Q4 2023 Curaleaf Holdings Inc Earnings Call

Operator: Good evening, and thank you for standing by for Curaleaf Holdings' quarterly conference call. We are holding for one moment to allow more to join. Please stay on the line.

Good evening and thank you for standing by securely Holdings annual I'm, sorry, rather a quarterly conference call. We are holding for one moment to allow more to join.

Please stay on the line the conference will begin momentarily. Thank you.

Operator: The conference will begin momentarily. Thank you. BF-WATCH TV 2021, BF-WATCH TV 2021, Hello and welcome to the Curaleaf Holdings, Inc. fourth quarter and fiscal year end 2023 earnings conference call. All participants will be in listen only mode.

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Hello, and welcome to the Cure Leaf Holdings, Inc, fourth quarter and fiscal year end 'twenty twenty-three earnings conference call.

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Camilo Russi Lyon: And to withdraw your question from the queue, you may press star, then two. I would now like to hand the call over to Camilo Lyon, Chief Investment Officer. Please go ahead. Good afternoon, everyone, and welcome to Curaleaf Holdings fourth quarter and full year 2023 conference. Today we're joined by Executive Chairman Boris Jordan, Chief Executive Officer Matt Darin, and Chief Financial Officer Ed Kremer. Before we begin, I'd like to remind everyone that the comments on today's call will include forward-looking statements within the meaning of Canadian and United States securities laws, which by their nature involve estimates, projections, plans, goals, forecasts, and assumptions, including the successful integration of acquisitions, and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements on certain material factors or assumptions that were applied in drawing a conclusion or making a forecast in such statements.

I would now like to hand, the call over to Camilo Lyon Chief Investment Officer. Please go ahead.

Good afternoon, everyone and welcome to <unk> Holdings fourth quarter and full year 2023 conference call. Today, we're joined by Executive Chairman, Boris Jordan, Chief Executive Officer, Matt, Darren and Chief Financial Officer, Ed Kraemer before.

Before we begin I'd like to remind everyone that the comments on today's call will include forward looking statements within the meaning of Canadian and United States Securities laws, which by their nature involve estimates projections plans goals forecasts and assumptions, including the successful integration of acquisitions.

And are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward looking statements on certain material factors or assumptions that were applied in drawing a conclusion or making a forecast in such statements.

Camilo Russi Lyon: These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors can be found in the company's filings and press releases on CDAR and the Toronto Stock Exchange. During today's conference call, in order to provide greater transparency regarding Curaleaf's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results. Such non-GAAP measures and ratios do not have a standardized meaning under U.S. GAAP. Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U.S. GAAP, should not be considered measures of Curaleaf liquidity, and are unlikely to be comparable to non-GAAP financial measures provided by other companies.

These forward looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. We undertake no obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise, except as required by applicable law.

Additional information about the material factors and assumptions, forming the basis of the forward looking statements and risk factors can be found in the company's filings and press releases on SEDAR and the Toronto stock exchange.

During today's conference call in order to provide greater transparency regarding Chile's operating performance, we will refer to certain non-GAAP financial measures and non-GAAP financial ratios that involve adjustments to GAAP results, such non-GAAP measures and ratios do not have a standardized meaning under U S. GAAP.

Any non-GAAP financial measures presented should not be considered to be an alternative to financial measures required by U S. GAAP should not be considered measures of cheerleaders liquidity and are unlikely to be comparable to non-GAAP financial measures provided by other companies any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U.

Boris Alexis Jordan: Any non-GAAP financial measures referenced on this call are reconciled to the most directly comparable U.S. GAAP financial measure under the heading, Reconciliation of Non-GAAP Financial Measures, in our early press release issued today and available on our investor relations website at ir.curaleaf.com. With that, I'll turn the call over to Executive Chairman Boris Jordan. Thank you, Camilo.

The us GAAP financial measure under the heading reconciliation of non-GAAP financial measures in our earnings press release issued today and available on our Investor Relations website at IR dot purely dot com with that I'll turn the call over to executive Chairman Boris Jordan Force.

Boris Alexis Jordan: Good afternoon, everyone, and thank you for joining us to discuss our fourth quarter and full-year results. 2023 had its share of challenges to overcome, but through our focus on controlling the controllables, our operations have improved significantly, and we ended the year on a strong note. In the fourth quarter, we generated record revenue of $345 million, up 4% sequentially, beating expectations as wholesale sales accelerated 14%. Adjusted gross margin of 46.5% improved by 80 basis points versus last quarter, and adjusted either by dollars $83 million or 24% of sales, a sequential improvement of 140 basis points. Domestic AEBITDA margins improved 80 basis points to 25% versus Q3, and our international segment turned 80 EBITDA positive for the first time.

Thank you Tim Hello, Good afternoon, everyone and thank you for joining us to discuss our fourth quarter and full year results.

23 had its share of challenges to overcome but through our focus on controlling the controllable our operations have improved significantly and we ended the year strong.

In the fourth quarter, we generated record revenue of $345 million up 4% sequentially, beating expectations as wholesale accelerated 14%.

Adjusted gross margin of 46, 5%.

By 80 basis points versus last quarter, and adjusted EBITDA was $83 million or 24% a sequential improvement of 140 basis points Domesticate EBITDA margins improved 80 basis points to 25% versus quarter, three and our international segment EBITDA positive.

For the first time the segment still represents 130 basis point headwind to consolidated margins, but as the business scales in the cannabis industry matures, we anticipate robust growth and margin expansion.

Boris Alexis Jordan: This segment will still represent 130 basis point headwinds to consolidated margins, but as the business scales and the EU cannabis industry matures, we anticipate robust growth and margin expansion. For the year, revenue totaled $1.35 billion, a 6% improvement from 2022, while adjusted gross margin and EBITDA margins were 46% and 23%, respectively. Margins were impacted by price compression and our decision to manage inventory by limiting excess capacity in some of our facilities.

For the year revenue totaled $1.35 billion, a 6% improvement from 2022, while adjusted gross margin.

And EBITDA margins were 46 and 23% respectively.

Margins were impacted by price compression and our decision to manage inventory, but I don't I suppose capacity somewhere around facilities that said I expect full recovery of our margins now that we have we plan to grow to meet accelerating.

Boris Alexis Jordan: That said, I expect full recovery of our margins now that we have replanted grow rooms to meet accelerating demand. Despite the industry challenges, 2023 was a pivotal year in Curaleaf's evolution. We took actions to optimize our asset base while aggressively scrutinizing every aspect of our cost structure.

Despite the industry challenges 2020.

Joe its evolution, we took actions to optimize our asset base, while aggressively scrutinizing every aspect of our cost structure.

Boris Alexis Jordan: These initiatives position the company for consistent long-term revenue growth, profit expansion, and cash generation. With that work behind us, we are prepared and energized to capitalize on the industry catalyst Curaleaf is uniquely positioned to leverage, including new or forthcoming adult use states such as New York, Ohio, Florida, and Pennsylvania, and key European countries like Germany, the UK, and Poland. 2024 is poised to be Curaleaf's catalyst year. I'm confident in the future and expect a strong growth trajectory as we have yet to see what unconstrained demand looks like. Let's discuss these catalysts in greater detail.

These initiatives positioning the company for consistent long term revenue growth profit expansion and cash generation with that work behind US we are prepared and energized to capitalize on the industry catalysts purely uniquely positioned to leverage including new or forthcoming adult use states such as New York, Ohio.

<unk> in Pennsylvania, and key European countries, like Germany, the U K and Poland.

'twenty 'twenty four is poised to be purely as a catalyst year I'm confident in the future, but I expect a strong growth trajectory because we have yet to see what unconstrained demand looks like.

Let's discuss these talents and greater detail domestically, we're thrilled New York finally opened its adult use market.

Boris Alexis Jordan: Domestically, we are thrilled New York finally opened its adult-use market to the incumbent operators in late December. And weeks later, Curaleaf opened its first adult-use store in Newburgh in January. We are encouraged by the initial sales ramp at this location, which continues to increase weekly. While we look forward to opening more adult-use stores in the future, the prize of New York's $5-6 billion cannabis opportunity is clearly wholesale. We enter the adult-use market with the benefit of having a 40% share of the medical market and a strong brand awareness and product offering we can leverage. The pace of new dispensary openings has increased steadily, reaching a total of 78 thus far, and we have made great progress in adding new wholesale accounts by meeting with our premium brands Select and Grassroots.

Operators in late December and weeks later purely opened its first adult use store in Newburgh Jed.

We are encouraged with the initial sales ramp that dislocation, which continues to increase we could well we look forward to opening four adult use stores in the future the price of New York's $5 billion to $6 billion cannabis opportunity, it's clearly wholesale.

Enter the adult use market with the benefit of having a 40% share of the medical market and a strong brand awareness and product offerings. We can leverage the pace of new dispensary openings has increased steadily reaching a total of 78, thus far and we have made great progress in adding new wholesale accounts.

With our premium branded select and grassroots however, the OCR and needs to do.

Boris Alexis Jordan: However, the OCM needs to do more to support the legal market with greater enforcement of illicit operators, which is paramount to creating the robust and safe marketplace we all want in this state. I have no doubt New York will be a top adult-use market for Curaleaf, just like the medical market has been. With Ohio's population of 12 million people and an underpenetrated medical patient rate of just 1.5%, we could see a meaningful three- to four-fold increase in the existing $500 million medical market after adult use launches. We are a vertical operator and tend to open the maximum five stores allowed, plus the additional three will be granted with adult use.

More to support the legal market with greater enforcement of illicit operators, which is paramount to creating a robust and safe marketplace. We all want in the state I have no doubt in New York will be a top adult use market procure only just like the medical market.

With Ohio population 12 million people and an underpenetrated medical patient rate of just one 5%, we could see a meaningful three to four fold increase of the existing $500 million medical market. After adult use launches we are a vertical operator and trying to open back so far.

Five stores a lot what's the additional three will be granted with adult use but do you have a robust pipeline of stores. We're in active discussions on to complement our existing two locations I look forward to what should be a robust marketplace with above average growth.

Boris Alexis Jordan: We have a robust pipeline of stores we're in active discussions on to complement our existing two locations and look forward to what should be a robust marketplace with above average growth. Florida, a top three revenue and margin state, is another significant catalyst for Curaleaf. The state's Supreme Court is due to provide a final summary judgment by April 1st on whether the Adult Use Initiative will be on the November ballot.

Florida, a top three revenue and margin state.

Another significant catalyst to procure.

The state Supreme Court is doing to provide a final summary judgment by April 1st on whether the adult use initially will be on the door November about we believe there's a high probability we'll conservatively speaking we estimate this 2 billion dollar market could double in its first full year of adult use sales and flows.

Boris Alexis Jordan: We believe there's a high probability it will. Conservatively speaking, we estimate this $2 billion market could double in its first full year of adult use sales. Interestingly, this does not include any incremental benefit from tourism, which last year brought 135 million visitors to the state.

Finally, this does not include any incremental benefit from tourism, which last year brought 135 million visitors to the state.

Boris Alexis Jordan: At the expected time of the adult use launch, Curaleaf will have the necessary cultivation capacity and stores in place to compete for the leadership position in Florida. Pennsylvania could also surprise and embrace adult use in 2025. I have been encouraged by the governor's recent comments urging the state legislature to legalize cannabis. This is a $1.3 billion market in which we have 18 stores, two cultivation facilities, and a robust wholesale presence that supports a top-three market share position. With a population of 13 million and a patient penetration rate of nearly 4%, we could see Pennsylvania increase two to three times upon adult use conversion. On the European front, Curaleaf International grew 63% year over year in the fourth quarter, driven by strength in the UK, Germany, and Poland. Despite the smaller markets, we are also building brand awareness in Switzerland and Sweden. And two weeks ago, Germany's Bundesbank voted to liberalize cannabis by removing it from the narcotics list. The significance of this vote cannot be overstated. In my view, this is akin to de-scheduling cannabis altogether.

At the expected time of the adult use launch surely will have the necessary cultivation capacity and stores in place to compete for the leadership position in Florida.

Pennsylvania could also surprised and embraced adult use in 2020 part I've been encouraged by the Governor's recent comments urgent state legislature to legalize cannabis was about $1 3 billion dollar market in which we have 18 stores two cultivation facilities and a robust wholesale presence.

It's a top three market share position with a population of 13 million patient penetration rate.

But we could see Pennsylvania increased student Repot upon adult use conversion.

On the European front purely for international grew 63% year over year in the fourth quarter driven by strength in the U K, Germany and Poland.

Smaller markets. We are also building brand awareness, and Switzerland, and Sweden, and two weeks ago, Germany's bundesbank volatile liberalized catalysts by removing it from the start.

What's the significance of this boat cannot be overstated in my view. This is a kin to de scheduling of cannabis altogether is there.

Boris Alexis Jordan: It is a massive move forward for the industry, the country, and the continent. I firmly believe that when this legislation is enacted, other nations such as France, Spain, Italy, and the Czech Republic will follow quickly, now that Germany has paved the path. In fact, just last month, Ukraine legalized medical cannabis.

As we move forward for the industry the country at the Congress.

Firmly believes that when this legislation was enacted other agents, such as France, Spain, Italy, and Czech Republic will follow quickly now that Germany is pacing flat in fact, just last month, Ukraine legalized medical cabinets to put this opportunity into context, the total addressable market and population Europe double that.

Boris Alexis Jordan: To put this opportunity into context, the total addressable market and population in Europe is double that of the United States. There is no better position than Curaleaf to fully leverage these opportunities in Europe. It has taken us three years to assemble the platform we have today, and there are no existing companies with nearly the scale and breadth of operations that we possess. Our established cultivation and processing infrastructure in Portugal, coupled with our leading patient platform and complete brand portfolio, including 420 Select and Curaleaf, ensures we are ready to capitalize on this massive opportunity. In aggregate, the state and country catalysts could add $500 to $750 million in incremental revenue for us in the next several years. In mid-December, we uplisted to the Toronto Stock Exchange, which, among other benefits, opens the doors to U.S. and international custody. Specifically, we have been clearing for custody at BNY Mellon and State Street, two of the largest global custodians. These custodians now provide the necessary clearing solutions for global investors to invest in Curaleaf without issue.

The United States.

There is no one better positioned than purely to fully leverage these opportunities in Europe. It has taken us three years to assemble a platform. We have today and there are no existing companies with nearly the scale and breadth of operations. Let me put that are established cultivation and processing infrastructure and Portugal, coupled with our leading patient platform and complete.

<unk> portfolio of cooling.

So that's been purely ensures we are ready to capitalize on this massive opportunity.

In aggregate this.

State and country catalyst could add $500 million to $750 million incremental revenue for us in the next several years.

In mid December uplift to the Toronto stock exchange, which among other benefits opened the doors to U S and international custody solution.

Specifically, we have been clear with us in one state Street two of the largest global custodians. These custodians now provides the necessary clearing solutions for global investors to invest in purely without issue.

Boris Alexis Jordan: In addition, we believe we will be eligible for inclusion in three indices, the TSX, the MSCI Small Cap, and the FTSE Small Cap, with no custody concern for our shares. This is just one example of how we are finding ways to increase shareholder access and value, something that drives our strategic, operational, and financial discussions every day. Finally, with respect to guidance, we are excited about the many catalysts coming to us over the next four to six quarters. However, we are also cognizant of the many variables that could change the arc of how the year unfolds.

And is there should we believe will be eligible for the cogent in three industries. The T. S X the MSCI small cap and the FTSE smallcap with no custody concern with our shares. This is just one example of how we are finding ways to increase shareholder access and value something that drives our strategic operational and financial.

Discussions every day.

Finally with respect to guidance, we are excited about the many catalysts coming to us.

Four to six quarters.

We're also cognizant of the many variables that could change the art of how the year unfolds based on what we know today, we expect sales to grow mid single digits and adjusted EBITDA margins of mid 20% both consistent with current consensus.

Boris Alexis Jordan: Based on what we know today, we expect annual sales to grow mid-single digits and adjusted even down margins of mid-20%, both consistent with current consensus. Also, now that we have fully planted our grow rooms to meet increasing demand, we expect to see a meaningful improvement in our gross margins, with quarter one margins approaching 50% a quarter earlier than we had originally planned. I'd like to thank our global team members that came together to make these results possible. Personally, I have seen the energy and passion our team comes to work with every day to help our customers find safe solutions for their needs, and what inspires me to push Curaleaf forward on its path to global brand adoption. With that, I'd like to turn the call over to CEO Matt Darin. Thanks, Boris.

So now that we are fully planted our growers to meet increasing demand, we expect to see meaningful improvement in our gross margins with quarter, one margins approaching 50% a quarter earlier than we had originally planned.

I'd like to thank our global team members that came together to make these results possible.

Personally I have seen the energy and passion of our team to.

To work with every day to help our customer response based solutions for their needs and then at what inspires me to push purely for others pop to a global brand adoption with that I'd like to turn the call over to see all about that Matt.

Thanks Boris.

Matthew S. Darin: On our last call, I said we were back in the office, and our fourth quarter results are a solid reflection of just that. A highlight of Q4 was our domestic wholesale business, which grew 15% sequentially. This growth was broad-based, with the east and central regions seeing robust gains driven by increasing store counts in New Jersey, New York, and Illinois.

On our last call I said, we are back on offense and our fourth quarter results are a solid reflection of just that.

A highlight in Q4 was our domestic wholesale business, which grew 15% sequentially.

This growth was broad based with the east and central regions seeing robust gains driven by increasing store counts in New Jersey, New York and Illinois.

Matthew S. Darin: We are focused on growing this revenue channel, and investments we've made in an expanded product portfolio, new sales leadership, and trade marketing are paying off. Now that we are back to operating at full capacity, we expect to build on this momentum and serve the growing number of independent dispensers. By state, we hold the number one market share position in New Jersey, Arizona, and New York, according to BDSA.

We are focused on growing this revenue channel and investments, we've made and an expanded product portfolio, new sales leadership and trade marketing investments are paying off.

Now that we are back to operating at full capacity, we expect to build on this momentum and serve the growing number of independent dispensaries.

I'd say, we held the number one market share position in New Jersey, Arizona, and New York According to BDSI.

Matthew S. Darin: Touching on the first two, in New Jersey, we grew wholesale 24% sequentially as our team was highly successful in getting our brands into new independent accounts that opened in the quarter. With 90 dispensaries open as of year-end and more opening each month, we anticipate continued strength in this channel. Arizona, a highly competitive market, has been a bright star for the past few quarters, steadily increasing share despite overall market decline. In fact, our number one share position is nearly twice that of our next closest competitor. The team on the ground has done an excellent job servicing both retail and wholesale, which combined to deliver 4% sequential growth in the quarter. Lastly, in Pennsylvania, we are capitalizing on the great reputation we've established for high-quality, consistent flour since the inception of the medical market.

Touching on the first two in New Jersey, we grew wholesale 24% sequentially as our team was highly successful and getting our brands into new independent accounts that opened in the quarter.

With nine dispensaries open as of year end and more opening each month, we anticipate continued strength in this channel.

Arizona, a highly competitive market has been a bright star for the past few quarters steadily increasing share despite overall market declines.

In fact, our number one share position is nearly twice that of our next closest competitor.

The team on the ground has done an excellent job servicing both the retail and wholesale which combined to deliver 4% sequential growth in the quarter.

Lastly, in Pennsylvania, we are capitalizing on the great reputation we've established for high quality consistent flower since the inception of the medical market and the recent introduction of Troche as helped the state growth, 11% sequentially again with superb results from wholesale complemented by strong retail performance.

Matthew S. Darin: And the recent introduction of trochies helped the state grow 11% sequentially, again with superb results from wholesale, complemented by strong retail performance. Our success in the medical market positions us well for a hopeful launch of adult use in 2025. I attribute much of the improvement to the early benefits we are seeing from the regionalized management structure we implemented last quarter. By empowering our regional teams with greater autonomy and control, we are winning on the ground by executing locally every day.

Our success in the medical market positions us well for a hopeful launch of adult use in 2025.

I attribute much of the improvement to early benefits, we're seeing from the regionalized management structure, we implemented last quarter.

By empowering our regional teams with greater autonomy and control we are winning on the ground by executing locally everyday.

Matthew S. Darin: I'm inspired by the commitment and energy I see in our team members across our stores and manufacturing facilities, and without question, that is showing up in our numbers. 2023 was a highly productive year for our retail business, as we eclipsed the $1 billion mark for the first time, bolstered by nine new store openings during the year. In the fourth quarter, our U.S. retail business grew 1% sequentially from Q3 and 9% for the year. As has been the case all year, traffic was strong in our dispensaries, as transactions grew 2% sequentially and 23% year over year. Both UPC and AUR were relatively stable, with AOV down about 1%. Our vertical mix was steady at 62%.

I'm inspired by the commitment and energy I see in our team members across our stores and manufacturing facilities and without question that is showing up in our numbers.

2023, with a highly productive year for our retail business as we eclipsed the $1 billion Mark for the first time bolstered by nine new store openings during the year.

In the fourth quarter, our U S retail business grew 1% sequentially from Q3 and 9% for the year.

As has been the case all year traffic was strong in our dispensaries as transactions grew 2% sequentially and 23% year over year.

Both UPC and AUR were relatively stable with <unk> down about 1%.

Our vertical mix was steady at 62% in.

Matthew S. Darin: In 2023, we sold $680 million of our branded products through our retail stores. While Q4 is a more seasonally promotional quarter than Q3, the overall rate of price compression has lessened. That said, we think the base case for 2024 is continued price compression, but at moderating rates compared to 2023. The upside from normalizing pricing is increased traffic, as we believe we are winning customers from both the illicit market and from substitute categories like alcohol. We are relentlessly focused on developing a best-in-class product and brand portfolio with leading market share across all major product categories. This focus is paying off as we grew market share in the fourth quarter with broad-based gains across our diverse footprint, including New Jersey, Arizona, Florida, Illinois, and Pennsylvania.

In 2023, we sold $680 million of our branded products through our retail stores.

While Q4 is a more seasonally promotional quarter than Q3, the overall rate of price compression is lessened.

That said, we think the base case for 2024 is continued price compression, but it moderating rates compared to 2023.

The upside from normalizing pricing has increased traffic as we believe we are winning customers from both the illicit market and from substitute categories like alcohol.

We are relentlessly focused on developing a best in class product and brand portfolio with leading market share across all major product categories.

This focus is paying off as we grew market share in the fourth quarter with broad based gains across our diverse footprint, including New Jersey, Arizona, Florida, Illinois and Pennsylvania.

Similarly, our brand portfolio is winning with customers as evidenced by 26% of our revenues driven by new product introductions.

Flower remains the largest and most important category and we are heavily investing in curating a proprietary strain offerings we.

Matthew S. Darin: Similarly, our brand portfolio is winning with customers, as evidenced by 26% of our revenues driven by new product introductions. Flower remains the largest and most important category, and we are heavily investing in curating a proprietary strain option. We have taken a rigorous, data-based approach to our strain menus such that consistency, average potencies, and quality metrics are all improving across the country.

We have taken a rigorous database approach to our screen menus, such that consistent theme average potencies and quality metrics are all improving across the country.

On the premium and grassroots is now in 12 markets.

We are seeing success with our grassroots diamond infused flower and pre rolls in many key markets, including Arizona, New Jersey, Maryland, and Illinois.

Our find value brand is resonating with consumers in 11 states and we are expanding the offering with more flavor forward terpene rich flower and pre rolls this year.

Matthew S. Darin: On the premium end, grassroots is now in 12 markets. We have seen success with our grassroots diamond-infused flour and pre-rolls in many key markets, including Arizona, New Jersey, Maryland, and Illinois. Our fine value brand is responding with consumers in 11 states, and we are expanding the offering with more flavor-forward terpene-rich flour in pre-rolls this year. Select is the number one bait brand in our market. Brick, our proprietary 2-gram hardware, is our most successful product launch to date, with more expansion to come. Liquid Diamond Vapes, using our proprietary ACE extraction technology, have been perfected in the Florida market and are now launched in Massachusetts, with additional markets launching later this year.

Select is the number one vape brand in our markets.

Rick are proprietary to Graham hardware is our most successful product launch with.

With more expansion to come.

Liquid diamond base, using our proprietary ace extraction technology has been perfected in the Florida market and is now launched in Massachusetts with additional markets launching later this year.

Liquid diamonds are the clearest smooth as vapour in the market and our platform we will build on in 2024.

These innovations are extending to select top market share position in the regulated market.

As Boris mentioned, our international segment generated an impressive year over year growth of 63% driven by continued strength in the U K and Germany and Poland of late.

Matthew S. Darin: Liquid Diamonds are the clearest, smoothest vape on the market and a platform we will build on in 2024. These innovations are extending Select's top market share position in the regulated market. As Boris mentioned, our international segment generated impressive year-over-year growth of 63%, driven by continued strength in the UK and Germany, and Poland of late. In the UK, our rebranded Curaleaf clinics are becoming known as the destination for high-quality medical cannabis, as seen in our healthy, market-leading patient share metric. In Germany, where groundbreaking legislation to liberalize cannabis is nearing enactment, we have estimated that it can conservatively unlock a three to five times increase in patient count, which we estimate is two to 300,000 patients today. However, recent reports have suggested the increase could be 10 to 15 times, which would put the patient penetration rate on par with Florida, a good medical market analyzer. While it took five years for Florida to reach 4% patient penetration, as sales growth was directly tied to dispensary growth.

In the U K.

Our rebranded purely clinics are becoming known as the destination for high quality medical cannabis as seen in our healthy market, leading patient share metrics.

In Germany were groundbreaking legislation to liberalized candidates is nearing enactment, we have estimated that a key conservative unlock a three to five times increase in patient count, which we estimate is two to 300000 patients today.

However, recent reports have suggested the increase could be 10 to 15 times, which would put the patient penetration rate on par with Florida, a good medical market analog.

While it took five years for Florida to reach 4% patient penetration as sales growth was directly tied to dispensary growth.

We think the ramp in Germany should be quicker due to the already installed distribution network of 18000 pharmacies through which candidates will be distributed.

All this is to say we are anticipating a significant increase in demand over time as awareness builds.

As such we are expanding our portfolio to include a mid tier flower offering under the <unk> brand to complement for 'twenty farmers premium positioning.

We expect to begin selling this flower into the German market over the coming months from our facility in Portugal.

Undoubtedly Germany is poised to become a robust healthy candidates market and we have a fantastic market position.

In Poland, our market that also resembles Germany's pharmacy distribution structure.

Matthew S. Darin: We think the ramp-up in Germany should be quicker due to the already installed distribution network of 18,000 pharmacies through which cannabis will be distributed. All this is to say we are anticipating a significant increase in demand over time as awareness builds. As such, we are expanding our portfolio to include a mid-tier flower offering under the Curaleaf brand to complement 420 Pharma's premium position. We expect to begin selling this flower into the German market over the coming months from our facility in Portia.

<unk> for our premium flower as far outstripping, our available supply underscoring the tremendous opportunity we have in this nascent candidates market of 40 million people.

Registering strains in Poland takes 18 months, thus extending our time mode against new entrants will use that time to build brand awareness and cement purely as the top cannabis brand in the country.

Overall, we have a first mover advantage across Europe and are deploying the learnings from the U S to continue extending our leading market position.

Given the two years it takes to stand up a EU GMP certified supply chain plus a 12 to 18 months. It takes to register screens, we have a distinct three to four year head start on potential future entrants.

Matthew S. Darin: Undoubtedly, Germany is poised to become a robust, healthy cannabis market. And we have a fantastic market position. In Poland, a market that also resembles Germany's pharmacy distribution structure, demand for our premium flour is far outstripping our available supply, underscoring the tremendous opportunity we have in this nation's $40 million cannabis market. Registering strains in Poland takes 18 months, thus extending our time mode against new entrants.

Our domestic and international footprint positions us in front of the largest catalyst of New York, Ohio, Florida, Pennsylvania and Germany.

Which gives us confidence in our long term growth prospects.

These catalysts combined could contribute $500 million to $750 million of revenue to our business over the next several years.

We have leaned out the business become more efficient and more automated.

We are seeing the benefits of our scale come through and they will continue to emerge as 2024 progresses.

Matthew S. Darin: We will use that time to build brand awareness and cement Curaleaf as the top cannabis brand in the country. Overall, we have a first mover advantage across Europe and are deploying the learnings from the U.S. to continue extending our leading market position. Given the two years it takes to stand up an EU GMP certified supply chain, plus the 12 to 18 months it takes to register strains.

We're encouraged by the momentum we continue seeing in our business and are poised for a solid 2024.

In closing I would like to thank our entire team across the U S and Europe that make these results possible.

Without the effort and hard work of each and every one of you we could not accomplish although we have thus far.

We are continually striving for more and we have the right team in place to achieve our goals.

With that I'll turn the call over to our CFO Ed Kraemer Ed.

You bet.

Total revenue for the fourth quarter was a record $345 million, representing sequential growth of 4% and year over year increase of one 5%.

Matthew S. Darin: We have a distinct 3-4 year head start on potential future entrants. Our domestic and international footprint positions us in front of the largest catalysts of New York, Ohio, Florida, Pennsylvania, and Germany, giving us confidence in our long-term growth process. These catalysts, combined, could contribute $500 to $750 million of revenue to our business over the next several years.

This was driven by the addition of nine stores, Maryland, and Connecticut adult use and our international segment.

By channel the retail revenue was $277 million compared to 272 million in the fourth quarter of 2022 up 2% year over year.

Sequentially retail revenue was up 1%.

Wholesale revenue increased 3% year over year to $67 million, representing 19% of total revenue.

Matthew S. Darin: We have leanened out the business, become more efficient, and more automated. We are seeing the benefits of our scale come through, and they will continue to emerge as 2024 progresses. We're encouraged by the momentum we continue seeing in our business and are poised for a solid 2024. In closing, I would like to thank our entire team across the U.S. and Europe that make these results possible. Without the effort and hard work of each and every one of you, we could not accomplish all that we have thus far.

Sequentially wholesale revenue increased 14% driven by the strength of our brand portfolio increased product availability and additional independent wholesale accounts.

For 2023 total revenue was 1.35 billion up 6% versus comparable prior year revenue of 1.28 billion.

Retail revenue of $1 $1 billion increased 10%, while wholesale revenue of $244 million decreased nine.

Looking at our consumer metrics transactions were up 2% sequentially in Q4 and up 30% in 2023.

Matthew S. Darin: We are continually striving for more, and we have the right team in place to achieve our goal. With that, I'll turn the call over to our CFO and Kremer, and... Thank you, Matt.

Despite inflationary pressures on the consumer we benefited from a significant increase in traffic that more than offset price compression average order value decreased 1% sequentially in Q4, and 15% for the year largely due to the aforementioned pricing pressure.

Edward Kremer: Total revenue for the fourth quarter was a record $345 million, representing sequential growth of 4% and year-over-year increase of 1.5%. Growth was driven by the addition of nine stores, Maryland and Connecticut adult use, and our international segment. By channel, retail revenue was $277 million compared to $272 million in the fourth quarter of 2022, up 2% year-over-year.

Our fourth quarter reported gross profit was $156 million, resulting in a gross margin of 45%.

After adjusting for $4 million of add backs related to closing one Nevada facility and associated inventory write downs. Our adjusted gross profit was $160 million, a sequential increase of 5% from $152 million.

Our adjusted gross margin was 46, 5% compared to $45 seven in the third quarter, a sequential increase of 80 basis points. The improvement was largely driven by lower drag from under absorption as we turned on idle capacity capacity.

Edward Kremer: Wholesale revenue increased 3% year-over-year to $67 million, representing 19% of total revenue. Sequentially, wholesale revenue increased 14% driven by the strength of our brand portfolio, increased product availability, and additional independent wholesale accounts. For 2023, total revenue was $1.35 billion, up 6% versus comparable prior year revenue of $1.28 billion. Retail revenue of $1.1 billion increased 10%, while wholesale revenue of $244 million decreased 9%.

And benefits from automation, partially offset by increased promotional activity during the holiday season.

We're a brand focused company building and distributing our portfolio of brands across the markets in which we sell.

Vertical mix is an important metric, but also one that is balanced with a strong third party assortment in.

In Q4, our vertical mix was 62% slightly lower than Q3 due to our intentional actions to bring in more third party brands for 2023 vertical mix was 63%.

Edward Kremer: Looking at our consumer metrics, transactions were up 2% sequentially in Q4 and up 30% in 2023. Despite inflationary pressures on the consumer, we benefited from a significant increase in traffic that more than offset price compression. Average order value decreased 1% sequentially in Q4 and 15% for the year, largely due to the aforementioned pricing pressure.

SG&A expenses remained relatively flat at $98 million in the fourth quarter compared with 97 million in the prior quarter and decreased $15 million from the year ago period SG&A as a percentage of revenue was 28, 5% in the fourth quarter, a decrease of 60 basis points compared with 29, 1%.

In the prior quarter and decreased 490 basis points compared to the year ago period.

Our fourth quarter SG&A included approximately $6 million of add backs.

Edward Kremer: Our fourth quarter reported gross profit was $156 million, resulting in a gross margin of 45%. After adjusting for $4 million of accretions related to closing one Nevada facility and associated inventory write-downs, our adjusted gross profit was $160 million, a sequential increase of 5% from $152 million. Our adjusted gross margin was 46.5% compared to 45.7% in the third quarter, a sequential increase of 80 basis points. The improvement was largely driven by lower drag from underabsorption as we turned on idle capacity and benefits from automation partially offset by increased promotional activity during the holiday season.

And net of those add backs our SG&A rate was 26, 8% of total revenue in the fourth quarter compared to 27, 3% in the prior quarter, primarily due to tight expense controls and leverage on higher revenue.

For the year, we reduced our total expenses, both Cogs and SG&A related by $93 million as we exited unprofitable markets and we're focused on driving greater productivity and efficiency gains.

For fourth fourth quarter net loss and net loss per share were <unk> $63 million and nine <unk> respectively.

Adjusted net loss and adjusted net loss per share from continuing operations was $5 million and <unk> respectively.

Full year 2023, net loss was $281 million and net loss per share of <unk> 39 cents.

Adjusted net loss and adjusted net loss per share from continuing operations was $126 million and 17, respectively.

Edward Kremer: We're a brand-focused company building and distributing our portfolio of brands across the markets in which we sell. Vertical mix is an important metric, but also one that is balanced with a strong third-party assortment. In Q4, our vertical mix was 62%, slightly lower than Q3 due to our intentional actions to bring in more third-party brands. For 2023, our vertical mix will be 63%. SG&A expenses remained relatively flat at $98 million in the fourth quarter, compared with $97 million in the prior quarter and decreased $15 million from the year-ago period.

Adjusted EBITDA for the fourth quarter was $83 million each.

10% increase sequentially.

<unk> EBITDA margin in the fourth quarter was 24% compared with $22 six in the third quarter.

Now turning to our balance sheet and cash flow.

We ended the year with cash and cash equivalents of $92 million, while our cash balance decreased by 26 million.

Quarter over quarter. It is important to note that we made acquisitions related they pay debt payments tax payments and biannual interest payments in the aggregate exceeding $100 million in the fourth quarter alone.

Net capital expenditures during the quarter was $16 million, bringing our full year total to $65 million, which came in below our $70 million projection.

Edward Kremer: SG&A as a percentage of revenue was 28.5% in the fourth quarter, a decrease of 60 basis points compared with 29.1% in the prior quarter and a decrease of 490 basis points compared to the year-ago period. Our fourth quarter SG&A included approximately $6 million of add-backs. And net of those add-backs, our SG&A rate was 26.8% of total revenue in the fourth quarter compared to 27.3% in the prior quarter, primarily due to tight expense controls and leverage on higher revenue. For the year, we reduced our total expenses, both COGS and SG&A, by $93 million as we exited unprofitable markets and were focused on driving greater productivity and efficiency. For the fourth quarter, our net loss Full year 2023 net loss was $281 million, and net loss per share of $0.39. Adjusted net loss and adjusted net loss per share from continuing operations were $126 million and $0.17, respectively.

Our outstanding debt was $588 million net of unamortized debt discounts of which 81% is not due until December 2026, we ended the quarter with 734 million fully diluted shares outstanding.

We made significant progress in improving the quality of our inventory last year inventory at year end decreased $38 million from peak levels in the first quarter and now represents 16% of full year sales versus 19% at the start of the year. Our unit inventory is much healthier and a higher <unk>.

Quality as we enter 2024.

In 2023, we generated operating and free cash flow from continuing operations of $91 million and $26 million respectively.

Given recent developments, we continue to evaluate our stance on legal challenges to the application of <unk> and more generally to the controlled substances Act as applied to state legal operators, we will share more details with you when we have them.

I'd like to provide context on how we see our first quarter shaping up we expect Q1 revenue to be flat to down slightly based on normal seasonality after a strong holiday fourth quarter.

With respect to gross margin as Boris mentioned, we initially expected to see a recovery of the under absorption margin drag by mid Q2. However, we are returning to full production in our facilities and are tracking ahead of that plan as such we expect to see a meaningful improvement in our first quarter gross margins.

Edward Kremer: Adjusted EBITDA for the fourth quarter was $83 million. A 10% increase; adjusted EBITDA margin in the fourth quarter was 24% compared with 22.6% in the third quarter. Now turning to our balance sheet and cash flow. We ended the year with cash and cash equivalents of $92 million, and while our cash balance decreased by $26 million, quarter over quarter, it is important to note that we made acquisition-related debt payments, tax payments, and biannual interest payments in the aggregate exceeding $100 million in the fourth quarter alone. Net capital expenditures during the quarter were $16 million, bringing our full year total to $65 million, which came in below our $70 million projection.

For the for the year, we expect to generate operating cash flow in excess of $100 million and plan our capital expenditures to be in the $50 million to $60 million range.

Finally, I am proud of our team that has successfully remediated all of the companys material weaknesses in less than one year. This is a massive undertaking by all involved and we are a better company for it and with that I'll turn the call over to the operator to open the line for questions.

Thank you very much we will now begin the question and answer session.

Edward Kremer: Our outstanding debt was $588 million of unamortized debt discounts, of which 81% is not due until December 2026. We ended the quarter with 734 million fully diluted shares. We made significant progress in improving the quality of our inventory last year. Inventory at year-end decreased $38 million from peak levels in the first quarter and now represents 16% of full-year sales versus 19% at the start of the year.

Ask a question you May press Star then one on your telephone keypad. If you were using a speaker phone. Please pick up your hasn't handset before pressing the keys to withdraw your question. Please press Star then two.

And the interest of time, please limit yourself to one question, we will pause momentarily to assemble our roster.

Today's first question comes from Aaron Grey with Alliance Global Partners. Please go ahead.

Hi, Good evening. Thank you for the question and congrats on the corner there tender year question for me is gonna be on Germany are obviously, a lot of potential opportunity for you with all of them are formats coming or expected to come.

Edward Kremer: Our inventory is much healthier and of higher quality as we enter 2020. In 2023, we generated operating and free cash flow from continuing operations of $91 million and $26 million in receivables. Given recent developments, we continue to evaluate our stance on legal challenges to the application of 280E and, more generally, to the Controlled Substances Act as applied to state legal operators.

The market in Germany set up a bit differently in the U S where the doctors prescribe often a specific brand as we understand it. So can you speak to the importance and planned investments you have in terms of getting in front of the doctors in helping them to educate not only the broader benefits of candidates, but also currently each brand as well and then any color on how telemedicine could.

Edward Kremer: We will share more details with you when we have them, but I'd like to provide context on how we see our first quarter shaping up. We expect Q1 revenue to be flat to down slightly based on normal seasonality after a strong holiday fourth quarter. With respect to gross margin, as Boris mentioned, we initially expected to see a recovery of the under-absorption margin drag by mid-Q2. However, we are returning to full production in our facilities and are tracking ahead of that plan. As such, we expect to see a meaningful improvement in our first quarter gross margin. For the year, we expect to generate operating cash flow in excess of $100 million and plan our capital expenditures to be in the $50 to $60 million range.

Tight and to help build that thank you.

Yeah, So great great question. Thanks.

The as I said, the German market does distribute very differently or distribute mainly through pharmacies, but I think the most important aspect of this decision and this is what many don't understand is that under the current regime, where cannabis isn't narcotic German doctors can only prescribe a certain amount of narcotics per year to there.

Patients. So it was always a third or fourth option for the doctor because they were prescribing most of the heavy narcotics to two and.

Edward Kremer: Finally, I am proud of our team that has successfully remediated all of the company's material weaknesses in less than one year. This is a massive undertaking by all involved, and we are a better company for it. And with that, I'll turn the call over to the operator to open the line for questions. Thank you very much. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing.

Fedex narcotics that of patients that's why the medical program in Germany was as low penetrated as it has been up until now what this reform does is it takes kind of a softer narcotics lesser basically do schedules, which allows doctors to have an unlimited amount of prescriptions that they can write for cannabis and so that frees up their ability to write these.

<unk>.

That should increase the amount of of patients, but we estimate at least three to five times.

Operator: To withdraw your question, please press star, then two. In the interest of time, please limit yourself to one question. We will pause momentarily to assemble our roster. Today's first question comes from Aaron Grey with Alliance Global Partners. Please go ahead. Hi, good evening. Thank you for the question, and congrats on the quarter there. It's in the year. The question for me is going to be about Germany.

Hum.

More reflect what the U S medical markets look like as an example, Florida.

The in terms of what we've done we've built the whole vertical chain to supply the German market, we have both indoor and outdoor and greenhouse based flower and oil supply we have our brands registered we have the strains registered it takes over a year to file to register any strain in Germany.

Boris Alexis Jordan: Obviously, a lot of big potential opportunities for you with the reform that's coming or expected to come. The market in Germany is set up a bit differently from the U.S., where doctors often prescribe a specific brand, as we understand it. So, can you speak to the importance and planned investments you have in terms of getting in front of doctors and helping them to educate not only the broader benefits of cannabis but also Curaleaf's brand as well? And then, can you comment on how telemedicine could be tied in to help build that? Thank you. Yeah, so great, a great question, thanks. As I said, the German market distributes very differently. It distributes mainly through pharmacies, but I think the most important aspect of this decision, and this is what many don't understand, is that under the current regime where cannabis is a narcotic, German doctors can only prescribe a certain amount of narcotics per year to their patients. So it was always a third or fourth option for the doctor because they were prescribing mostly heavy narcotics and synthetic narcotics to their patients.

Very high barriers to entry so we've got all of our various strains and products ready we've been doing that over the past three years in order to supply the increase in volumes that we expect as soon as the law comes into effect.

As far as the.

As far as the telemedicine platforms, we work with all of the telemedicine platforms.

And in Germany, We also oh through through a close relationship of ours through VC firm, which I have been associated with own a stake in one of the larger medical platforms in Germany, and purely works with them as well so we.

We feel very very comfortable with our positioning.

And in that market and most importantly, with our brands and just to remind you we have around a 23% between 23 and 25% Mark just share on flower in that market.

Thank you. The next question comes from Frederico Gomez with ATB capital markets. Please go ahead.

Hi, Good evening and thank you for taking my question.

Boris Alexis Jordan: That's why the medical program in Germany was as low penetrated as it has been up until now. What this reform does is it takes cannabis off the narcotics list or basically deschedules it, which allows doctors to have an unlimited amount of prescriptions that they can write for cannabis. And so that frees up their ability to write these prescriptions. That should increase the number of patients, but we estimate at least three to five times to more reflect what the U.S. medical markets look like, as an example, Florida. In terms of what we've done, we've built the whole vertical chain to supply the German market. We have both indoor and outdoor, and greenhouse-based flowers.

Just on the margin side, you mentioned your gross margins approaching 50% for the first quarter.

I'm curious just expand on what's driving that but how much of it is related to <unk>.

You've mentioned your capacity utilization or overall improvements in production and how much more efficiency do you think it takes that acute care well beyond Q1. Thank you.

Yeah Frederico Hi, this is Ed I think thank you for your question the bulk of the margin expansion that we've seen and we've said it was going to be ahead of schedule is due to due to our absorptions coming online.

Our our production coming online, reducing our absorption drag earlier than originally anticipated. So the big bulk of the margin expansion, we expect as do too.

Boris Alexis Jordan: In order to supply, we have our brands registered, and we have the strains registered. It takes over a year to register any strain in Germany, so there are very high barriers to entry. So we've got all of our various strains and products ready. We've been doing that over the past three years in order to supply the increase in volumes that we expect as soon as the law comes into effect. As far as telemedicine platforms are concerned, we work with all the telemedicine platforms in Germany.

Our production capacity being absorbed there's also in conjunction with.

High quality of our sales mix I think to some extent of pricing, we've seen pricing stabilize and.

And our discount levels have a decrease in some at some stage such that the overall mix is accretive in our margin.

And what I would just add to that is but it's an amazing turnaround story in that regard because for instance in new Jersey, our original Belmar grow which were actually shut down about a year ago, who were planning to sell we actually decided to keep it and have reopened and are fully stocking it now and we're almost short.

Boris Alexis Jordan: We also, through a close relationship of ours through a VC firm that I've been associated with, Onastake, and one of the larger medical platforms in Germany, and Curaleaf works with them as well. So we feel very, very comfortable with our positioning in that market, and most importantly with our brands. And just to remind you, we have around a 23, between 23 and 25 percent market share of flowers in that market. Thank you. The next question comes from Frederico Gomes with ATB Capital Markets. Please go ahead. Hi, good evening.

Even with the large capacity, we have coming out of our main grow at Winslow and the bellmawr growers.

We're still almost hand to mouth in terms of the capacity required for that market. So we've seen a resurgence of demand throughout the whole country.

Not in every single market, but I would say the bulk of our larger markets, we're seeing a resurgence of demand from customers and patients.

Thank you. The next question comes from Russell Stanley with Beacon Securities. Please go ahead.

Operator: Thank you for taking my question. Just on the margin side, you mentioned that your gross margin is approaching 50% for the first quarter. I'm curious if, you know, you could expand on what's driving that, you know, how much of it is related to improvement in your capacity utilization or, you know, overall improvement in production, and how much more efficiency do you think you can continue to achieve there, you know, beyond Q1? Thank you. Yeah, Frederico. Hi, this is Ed.

Good afternoon, and thanks for taking my question.

Maybe if I could just following up on the decision to.

Bring more third party products in your retail I'm wondering.

Pardon me can you I guess elaborate on which margin which markets you're focused on doing that in <unk>.

And I guess, what prompted that and where do you think the vertical mix might settle when you. When you are when you complete the adjustment where do you think that the best balances. Thank you.

Okay.

Hey, Russell is Matt good question, so for the full year.

Edward Kremer: I think so, thank you for your question. The bulk of the margin expansion that we've seen, and we said it was going to be ahead of schedule, is due to our absorption coming online, or our production coming online, reducing our absorption drag earlier than originally anticipated. So the bulk of the margin expansion we expect is due to our production capacity being absorbed. It's also in conjunction with the high quality of our sales mix. I think, to some extent, a price that we've seen pricing stabilize, and our discount levels have decreased in some states, such that the overall mix is accretive to our margin growth program. And what I would just add to that is that it's an amazing turnaround story in that regard because, for instance, in New Jersey, our original Belmar grow, which we actually shut down about a year ago and we were planning to sell, we actually decided to keep it and have reopened it and are fully stocking it now.

We were in around the 62% range on a vertical mix side as we mentioned, we sold $680 million of our branded products through our stores and so I do think thats a pretty healthy.

We want to be in.

In some markets.

Have looked at is sorting with some more third party very selectively as we're looking at the ideal assortment. So it certainly does vary by market, but I think it's something that we're really looking closely at.

We continue to accelerate the growth of the wholesale channel and ensure that we're meeting all the demand that youre seeing a lot of new stores opening up in a number of these markets, New Jersey, Illinois, New York et cetera, we do want to make sure we have the right mix for both revenue channels and ultimately at the right.

Assortment at the retail stores as well.

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

Edward Kremer: And we're almost short, even with the large capacity we have coming out of our main grow at Winslow and the Belmar grow, we're still almost hand-in-mouth in terms of the capacity required for that market. So we've seen a resurgence of demand throughout the whole country, not in every single market, but I would say in the bulk of our larger markets, we're seeing a resurgence of demand from customers Thank you. The next question comes from Russell Stanley of Beacon Securities. Please go ahead. Good afternoon.

Good evening, everyone and congrats on a strong end to the year here just wanted to get a better understanding maybe of some of the sequential tailwind.

Tailwind that you guys saw that you guys came well out of.

Guidance for your for your or the implied guidance for the full year 2000.

23, specifically, we know New Jersey did very well in Q4, but I know there was a lot of new store openings, where maybe you didn't get the full up uplift from it but I'm just wondering in some of those core markets that you mentioned, where you were leading you know.

In New Jersey.

Florida, Pennsylvania, Pennsylvania, Arizona, where did you see some of the growth versus Q3 are that led to the stronger than anticipated print.

Operator: Thanks for taking my question. Maybe if I could, just following up on the decision to bring more third-party products into retail, I'm wondering, pardon me, can you, I guess, elaborate on which markets you're focused on doing that in? And, I guess, what prompted that? And where do you think the vertical mix might settle when you complete the adjustment?

Yes so.

In all these markets, we're definitely there's an evolution taking place as youre seeing a lot of these new stores that were delayed due to regulatory reasons and other reasons that are now opening up in the markets are really maturing so take new Jersey as an example, I think yet 19 stores at the beginning of the year ended the year at.

90 today, there's over 100, and so I think what we're seeing is a really big opportunity on the wholesale side to meet the demand to fill the shelves of all these new wholesale accounts thats a core focus of ours, because we see in a number of these different markets, Illinois is another example, New York, obviously with the <unk>.

Matthew S. Darin: Where do you think the best balance is? Thank you. Hey Russell, it's Matt.

Matthew S. Darin: Good question. So for the full year, you know, we were in around the 62% range on the vertical mix. As we mentioned, we sold about $680 million of our brand of products through our stores. And so I do think that's a pretty healthy place we want to be. In some markets, you know, we have looked at assorting with some more third parties very selectively as we're looking at the ideal assortment. So it certainly does vary by market, but you know, I think it's something that we're really looking closely at.

Adult use, Maryland, Connecticut et cetera, there's an evolution, taking place where the wholesale business, which was previously challenged due to a lot of the market dynamics that were in place is really now back on offense and that's why we've invested so heavily in the product portfolio and innovation pipeline and our sales teams and it really.

Really focusing hard on it and so that is an area that we continue to see great growth opportunities.

Matthew S. Darin: And you know, as we continue to accelerate the growth of the wholesale channel and ensure that we're meeting all the demand, as you're seeing a lot of new stores opening up in a number of these markets, New Jersey, Illinois, New York, etc., we do want to make sure we have the right mix for both revenue channels and ultimately have the right assortment at the retail stores as well. Thank you. The next question comes from Matt Bottomley with Canaccord Genuity. Please go ahead.

As we continue forward look on the retail side, there's no doubt there's more stores opening in many of these markets and it's something that we're monitoring for.

The retail channel, but we see the big opportunity to continue to fill the shelves on the wholesale side.

Thank you. The next question comes from Scott Fortune with Roth M. Kam. Please go ahead.

Yes. Good afternoon. Thanks for the questions and congrats just wanted to follow back up on the international side and kind of you mentioned Jeremy. Thank you for the market share there, but kind of a sense for is this 50 50 insurance versus out of pocket and this is just going to be more insurance being paid what will really tried to growth there.

Operator: Good evening, everyone, and congratulations on a strong end to the year here. Just wanted to get a better understanding maybe of some of the sequential tailwinds that you guys saw, that you guys came well ahead of guidance or the implied guidance for the full year 2023. Specifically, we know New Jersey did very well in Q4, but I know there were a lot of new store openings where maybe you didn't get the full uplift from them. But I'm just wondering, in some of those core markets that you mentioned where you're leading, New Jersey, Florida, Pennsylvania, Arizona, where did you see some of the growth versus Q3 that led to the stronger than anticipated print? Yes, so look... in all these markets, you know, we're definitely seeing an evolution taking place as you're seeing a lot of these new stores that were delayed due to regulatory reasons and other reasons that are now opening up, and the markets are really maturing. So, you know, take New Jersey as an example. I think you had 19 stores at the beginning of the year, and at the end of the year, you had 90. Today, there are over 100.

And then how are you kind of looking at market share in Poland with your recent acquisition there in the Czech Republic, and these kind of growth opportunities coming onboard into 'twenty four but more of a 25 story just kind of looking at kind of the cadence for the different countries come on board would be great. Yes, I think youre, absolutely right I think.

It starts in 'twenty four really.

We anticipate most of the growth the real sort of significant growth to come into 'twenty five as these markets start to ramp up and people understand how to use the new legislation in those markets.

But as far as.

As far as Germany is concerned.

<unk>.

Okay.

Sorry could you Scott Canute peoples, what was the question on Germany exactly is my about insurance being paid for it.

Right.

Matthew S. Darin: And so I think what we're seeing is a really big opportunity on the wholesale side to meet the demand to fill the shelves of all these new wholesale accounts. It's a core focus of ours because we see in a number of these different markets: Illinois is another example, New York, obviously, with the adult use, Maryland, Connecticut, etc. You know, there's an evolution taking place where the wholesale business, which was previously challenged due to a lot of the market dynamics that were in place, is really now back on offense. And that's why we've invested so heavily in the product portfolio and innovation pipeline in our sales teams and really, you know, really focused hard on it. And so that is an area that we continue to see great growth opportunities as we continue forward. But on the retail side, there's no doubt there are more stores opening in many of these markets.

It's a very good question. So that's so just so at the moment it looks as though insurance companies are most likely going to be forced to have to respond.

Cannabis purchases under this new legislation and so that's going to open up a very significant amount of Av Av Av demand as patients not only that we will be patient, obviously that will choose to buy on their own but for the most part patients will be allowed to go to their insurance companies. That's refunds now we expect challenges from the insurance company.

For this but every challenge so far.

Ladies and gentlemen, please standby.

Okay.

[music].

Matthew S. Darin: And it's something that we're monitoring, you know, for the retail channel. So we see a big opportunity to continue to fill the shelves at wholesale. Thank you. The next question comes from Scott Fortune with Ross MKM. Please go ahead. Yeah, good afternoon.

Operator: Thanks for the questions and congratulations. Just want to follow back up on the international side and kind of, you mentioned Germany, thank you for the market share there, but kind of the sense of, is this 50-50 insurance versus out of pocket? And is this going to be more insurance being paid that will really drive the growth there? And then how are you kind of looking at kind of market share in Poland with your recent acquisition there and the Czech Republic and these kind of growth opportunities coming on board into 24, but more of a 25 story, just kind of looking at kind of the cadence for these different countries coming on board would be great. Yeah, I think you're absolutely right.

Okay.

[music].

Boris Alexis Jordan: I think it's, it's, it starts in 24, but we really anticipate most of the growth, the real sort of significant growth to come into 25 as these markets start to ramp up and people understand how to use the new legislation in those markets. But as far as, as far as Germany is concerned, Sorry, Scott, can you please repeat what was the question about Germany exactly? Is it about insurance being paid for it?

Thank you for standing by we've reestablished our connection with our speakers.

We apologize for that technical.

Boris Alexis Jordan: Yeah, that's right. That's a very good question. So at the moment, it looks as though insurance companies are most likely going to be forced to have to refund cannabis purchases under this new legislation, and so that's going to open up a very significant amount of demand, as patients not only, there will be patients obviously that will choose to buy on their own, but for the most part, patients will be allowed to go to their insurance companies for refunds. Now we expect challenges from the insurance companies on this, but every challenge so far has been met. Ladies and gentlemen, please stand by.

Problem with our with our operator, but we're back.

We I was answering the question on <unk>.

On Germany.

Durrance refunds would you expect with this new a rescheduling of the law that insurance companies will be paying for cannabis prescriptions, we anticipate that there will be challenges by insurance companies, but so far most insurance companies have lost their challenges in Germany, and not paying them. So we do expect in the second half of the year.

Operator: We've re-established our connection with our speaker. We apologize for that technical problem with our operator, but we're back. I was answering the question on Germany's insurance refunds. We do expect, with this new rescheduling and the law, that insurance companies will be paying for cannabis prescriptions. We anticipate that there will be challenges by insurance companies, but so far, most insurance companies have lost their challenges in Germany and are not paying, and so we do expect in the second half of the year to see insurance companies paying for these cannabis prescriptions.

To see insurance companies paying for.

These cannabis prescriptions, we do anticipate that that will obviously add a significant amount of volume to the business.

So where we are in a wait and see.

You on that but the loss clearly stipulates that they will be paying those insurance proceeds in terms of Poland too early to tell we just entered the market in the third quarter of last year.

Boris Alexis Jordan: We do anticipate that that will obviously add a significant amount of volume to the business, and so we're in a wait-and-see view on that, but the law clearly stipulates that they will be paying those insurance proceeds. In terms of Poland, too early to tell; we just entered the market in the third quarter of last year. We made an acquisition locally there in order to control our distribution and our branding, but you know, as in most markets in Europe so far, if you look at the UK, we have about a 43% share; in Germany, between 23 and 25 percent.

We made that acquisition.

Locally there.

Order to control, our distribution and our branding, but you know and as.

As in most markets in Europe. So far if you look at the U K with about a 43% share in Germany between 23, and 25% sure we'd like to get to a 20 plus percent share in the Polish market as well.

Boris Alexis Jordan: We'd like to get to a 20 plus percent share in the Polish market as well. Thank you. The next question comes from Sunny Radnawa with Seaport Global. Please go ahead. Good evening.

Thank you. The next question comes from Sonny Randhawa with Seaport Global. Please go ahead.

Operator: Thanks for taking my question. We were just kind of looking at the wholesale numbers, obviously much better than we were anticipating. I know that you're looking to potentially get it back to around 30%. Within the context of your current 2024 guidance, what do you see wholesale as a percentage of revenues trending towards as we go through 2024? Obviously, lots of opportunities in Illinois and New Jersey. New York is coming on at the end of Q4, so not really in those numbers. Just wanted to kind of get some color on that. Hey Sonny.

Good evening, Thanks for thanks for taking my question.

Just kind of looking at the wholesale numbers, obviously much better.

And we were anticipating I know that youre looking at potentially get it back to around 30%.

Within the context of your current 2024 guidance what do you what do you think wholesale as a percentage of revenues.

Trending towards.

As we go through two.

2024, obviously lots of opportunities.

In Illinois, and New Jersey.

New York is coming on at.

At the end of Q4, so not really and those numbers just wanted to kind of get some color on that.

Okay.

Matthew S. Darin: So look, we expect it's going to continue to grow, and we're going to see the wholesale mix as a total percentage of revenue climb from the approximately 20% we're at today, and continue to climb as we move forward into the year. First of all, as we've talked about, you have many new stores that have opened in some of our most core markets here. So the opportunity and the demand for really high quality formulated products as well as, of course, high quality flour are there in the market in many of these key markets, and it's something that we're heavily investing in to ensure that we're meeting that demand. You also have some new markets, such as New York, you know, which we are very excited about being in that adult-use market and really seeing a lot of demand for our product there.

Sony.

So look we expect it's going to continue to grow and we're going to see the wholesale mix as a total percentage of the revenue climb from the approximately 20% where it's at today.

The decline as we move forward into the year largely based on a few different things first of all as we've talked about you have many new stores that have opened up in some of our most core markets here, so the opportunity and the demand for really high quality formulated products as well as of course high quality flower.

Or is there in the market.

In many of these key markets and it's something that we're heavily investing in to ensure that we're meeting that demand. You also have some new markets such as New York.

We are very excited for to finally be in that adult use market and really seeing a lot of demand.

Matthew S. Darin: So we expect it to continue to grow. I'm not going to give a specific target there, but it's expected to grow quarter over quarter and continue to increase as time goes on and the market evolves. Thank you. The next question is from Eric Delaurier with Craig Hallam Capital Group. Please go ahead.

For product there. So we expect it to continue to grow.

Give a specific target.

Yeah, there but.

We expect it to grow quarter over quarter and continue to increase as time goes on in the market evolves.

Thank you. The next question is from Eric Laurie I with Craig Hallum Capital Group. Please go ahead.

Operator: Great, thank you for taking my question. With respect to capacity utilization, can you comment on some of what you've learned over the past several quarters? We've had some idling and restarting of capacity, and I just wondered what you've learned and how you can minimize the risk of mismatches between production and demand going forward. And then, if I could just squeeze in a housekeeping question.

Great. Thank you for taking my question.

With respect to capacity utilization.

Can you comment on some of what you've learned over the past several quarters, we've had some idling and restarting with capacity.

And just wondering sort of what you've learned and how you can minimize the risk of mismatches between production and demand going forward and then if I can.

Could just squeeze in a housekeeping question.

Edward Kremer: Q4 showed a tax benefit for the first time in several years. Just wondering if we can expand on the cause of that. Thank you. So, let me take the first question. Look, in the earlier quarters, we said that we started to take down our inventory quite intentionally because the company was historically running on fairly high inventory levels. We wanted to optimize for cash and make sure we had lots of working capital throughout the year. And that's been a continuous thread that we continue to execute on.

Q4 showed a tax benefit for the first time in several years just wondering if you can expand on the cause of that thank you.

So let me let me take the first question.

Look we in the earlier quarters, we said that we started to take down our inventory quite intentionally but we were running the company was historically running at fairly high inventory levels, we wanted to optimize for cash and make sure. We have lost some working capital throughout the year and that's been a continuous thread that we continued to execute on so part of the idling of capacity was.

Edward Kremer: So part of the idling of the capacity was to make sure we could work through some of our inventory as it started to age, and our production was probably running ahead of demand and the amount of capacity that we had. As we right-sized that, and part and parcel with it, frankly, what we've learned is that quality product sells, and it carries lesser discounts with it as a result.

To make sure we can work through some of our inventory as it started to age.

Our production was probably running ahead of demand and the amount of capacity that we've had as we rightsize that an important parcel with and frankly, what we've learned is quality of product.

Cells and it carries lesser discounts with it as a result, so part of the improvement as we kind of go into 2024 and beyond is to make sure that our product is right sized and we're optimizing for quality over quantity and really bringing those facilities on thoughtfully to match demand, where we need it so.

Edward Kremer: So part of the improvement as we kind of go into 2024 and beyond is to make sure that our product is right-sized and we're optimizing for quality over quality and really are bringing those facilities on thoughtfully to match demand where we need them. So there's been a lot of learnings throughout the year. I think we're in very good shape at this point.

It's been a lot of learnings throughout the year I think we're in a very good shape at this point, our inventories down to 60% of our revenue we're going to continue to improve in that metric throughout the year.

Edward Kremer: Our inventory is down to 60% of our revenue, and we're going to continue to improve on that metric throughout the year. We have a longer-term target to get even more productive than that, although it won't come at the same level of decrease. I mean, I think the working capital is probably right about where it needs to be, and we hope to make incremental improvements, but it's not so much overall. But those are the learnings.

We have a longer term target to get even more productive than all but it wont comment the same level of bot decreases I mean, I think the working capital is probably right about where it needs to be and we hope to make incremental improvement that's not so much overall.

But those are the learnings and what was your second question again.

Edward Kremer: And what was your second question again? There was a tax benefit in Q4. It was the first time I'd seen that in several years. I was just wondering what the driver of that was.

There was a tax benefit in Q4 was the first time it seemed that in several years just wondering what the driver of that was thanks.

Edward Kremer: Thanks. Some of that has to do with our deferred taxes and our current tax payable. I mean, we did pay quite a bit of taxes in the fourth quarter to catch up on our payment, but overall, there's a little bit of a timing difference between the years in terms of some of the states and some of the deferreds.

Some of that has to do with our deferred taxes and our our current tax payable I mean, we did pay quite a bit of taxes in the fourth quarter as a catch up payment but.

Overall, there is a little bit of a timing difference between the years in terms of.

Edward Kremer: So it's just a little bit of a—it was a higher number in the prior year coming into the end of the quarter, so mostly timing-related. Thank you. The next question comes from Pablo Zuanic with Zuanic and Associates. Please go ahead.

Some of the states and some of the deferred so it's just a little bit of a there was a higher number.

In the prior prior year coming into the end of the quarter, so mostly timing related.

Thank you. The next question comes from Pablo <unk> with <unk> Associates. Please go ahead.

Operator: Thank you. Boris, I guess it's a three-part question regarding international opportunities. Number one, you only own 69% of your international business. Given all the growth opportunities, I suppose you would plan to buy that 32%. Why leave all that money on the table?

Boris It's I guess, it's a three part question regarding international opportunity number. One you know you you only own 69% of your international business given all the growth opportunities I suppose you would plan to buy that 32% while leave all the money on the table.

Boris Alexis Jordan: Number two, to add more credibility to the international story, it would be nice if you could disclose the international sales numbers. I mean, Tilray, Aurora, they report those numbers. How much of the 345 million was international? And number three, when I remember EMAC, although they did have outdoor capacity and very limited indoor capacity, it seems to me that your growth in Europe at the moment is still quite limited compared to the opportunities that we've talked about, right? Three, four times in Germany, 10, 15 times on the high end.

Number two you know towards more clearly be linked to international story. It would be nice if you could disclose international sales number I mean jewelry Aurora Dave report those numbers you know how much with regard to your 45 million, Washington National and number three when he remembered from IMO, although they did have outdoor capacity in very limited indoor capacity.

It seems to me that your growth in Europe at the moment, it's still quite limited compared to the opportunity that we've talked about right three or four times in Germany.

On the high end.

Boris Alexis Jordan: Would you need to make an acquisition? I don't know, look at cultivation in Canada or other parts of the world to be really fully integrated into that opportunity? Thank you. So, I'll start with the last question, with the last part of the question first, right? So we have all the capacity we need to meet all the demand that we're foreseeing over the next two years in Europe, and we will be making some announcements regarding our plans shortly. But as we speak right now, we do have that capacity in place. We did a lot of work on TeraVerti.

What did you need to make an acquisition I don't know look like what's the rate you're in kind of that what other parts of the world to be really fully integrated to tap that opportunity. Thank you.

So.

On the I'll start with last question, what's the last part of the question first so we have all the capacity we need to meet all the demand that we're seeing over the next two years in and Europe.

And we will we will be in shortly making some announcements regarding our plants.

But as we speak right now we do have that capacity in place. We did a lot of work on Cerro Verde, we invested quite a bit of capital into our Verde. We also bought the.

Boris Alexis Jordan: We invested quite a bit of capital in TeraVerti, and we also bought the EU GMP assets of Pharmacielo. So we are in a very, very strong position coming out of our facilities in Portugal to supply the market. As we've always said, at the moment, we are about at a 50-50, where we supply 50% ourselves, and 50% we buy in. But we anticipate being at almost a 75-25 situation, where we're 75% of our own product and 25% that's bought in shortly, and we'll be making some announcements in that regard. So we have plenty of capacity. Paolo, can you... Oh yeah, so international sales, we do disclose that in our filings, so you'll see those in our filings, but more importantly, the anticipated revenue this year is around $100 million, and it'll be the first year that becomes meaningful, so in 2024, we anticipate around $100 million in European revenues, with a significant ramp going into 2025.

The EU GMP assets.

Pharma CLO. So we are very very strong position coming out of our facilities and Portugal to be able to supply.

The market as we've always said at the moment, we are about at a 50 50.

Our supply, 50% ourselves and 50% we buy in.

But we anticipate being at almost a 70 525 situation, where we're 75% of our own product and 25 bps bought in shortly and we will be making some announcements in that regard. So we have plenty of capacity.

Publicly.

Yes.

Oh, yes.

Revenue.

So international sales, we do we do disclose that in our filings so you'll see those in our filings, but more importantly, the anticipated revenue. This year is around $100 million and it'll be the first year that becomes meaningful. So 2024, we anticipate around 100 million euro.

European revenues with a significant ramp going into 'twenty five.

And on the minority shareholder side, so it's pretty clear.

All of our documents if you review them that we have.

Have a call option on.

Boris Alexis Jordan: And on the minority shareholder side, it's pretty clear in all of our documents, if you review them, that we have a call option on our minority stake at the end of 2024. We fully anticipate exercising that call option. Thank you. The next question is a follow-up from Matt Bottomley with Canaccord Genuity. Please go ahead.

Our minority stake at the end of 2024, we fully anticipate exercising the call option.

Sure.

Thank you. The next question is a follow up from Matt Bottomley with Canaccord Genuity. Please go ahead.

Thanks, again, I know that you said in your prepared remarks, you're going to be looking at the potential strategy for for QAD EE tax refunds here. So I know, there's a lot of legal opinion behind that so I don't expect you to expand on it but I'll I'll I guess I'll leave the door open if there is any other commentary on it I guess the only question I have is and your guidance of up having a free cash flow.

Operator: Yeah, thanks again. I know that, in your prepared remarks, you're going to be looking at the potential strategy for 280e tax refunds here. So I know there's a lot of legal opinion behind that, so I don't expect you to expand on it. But I guess I'll leave the door open if there's any other commentary on it.

From operations of 100 million, how does that relate to the $91 million you printed this year or is that an apples and apples comparison with respect to your plans on the timing and remittances of up to 80 tax going forward for 2024 months, So I'm going to correct you.

Boris Alexis Jordan: I guess the only question I have is, in your guidance of having free cash flow from operations of $100 million, how does that relate to the $91 million you printed this year? Is that an apples-and-apples comparison with respect to your plans for the timing and remittances of 280e tax going forward for 2024? Yeah, so I'm going to correct you first. It's $100 million of operating cash flow. And you can come to your conclusion on free cash flow; and no tax deferrals or anything are calculated in those numbers at all. So it's light for light.

$100 million of operating over $100 million of operating cash flow.

You can come if you take our capex numbers that could come to a conclusion.

On free cash flow and no tax deferrals or anything it's calculated in those numbers at all so it's like for like.

As we indicated on our.

On our third quarter call at the moment clearly, it's taken a position of paying all of our taxes and we made I think $55 million in tax payments in the fourth quarter with it.

Thank you. The next question is a follow up from Pablo <unk> with <unk> Associates. Please go ahead.

Yeah. Thank you for taking the follow up look Boris regarding Florida, you said that you expect to be you know competing therefore leadership once you might get goes Rick.

At the moment to leave has a 132 stores you have 61 your number 40 stores to leave stores do about two times, who flower volume per store compared to you to your stores is a plan to get there organically or would you need to make an acquisition in Florida to really compete for leadership in that market. Thank you.

Boris Alexis Jordan: As we, as I indicated on our third quarter call, at the moment, Curaleaf is taking the position of paying all of our taxes. And we made, I think, $55 million in tax payments in the fourth quarter. Thank you. The next question is a follow-up from Pablo Zuanic with Zuanic & Associates. Please go ahead.

So Pablo first of all that's an incorrect number they don't do twice the flower per store that we do that's not.

Operator: Yeah, thank you for taking the follow up. Look, Boris, regarding Florida, you said that you expected to be, you know, competing there for leadership once the market goes wreck. At the moment, Trulieve has 132 stores, you have 61, you're number four in stores. Trulieve stores do about two times the flower volume per store compared to your stores.

Correct.

The most efficient stores I believe.

And the state in terms of volume that goes through them.

Secondly, we are currently.

Under our Capex investment program in Florida that we had started before we learned from dissenters.

On the program, but one that we're now accelerating that we've heard that the program will make the ballot that will put us on equal footing now not in store will certainly have the same capacity in terms of production capacity and cultivation capacity, just truly but where will be different is in stores. We are anticipating a target around 85 stores in the state which will.

Boris Alexis Jordan: Is the plan to get there organically, or will you need to make an acquisition in Florida to really compete for leadership in that market? Thank you. So, Pablo, first of all, that's an incorrect number. They don't make twice the flour per store that we do. That's not correct.

We have a funnel for to complete by the time. The program gets launched in July we believe that that footprint under all calculations will give us the right geographic spread in the state to cover fully the population quite we don't believe we need to go to the 130 stores. We don't believe we'll get the incremental benefit from that.

Boris Alexis Jordan: We have the most efficient stores, I believe, in the state in terms of the volume that goes through them. Secondly, we are currently under a CapEx investment program in Florida that we had started before. We learned from DeSantis on the program, but one that we're now accelerating: we've heard that the program will make the ballot, which will put us on equal footing. Now, not in store. We'll certainly have the same capacity in terms of production capacity and cultivation capacity, truly.

We believe the 85 stores that we're looking at having we will cover the geographic spread.

And the state in order to be able to.

To not only compete but hopefully when what.

<unk> leadership in Florida, and that's our goal.

Thank you. This concludes our question and answer session I'll now turn the call back over to Darin for closing remarks.

Boris Alexis Jordan: But where we will be different is in stores. We're anticipating a target of around 85 stores in the state, which we have a funnel for to complete by the time the program gets launched in July. We believe that that footprint, according to our calculations, will give us the right geographic spread in the state to cover fully the population required. We don't believe we need to go to the 130 stores. We don't believe we'll get the incremental benefit from that number. We believe the 85 stores that we're looking at having will cover the geographic spread in the state in order to be able to not only compete but hopefully win in the battle of leadership in Florida.

Thanks, everybody for joining us and we look forward to seeing you in the next quarter.

The conference has now concluded. Thank you for your participation you may now disconnect your lines.

[music].

Matthew S. Darin: And that's our goal. Thank you. This concludes our question and answer session. I'll now turn the call back over to Matt Darin for closing remarks. Thank you everybody for joining us and we look forward to seeing you in the next quarter. The conference has now concluded. Thank you for your participation. You may now disconnect your line.

Yes.