Q4 2025 Terrascend Corp Earnings Call
Speaker #2: I will now turn the call over to Walter Pintel, Managing Director of KCSA Strategic Communications for Introduction. Please go ahead. Thank you, Operator, and good evening.
Valter Pinto: Thank you, operator, and good evening. Welcome to the TerrAscend Q4 and full year 2025 financial results conference call. Joining us for today's call is Jason Wild, Executive Chairman, Ziad Ghanem, President and Chief Executive Officer, and Alisa Campbell, Interim Chief Financial Officer. Our remarks today include forward-looking statements, including statements with respect to the company's outlook, including the company's financial results for the Q4 and full year 2025 and the estimates and assumptions relating thereto, including the company's expectations regarding its growth prospects in new and existing markets such as Ohio and New Jersey, its M&A strategy, anticipated timing and benefits regarding the sale of the company's assets in Michigan, and the expectations regarding regulatory reform and the potential benefits thereof.
Valter Pinto: Thank you, operator, and good evening. Welcome to the TerrAscend Q4 and full year 2025 financial results conference call. Joining us for today's call is Jason Wild, Executive Chairman, Ziad Ghanem, President and Chief Executive Officer, and Alisa Campbell, Interim Chief Financial Officer. Our remarks today include forward-looking statements, including statements with respect to the company's outlook, including the company's financial results for the Q4 and full year 2025 and the estimates and assumptions relating thereto, including the company's expectations regarding its growth prospects in new and existing markets such as Ohio and New Jersey, its M&A strategy, anticipated timing and benefits regarding the sale of the company's assets in Michigan, and the expectations regarding regulatory reform and the potential benefits thereof.
Speaker #2: Welcome to the TerrAscend fourth quarter and full year 2025 financial results conference call. Joining us for today's call is Jason Wilde, Executive Chairman. Ziad Ghanem, President and Chief Executive Officer, and Alyssa Campbell, Interim Chief Financial Officer.
Speaker #2: Our remarks today include forward-looking statements, including statements with respect to the company's outlook including the company's financial results for the fourth quarter and full year 2025.
Speaker #2: And the estimates and assumptions relating thereto, including the company's expectations regarding its growth prospects and new and existing markets, such as Ohio and New Jersey, its M&A strategy, anticipated timing and benefits regarding the sale of the company's assets in Michigan, and the expectations regarding regulatory reform and the potential benefits thereof.
Speaker #2: Each forward-looking statement discussed in today's call is subject to risk and uncertainties that could cause actual results to differ materially from those projected in such statements.
Valter Pinto: Each forward-looking statement discussed in today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Additional information regarding these factors appear under the heading Risk Factors in the company's Form 10-K filed with the Securities and Exchange Commission and other filings that the company makes with the SEC from time to time, which are available at sec.gov, on SEDAR+, and on the company's website at terrascend.com. The forward-looking statements in this call speak as of today's date, and the company undertakes no obligation to update or revise any of these statements.
Valter Pinto: Each forward-looking statement discussed in today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Additional information regarding these factors appear under the heading Risk Factors in the company's Form 10-K filed with the Securities and Exchange Commission and other filings that the company makes with the SEC from time to time, which are available at sec.gov, on SEDAR+, and on the company's website at terrascend.com. The forward-looking statements in this call speak as of today's date, and the company undertakes no obligation to update or revise any of these statements.
Speaker #2: Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements and reported results should not be considered as an indication of future performance.
Speaker #2: Additional information regarding these factors appears under the heading 'Risk Factors' in the company's Form 10-K filed with the Securities and Exchange Commission and other filings that the company makes with the SEC from time to time, which are available at sec.gov, on SEDAR+, and on the company's website at terrascend.com.
Speaker #2: The forward-looking statements in this call speak as of today's date and the company undertakes no obligation to update or revise any of these statements.
Speaker #2: Also, during the call, the company may present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release in our annual report on Form 10-K for the year ended December 31st, 2025, which you can find in the company's investor relations website or on the SEC and Cedar Plus websites.
Valter Pinto: Also, during the call, the company may present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release in our annual report on Form 10-K for the year ended December 31, 2025, which you can find in the company's investor relations website or on the SEC, and SEDAR+ websites. I'd now like to turn the call over to Mr. Jason Wild. Please go ahead, Jason.
Valter Pinto: Also, during the call, the company may present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release in our annual report on Form 10-K for the year ended December 31, 2025, which you can find in the company's investor relations website or on the SEC, and SEDAR+ websites. I'd now like to turn the call over to Mr. Jason Wild. Please go ahead, Jason.
Speaker #2: I'd now like to turn the call over to Mr. Jason Wilde. Please go ahead, Jason.
Speaker #3: Good evening, everyone, and thank you for joining us. I'm pleased to report another strong performance in our core Northeast markets of New Jersey, Maryland, and Pennsylvania.
Jason Wild: Good evening, everyone, and thank you for joining us. I'm pleased to report another strong performance in our core Northeast markets of New Jersey, Maryland, and Pennsylvania. In Q4, we generated $66.1 million in revenue, bringing full year 2025 revenue to approximately $261 million, with gross margins for the quarter and full year of over 52%. For Q4, adjusted EBITDA from continuing operations totaled $16.7 million or 25.2% of revenue. For the full year, we delivered $67.8 million of adjusted EBITDA from continuing operations, representing a 26% margin. Notably, we generated $33.9 million in operating cash flow from continuing operations and $25.3 million in free cash flow for the full year.
Jason Wild: Good evening, everyone, and thank you for joining us. I'm pleased to report another strong performance in our core Northeast markets of New Jersey, Maryland, and Pennsylvania. In Q4, we generated $66.1 million in revenue, bringing full year 2025 revenue to approximately $261 million, with gross margins for the quarter and full year of over 52%. For Q4, adjusted EBITDA from continuing operations totaled $16.7 million or 25.2% of revenue. For the full year, we delivered $67.8 million of adjusted EBITDA from continuing operations, representing a 26% margin. Notably, we generated $33.9 million in operating cash flow from continuing operations and $25.3 million in free cash flow for the full year.
Speaker #3: In the fourth quarter, we generated $66.1 million in revenue, bringing full year 2025 revenue to approximately $261 million, with gross margins for the quarter and full year of over 52%.
Speaker #3: For the fourth quarter, adjusted EBITDA from continuing operations totaled $16.7 million. Or 25.2% of revenue. And for the full year, we delivered 67.8 million of adjusted EBITDA from continuing operations representing a 26% margin.
Speaker #3: Notably, we generated $33.9 million in operating cash flow from continuing operations and $25.3 million in free cash flow for the full year. During the fourth quarter, we generated $8.3 million in operating cash flow from continuing operations and $6.6 million in free cash flow.
Jason Wild: During Q4, we generated $8.3 million in operating cash flow from continuing operations and $6.6 million in free cash flow. This marks TerrAscend's 14th consecutive quarter of positive operating cash flow and 10th consecutive quarter of positive free cash flow. These results are the product of continued operational discipline and execution across our core markets of New Jersey, Maryland, and Pennsylvania. In New Jersey, we recently completed the Union Chill transaction, which expanded our retail footprint to four dispensaries in the state. In Maryland, we are operating at a roughly $75 million annual run rate, with Q4 gross margins impressively nearing 60%. In Pennsylvania, both retail and wholesale revenue increased sequentially for Q4.
Jason Wild: During Q4, we generated $8.3 million in operating cash flow from continuing operations and $6.6 million in free cash flow. This marks TerrAscend's 14th consecutive quarter of positive operating cash flow and 10th consecutive quarter of positive free cash flow. These results are the product of continued operational discipline and execution across our core markets of New Jersey, Maryland, and Pennsylvania. In New Jersey, we recently completed the Union Chill transaction, which expanded our retail footprint to four dispensaries in the state. In Maryland, we are operating at a roughly $75 million annual run rate, with Q4 gross margins impressively nearing 60%. In Pennsylvania, both retail and wholesale revenue increased sequentially for Q4.
Speaker #3: This marks TerrAscend's 14th consecutive quarter of positive operating cash flow and 10th consecutive quarter of positive free cash flow. These results are the product of continued operational discipline and execution across our core markets of New Jersey, Maryland, and Pennsylvania.
Speaker #3: In New Jersey, we recently completed the Union Shell transaction, which expanded our retail footprint to four dispensaries in the state. In Maryland, we are operating at a roughly 75 million annual run rate with fourth quarter gross margins impressively nearing 60%.
Speaker #3: And in Pennsylvania, both retail and wholesale revenue increased sequentially for the fourth quarter. We have increased capacity at our cultivation facility in Pennsylvania to account for new product launches increased wholesale demand and in preparation for potential adult use conversion.
Jason Wild: We have increased capacity at our cultivation facility in Pennsylvania to account for new product launches, increased wholesale demand, and in preparation for potential adult use conversion. Turning to our balance sheet. In July 2025, we completed a $79 million non-dilutive debt financing, which allowed us to retire $68 million of existing debt, with the remainder designated for future growth initiatives. The vast majority of our debt maturities are now extended to the second half of 2028, significantly eliminating near-term refinancing risk. Importantly, the facility also includes an additional uncommitted term loan of up to $35 million to support future strategic M&A. This gives us meaningful financial flexibility to pursue accretive growth opportunities while maintaining our disciplined approach. On the M&A front, as I mentioned, we recently closed on Union Chill in New Jersey.
Jason Wild: We have increased capacity at our cultivation facility in Pennsylvania to account for new product launches, increased wholesale demand, and in preparation for potential adult use conversion. Turning to our balance sheet. In July 2025, we completed a $79 million non-dilutive debt financing, which allowed us to retire $68 million of existing debt, with the remainder designated for future growth initiatives. The vast majority of our debt maturities are now extended to the second half of 2028, significantly eliminating near-term refinancing risk. Importantly, the facility also includes an additional uncommitted term loan of up to $35 million to support future strategic M&A. This gives us meaningful financial flexibility to pursue accretive growth opportunities while maintaining our disciplined approach. On the M&A front, as I mentioned, we recently closed on Union Chill in New Jersey.
Speaker #3: Turning to our balance sheet, in July 2025, we completed a 79 million non-diluted debt financing, which allowed us to retire 68 million of existing debt with the remainders designated for future growth initiatives.
Speaker #3: The vast majority of our debt maturities are now extended to the second half of 2028, significantly eliminating near-term refinancing risk. Importantly, the facility also includes an additional uncommitted term loan of up to $35 million to support future strategic M&A.
Speaker #3: This gives us meaningful financial flexibility to pursue a creative growth opportunities while maintaining our disciplined approach. On the M&A front, as I mentioned, we recently closed on Union Shell in New Jersey.
Speaker #3: We also entered Ohio with the acquisition of the assets of Ratio Cannabis earlier in 2025. Throughout the year, we demonstrated discipline deliberately passing on multiple opportunities that were not attractive enough for us.
Jason Wild: We also entered Ohio with the acquisition of the assets of Ratio Cannabis earlier in 2025. Throughout the year, we demonstrated discipline, deliberately passing on multiple opportunities that were not attractive enough for us. Some of these opportunities came back to us with better pricing, proving that our approach was appropriate. Growing through acquisitions is a major part of our strategy, but we will only do it at the right time and at the right price. In this current environment, we are evaluating attractive distressed assets, particularly in our core markets of New Jersey and Pennsylvania. We believe our scale and vertical integration position us favorably when considering these opportunities. Turning briefly to regulatory reform. We continue to monitor developments at both the state and federal levels.
Jason Wild: We also entered Ohio with the acquisition of the assets of Ratio Cannabis earlier in 2025. Throughout the year, we demonstrated discipline, deliberately passing on multiple opportunities that were not attractive enough for us. Some of these opportunities came back to us with better pricing, proving that our approach was appropriate. Growing through acquisitions is a major part of our strategy, but we will only do it at the right time and at the right price. In this current environment, we are evaluating attractive distressed assets, particularly in our core markets of New Jersey and Pennsylvania. We believe our scale and vertical integration position us favorably when considering these opportunities. Turning briefly to regulatory reform. We continue to monitor developments at both the state and federal levels.
Speaker #3: Some of these opportunities came back to us with better pricing proving that our approach was appropriate. Growing through acquisitions is a major part of our strategy but we will only do it at the right time and at the right price.
Speaker #3: In this current environment, we are evaluating attractive distressed assets particularly in our core markets of New Jersey and Pennsylvania. We believe our scale and vertical integration position us favorably when considering these opportunities.
Speaker #3: Turning briefly to regulatory reform, we continue to monitor developments at both the state and federal levels. As we've said many times, we operate under the assumption that reform will take time and any successful reform only serves as upside to our plan.
Jason Wild: As we've said many times, we operate under the assumption that reform will take time, and any successful reform only serves as upside to our plan. In December 2025, the White House issued an executive order directing federal agencies to expedite the rescheduling process for marijuana and enhance federal research and policy coordination. This represents the most significant federal cannabis policy action in decades. That said, the formal rescheduling process remains subject to agency rulemaking and implementation timelines. Lastly, in 2025, we renewed and replenished our normal course issuer bid, authorizing up to an additional $10 million in repurchases through August 2026. During 2025, we repurchased over 1.1 million shares at a weighted average price of $0.44 per share.
Jason Wild: As we've said many times, we operate under the assumption that reform will take time, and any successful reform only serves as upside to our plan. In December 2025, the White House issued an executive order directing federal agencies to expedite the rescheduling process for marijuana and enhance federal research and policy coordination. This represents the most significant federal cannabis policy action in decades. That said, the formal rescheduling process remains subject to agency rulemaking and implementation timelines. Lastly, in 2025, we renewed and replenished our normal course issuer bid, authorizing up to an additional $10 million in repurchases through August 2026. During 2025, we repurchased over 1.1 million shares at a weighted average price of $0.44 per share.
Speaker #3: In December 2025, the White House issued an executive order directing federal agencies to expedite the rescheduling process for marijuana and enhance federal research and policy coordination.
Speaker #3: This represents the most significant federal cannabis policy action in decades. That said, the formal rescheduling process remains subject to agency rulemaking and implementation timelines.
Speaker #3: Lastly, in 2025, we renewed and replenished our normal course issuer bid authorizing up to an additional $10 million in repurchases through August 2026. During 2025, we repurchased over $1.1 million shares at a weighted average price of $44 US per share.
Speaker #3: In summary, we are very pleased with how we finished this year and strongly believe in our differentiated pathway for growth both organically and through an M&A due to our deep presence and successful operations in our existing markets and a wide open map for further expansion.
Jason Wild: In summary, we are very pleased with how we finished this year and strongly believe in our differentiated pathway for growth, both organically and through an M&A, due to our deep presence and successful operations in our existing markets and a wide open map for further expansion. We have consistently demonstrated positive free cash flow with gross margins and adjusted EBITDA margins among the leaders in the industry, regardless of size. Considering the strength of our balance sheet, no sale-leasebacks and over $37 million in cash, the potential for Pennsylvania to convert to adult use and multiple attractive acquisition opportunities, we believe that our equity is significantly undervalued. With our Normal Course Issuer Bid in place, we will continue to execute on the buyback in a disciplined manner while balancing growth investments, capital expenditures, and selective M&A.
Jason Wild: In summary, we are very pleased with how we finished this year and strongly believe in our differentiated pathway for growth, both organically and through an M&A, due to our deep presence and successful operations in our existing markets and a wide open map for further expansion. We have consistently demonstrated positive free cash flow with gross margins and adjusted EBITDA margins among the leaders in the industry, regardless of size. Considering the strength of our balance sheet, no sale-leasebacks and over $37 million in cash, the potential for Pennsylvania to convert to adult use and multiple attractive acquisition opportunities, we believe that our equity is significantly undervalued. With our Normal Course Issuer Bid in place, we will continue to execute on the buyback in a disciplined manner while balancing growth investments, capital expenditures, and selective M&A.
Speaker #3: We have consistently demonstrated positive free cash flow, with gross margins and adjusted EBITDA margins among the leaders in the industry regardless of size. Considering the strength of our balance sheet, no sale-leasebacks, and over $37 million in cash, the potential for Pennsylvania to convert to adult use, and multiple attractive acquisition opportunities, we believe that our equity is significantly undervalued.
Speaker #3: With our normal course issuer bid in place, we will continue to execute on the buyback in a disciplined manner while balancing growth investments capital expenditures and selective M&A.
Speaker #3: With that, I'll turn the call over to Ziad to provide a detailed update across our key markets. Zi?
Jason Wild: With that, I'll turn the call over to Ziad to provide a detailed update across our key markets. Z?
Jason Wild: With that, I'll turn the call over to Ziad to provide a detailed update across our key markets. Z?
Speaker #4: Thank you, Jason. Let me walk you through our performance across each of our key markets this quarter, beginning with New Jersey. In the fourth quarter, retail revenue increased modestly while wholesale revenue decreased quarter over quarter due to price compression.
Ziad Ghanem: Thank you, Jason. Let me walk you through our performance across each of our key markets this quarter, beginning with New Jersey. In Q4, retail revenue increased modestly, while wholesale revenue decreased quarter-over-quarter due to price compression. Gross margins in the state declined slightly due to the competitive pricing environment. Our retail stores continue to perform well, and with the addition of Union Chill at year-end, we believe we have entered 2026 as the highest grossing retailer in the state. On the brand side, Legend, Kind Tree, and Valhalla continue to resonate with consumers. They rank in the top 10 across the state amongst more than 275 brands. Legend vape sales grew 12% quarter-over-quarter, and Legend pre-rolls delivered their highest sales quarter to date, growing approximately 85% sequentially with meaningful share gains.
Ziad Ghanem: Thank you, Jason. Let me walk you through our performance across each of our key markets this quarter, beginning with New Jersey. In Q4, retail revenue increased modestly, while wholesale revenue decreased quarter-over-quarter due to price compression. Gross margins in the state declined slightly due to the competitive pricing environment. Our retail stores continue to perform well, and with the addition of Union Chill at year-end, we believe we have entered 2026 as the highest grossing retailer in the state. On the brand side, Legend, Kind Tree, and Valhalla continue to resonate with consumers. They rank in the top 10 across the state amongst more than 275 brands. Legend vape sales grew 12% quarter-over-quarter, and Legend pre-rolls delivered their highest sales quarter to date, growing approximately 85% sequentially with meaningful share gains.
Speaker #4: Gross margins in the state declined slightly due to the competitive pricing environment. Our retail stores continued to perform well, and with the addition of Union Shell at year-end, we believe we have entered 2026 as the highest grossing retailer in the state.
Speaker #4: On the brand side, Legend, KineTree, and Valhalla continue to resonate with consumers. They rank in the top 10 across the state amongst more than 275 brands.
Speaker #4: Legend vape sales grew 12% quarter over quarter, and Legend pre-rolls delivered their highest sales quarter to date, growing approximately 85% sequentially with meaningful share gains.
Speaker #4: Valhalla gained category share every quarter in 2025. Today, we operate four dispensaries in New Jersey. Looking ahead, our objective is to expand our retail presence to the current maximum of 10 dispensaries to further strengthen our leadership position in the state.
Ziad Ghanem: Valhalla gained category share every quarter in 2025. Today, we operate four dispensaries in New Jersey. Looking ahead, our objective is to expand our retail presence to the current maximum of 10 dispensaries to further strengthen our leadership position in the state. Turning to Maryland, we are operating at approximately a $75 million run rate, and our gross margins improved this quarter to nearly 60%, driven by our vertical integration and sustained operational efficiencies. Retail revenue declined quarter-over-quarter, while wholesale revenue increased slightly. Our cultivation expansion is driving improved flower output and operational leverage. As we are evaluating the impact of the state's social equity license rollout, we believe our vertical integration and brand portfolio will allow us to grow further in the state.
Ziad Ghanem: Valhalla gained category share every quarter in 2025. Today, we operate four dispensaries in New Jersey. Looking ahead, our objective is to expand our retail presence to the current maximum of 10 dispensaries to further strengthen our leadership position in the state. Turning to Maryland, we are operating at approximately a $75 million run rate, and our gross margins improved this quarter to nearly 60%, driven by our vertical integration and sustained operational efficiencies. Retail revenue declined quarter-over-quarter, while wholesale revenue increased slightly. Our cultivation expansion is driving improved flower output and operational leverage. As we are evaluating the impact of the state's social equity license rollout, we believe our vertical integration and brand portfolio will allow us to grow further in the state.
Speaker #4: Turning to Maryland, we are operating at approximately a $75 million run rate, and our gross margins improved this quarter to nearly 60%, driven by our vertical integration and sustained operational efficiencies.
Speaker #4: Retail revenue declined quarter over quarter while wholesale revenue increased slightly. Our cultivation expansion is driving improved flower output and operational leverage. As we are evaluating the impact of the state's social equity license rollout, we believe our vertical integration and brand portfolio will allow us to grow further in the state.
Speaker #4: At retail, two of our four apothecarium stores rank in the top 10 statewide including Salisbury at number 6 and Cumberland at number 7 according to LitAlerts.
Ziad Ghanem: At retail, 2 of our 4 Apothecarium stores rank in the top 10 statewide, including Salisbury at number 6 and Cumberland at number 7, according to Lit Alerts. Kind Tree and Valhalla are also performing well in Maryland, with Kind Tree remaining a top 6 flower brand with double-digit sequential growth and Valhalla edibles continuing to gain market share, according to BDSA. In Pennsylvania, net revenue increased over 8% sequentially, driven by a 5.6% increase in retail and a 19.1% increase in wholesale. According to BDSA, we grew our market share quarter-over-quarter and continue to see strong performance across brands. 3 of our Apothecarium stores rank among the top 10 statewide, according to Lit Alerts, with our remaining stores in the top 30 out of 176 stores in total in the state.
Ziad Ghanem: At retail, 2 of our 4 Apothecarium stores rank in the top 10 statewide, including Salisbury at number 6 and Cumberland at number 7, according to Lit Alerts. Kind Tree and Valhalla are also performing well in Maryland, with Kind Tree remaining a top 6 flower brand with double-digit sequential growth and Valhalla edibles continuing to gain market share, according to BDSA. In Pennsylvania, net revenue increased over 8% sequentially, driven by a 5.6% increase in retail and a 19.1% increase in wholesale. According to BDSA, we grew our market share quarter-over-quarter and continue to see strong performance across brands. 3 of our Apothecarium stores rank among the top 10 statewide, according to Lit Alerts, with our remaining stores in the top 30 out of 176 stores in total in the state.
Speaker #4: KineTree and Valhalla are also performing well in Maryland with KineTree remaining a top 6 flower brand with double digit sequential growth and Valhalla Edibles continuing to gain market share according to BDSA.
Speaker #4: In Pennsylvania, net revenue increased over 8% sequentially driven by a 5.6% increase in retail and a 19.1% increase in wholesale. According to BDSA, we grew our market share quarter over quarter and continue to see strong performance across brands.
Speaker #4: Three of our apothecarium stores rank among the top 10 statewide according to LitAlerts with our remaining stores in the top 30 out of 176 stores in total in the state.
Speaker #4: Legend flower sales grew over 40% sequentially and both Legend and KineTree vape categories delivered double digit growth. Valhalla remains a top 3 Edibles brand in the state.
Ziad Ghanem: Legend flower sales grew over 40% sequentially, and both Legend and Kind Tree vape categories delivered double-digit growth. Valhalla remains a top three edibles brand in the state. Importantly, we have a fully built-out large-scale cultivation and manufacturing facility in Pennsylvania with no need for additional investment. In preparation for new product launches, increased wholesale demand, and potential adult use conversion, we have brought online additional capacity. As part of that effort, we reactivated 6 additional rooms in mid-December. This expansion will increase total flower output by roughly 50%. We expect the first harvest to occur in April, with products available for sale in June. Importantly, this increased capacity leverages existing infrastructures and requires no incremental CapEx. In Ohio, Ratio is now fully integrated into our operations and is performing well.
Ziad Ghanem: Legend flower sales grew over 40% sequentially, and both Legend and Kind Tree vape categories delivered double-digit growth. Valhalla remains a top three edibles brand in the state. Importantly, we have a fully built-out large-scale cultivation and manufacturing facility in Pennsylvania with no need for additional investment. In preparation for new product launches, increased wholesale demand, and potential adult use conversion, we have brought online additional capacity. As part of that effort, we reactivated 6 additional rooms in mid-December. This expansion will increase total flower output by roughly 50%. We expect the first harvest to occur in April, with products available for sale in June. Importantly, this increased capacity leverages existing infrastructures and requires no incremental CapEx. In Ohio, Ratio is now fully integrated into our operations and is performing well.
Speaker #4: Importantly, we have a fully built-out large-scale cultivation and manufacturing facility in Pennsylvania with no need for additional investment. In preparation for new product launches, increased wholesale demand, and potential adult use conversion, we have brought online additional capacity.
Speaker #4: As part of that effort, we reactivated six additional rooms in mid-December. This expansion will increase total flower output by roughly 50%. We expect the first harvest to occur in April with product available for sale in June.
Speaker #4: Importantly, this increased capacity leverages existing infrastructure and requires no incremental CapEx. In Ohio, Ratio is now fully integrated into our operations and is performing well.
Speaker #4: Our strategy in Ohio is focused on assembling a leading retail footprint through disciplined acquisitions while leveraging our infrastructure to drive profitability. Lastly, I would like to provide an update on our Michigan exit.
Ziad Ghanem: Our strategy in Ohio is focused on assembling a leading retail footprint through disciplined acquisitions while leveraging our infrastructure to drive profitability. Lastly, I would like to provide an update on our Michigan exit. We have now completed the majority of the asset sales in Michigan and have significantly negotiated down liabilities and debt exposure. We are now entering the final stages of the exit process in the state. The proceeds from divested assets are being used to reduce debt, and the exit has been executed efficiently, allowing us to focus on our core markets. In closing, TerrAscend continues to show strong numbers across the board. Our business remains solid due to strong business fundamentals, a targeted M&A strategy, no material debt maturing until late 2028, consistent positive operating and free cash flow quarter-over-quarter, best-in-class sponsorship, and a strong leadership team.
Ziad Ghanem: Our strategy in Ohio is focused on assembling a leading retail footprint through disciplined acquisitions while leveraging our infrastructure to drive profitability. Lastly, I would like to provide an update on our Michigan exit. We have now completed the majority of the asset sales in Michigan and have significantly negotiated down liabilities and debt exposure. We are now entering the final stages of the exit process in the state. The proceeds from divested assets are being used to reduce debt, and the exit has been executed efficiently, allowing us to focus on our core markets. In closing, TerrAscend continues to show strong numbers across the board. Our business remains solid due to strong business fundamentals, a targeted M&A strategy, no material debt maturing until late 2028, consistent positive operating and free cash flow quarter-over-quarter, best-in-class sponsorship, and a strong leadership team.
Speaker #4: We have now completed the majority of the asset sales in Michigan and have significantly negotiated down liabilities and debt exposure. We are now entering the final stages of the exit process in the state.
Speaker #4: The proceeds from divested assets are being used to reduce debt and the exit has been executed efficiently allowing us to focus on our core markets.
Speaker #4: In closing, TerrAscend continues to show strong numbers across the board. Our business remains solid due to strong business fundamentals, a targeted M&A strategy, no material debt maturing until late 2028, consistent positive operating and free cash flow quarter over quarter, best-in-class sponsorship, and a strong leadership team.
Speaker #4: Giving all this, I am more confident in our future than I have ever been. With that, let me turn the call over to Alyssa to provide more detail on our fourth quarter and full year 2025 financial results.
Ziad Ghanem: Given all this, I am more confident in our future than I have ever been.
Ziad Ghanem: Given all this, I am more confident in our future than I have ever been.
Ziad Ghanem: With that, let me turn the call over to Alisa to provide more detail on our Q4 and full year 2025 financial results. Alisa?
Ziad Ghanem: With that, let me turn the call over to Alisa to provide more detail on our Q4 and full year 2025 financial results. Alisa?
Speaker #4: Alyssa?
Speaker #5: Thanks, Theod. Good evening, everyone. The results that I'll be going over today have already been filed with both Cedar Plus and with the SEC, and all results that I reference today are stated in U.S. dollars.
Alisa Campbell: Thanks, Ziad. Good evening, everyone. The results that I'll be going over today have already been filed with both SEDAR+ and with the SEC, and all results that I reference today are stated in US dollars. All financials discussed reflect results from continuing operations. Net revenues for the full year of 2025 totaled $260.6 million compared to $268.1 million for 2024. The year-over-year decline was primarily driven by pricing compression in New Jersey that was partially offset by growth in Pennsylvania and Maryland. Net revenues for Q4 of 2025 totaled $66.1 million, an increase of approximately 1.6% sequentially compared to $65.1 million in Q3 of 2025.
Alisa Campbell: Thanks, Ziad. Good evening, everyone. The results that I'll be going over today have already been filed with both SEDAR+ and with the SEC, and all results that I reference today are stated in US dollars. All financials discussed reflect results from continuing operations. Net revenues for the full year of 2025 totaled $260.6 million compared to $268.1 million for 2024. The year-over-year decline was primarily driven by pricing compression in New Jersey that was partially offset by growth in Pennsylvania and Maryland. Net revenues for Q4 of 2025 totaled $66.1 million, an increase of approximately 1.6% sequentially compared to $65.1 million in Q3 of 2025.
Speaker #5: All financials discussed reflect results from continuing operations. Net revenue for the full year 2025 totaled $260.6 million compared to $268.1 million for 2024. The year-over-year decline was primarily driven by pricing compression in New Jersey that was partially offset by growth in Pennsylvania and Maryland.
Speaker #5: Net revenue for the fourth quarter of 2025 totaled $66.1 million and increase of approximately 1.6% sequentially compared to $65.1 million in the third quarter of 2025.
Speaker #5: Retail revenue was up sequentially, while wholesale revenue remained stable to modestly higher, reflecting improvements in certain Northeast markets and the continued contribution from Ohio.
Alisa Campbell: Retail revenue was up sequentially while wholesale revenue remained stable to modestly higher, reflecting improvements in certain Northeast markets and the continued contribution from Ohio. Gross margins for the full year of 2025 was 52.3% compared to 50.7% in 2024, reflecting improved vertical integration efficiencies and disciplined cost management across our core markets. Gross margin for Q4 was 52.1%, remaining stable quarter-over-quarter. This was driven by pricing pressure in New Jersey, offset by strong performance in Maryland. G&A expenses for the full year of 2025 were $86.2 million or approximately 33.1% of revenue, compared to $90.6 million or 33.8% of revenue in 2024.
Alisa Campbell: Retail revenue was up sequentially while wholesale revenue remained stable to modestly higher, reflecting improvements in certain Northeast markets and the continued contribution from Ohio. Gross margins for the full year of 2025 was 52.3% compared to 50.7% in 2024, reflecting improved vertical integration efficiencies and disciplined cost management across our core markets. Gross margin for Q4 was 52.1%, remaining stable quarter-over-quarter. This was driven by pricing pressure in New Jersey, offset by strong performance in Maryland. G&A expenses for the full year of 2025 were $86.2 million or approximately 33.1% of revenue, compared to $90.6 million or 33.8% of revenue in 2024.
Speaker #5: Gross margin for the full year 2025 was 52.3%, compared to 50.7% in 2024, reflecting improved vertical integration efficiencies and disciplined cost management across our core markets.
Speaker #5: Gross margin for the fourth quarter was 52.1%, remaining stable quarter over quarter. This was driven by pricing pressure in New Jersey, offset by strong performance in Maryland.
Speaker #5: G&A expenses for the full year 2025 were $86.2 million or approximately $33.1% of revenue, compared to $90.6 million or $33.8% of revenue in 2024.
Speaker #5: G&A expenses for the fourth quarter were $22.8 million compared to $21.3 million in the third quarter. The increase was primarily driven by planned investments and wholesale.
Alisa Campbell: G&A expenses for Q4 were $22.8 million compared to $21.3 million in Q3. The increase was primarily driven by planned investments in wholesale. Net loss from continuing operations for the full year of 2025 was $24.5 million compared to $11.5 million in 2024. The increase was primarily driven by other non-cash operating items during the year. Net loss from continuing operations for Q4 of 2025 was $0.5 million compared to a net loss of $9.9 million in Q3, representing significant improvement sequentially. Full year 2025 adjusted EBITDA from continuing operations totaled $67.8 million compared to $70.2 million in 2024.
Alisa Campbell: G&A expenses for Q4 were $22.8 million compared to $21.3 million in Q3. The increase was primarily driven by planned investments in wholesale. Net loss from continuing operations for the full year of 2025 was $24.5 million compared to $11.5 million in 2024. The increase was primarily driven by other non-cash operating items during the year. Net loss from continuing operations for Q4 of 2025 was $0.5 million compared to a net loss of $9.9 million in Q3, representing significant improvement sequentially. Full year 2025 adjusted EBITDA from continuing operations totaled $67.8 million compared to $70.2 million in 2024.
Speaker #5: Net loss from continuing operations for the full year 2025 was $24.5 million, compared to $11.5 million in 2024. The increase was primarily driven by other non-cash operating items during the year.
Speaker #5: Net loss from continuing operations for the fourth quarter of 2025 was $0.5 million compared to a net loss of $9.9 million in the third quarter.
Speaker #5: Representing significant improvements sequentially. Full year 2025 adjusted EBITDA from continuing operations totaled $67.8 million compared to $70.2 million in 2024. Adjusted EBITDA margin for the full year was approximately 26% compared to 26.2% in 2024, demonstrating stability and profitability despite revenue headwinds.
Alisa Campbell: Adjusted EBITDA margin for the full year was approximately 26% compared to 26.2% in 2024, demonstrating stability and profitability despite revenue headwinds. Adjusted EBITDA for Q4 of 2025 was $16.7 million or 25.2% of revenue compared to $17 million or 26.1% of revenue in Q3. The slight sequential decline reflects gross margin compression in New Jersey and targeted wholesale investments. Turning to the balance sheet and cash flow. Cash and cash equivalents were $37.4 million as of 31 December 2025, compared to $36.6 million as of 30 September 2025. The Q4 ending cash balance was impacted by the payment of a $3.4 million refundable deposit as a stalking horse bidder.
Alisa Campbell: Adjusted EBITDA margin for the full year was approximately 26% compared to 26.2% in 2024, demonstrating stability and profitability despite revenue headwinds. Adjusted EBITDA for Q4 of 2025 was $16.7 million or 25.2% of revenue compared to $17 million or 26.1% of revenue in Q3. The slight sequential decline reflects gross margin compression in New Jersey and targeted wholesale investments. Turning to the balance sheet and cash flow. Cash and cash equivalents were $37.4 million as of 31 December 2025, compared to $36.6 million as of 30 September 2025. The Q4 ending cash balance was impacted by the payment of a $3.4 million refundable deposit as a stalking horse bidder.
Speaker #5: Adjusted EBITDA for the fourth quarter of 2025 was $16.7 million, or 25.2% of revenue, compared to $17 million, or 26.1% of revenue in the third quarter.
Speaker #5: The slight sequential decline reflects gross margin compression in New Jersey and targeted wholesale investments. Turning to the balance sheet and cash flow, cash and cash equivalents were $37.4 million as of December 31, 2025.
Speaker #5: Compared to $36.6 million as of September 30, 2025. The Q4 ending cash balance was impacted by the payment of a $3.4 million refundable deposit as a stocking horse fitter.
Speaker #5: This $3.4 million deposit is expected to be refunded this quarter with an additional breakup fee of approximately $750,000 payable to TerrAscend. Cash flow from continuing operations for the full year 2025 was $33.9 million.
Alisa Campbell: This $3.4 million deposit is expected to be refunded this quarter, with an additional breakup fee of approximately $750,000 payable to TerrAscend. Cash flow from continuing operations for the full year of 2025 was $33.9 million after net tax payments of $9.4 million compared to $46.2 million in 2024 after net tax refunds of $5 million. The decline reflects certain one-time tax refunds seen in the prior year. Cash flow from continuing operations in Q4 2025 was $8.3 million, representing our fourteenth consecutive quarter of positive operating cash flow. Capital expenditures were $1.7 million in Q4, primarily related to ongoing cultivation expansion projects in the Northeast. For the full year, total CapEx was $8.6 million.
Alisa Campbell: This $3.4 million deposit is expected to be refunded this quarter, with an additional breakup fee of approximately $750,000 payable to TerrAscend. Cash flow from continuing operations for the full year of 2025 was $33.9 million after net tax payments of $9.4 million compared to $46.2 million in 2024 after net tax refunds of $5 million. The decline reflects certain one-time tax refunds seen in the prior year. Cash flow from continuing operations in Q4 2025 was $8.3 million, representing our fourteenth consecutive quarter of positive operating cash flow. Capital expenditures were $1.7 million in Q4, primarily related to ongoing cultivation expansion projects in the Northeast. For the full year, total CapEx was $8.6 million.
Speaker #5: After net tax payments of $9.4 million, compared to $46.2 million in 2024 after net tax refunds of $5 million. The decline reflects certain one-time tax refunds seen in the prior year.
Speaker #5: Cash flow from continuing operations in the fourth quarter of 2025 was $8.3 million, representing our 14th consecutive quarter of positive operating cash flow. Capital expenditures were $1.7 million in the fourth quarter, primarily related to ongoing cultivation expansion projects in the Northeast.
Speaker #5: For the full year, total CapEx was $8.6 million. Free cash flow for the fourth quarter was $6.6 million, and for the full year 2025 totaled $25.3 million, representing our 10th consecutive quarter of positive free cash flow.
Alisa Campbell: Free cash flow for the Q4 was $6.6 million, and for the full year 2025 totaled $25.3 million, representing our 10th consecutive quarter of positive free cash flow. During the quarter, we continued to allocate capital prudently while maintaining a strong liquidity position. Looking ahead to Q1, we expect revenue and gross margins to be similar to the results we reported for Q4. In summary, our Q4 and full year 2025 results reflect continued operational resilience, strong margins, consistent free cash flow generation, and a strengthened balance sheet positioning us well for 2026.
Alisa Campbell: Free cash flow for the Q4 was $6.6 million, and for the full year 2025 totaled $25.3 million, representing our 10th consecutive quarter of positive free cash flow. During the quarter, we continued to allocate capital prudently while maintaining a strong liquidity position. Looking ahead to Q1, we expect revenue and gross margins to be similar to the results we reported for Q4. In summary, our Q4 and full year 2025 results reflect continued operational resilience, strong margins, consistent free cash flow generation, and a strengthened balance sheet positioning us well for 2026.
Speaker #5: During the quarter, we continued to allocate capital prudently while maintaining a strong liquidity position. Looking ahead to Q1, we expect revenue and gross margins to be similar to the results we reported for Q4.
Speaker #5: In summary, our fourth quarter and full year 2025 results reflect continued operational resilience, strong margins, consistent free cash flow generation, and a strengthened balance sheet positioning us well for 2026.
Speaker #5: We look forward to sharing our continued progress on the business during our next quarterly call. This concludes our prepared remarks. I'd now like to turn it over to the operator for questions.
Alisa Campbell: We look forward to sharing our continued progress on the business during our next quarterly call. This concludes our prepared remarks. I'd now like to turn it over to the operator for questions.
Alisa Campbell: We look forward to sharing our continued progress on the business during our next quarterly call. This concludes our prepared remarks. I'd now like to turn it over to the operator for questions.
Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have any questions, please press star followed by the one on your telephone keypad.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by 1 on your telephone keypad. Should you wish to cancel your request, please press star followed by 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from the line of Frederico Gomes from ATB Capital Markets. Please go ahead.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by 1 on your telephone keypad. Should you wish to cancel your request, please press star followed by 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from the line of Frederico Gomes from ATB Capital Markets. Please go ahead.
Speaker #1: Should you wish to cancel your request, please press star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys.
Speaker #1: One moment, please, for your first question. And your first question comes from the line of Frederico Gomez from ATB Capital Markets. Please go ahead.
Speaker #6: Hi, good evening. Thanks for taking my questions. Congrats on the great quarter here. First question is talking about the performance in Pennsylvania that has been quite impressive.
Frederico Gomes: Hi, good evening. Thanks for taking my questions. Congrats on the great quarter here. First question, just talking about the performance in Pennsylvania that has been quite impressive, the sequential growth there, especially in wholesale. What is it that you're doing in that state that's special and is driving that performance? In terms of, it sounds like you're very bullish on continued growth in the state. What about, does that capacity expansion there, I guess, imply that maybe you're close to executing on M&A in the state, given your comments about the distressed assets? Thank you.
Frederico Gomes: Hi, good evening. Thanks for taking my questions. Congrats on the great quarter here. First question, just talking about the performance in Pennsylvania that has been quite impressive, the sequential growth there, especially in wholesale. What is it that you're doing in that state that's special and is driving that performance? In terms of, it sounds like you're very bullish on continued growth in the state. What about, does that capacity expansion there, I guess, imply that maybe you're close to executing on M&A in the state, given your comments about the distressed assets? Thank you.
Speaker #6: The sequential growth there especially in wholesale. What is it that you're doing in that state that's special and is driving that performance? And in terms of your it sounds like a very bullish on continued growth in the state.
Speaker #6: So what about does that capacity expansion there, I guess, implies that maybe you're close to executing an M&A in the state given your comments about the stressed assets?
Speaker #6: Thank you.
Speaker #7: Hi, Fred. Zias here. Yes, you highlighted the right thing. Pennsylvania, we're very excited about Pennsylvania. Those are the same number of stores that are comparable numbers both year over year and sequentially.
Ziad Ghanem: Hi, Fred. Ziad here. Yes, you highlighted the right thing, Pennsylvania. We're very excited about Pennsylvania. Those are the same number of stores. They're comparable numbers, both year-over-year and sequentially, we were up on revenue in both retail and wholesale. What's driving this? Multiple things. We continue to improve on our quality. We continue to innovate and launch new products. We're excited about the state and the further development because of the new partnership that we announced with Tyson 2.0 and some of the new products that are coming. We are expanding our cultivation in the state in preparation for all three things, the innovation, the new partnership, the trend in the state, and also the potential for adult use.
Ziad Ghanem: Hi, Fred. Ziad here. Yes, you highlighted the right thing, Pennsylvania. We're very excited about Pennsylvania. Those are the same number of stores. They're comparable numbers, both year-over-year and sequentially, we were up on revenue in both retail and wholesale. What's driving this? Multiple things. We continue to improve on our quality. We continue to innovate and launch new products. We're excited about the state and the further development because of the new partnership that we announced with Tyson 2.0 and some of the new products that are coming. We are expanding our cultivation in the state in preparation for all three things, the innovation, the new partnership, the trend in the state, and also the potential for adult use.
Speaker #7: We were up in on revenue in both retail and wholesale. What's driving this? Multiple things. We continue to improve on our quality. We continue to innovate and launch new products.
Speaker #7: We're excited about the state and the further development because of the new partnership that we announced with Tyson 2.0, and some of the new products that are coming.
Speaker #7: We are expanding our cultivation in the state in preparation for all three things: the innovation, the new partnership, the trend in the state, and also the potential for adult use.
Speaker #7: As you know, the benefits of that expansion come in a few months later. So with the perfect inventory that we have, we need to build some to prepare for this.
Ziad Ghanem: As you know, the benefits of that expansion comes in few months later. There, with the perfect inventory that we have, we need to build some to prepare for this. As far as M&A, this is not related to any M&A preparation, even though we continue to look at accretive opportunity to go deeper in the state. This is independent of any M&A opportunity.
Ziad Ghanem: As you know, the benefits of that expansion comes in few months later. There, with the perfect inventory that we have, we need to build some to prepare for this. As far as M&A, this is not related to any M&A preparation, even though we continue to look at accretive opportunity to go deeper in the state. This is independent of any M&A opportunity.
Speaker #7: As far as M&A, this is not related to any M&A preparations, even though we continue to look at accretive opportunities to go deeper in the state.
Speaker #7: But this is independent of any M&A opportunity.
Speaker #6: Great. Appreciate that, Zias. Second question. In regards to Ohio, I understand that the strategy there is on the retail side. But I noticed that you did not mention when you were talking about M&A and calling out that the stressed assets in New Jersey and Pennsylvania, you didn't mention Ohio.
Frederico Gomes: Great. Appreciate that, Ziad. Second question, in regards to Ohio, I understand that the strategy there is on the retail side. I noticed that you did not mention, you know, when you were talking about M&A and calling out the distressed assets in New Jersey and Pennsylvania, you didn't mention Ohio. Just curious about the how the pipeline looks in Ohio right now. I mean, you know, are you seeing good opportunities there or it's more about these other two states that you mentioned? Thank you.
Frederico Gomes: Great. Appreciate that, Ziad. Second question, in regards to Ohio, I understand that the strategy there is on the retail side. I noticed that you did not mention, you know, when you were talking about M&A and calling out the distressed assets in New Jersey and Pennsylvania, you didn't mention Ohio. Just curious about the how the pipeline looks in Ohio right now. I mean, you know, are you seeing good opportunities there or it's more about these other two states that you mentioned? Thank you.
Speaker #6: So, just curious about how the pipeline looks in Ohio right now. I mean, are you seeing good opportunities there, or is it more about these other two states that you mentioned?
Speaker #6: Thank you.
Speaker #7: Yeah. We mentioned Fred, the other two because we are closer; we have something in the pipeline. We have close conversation in Ohio. We've had conversations— we didn't like the price in some cases.
Ziad Ghanem: Yeah, we mentioned, Fred, the other two because we are closer. We have something in the pipeline. We have close conversation. In Ohio, we've had conversations. We didn't like the price in some cases. In some other cases, there's a group with big box stores that is going to be diluted pretty heavily in the next 12 months with new stores that are opening. Learning from other states, the pricing did not make sense to us. This is not a reflection of a decrease in interest, more of the right price at the right time. You know, we said on our prepared remarks, we will continue to be disciplined, and we will only acquire at the right price.
Ziad Ghanem: Yeah, we mentioned, Fred, the other two because we are closer. We have something in the pipeline. We have close conversation. In Ohio, we've had conversations. We didn't like the price in some cases. In some other cases, there's a group with big box stores that is going to be diluted pretty heavily in the next 12 months with new stores that are opening. Learning from other states, the pricing did not make sense to us. This is not a reflection of a decrease in interest, more of the right price at the right time. You know, we said on our prepared remarks, we will continue to be disciplined, and we will only acquire at the right price.
Speaker #7: In other cases, there's a group with Big Bomber stores that is going to be diluted pretty heavily in the next 12 months with new stores that are opening.
Speaker #7: So, learning from other states, the pricing did not make sense to us. So, this is not a reflection of a decrease in interest—more of the right price at the right time.
Speaker #7: And we said on our prepared remark, we will continue to be disciplined, and we will only acquire at the right price. We've had multiple occasions in almost every state we mentioned today where we said no in the past, and the opportunity came back six months or 12 months later with pricing that is a lot more reasonable.
Ziad Ghanem: We've had multiple occasions in almost every state we mentioned today where we said no in the past and the opportunity came back, 6 months or 12 months later with pricing that is a lot more reasonable. We'll continue to stay disciplined there.
Ziad Ghanem: We've had multiple occasions in almost every state we mentioned today where we said no in the past and the opportunity came back, 6 months or 12 months later with pricing that is a lot more reasonable. We'll continue to stay disciplined there.
Speaker #7: So we'll continue to stay disciplined there.
Speaker #6: Thank you very much.
Frederico Gomes: Thank you very much.
Frederico Gomes: Thank you very much.
Speaker #7: Thanks, Fred.
Ziad Ghanem: Thanks, Fred.
Ziad Ghanem: Thanks, Fred.
Speaker #1: Great. Thank you once again. That is star and one to ask a question. And your next question. Comes from the line of Kendrick Ticket from Kendrick Continuity.
Operator: Thank you. Once again, that is star and one to ask a question. Your next question comes from the line of Kenric Tyghe from Canaccord Genuity. Please go ahead.
Operator: Thank you. Once again, that is star and one to ask a question. Your next question comes from the line of Kenric Tyghe from Canaccord Genuity. Please go ahead.
Speaker #1: Please go ahead.
Speaker #6: Thank you. And good evening. Congrats on the quote. I just want to follow up quickly on Fred's question with respect to Ohio. Zias, is it better characterized as waiting on the honeymoon pricing phase to end and that you're not going to be tempted to bid up a market that is clearly still very frothy?
Kenric Tyghe: Thank you and good evening. Congrats on the quarter. I just want to follow up quickly on Fred's question with respect to Ohio. Ziad, is it fair to characterize it as waiting on the honeymoon pricing phase to end and that you're not gonna be tempted to bid up a market that is clearly still very frothy? Is that gonna be a reasonable characterization? I'll follow up. I have a second question on New Jersey. Thank you.
Kenric Tyghe: Thank you and good evening. Congrats on the quarter. I just want to follow up quickly on Fred's question with respect to Ohio. Ziad, is it fair to characterize it as waiting on the honeymoon pricing phase to end and that you're not gonna be tempted to bid up a market that is clearly still very frothy? Is that gonna be a reasonable characterization? I'll follow up. I have a second question on New Jersey. Thank you.
Speaker #6: Is that would be a reasonable characterization? And then I'll follow up. I have a second question on New Jersey. Thank you.
Speaker #7: Yeah. Kendrick, welcome back. Yeah. And the honeymoon has not been super full of honey as well. So yes, your assessment of the price, we're waiting for this to unfold.
Ziad Ghanem: Yeah, Kenric, welcome back. Yeah, the honeymoon has not been super full of honey as well. Yes, you're absolutely right. We're waiting for this to unfold. We are waiting for the licenses and the expansion to be better understood. Look, what cost $1 today will cost 70 cents tomorrow, and we'll continue to wait on those.
Ziad Ghanem: Yeah, Kenric, welcome back. Yeah, the honeymoon has not been super full of honey as well. Yes, you're absolutely right. We're waiting for this to unfold. We are waiting for the licenses and the expansion to be better understood. Look, what cost $1 today will cost 70 cents tomorrow, and we'll continue to wait on those.
Speaker #7: We're waiting for the licenses and the expansion to be better understood. And look, what costs a dollar today will cost seventy cents tomorrow, and we'll continue to wait on those.
Kenric Tyghe: Right. Right. Thanks, Ziad. Just switching to New Jersey, you know, challenging headline numbers out of BDSA in terms of the overall market, obviously more challenging in retail than in wholesale. Could you speak to competitive dynamics? Is what we're seeing in New Jersey a necessary rebalancing or normalization before that next leg of growth? How should we think about the evolution of the New Jersey market, just given the sort of headline numbers coming out of the state currently?
Kenric Tyghe: Right. Right. Thanks, Ziad. Just switching to New Jersey, you know, challenging headline numbers out of BDSA in terms of the overall market, obviously more challenging in retail than in wholesale. Could you speak to competitive dynamics? Is what we're seeing in New Jersey a necessary rebalancing or normalization before that next leg of growth? How should we think about the evolution of the New Jersey market, just given the sort of headline numbers coming out of the state currently?
Speaker #6: Right. Right. Thanks, Fred, Zias. And then just switching to New Jersey. Challenging headline numbers out of BDSA in terms of the overall market. Obviously, more challenging in retail than in wholesale.
Speaker #6: Could you speak to competitive dynamics? And is what we're seeing in New Jersey a necessary rebalancing or normalization before that next leg of growth?
Speaker #6: Or how should we think about the evolution of the New Jersey market just given the sort of headline numbers coming out of the state currently?
Ziad Ghanem: Yeah, look, I think New Jersey, we started 17 stores. We had only 3 stores of 17 a few years ago when the state turned recreational. We're up now to more than 200 stores. The retail numbers, depending on the company, reflect the stage of when those stores, when the new stores open next to your big box stores. In our case, we've already gone through the majority of that in 2024. When you look at our retail business in New Jersey, sequentially, we were up 3.1% or 3% on the business. Pricing pressure in New Jersey exists, but there's a way to combat it.
Ziad Ghanem: Yeah, look, I think New Jersey, we started 17 stores. We had only 3 stores of 17 a few years ago when the state turned recreational. We're up now to more than 200 stores. The retail numbers, depending on the company, reflect the stage of when those stores, when the new stores open next to your big box stores. In our case, we've already gone through the majority of that in 2024. When you look at our retail business in New Jersey, sequentially, we were up 3.1% or 3% on the business. Pricing pressure in New Jersey exists, but there's a way to combat it.
Speaker #7: Yeah. Look, I think New Jersey, we started 17 stores. We had only three stores of 17 a few years ago when the state turned recreational.
Speaker #7: And then we're up now to more than 200 stores. And the retail numbers, depending on the company, reflect the stage of when those stores, when the new stores open next to your Big Bomber stores.
Speaker #7: In our case, we've already gone through the majority of that in 2024. And when you look at our retail business in New Jersey sequentially, we were up 3.1% or 3% on the business.
Speaker #7: Pricing pressure in New Jersey exists. But there's a way to combat it. And the way we have combated it so far and maintain our new gross margin in the high 50s is by maintaining the quality by the innovation, by launching new products.
Ziad Ghanem: The way we have combated it so far and maintain our gross margin in the high fifties is by maintaining the quality, by the innovation, by launching new products. We're expanding cultivation in New Jersey to account for the new store that is coming with Union Chill. Is it the calm before the next period? Look, I think if you ask any of us a few years ago that 3.5, 4 years into the adult use in New Jersey, that where the pricing is today, where the gross margin is today, pretty excited to see it where it is today. Be excited about how the.
Ziad Ghanem: The way we have combated it so far and maintain our gross margin in the high fifties is by maintaining the quality, by the innovation, by launching new products. We're expanding cultivation in New Jersey to account for the new store that is coming with Union Chill. Is it the calm before the next period? Look, I think if you ask any of us a few years ago that 3.5, 4 years into the adult use in New Jersey, that where the pricing is today, where the gross margin is today, pretty excited to see it where it is today. Be excited about how the.
Speaker #7: We're expanding cultivation in New Jersey to account for the new store that is coming with the Union Shell. Is it the calm before the next period?
Speaker #7: Look, I think if you asked any of us a few years ago that, three and a half, four years into adult use in New Jersey, where the pricing is today, where the gross margin is today—we'd be pretty excited to see it where it is today.
Speaker #7: Pretty excited on how the market is responding.
Kenric Tyghe: Thanks, Ziad. Sorry, just to close the loop, and then I'll get back in queue. Call it 3% growth in that market. Correct me if I'm wrong, but you managed to, on those numbers, take share in the market in the current, given current dynamics. Is that a fair characterization, that you gained share in both New Jersey and Pennsylvania in quarter?
Kenric Tyghe: Thanks, Ziad. Sorry, just to close the loop, and then I'll get back in queue. Call it 3% growth in that market. Correct me if I'm wrong, but you managed to, on those numbers, take share in the market in the current, given current dynamics. Is that a fair characterization, that you gained share in both New Jersey and Pennsylvania in quarter?
Speaker #6: Thanks, Fred, Zias. Sorry. Just to close the loop, and then I'll get back in queue. Three call it 3% growth in that market. Correct me if I'm wrong, but you managed to on those numbers take share in the market in the given current dynamics.
Speaker #6: Is that a fair characterization that you gained share in both New Jersey and Pennsylvania in quarter?
Ziad Ghanem: We did gain share in Pennsylvania. We did gain share in Maryland. We did not gain share in New Jersey. The reason for that is market share is measured as a whole, wholesale and retail. I would say in retail, we definitely entered the state or entered the year as the highest grossing retailer with the addition of Union Chill. But overall.
Ziad Ghanem: We did gain share in Pennsylvania. We did gain share in Maryland. We did not gain share in New Jersey. The reason for that is market share is measured as a whole, wholesale and retail. I would say in retail, we definitely entered the state or entered the year as the highest grossing retailer with the addition of Union Chill. But overall.
Speaker #7: We did gain share in Pennsylvania. We did gain share in Maryland. We did not gain share in New Jersey. And the reason for that is market share is measured as a whole wholesale and retail.
Speaker #7: I would say in retail, we definitely entered the state or entered the year as the highest grossing retailer with the addition of Union Shell.
Kenric Tyghe: Mm-hmm.
Kenric Tyghe: Mm-hmm.
Ziad Ghanem: We did not gain market share for a couple of reasons. We held back and strategically changed our wholesale mix, especially on some of the profitable bulk sale to plan for Union Chill and increase verticality. When it come to wholesale finished good and wholesale total units sold in finished good, that we saw that increase, but it was balanced by the pricing pressure.
Ziad Ghanem: We did not gain market share for a couple of reasons. We held back and strategically changed our wholesale mix, especially on some of the profitable bulk sale to plan for Union Chill and increase verticality. When it come to wholesale finished good and wholesale total units sold in finished good, that we saw that increase, but it was balanced by the pricing pressure.
Speaker #7: But overall, we did not gain market share for a couple of reasons. We held back in strategically changed our wholesale mix especially on some of the profitable bulk sale to plan for Union Shell and the increased verticality.
Speaker #7: But when it comes to wholesale finished goods and wholesale total units sold in finished goods, we saw that increase. But it was balanced by the pricing pressure.
Kenric Tyghe: Great. Thanks again, and I'll get back in queue.
Kenric Tyghe: Great. Thanks again, and I'll get back in queue.
Ziad Ghanem: Thanks, Kenric.
Ziad Ghanem: Thanks, Kenric.
Speaker #6: Great, thanks again. And I'll get back in queue.
Kenric Tyghe: Sure. Thanks, Jesse.
Kenric Tyghe: Sure. Thanks, Ziad.
Operator: Thank you. Thank you once again. That is star one to ask a question. There are no further questions at this time. I will now hand the call back to Mr. Jason Wild, Executive Chairman, for any closing remarks. Please go ahead.
Operator: Thank you. Thank you once again. That is star one to ask a question. There are no further questions at this time. I will now hand the call back to Mr. Jason Wild, Executive Chairman, for any closing remarks. Please go ahead.
Speaker #7: Thanks, Kendrick.
Speaker #6: Sure. Thanks, Zias.
Speaker #1: Thank you. Thank you once again. That is star and one to ask a question. And there are no further questions at this time. I will now hand the call back to Mr. Jason Wald, Executive Chairman, for any closing remarks.
Jason Wild: Thank you all for joining us here today. We look forward to sharing our Q1 results in the coming months. Thank you.
Jason Wild: Thank you all for joining us here today. We look forward to sharing our Q1 results in the coming months. Thank you.
Speaker #1: Please go ahead.
Speaker #8: Thank you all for joining us here today. We look forward to sharing our Q1 results in the coming months. Thank you.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.