Q1 2025 Trulieve Cannabis Corp Earnings Call
Another mother will cry Now I know they got a job to do But if I had one wish I'd wish it all from home So we could all get stoned I might as well get stoned And head it off my mind Ain't got shit to lose
Speaker Change: He was a killer, first time that I saw him Wonder how many girls he had left and left haunted But if he's a ghost, then I can be a phantom Holding him for ransom Some, some, some boys are trying too hard He don't try at all, though Younger than my exes, but he acts like such a man, so
Speaker Change: Vendetta, I, I, I see how this is gonna go Touch me and you'll never be alone Ice island breeze, the lights down low No one has to know In the middle of the night, in my dreams You should see the things we do, baby In the middle of the night, in my dreams
Speaker Change: I know I'm gonna stay with you, so I'll take my time Are you ready for it?
[inaudible]
Debbie: Good morning, everyone, and welcome to the Trulieve Cannabis Corporation First Quarter 2025 Financial Results Conference Call. My name is Debbie, and I will be your conference operator today.
Speaker Change: As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Christine Hershey, Vice President of Investor Relations for Trulieve. You may begin.
Thank you. Good morning and thank you for joining us.
Speaker Change: So during today's call, Tim Rivers, Chief Executive Officer, and Ryan Blust, Interim Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for Trulieve. Following the prepared remarks, we will open the call to questions.
Speaker Change: An archived version of today's conference call will be available on our website later today.
Speaker Change: As a reminder, statements made during this call that are not historical facts [inaudible]
Institute for Looking Statements
Speaker Change: including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including item 1a, risk factors of the company's most reads and annual report on form 10k, as well as our periodic quarterly filings.
Speaker Change: Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these four living statements whether as a result of new information, future events or otherwise, except as required by law [inaudible]
Speaker Change: During the call, management will also discuss certain financial measures that are not calculated in accordance with the United States generally accepted accounting principles or gap. We generally refer to these as non-GAAP financial measures.
Speaker Change: These measures should not be considered in isolation or as a substitute for Trulie's financial results prepared in accordance with GAP.
Speaker Change: A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on Form 8K that we furnished to the SEC today and can be found in the Investor Relations section of our website.
Speaker Change: Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics to provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details in the future.
Speaker Change: I'll now turn the call over to our CEO , Kim Rivers
Kim Rivers: Thank you, Christine, and good morning everyone, and thank you for joining us today.
Speaker Change: We are excited to report another strong quarter and fantastic start to the year.
Kim Rivers: Best in-class growth margin and strong operating cash flow during a seasonally slower quarter clearly demonstrate our commitment to operational excellence.
Kim Rivers: First Quarter Revenue of $298 million increased slightly compared to an atypally strong first quarter last year
Kim Rivers: Growth Margin increases 62% versus 58% last year, driven by lower production costs and discipline
Kim Rivers: Adjusted EBITDA of $109 million, or $37% margin, improved by 1% compared to last year. Operating cash flow at $51 million, contributed to cash of approximately $330 million at quarter-end
Kim Rivers: First quarter result shows strong demand for cannabis products. Retail traffic and unit sold both increased 7% year-over-year, while pricing compression and loyalty point redemptions pressured retail revenue to decline slightly by 1%.
Kim Rivers: Momentum in our wholesale business continued in the first quarter, with revenue up 25% versus last year. Demand for Trulieve branded products and expanded relationships with key wholesale partners in Maryland and Pennsylvania, contributed to higher wholesale revenue.
Kim Rivers: Since the start of the year, we observed modest shifts in consumer behavior towards value-oriented products.
Kim Rivers: As in prior cycles, we are actively refining our product offerings, pricing, and promotional activity to meet customers where they are.
Kim Rivers: By leading into competitive advantages, including deep connectivity to our customer base and the ability to quickly modify production mix and utilization, we are further solidifying our position as an industry leader. This year, we are building upon the strengths of our business with an emphasis of four key areas.
Kim Rivers: Customers, distribution, branded products, and reform to drive regulatory change. First and foremost, everything at Trulieve begins and ends with a customer in mind. Our store teams take great pride in serving our customers with care, knowledge, and convenience.
Kim Rivers: A key component of our customer-centric approach is our ability to provide store managers and associates with training, support, and real-time feedback to drive overall customer satisfaction and outstanding experiences.
Kim Rivers: During the first quarter, net promoter score increased by 4 percent, 4 points compared to last year, and every market scored within our target range. Kudos to the entire retail team for driving such a notable improvement.
Kim Rivers: As part of our strategy to attract and retain loyal customers, last year Trulieve rolled out a refresh rewards program companywide featuring portable, stackable, and redeemable points.
Kim Rivers: All designs reward repeat purchases in foster customer retention. At quarter end, the loyalty program reached over 625,000 members growing by almost 20% in the first quarter of the year.
Kim Rivers: Consistent with last quarter on average loyalty program members spent 2.3 times more per month than non-loyalty members in the first quarter.
Kim Rivers: Our data shows that consistently delivering elevated experiences, high-quality branded products, and generous loyalty of rewards to customers, reinforces retention. First quarter customer retention remains strong at 66% company-wide and 75% in medical-friendly markets.
Kim Rivers: Turning now into our second focus area, distribution, explaining our retail and wholesale distribution channels allows us to reach more customers while providing greater access to legal cannabis products.
Kim Rivers: We are working to attract new customers in retail with new, relocated, and refreshed shores, while accelerating wholesale distribution of branded products, particularly in Maryland and Pennsylvania [inaudible] We are working to attract new customers in the country
Kim Rivers: This year we plan to open ten new retail locations, relocate up to three stores, and refresh every model of the 45 dispensaries.
Kim Rivers: During the first quarter, we opened 60 dispensaries in Arizona, Florida, and Ohio. We relocated one Pennsylvania dispensary, refreshed nine locations and closed two Florida locations. Today, we operate 229 dispensaries in eight states.
Kim Rivers: The power of our retail platform was on full display during the 420 holiday season. Compared to last year, units sold increased by 20% and traffic increased by 9%
Kim Rivers: Customers took advantage of 420 deals stocking up during sales while celebrating the holiday Our retail team expertly managed the spike in customer traffic equipped with training, technology and support
Kim Rivers: On average, customer wait times were less than four minutes, demonstrating our ability to provide superior service levels at higher volumes.
Kim Rivers: The size and sophistication of our combined retail production and data platform, Lens Relieve and Meaningful Contentive Edge in several ways, especially in dynamic macroeconomic environments.
Kim Rivers: First, as a leading cannabis retailer in the US, Trulieve has unparalleled access to customers.
Kim Rivers: Second, multi-year investments in data analytics enable early identification of changing customer behavior Third, modular production capacity allows quick pivot in utilization and product mix in response to market condition .
Kim Rivers: In combination, these capabilities afford truly the flexibility to identify and respond to evolving customer preferences for the reinforcing customer satisfaction and retention.
Kim Rivers: Knowing what our customers want dictates efforts in our third focus area, branded products. Consistent availability of approachable, high-quality products is essential to long-term success. With over 4 million square feet of capacity, our production team continues to deliver outstanding results.
Kim Rivers: Yeels and potencies remain strong overall in the first quarter, contributing to growth margins while supporting the value proposition of branded products.
Kim Rivers: Trulieve's brand portfolio includes meticulously crafted internal brands augmented by popular third party brands.
Kim Rivers: In the first quarter, truly sold over 12 million branded products through our branded retail network, up 7% versus last year.
Kim Rivers: Truly Brand's Modern Flower, Enroll One, continues to gain momentum, representing over 40% of our branded products sold.
Kim Rivers: The expanded reach of these accessible brands demonstrates true residents with customers across the country. Our edible brand Sweet Talk continues to gain traction in Arizona, Florida, and Maryland. We plan to launch additional products under the Sweet Talk brand and existing markets this year.
Kim Rivers: Turning now to a new Brandon Product Category for Trulieve, CHC Beverages The End
Kim Rivers: In February, we launched Onward, a line of Farm Bill compliant beverages.
Kim Rivers: Through a combination of in-shore sampling events and training sessions, we are raising awareness and understanding of the THC beverage category in the onward brand.
Kim Rivers: Next month, we plan to launch an exciting new energy drink called Upward.
Kim Rivers: Upboard leverages are proprietary CBD and TFC Emulsion Blend to provide an enjoyable focusing occasion like no other.
Kim Rivers: Combining CBD and THC with natural caffeine creates an elevated feeling that is simultaneously calming and energizing. The upside is for consumers seeking clarity and focus without legitimizers or crash associated with traditional caffeine-based energy drinks.
Kim Rivers: Upwork will be available in 4 flavors, 5 milligram lemonade, peach nectarine, and strawberry tea, and 10 milligram pink lemonade
Kim Rivers: Broad Distribution of High Quality Branded Products is essential to building lasting brand equity supported by an army of oil customers. We look forward to expanding branded product offerings and distribution through new and established channels.
Finally, our 4-K area is reform.
Kim Rivers: Trulieve continues to leave from the front, tirelessly pushing for a common sense approach that acknowledges the value of cannabis and reflects popular opinion in the end.
Kim Rivers: This year, we are investing to support meaningful advancement, including reef scheduling, state thinking, and state 2.0, at the federal level, and adult use in Florida and Pennsylvania.
Kim Rivers: Our action includes individual efforts by Trulieve and a leadership role in the U.S. cannabis roundtable. For decades, federal classification of cannabis as a schedule one drug has lost medical research, prevented full development of the regulated industry and limited access to natural release provided by the plant.
Kim Rivers: Rescheduling to Schedule 3 would acknowledge the medicinal value of cannabis and enable cannabis research, representing a meaningful step towards greater reform. At the same time, Rescheduling would remove the 288 tax burden, allowing state licensed operators to pay normalized tax rates.
Bring up capitals who invest in the regulated industry. [inaudible]
Kim Rivers: State Banking would allow financial institutions to provide ordinary banking services to cannabis companies and employees, reducing reliance on cash and improving safety for dispensary workers for the first time in the world.
Kim Rivers: State Banking enjoys strong bipartisan support, as it would accelerate economic growth in the development of a more robust legal industry [inaudible]
Kim Rivers: Since 2019, state banking legislation passed in the House seven times and moved out of the Senate banking committee We are optimistic that state banking legislation will be revisited this year
Kim Rivers: Last month, bipartisan legislators introduced a new bill called the State 2.0 Act.
Kim Rivers: It passed, this bill would allow each state to determine its own approach to regulating cannabis . . . .
Kim Rivers: Stage 2.0 removes cannabis from the control substances act, allows oversight by the TTB and the FDA, and removes the 28E tax burden for compliant operators.
Kim Rivers: In our home state of Florida, last November , voters fell just shy of the 50% threshold required for passage. However, approximately six million Floridians voted in favor of personal abilities. Thank you.
Kim Rivers: In December , the Spartan State Florida campaign filed revised about language for personal adult youth legislation in court legalization, incorporating learning from the 2024 campaign.
Kim Rivers: The campaign is currently working on signature gathering required for inclusion in the November 2026 election cycle. To date, the campaign has collected over 700,000 signatures, which once validated, it's sufficient to trigger a review by the Florida Supreme Court.
Speaker Change: with 23 million residents and 143 million tourists visits per year. Florida has the potential to be the best leoal canvas market.
Speaker Change: In Pennsylvania, support for ability legalization continues to build momentum as most neighboring states have launched adult youth programs in the United States.
Speaker Change: Earlier this week, adult youth legislation was filed in the House of Representatives, kicking off the first step towards reaching a bipartisan agreement.
Speaker Change: Trulieve had been working to educate legislators and key stakeholders about the benefits of cannabis and legalization for adults We remain optimistic that adult legalization can happen in the near term We remain optimistic that adult legalization can happen in the near term
Speaker Change: With increasing acceptance of cannabis, Trulieve will continue to push for meaningful cannabis reform and expanded access for patients and adults.
Speaker Change: In summary, we're advancing our leading edge in four areas this year. Customers, distribution, branded products and reforms.
Speaker Change: By leaning into our intrinsic strengths, Trulieve continues to separate from the pack, propelled by a differentiated strategy and meaningful competitive advantages. With that, I'd like to turn the call over to our interim CFO , Ryan Blust. Please go ahead. Thank you, Kim. Good morning, everyone.
Ryan Blust: First quarter revenue was $298 million, up slightly year by year, driven by new store openings, adult youth sales in Ohio and growth in the wholesale channel.
Ryan Blust: First quarter growth profit was 183 million, or 62% margin, up 9 million from last year. Growth margin will continue to fluctuate quarter to quarter depending on product and market mix, inventory sell through, promotional activity, and idle capacity cost.
Ryan Blust: S-GNA expenses in the first quarter were $119 million or 40% of revenue compared to $101 million or 34% last year Higher S-GNA included new store opening expenses, technology and infrastructure investments and cattle is campaign support
Ryan Blust: First quarter net loss was 33 million compared to a loss of 23 million last year. First quarter loss per share was 17 cents, which was comparable to last year. Excluding non-recurring charges, first quarter loss per share would have been 2 cents compared to a loss of 5 cents last year.
Ryan Blust: 1st quarter of Adjusted EBITDA with $109 million or 37% representing a margin agreement of 1% compared to last year. 1st quarter of Adjusted EBITDA margin reflects industry leading growth margin and expense control in our core business.
Ryan Blust: Moving on to our balance sheet, we ended the pool girl with approximately 330 million in cash and 480 million in debt. Given the strength of our cash generation, we remain well-positioned to address our near-term financial obligations
Ryan Blust: As we indicated in our last call, we are prepared to retire our senior secured notes due in 2026 later this year with a target to refinance up to half of the 360 million ounce of handing.
Ryan Blust: Shifting the cash flow. First quarter cash flow from operations sold with 51 million. Capital expenditures were 17 million with free cash flow of 34 million. Absent the catalyst campaign contribution cash flow from operations would have been 74 million and free cash flow would have been 57 million.
Ryan Blust: Turning now to our outlook, we anticipate second quarter revenue will be flat to upload single digits sequentially We anticipate gross margin will fluctuate quarter to quarter and expect a full year gross margin will be comparable to 2024 [inaudible]
Ryan Blust: We expect full-year cash flow from operations of at least 250 million in capital expenditures about supporting millions.
Ryan Blust: We may refresh our forecast later this year, dependent on macroeconomic conditions, and the time and progress for catalysts.
Ryan Blust: I look forward to working with the team as we execute on our plans. With that, I'll turn the file back over to him.
Thanks, Ryan.
Speaker Change: Cannabis is an integral part of daily life for millions of Americans. We will cannabis provide safe products for patients and adults seeking relief and recreation. This is a growing American industry that employs almost half a million workers directly while generating tax revenue and contributing to economic growth through support services. [inaudible]
Speaker Change: US Cannabis Sales are production to reach $36 billion this year.
Speaker Change: Today, the US has 39 states with medical and or adult youth programs, all operating in direct conflicts with federal law and popular opinions. Most Americans support reform, including rescheduling, state banking, and expanded access, especially for medicinal youth.
Speaker Change: A March poll conducted by Fabrizio Lee and Associates showed 72% of registered voters support rescheduling with 80% of voters aged 18 to 34 in favor. The growing divide between federal and state law is unsustainable.
Speaker Change: We remain an optimistic about the future of the industry and of the current administration.
Speaker Change: and Florida and Pennsylvania, a majority of constituents support adult youth legalization. We believe it is a matter of when and not if these states will launch adult youth programs.
Speaker Change: Trulieve will do its part, continuing to push for common sense reform, working directly with elected officials, regulators, and key decision makers alongside industry peers.
Speaker Change: Both stirred by industry-leading margins and strong cash generation, Trulieve had flexibility to make strategic investments while reducing beverage balance sheet leverage .
Speaker Change: With our loyal customer base, branded products, and reform efforts, Julie stands out as an industry leader. I am so proud to leave this team, together we are ready to define the future of Cannabis. Thank you for joining us, and as I always say, onward.
Speaker Change: At this time, Kim Rivers and Ryan Bluffs will be available to answer any questions. Operator, please open up the call for questions.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your hands at before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster and also as a reminder, please limit yourselves to one question and one follow-up .
Speaker Change: The first question comes from Luke Hannan with Can Accord Genuity. Please go ahead.
Thanks, good morning everybody, and congratulations on the results.
Speaker Change: Kim, I wanted to dig in. I mean, you touched on in your prepared remarks that it is an industry-leading margin and very robust cash flow that you're able to deliver during the quarter. But Q1 is typically seasonally a slower quarter. Despite that, you delivered a 62% gross margin. I know that that sort of ebbs and flows throughout the year and you're still anchored around that 60%. But can you just shed some light on what specifically drove that sort of outperformance versus the 60% during this quarter? If there happened to be one or two.
and two items that were really behind that. Thanks.
Speaker Change: Yeah, thanks, Luke. As we've said consistently, right, that the margin really will fluctuate from quarter to quarter and depending on...
Speaker Change: specifics in terms of what's happening within the quarter. And, you know, I would, of course, like to take the opportunity to give kudos to the entire team with that has remained focused on continuing to deliver exceptional operational efficiencies across the platform and everything from, of course, you know, expense control at retail, but really also outperformance, not only from a discipline expense control side on the production and cultivation, but of course outperformance also on the yields and the quality of
of the flower and in products that we're able to produce. Thank you.
Speaker Change: and Products Mix also has a bit to do with it in terms of what folks are gravitating towards in the quarter. The company remains very disciplined in our strategic positioning of our products. And again, that's to the entire team in our shared services department who focuses on really deep understanding of the customers. And it's one thing to understand the customer. It's another thing to be able to actually take those learnings and monetize and react right and quickly
Speaker Change: to changing patterns and trends. I think that we as an organization are continuing to build upon those expertise which are pulling through in the numbers. That being said, I would just say, again, as we look through and we look down the pike at the rest of the year, that it will absolutely we fully expect it to ebb and flow just with certain dynamics that may be happening in a quarter. And again, that product
Speaker Change: Mix, and the consumer preferences. We have an obligation rate. We're always going to meet the customer where they're at. And so, you know, we'll see where that is up for the rest of the year, but really, I think it's controlling the controllables and really a laser focus on continuing to deliver efficiently, but also, of course, like I said, meeting that customer where they're at. [inaudible]
Speaker Change: That's great. Thanks. And for my follow-up, I did want to ask about your beverage line as well. So you've touched on some of the success that you've witnessed to date. When it comes to the sort of consumer that you're attracting or that product line is attracting rather, is that more of the typical cannabis connoisseur is a gaining traction with those who maybe haven't been quite as familiar with THC products or cannabis in the past. [inaudible]
Speaker Change: And then I realize this is sort of a few questions in one here, but I'm curious to know how the consumer education
and perhaps government education efforts have gone so.
Speaker Change: as well. Thanks. Sure. And so it's still early days, Luke, as it relates to that onward, but we are very excited and as it relates to initial findings. And I mentioned in our prepared remarks that we were focused on connectivity with the consumer. And that's one of the reasons why we've leaned so heavily into sampling events across the stores that we are selling in. And we have hundreds of those events and scheduled throughout the summer.
Speaker Change: Levels, and how they integrate cannabis into their regular consumption habits. Whereas, you know, on the on the fives and the threes and we're doing a lot of conversation around folks who haven't tried cannabis before or the panic curious or maybe they've tried here and there and are interested in really in our case because we are through a standard called beer and wine or liquor distribution channel are curious about maybe replacing or augmenting alcohol consumption. Let's get started.
Speaker Change: with Cannabis products. So we believe education is key to the sustainability of this category and are working not only, of course, directly with consumers, but also have a whole education platform behind the scenes with our distribution partners to make sure that the sales teams and associates, because we are finding that there's knowledge gaps, for sure, as it relates to sales force training in these stores, because they're just not familiar with the category. So we see that as a very large opportunity for us to come in and really be...
Speaker Change: the leading expert and in force of information for the sales force and on the ground and also course through our distribution partners as well.
That's great. Thank you very much.
Yep.
Speaker Change: The next question is from Aaron Grey with the Alliance Global Partners. Please go ahead.
Aaron Gray: Hi, good morning. Thank you very much for the questions and I'll congrats on the quarter.
So
Aaron Gray: The first question for me, just want to talk a bit about the rewards program, seems to be getting some nice momentum [inaudible]
Um...
Speaker Change: You can speak to how it's helped you to refine your promotional strategy, build a remote around your core consumer, and if you're looking to make any adjustments to it, I know it's been a couple quarters now that you've implemented it, so curious. Any feedback you have now of the program has been active for some time, kind of for about 7% of sales, so any kind of targets or potential changes you might want to implement now that's been in there for a while. Thank you.
Speaker Change: You know, some increased points on specific brands, and whether it's offering loyalty rewards numbers.
Speaker Change: specific loyalty only savings on certain days or certain products. So we're doing a lot of continued exploration and testing on what really resonates with that customer base. But I mean, look, we've got, you know, as we mentioned over 250,000 folks signed up and, you know, when when you've got over, you know, 58% of purchases in Q1 from folks that that are subscribed and there obviously is definitely. . . . . .
Speaker Change: And it's a very exciting, exciting tool for us to continue to lean into the world.
Speaker Change: Okay, great. Appreciate the color there. A second question for me, just on floor end of promotional environment.
Speaker Change: Can you comment on the promotional environment that you're seeing there? We're now six months removed from the adult measure not passing at the November election so [inaudible]
Speaker Change: Are you seeing the notable changes in the competitive environment in the state? Do you feel like now you've kind of worked through any potential inventory that might have built up ahead of anticipation?
Speaker Change: and it's more rational now with the more focused needed on profitability and cash flow. So you know any commentary what you're seeing in the environment will be helpful. Thanks.
Speaker Change: Yeah, I mean, I think that across the country, and then I'll get to support it specifically, but I think across the country, as I mentioned in the prepared remarks, we are starting to see some continued macro economic pressure on the consumer. We are seeing and it's a mixed bag, and depending on the specifics of the market, but I think just generally, right, and we saw this, you know, this has been flowed throughout the artistry as a company, so this has been a pattern that we're unfamiliar with. But [inaudible]
Speaker Change: It continues to not be necessarily rational, as it relates to pricing and continue to have broad-based approaches to kind of workable discounts, etc. We are going to continue to operate the way that we've continued to operate, meaning that we're going to be strategic in terms of
Speaker Change: Speaking directly to our customers, we're also ensuring that we have product offerings and availability to, again, the customers where they are. So, right in an environment where you may have some tree down occurring, you of course want to make sure that your value portfolio is robust and can speak to that to that customer. While maintaining our high levels of service and service, we are also ensuring that our value portfolio is robust and can speak to that customer.
Speaker Change: And again, you know, the royalty program helps with that as it relates to retention to make sure we retain the customers that we have. So, you know, certainly there is, you know, wallet pressure in the market. But again, I think that's more than just a Florida conversation. I think that that's a national conversation. But I think that, you know, we're very aware of it and very equipped in how we're strategically addressing it. And it was present in the first quarter as well. And I think that I think we
and Caledonian.
Speaker Change: Appreciate that, that's hopeful color. I'll go and jump back in the queue.
Thanks.
The next question is from Russell Stanley with Beacon Securities
Russell Stanley: Please go ahead. Good morning and thank you for taking my question. Now I just wanted to follow up on a prior question around
Russell Stanley: Onward, I know that again it's early days but can you talk about where you're seeing the strongest traction in terms of distribution channel, directed consumer versus retail shelves and on the director consumer front just wondering which states you're seeing the most interest out of. Thank you.
I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry
Speaker Change: Sure, so rest look, I mean I think we believe strongly that this is ultimately going to be a distribution play to be a distribution play.
Russell Stanley: We have augmented some of our strategy as it relates to direct to consumer and I have to do more with our pricing tiers and shipping costs and whatnot and our ability to negotiate and that's do a more reasonable
Spread, if you will, on cost between DTC and distribution.
Russell Stanley: previously and so I would say check back with me on that maybe next quarter and I can give you some additional additional color and and again as it really to states the same thing I think it's I think it's a little early to be able to call balls and strikes in terms of who and where leadership is because we're
Russell Stanley: Again, this is a reminder to everyone, this was a pilot, this was a pilot for us. So we have kind of our first normalized manufacturing run that is literally coming off the line right now in time for summer. And so we'll be able to provide you guys, I think some deeper color on on that next quarter.
Speaker Change: Great, thanks. And then, specifically to Florida, I just want to ask around patient count growth. It varies week to week considerably. The most maple was pretty strong. Any thoughts on...
Speaker Change: What's behind that, but beyond perhaps 420 and how sustainable growth might be in four together to give the penetrator a quality shade eye?
Speaker Change: Sure. Yeah, I mean, I think, you know, of course, we're happy to see and the numbers coming out of Florida in April . I mean, I think anytime you have a robust, you know, legalization campaign, it's going to impact, you know, to some extent, right renewal rates, as well as new new patients entering the market as they contemplate, you know, whether or not they want to spend the money to renew a card or get a renewal vis-a-vis being hopeful that adult youth will pass. And so it's not always understanding. Thank you.
Speaker Change: The implementation timeline behind legalization post amendment passes. So I think that, you know, we may have some rebound happening there and, you know, I will see, right. And again, I think we've got to kind of chart that out over the next
Speaker Change: called three to six months, but look I mean Florida has we have we have over 21 million residents right and as Cannabis becomes more and more mainstream and you know their of course is continued opportunities for Floridian to enter the program and to become to become patients for sure.
Speaker Change: Thanks for that, I'll get back in the queue, congrats on the corner [inaudible]
Thanks.
Frederico Gomez: The next question is from Frederico Gomes with ATB Capital Markets. Please go ahead.
Frederico Gomez: Hi, good morning. Thanks for taking my questions and the great quarter. First question, if you spent over 23 million in pain and political contributions to squatter, so just curious if you could provide any estimate of how do you think that, how much more capital do you tend to allocate to, I guess, other contributions through the year. And if, you know, that's already fully accounted for, you know, a casual guidance for this year. Thank you.
Thank you. Thank you. Thank you.
Frederico Gomez: Sure. So our cash flow guidance is our cash flow guidance that incorporates everything that we see, you know, sitting here, sitting here today. So, yeah, so I would say the thought is, that is fully baked guidance and other relates to the spend and this, this quarter, as mentioned, right, there was some pretty significant and. [inaudible]
Frederico Gomez: Effort that were happening across both federal and in Florida, specifically in Q1, 700,000 positions have been collected for 2026 efforts. So, you know, I would not what I would say is that
Frederico Gomez: You know, that is outsized for what we see moving forward and throughout the year, but it's really is going to depend on you.
Frederico Gomez: What the opportunities are and what catalyst become clear and more in focus as the year continues. We do feel like it's important to be able to lean in and to invest as opportunities arise. Thank you very much.
Speaker Change: Thank you very much for that. And second question is just how you're thinking about M and A.
Frederico Gomez: and the current environment, the evaluations are at all time lows in the public space, but just curious how you're seeing that, and considering the cash you have on hand at the same time, some of your developing initiatives, how you think about M&A as a capital location alternative. Thanks.
Frederico Gomez: Sure. So as you mentioned, we are absolutely focused on addressing the balance sheet this year, and we'll be doing that. And that being said, of course we're always interested to understand what the opportunities are. They're out there.
Frederico Gomez: to pay that down like we do. And so I think those are going to be basing some tough decisions and that creates opportunity. And so I think that we are going to make sure that we're in a position to be opportunistic when this opportunity arrives. I'm at the end.
Frederico Gomez: I also think that there's no benefit here in not being patient.
Thank you very much
Thanks.
Speaker Change: The next question is from Bill Kirk with MKM Partners. Please go ahead.
Bill Kirk: Good morning, everybody. I had a question on 420-year-over-year. What were dollars year-over-year? And I asked because...
Bill Kirk: Units were a pretty big acceleration over 1Q, yet the 2Q Revenue Guide is not as large of an acceleration over 1Q, so I'm curious what dollars were for 420 year over year.
Bill Kirk: Yeah, so we don't give specific dollars or revenue by holiday, but what I can tell you is right, I mean, 420 is one weekend.
Bill Kirk: and we have a whole quarter, right? And so when you have to look at how the consumers reacting within that quarter, right? And so what we've said is that we've said that, I mean, the good news here is that we've got traffic increases, we've got strong retention. But what we also have is we have wallet pressure and we have potential trade down happening. So P-Mix is a big part of that position.
and in terms of what...
Bill Kirk: Could what we could see, right, and in K2. So it was a exceptionally strong 420 in terms of our ability to serve a bunch of customers and to continue to sell and have a number of transactions and come through our platform across the country.
Bill Kirk: But again, there's this one weekend and there's a ton of other factors that play.
Bill Kirk: Okay, and as a follow-up on the THC beverages.
Bill Kirk: I believe you're allowed to pay retailer slotting fees for those. Alcohol is not allowed to pay slotting, so I guess are you seeing?
Bill Kirk: The emerging Delta 9 beverages paying for shelf space is like a way to establish themselves, you know, there's a lot of new entrance, so do they go pay, slotting to get established at retail accounts, and also is that a way for THC beverages to kind of...
Bill Kirk: Take space from alcohol. Alcohol can't pay it, pay the retailers for shelf space and get it right from those alcohol brands.
Speaker Change: Yeah, so again, we are not playing slotting, slotting these to date, and I do think that, you know, I think I think that that is varies by state-to-state, specifically as these states pass.
Speaker Change: Hemp Regulations and Regulatory Framework, we're seeing the emergence of specific regulatory structures around and T.C. beverages.
and Charity among the infer in the CHC beverage market.
I appreciate it. Thank you, Jim.
Thank you. Thank you. Thank you.
Speaker Change: The next question is from Andrew Semple with echelon capital markets. Please go ahead.
Good morning, congrats on the two wonderful results [inaudible]
Speaker Change: My first question is just on the rebuttiveness of the supply chain with respect to terrorism.
Speaker Change: and potential tariff interruptions that we might see. Do you have any concerns on any of your public categories, resourcing, packaging, and other materials, as they're related to surround tariffs, or are feeling pretty good, about how Trulie Rivers' position is about to be here.
Speaker Change: Yeah, thanks. We've done a very robust analysis around potential tear bin packs and it's in material.
Speaker Change: for our organization. Again, Kudos to your supply chain team. They have had this on the radar for quite some time and have worked directly.
Speaker Change: with our suppliers to ensure that the impact when and if would be minimal and in fact that is what has come to fruition. So we feel good about our position on that.
Speaker Change: Great. Okay, glad to hear. And my follow up here would just be on the company's inventory balance. Dave has been inventory having creeping higher.
Speaker Change: and that continued into the first quarter of 2025. That reflected the growth expectations or building any strategic inventory reserves.
Speaker Change: States, such as Pennsylvania, maybe head of the adult youths, both there, or the legalization opportunity there. Maybe just some thoughts about the companies in the Florida position as a stance today would be helpful. Thank you.
Speaker Change: Yeah, our inventory is in a place where I mean we're fairly comfortable, it's gonna fluctuate quarter to quarter and as it moves through the line I mean again we're different than some of our peers and that we do believe very strongly in branded products through branded retail as a key cornerstone strategy.
Speaker Change: of ours, and as we mentioned, we've been increasing wholesale. No.
Speaker Change: It's, you know, again, I think it's a normal fluctuation given our current strategic priorities across the platform.
Speaker Change: Great, that's helpful, thanks for taking my questions, I'll get back into queue Thank you.
All right, thanks.
[inaudible]
Speaker Change: This concludes our question and answer session. I would like to turn the call back over to Christine Hershey for closing remarks.
Thanks everyone for your time today.
Christine Hershey: We look forward to sharing additional updates during our next earnings call. Thanks again and have a great day.
Christine Hershey: Thank you. The conference is now concluded. Thank you for attending today. It's presentation. You may now disconnect.