos with people. Please go ahead.

The next question comes from Andrew <unk> with Stifel. Please go ahead.

Okay.

Okay.

Speaker 8: hi good evening thanks for taking my questions and congrats on the on the good quarter here uh... just wondering if you have this

Hi, good evening, Thanks for taking my questions and congrats on the good quarter here.

I'm just wondering if you have this.

Speaker 8: Can you let us know what the same store sales growth is if you exclude New Jersey as it's kind of an outlier since last year, rec launched? I'm not sure if you have that, but. So, for people here in their home.

Do you can you, let us know what the.

Same store sales growth is if you exclude a new Jersey is it's kind of an outlier since last year Rec launched.

I'm not sure if you have that but.

Speaker 8: also wondering about uh... production expansion that are expected to come online uh... toward the end of this year beginning of twenty twenty four and number of states uh... crack if i'm wrong but new york new jersey minnesota virginia

Also I was wondering about production expansions that are expected to come online.

Towards the end of this year beginning of 'twenty 'twenty four.

And a number of states correct me, if I'm wrong, but New York, New Jersey, Minnesota, Virginia.

Speaker 8: you talk a little bit about how each market is behaving and and if they can support additional supply uh... you know what do you expect a in terms of you know your inventory levels and

Could you talk a little bit about how each market is behaving in and if it can support additional supply you know what are you expecting in terms of you know your inventory levels and.

Speaker 8: And what this additional supply that comes online, how do you think the market can react in terms of all human price things?

And what this this additional supply as it comes online.

How do you think the market can react in terms of volume and price.

Speaker 9: Sure, I'll jump on that. Thanks Andrew, it's been appreciated.

Sure I'll I'll jump on that thanks, Andrew It's Ben I appreciate it.

Speaker 4: these two things are one on the same star sales, no we're not going to break out you know X New Jersey what the same star sales are, but I would say New Jersey turned out April 21st so it's most of the second quarter so that's not a key driver I don't think into the comp especially with how good that market started so I wouldn't it's not a huge factor but obviously we'll see in the third quarter where it's lapping a full 90 days here in the third quarter.

Let's say, it's two things I wanted to think of ourselves. So we're not going to break out you know X New Jersey, what the same store sales would be but I would say new Jersey turns on April 21st.

So most of the second quarter. So that's not a key driver I don't think into the comp, especially.

Especially with how good that market started so I wouldn't it's not.

Huge factor, but also youll see in the third quarter, where it is lapping a full 90 days during the third quarter.

Speaker 4: Second part of your question, can the new supply coming on, you're right about the timing which is 2024, and can it support it in New York, New Jersey, Virginia, Minnesota? And I think it's, you know, bottom up answer. A lot depends on the rules and what's going on and what gets enacted when. But we have a lot of confidence that people across the country want more rhythm flour. This is a product.

Second part of your question canvas, Camden, new supply coming on you're right about the timing, which is 2024 and cannot support it in New York, New Jersey, Virginia, Minnesota, and I think it's you know bottom up answer a lot depends on the rules and what's going on and what gets enacted win but we have a lot of confidence that people across the country want more rhythm flower.

This is a product and a brand that resonates with people. We know that dog walkers is working we need to make more dog-walker, we get questions every day, including a handful today and when can we get dog walkers and New York.

Speaker 4: We know that dog walkers is working. We need to make more dog walkers. We get questions every day, including a handful today, when can we get dog walkers in New York?

Speaker 4: So we know that we just got to make the right product, that we have the right formulations here and we just got to go execute against our strategy and we have spots in these markets. We look at total size market total population, number of stores, our stores, the adult turn on the verticality. That's why we spent 50 plus million in several of these markets because we should be able to sell that wholesale product. So yes.

So we know that when you just got to make the right product that we have the right formulations here and we just got to go execute against our strategy and we have spots in these markets. We look at total size of market total population number of stores our stores. The adult turn on the vertical <unk>. That's why we spent 50 plus million dollars in several of these markets because we should be able to sell that wholesale product. So yes, we.

Speaker 4: We have product turning on. You know, again, it's been a bottom up approach, pretty crawl walk run. So there's nothing monumental or game changing, but it's slow, methodical growth against the core strategy, just as it's always been. So we're pumped about what's ahead.

We have product turning on you know again its been a bottom up approach pretty crawl walk run. So theres nothing monumental are game changing but it's slow methodical growth against the core strategy just as it's always been so were pumped about what's ahead.

Speaker 1: The next question comes from Michael Lavery with Piper Sandler. Please go ahead. Thank you. Good afternoon.

The next question comes from Michael Library with Piper Sandler. Please go ahead.

Thank you and good afternoon.

Hey, Michael.

Speaker 10: Could you just give us the latest look ahead or kind of where we sit now in terms of price compression? Are you seeing lights at the end of the tunnel? Well, you know, how much?

Could you just give us the latest.

Look ahead or kind of where we sit now in terms of price compression or are you seeing licensing of the tunnel.

Speaker 10: Or, you know, it varies obviously state to state, but can you point to places where, you know, just maybe just a little state of the union and give us a sense of where it's. Is it improving anywhere yet at least stabilizing, you know, just sort of a walk around for that.

Much.

It varies obviously state to state, but can you point to places where.

Maybe just a little state of the Union and give us a sense of where it is.

Is it improving anywhere yet at least stabilizing just sort of a walk around for that.

Speaker 5: Sure, Michael, I'll take that. So look, I'll tell you a high level price compression can continue in many of the markets we operate in. I would say that in the third quarter, it's not as if we saw a material slow down in any of the markets that have exhibited that the price compression that we felt all year.

Sure Michael I'll take that so look I'll tell you a high level price compression continues and in many of the markets we operate in.

You know I would say that.

In the third quarter.

It's not as if we saw a material slowdown in any of the markets that have exhibited then you know the price the price compression that we felt all year.

Speaker 5: You know, and have we seen a real stabilization? The reality is no, we haven't. You know, now.

You know and have we seen a real stabilization. The reality is is no we haven't.

You know now.

Speaker 5: We did start to see some stabilizing in, call it, Maryland, with the don't use coming. But across the board, I think when we look back on 23, I think one of the themes of the year is just going to be the price compression that we felt.

We did start to see some stabilizing in call it Maryland.

With adult use counting.

But across the board I think you know when we look back on 23.

I think one of the themes of the year, it's just going to be the price compression that we felt.

Speaker 5: But generally speaking, we haven't seen a material slow down.

But generally speaking we haven't we haven't seen a material slowdown and but we do continue to see again as it is a trading down by the consumer where you know in terms of the quality of the product they're purchasing.

Speaker 5: And what we do continue to see again is a trading down by the consumer, where in terms of the quality of the product they're purchasing and buying greater unit size. So that's been a recurring theme of Q2. We'll see if it continues in Q3 and Q4. But that's one of the reasons why we built the business that we have is we now have a brand portfolio that allows us to kind of to service kind of all into the market.

And buying greater unit side. So you know that's that's been a recurring theme of Q2, we'll see if it continues in Q3 and Q4, but you know that's one of the reasons why we built the business that we have as you know we now have a brand portfolio that allows us to kind of to.

To serve as kind of all into the market and so that's really how we're reacting to the price compression that we continue to feel.

Speaker 5: So that's really how we're reacting to the price compression that we continue to be able to do.

Speaker 10: And initially there was Billy's in thumb state scarcity from the limited life.

Okay.

And.

Initially there was at least in some states.

Scarcity from the limited license.

Speaker 10: environment that that drove supported pricing and drove value historically in CPG.

Environment.

<unk> supported pricing and drove value historically in CPG.

Speaker 10: primarily been brand driven. It's still so early for brands in the category, but you've got the awful brands and put resources behind them. Are you seeing?

Primarily been brand driven.

Still so early for brands in the category, but you.

<unk>.

That's helpful brands.

And put resources behind them or are you seeing.

Speaker 10: some loyalty developing, how is it look as far as kind of evolution of branding in your portfolio?

Loyalty developing how does it look as far as kind of evolution of branding in your portfolio.

Speaker 4: I think your characterization is correct. It's early stages. We're pleased with where we're at and you know we look out and play out three to five years, and we think we have a chance to really build resonating brands with Americans who can make a difference.

Yeah, I think your characterization is correct. Its early stages, we're pleased with where we're at.

And we look out and play out three to five years, and we think we have a chance to really build resonate.

Resonating brands with Americans, who consume this product we understand that experience, we understand the consumer and we're playing the medium long game on that.

Speaker 4: We understand that experience, we understand the consumer and we're playing the medium-long game on that.

Speaker 4: And we have tons of great American brands and great American companies that have done it before and it's entirely the exact thesis we've had at the business we talk to you and everybody about it.

And we have tons of great American brands, a great American companies, who have done it before and it is entirely the exact thesis we've had in the business. We talked to you and everybody about is history doesn't repeat it right. So we can look towards that Ryan with history to understand how to build quality American companies allocate capital that can survive the cycle.

Speaker 4: History doesn't repeat a rhyme so we can look towards the rhyme of history to understand how to build quality American companies out in Capitol Hill that can survive the cycle and build brands that resonate with American consumers.

And build brands that resonate with American consumers. So it's early but we're excited about what's going on and it gives us just continued increased confidence, especially going into dicier markets that have unregulated you know sloppy regulations or illegal markets like New York.

Speaker 4: It's early, but we're excited about what's going on and gives us just continued increased confidence, especially going into, you know, dice your mark.

Speaker 4: Unregulated, you know, sloppy regulations or illegal markets like New York.

Okay, great. Thanks, so much.

Sure.

Speaker 1: As a reminder, we would ask for a limit of one question per person.

As a reminder, we would ask for a limit of one question per person.

Speaker 1: Your next question comes from Sunny Randhawa with the report. Please go ahead.

Your next question comes from Sonny Randhawa with important. Please go ahead.

Speaker 11: Thanks for taking my question. I just wanted to get an update on the early weeks of Maryland. Some of your peers are seeing that sales are trapping at two to two and a half times medical volumes. I kind of want to see if you guys are seeing similar results out of Maryland in the early.

Hi, Thanks for taking my question I, just wanted to get an update on our early.

Early weeks of Maryland. Some of your peers are saying that sales are tracking at a two to two five times our medical volumes.

I don't want to see if you guys are seeing similar results not in Maryland and in.

The early weeks.

Speaker 5: Sure, it's not even happening. You know, look, as I mentioned in my parable marks, you know, we're off to a good start.

Sure. This is Anthony.

Because as I mentioned in my prepared remarks.

You know we're off to a we're off to a good start.

Speaker 5: really good about the execution, but really convinced by July 1. You know, I would say our performance is...

Good about about the execution that really commenced on July one.

Today, our performance is is consistent with what others have kind of indicated.

Speaker 5: It's consistent with what others have kind of indicated. We have four stores within the state. We've got a healthy wholesale business. And the reality though is that we're less than 45 days into this thing and still very, very early.

We have four stores.

Four stores within the state we've got a healthy wholesale business and the reality, though is that where we're less than 45 days into this thing and it's still very very early so you know as we think about as the as the business in Maryland starts to normalize dust settles in.

Speaker 4: So as we think about as the business of Maryland starts to normalize, as the dust settles, and candidly as more consumers are aware that they can now purchase this product, it really remains to be seen where that really settles out. But so far, we're encouraged and we're excited about our position in the market. As we come to a complex kinda legislator for Maryland and those sunset costs start to break apart what is now a space zone where very soon there are going to be more and more consumers with a channels type and a track record to try to get the sales ban to go north.

And candidly as more consumers are aware that they can now purchase this product.

It really remains to be seen where that where that really settles out, but so far we're encouraged and.

We're excited about our position in the market.

Yeah.

Great I'll turn it back.

Speaker 1: The next question comes from Matt Bottomley with Canacred Generity. Stay Go ahead.

The next question comes from Matt Bottomley with Canaccord Genuity. Please go ahead.

Speaker 12: Yeah, good evening everyone. I just wanted to focus my question more on Illinois and maybe...

Yes. Good evening, everyone. Just wanted to focus my question more on Illinois and maybe.

Speaker 12: Just some of the macro level comments that you were giving at the beginning of the call about price compression and inflation, how it relates to that home market. Where I know you guys are having or competing for the leading share. What are you seeing in terms of trends in that market and more specifically on the retail front? Can you just remind us how many stores have opened in the first six months or I guess first eight months of the year and what your anticipation is for further distribution on the retail side and 2023.

Just some of the macro level comments that you were you were you were giving at the beginning of the call about price compression and an inflation how it relates to that home market, where I know you guys. There are however, a competing for the leading share.

You know what.

What are you seeing in terms of trends in that market and more specifically on the retail front can you just remind us how many stores have opened in the first six months or I guess first eight months of the year and what your anticipation is for further distribution on the retail side to in 'twenty three.

Speaker 4: Sure, Matt, I'll think that as well. Look, there's a lot happening in Illinois. In terms of the number of stores that have opened, believe the number is approximately 20 to 30 up at this point. What I'll tell you is that that's a much smaller number than anyone would have anticipated. You know, come on, August of 2023.

Sure, Matt I'll take that I'll take that as well.

Yeah look there's a lot happening in Illinois.

In terms of the number of stores that have opened believe the number is approximately 20 to 30 up to this point what I will tell you is that it.

That's a much smaller number than anyone would have anticipated.

You know I come August 2023.

Speaker 4: So, you know, the situation there is you've got, you know, you now have price compression that's happening within the market as additional supplies kind of come online, certainly anticipating greater retail demand. You know, but what I'll also say is that, you know, what we're seeing in the market is that,

So you know the situation there is you've got you now have.

Price compression that's happening within the market as additional supply has kind of come online certainly anticipating greater retail demand.

But what I'll also say is that you know.

What we're seeing in the market as it is it's not as if it's been a stairstep, it's been kind of a slow and steady in terms of the compression that we've seen so its allowed us and probably others to kind of just react accordingly to it.

Speaker 4: It's not as if it's been a stair step, it's been kind of a slow and steady in terms of the compression that we've seen. So it's allowed, you know, us and probably others to kind of just react accordingly to it. But the reality is the next six months, six and nine months are probably going to tell us a lot. And it's really going to be driven by the number of stories that are able to open.

But the reality is the next six months six to nine months, you're probably going to tell us a lot and it's really going to be driven by the number of stores that are able to open.

Speaker 4: For us, you know, with our tends to report portfolio, there has been a competition that's opened up around us. It certainly has impacted our retail business and it's something we just continue to watch.

For us with our 10 store portfolio.

There has been competition, that's opened up around us it certainly has impacted our retail business and.

And it's something we just continue to watch.

Okay. Thanks for that.

Speaker 1: The next question comes from Scott Borshin with Roth MKM. Please go ahead.

The next question comes from Scott <unk> with Roth and Pan. Please go ahead.

Speaker 13: Good, and thanks for the questions. I appreciate the color on, obviously, the ongoing price compression.

Good afternoon, and thanks for the questions.

I appreciate the color on obviously, the ongoing price compression and kind of around the stabilization there, but can you focus a little more on your side on the cost environment and the improvements that you can.

Speaker 13: around the stabilization there, but can you focus a little more on your side on the cost environment?

Speaker 13: improvements that you can continue to make there. The continuous flow into the margins, taking it just still expected, 50% first margin, 30% EBITDA margins moving forward. But just what kind of cost efficiencies are, are you able to drive further forward for the model here? And then just on top of that, kind of FGNA, how we look at that kind of continuing increase as new stores kind of get added throughout the second half here.

We continue to make there.

The continued flow into the margins are indeed take he gives you still expected, 50% gross margin, 30% EBITDA margins moving forward, but just about paring cost efficiencies or are you able to kind of.

Drive further full for the model here and then just on top of that and kind of <unk> SG&A. How are we look at that kind of continuing to increase as new tours kind of scattered throughout the second half here.

Speaker 4: Sure, Scott and Anthony, I'll take that one as well.

Sure.

Scott I'll take I'll take that one as well.

Speaker 4: You know, look, as we felt price compression, there's a couple of levers in the business that we had. You know, I've talked about this on previous calls. One of those is operating efficiency. And I'll tell you that, you know, that's an area that we're very focused on. And, you know, the way we kind of look at this, we look at it on a facility by facility basis and a store by store basis.

<unk>.

You know look as as we felt price compression you know there's a couple of levers in the business that we have you know I've talked about this on previous calls one of those is is operating efficiency.

I'll tell you that you know that's an area that we're very focused on.

And you know.

The way, we kind of look at as we look at it on a on a facility by facility basis on a store by store basis.

Speaker 4: You know, and something we watch very closely. We're encouraged by the progress. I'll tell you that, you know, I think we continue to have plenty of opportunity there, particularly as we continue to grow into the CPG capacity that we've already built. Um,

It's something we watch very closely we're encouraged by the progress I'll tell you that you know I think we continue to have plenty of opportunity there, particularly as we continue to grow into the CPG capacity that we've already built.

Speaker 4: you know, on the kind of SG&A side, you know, I was going to kick it over to Matt, but I can just answer it. You know, look, we...

You know on the kind of SG&A side.

I was going to kick it over to Matt, but I can just stands for it you know what.

Speaker 4: We've been sitting around, Cal, at the 56, 57 billion normalized operating costs.

Sure.

We've been sitting around call. It 50, 657 billion normalized operating cost and as we open up stores, we're going to continue to see additional SG&A I mean, there's just you know there's really no way around it. So one of the things that we're doing is we're constantly looking at effectively the yes, the normalized SG&A.

Speaker 4: And as we open up stores, we're going to continue to see additional S-GNA. I mean, there's just, you know, there's really no way around it. So one of the things that we're doing is we're constantly looking at effectively the normalized S-GNA expenses as a percent of our revenue. And that's kind of how we hold ourselves accountable. And we like where it is. And our goal in our plan is to keep it at or around that level on GoFour-D-Based.

<unk> as a percent of our revenue and that's kind of how we hold ourselves accountable.

And we like where it is and our goal and our plan is to keep it at or around that level on a go forward basis.

Speaker 4: I'll just jump in Scott's good question, but zooming out a little, let's just look at the whole income statement You got gross margin above the SGNA, but really below the SGNA I think is a key area Especially in cannabis. He was talking about adjusted EBITDAI, it includes a lot of murky kinds of adjustments But just below EBITDAI, so we're all on the same page

I'll just jump in Scott good question, but zooming out a little let's just look at the whole income statement you got gross margin above yesterday, but really below the SG&A I think is a key area, especially in cannabis.

Talk about adjusted EBITDA. It includes a lot of murky times of adjustments, but just below EBITDA. So we're all on the same page.

Speaker 4: You know, we go through a real basic around here, just a cash flow lesson, but EBITDA minus taxes, minus interest, because you pay taxes in cash, if you pay taxes, you pay interest in cash most of it usually. And then your tap ex, and what's less is the cash balance. There's really not much else. And so for green thumb most...

We go through a real basic around here, just a cash flow lesson, but EBITDA minus taxes minus interest because you pay taxes and cash if you pay taxes you pay interest in cash most of it usually and then your Capex and what's left is the cash balance there's really not much else in so for Greenbelt most.

Speaker 4: Basic back of the envelope with a 300 ish run rate just taking this quarter times for take 120 million of taxes That's current year cash taxes on the current EBITDA a pretty simple story Minus our interest cash payment due annually, which is 17 million

Basic back of the envelope with a 300 ish run rate just taking this quarter times four take a $120 million of taxes that current year cash taxes on the current EBITDA a pretty simple story.

Minus our interest cash payments due annually, which is $17 million just as a reminder, if we have a mortgage on it on a retail property. It shows up in SG&A has ramped up we have a mortgage on a cannabis production facility it'll show up as Cogs and rent. So that's all above the line. However, the interest is not and what's left there from our perspective.

Speaker 4: It says a reminder, if we have a mortgage on a retail property, it shows up in SGNA as rent, if we have a mortgage on a cannabis production facility, it'll show up as CODs in rent. So that's all above the line. However, the interest is not.

Speaker 4: And what's left there from our perspective is, you know, some number over 150, the number you can do the math yourself. And then minus cat-backs. And there's two kinds of cat-backs. There's maintenance cat-backs, to essentially keep the light on. And then gross cat-backs. And we've been able to really control that dial and understand our position.

As you know some number over 150. The number you can do the math yourself and then minus Capex and there's two kinds of Capex is maintenance capex to essentially keep the lights on and then growth Capex and we've been able to really control that dial and understand our position that cash flow generation. After all of that for US is what puts us in a position to continue to invest in the SG&A Matan Anthony have done an amazing job, we got a very.

Speaker 4: That cash flow generation after all of that for us is what puts us in a position to continue to invest. So the SGNA, Matt and Anthony have done an amazing job. We got it very tight. We understand it percentage of revenue Anthony is right. But it's the gross profit. It's the tax that is the interest in the cat-backs also that makes the whole formula work. And that's what gives us a cash-producing machine and enterprise here that we're building for the long term on behalf of shareholders and gets us pretty excited. Thanks for the question.

Tight we understand its percentage of revenue Anthony is right, but it's the gross profit is the taxes. It's the interest and the Capex also that makes the whole formula work and that's what gives us a cash producing machine in enterprise here that we're building for the long term on behalf of shareholders and gets us pretty excited so thanks for the question.

I appreciate the color. Thanks.

Speaker 1: The next question comes from Mike Reagan with Excelsior Equities. Please go ahead.

The next question comes from Mike <unk> with Excelsior equity. Please go ahead.

Speaker 14: Hi, I think sort of taking the question and we're actually in a pretty good corner. Can you help us understand sort of the nature of this 55 to 65 incremental cap spending in the second half of this sort of incremental spending versus what was guided in May, or is this a pull forward from 2024 and some of us sort of understand what change versus made to make this incremental investment. Thanks.

Hi, Thanks for taking my question and congrats on a pretty good quarter.

Can you help us understand sort of the nature of this 55 to 65 incremental cap spending in the second half is this sort of incremental spending versus what was guided in may or is this a pull forward from 2024, and just help us sort of understand what changed versus our versus Nader.

To make this incremental investment thanks.

Speaker 4: Yeah, it's a good question and you're right. You know, so it's a little here, a little there, a little bit of everything.

Yes, it's a good question and you're right.

A little here a little there a little bit of everything we were able to see the results of the business and then make decisions of what's going on so we see the $90 million of cash flow from operations, which gives us the cash to continue to invest so some of its discretionary so it's finishing out we're looking at each project.

Speaker 4: We're able to see the results of the business and then make decisions of what's going on. So we see the 90 million of cash flow from operations, which gives us the cash to continue to invest. So some of it's discretionary, so it's finishing out. We're looking at each project and doing it. I do not think, and as Anthony mentioned, one of the other questions is that's indicative that 24 is going to all of a sudden look like 23.

And doing it I do not think and as Anthony mentioned in one of the other questions. If that's indicative that 'twenty four is going to all of a sudden looks like 23, we continue to sort of double underlying that were at the end of the capex cycle and that's not an indication of what's happening it's not even really that's really a pull forward.

Speaker 4: We continue to sort of double underline that we're at the end of the capex cycle and that's not an indication of what's happening. It's not even really necessarily a pull forward. There'll be a couple of things in 24 at the moment. We have the ability to play a ton of offense and do lots of different things. We've talked about our priorities of that cash flow being one capex. And here we are at the end, two dead. We've talked a ton about the dead and then three potentially buyback or some advantage for shareholders. So.

There'll be a couple of things in 24 at the moment, we have the ability to play a ton of offence and do lots of different things, we've talked about our priorities with that cash flow be one capex and here. We are at the end to that I haven't talked talking about the debt and then three potentially buyback or some advantage for shareholders. So it's really confidence in the operations of the business, finishing out the projects, we have four or five.

Speaker 4: It's really confidence in the operations of the business. Finishing out the projects, we have four or five very large scale projects that we wanted to finish out. And it's continued retail expansion that's making it happen a little bit of hustle and Maryland to get those stores open and up and running for July 1 that we didn't quite know was going to happen when we gave that first guidance. But little here, a little there is the core answer. Answer.

<unk> very large scale projects that we wanted to finish off and it continued retail expansion is.

It is making it happen a little bit of hustle and Maryland to get those stores opened it up and running for July one that we didn't quite know what's going to happen. When we gave that first guidance, but little here a little there is the core answer.

Great. Thanks, a lot well pass along to the next person.

Thanks, Mike.

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

This concludes our question answer session I would like to turn the conference back over to management for any closing remarks.

Speaker 4: Thanks everybody for joining us. Look forward to talking to you again in about 90 days. Have a great summer. And have a great fall!

Thanks, everybody for joining us look forward to talking to you again in about 90 days have a great summer Paul.

Speaker 1: The conference is now concluded. Thank you for attending today's presentation. And we now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker 2: The per se.

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