Q2 2026 Terrascend Corp Earnings Call

August 6, 2026

Speaker #1: Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to the TerraSend second quarter 2026 financial results conference call.

Speaker #1: I would now like to turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications for introductions. Please go ahead.

Speaker #2: Thank you, operator, and good afternoon. Welcome to the TerraSend second quarter 2026 financial results conference call. Joining us for today's call is Jason Wilde, Executive Chairman.

Valter Pinto: Thank you, operator, and good afternoon. Welcome to the TerrAscend Second Quarter 2026 Financial Results Conference Call. Joining us for today's call is Jason Wild, Executive Chairman, Ziad Ghanem, President and Chief Executive Officer, and Eric Jackson, Chief Financial Officer. Our remarks today include forward-looking statements, including statements with respect to the company's outlook, including the company's expected financial results for Q2 2026 and for future periods, including Q3 2026, and the estimates and assumptions relating thereto. The company's expectations regarding its growth prospects in new and existing markets such as Ohio and New Jersey, its M&A strategy, the company's share repurchase program and capital allocation priorities, the proposed share consolidation and special meeting of shareholders, the company's plans regarding a potential uplisting to a US exchange, and the expectations regarding regulatory reform, including hemp regulation and the potential benefits thereof.

Valter Pinto: Thank you, operator, and good afternoon. Welcome to the TerrAscend Q2 2026 Financial Results Conference Call. Joining us for today's call is Jason Wild, Executive Chairman, Ziad Ghanem, President and Chief Executive Officer, and Eric Jackson, Chief Financial Officer. Our remarks today include forward-looking statements, including statements with respect to the company's outlook, including the company's expected financial results for Q2 2026 and for future periods, including Q3 2026, and the estimates and assumptions relating thereto. The company's expectations regarding its growth prospects in new and existing markets such as Ohio and New Jersey, its M&A strategy, the company's share repurchase program and capital allocation priorities, the proposed share consolidation and special meeting of shareholders, the company's plans regarding a potential uplisting to a US exchange, and the expectations regarding regulatory reform, including hemp regulation and the potential benefits thereof.

Speaker #2: Ziya Ghanem, President and Chief Executive Officer, and Eric Jackson, Chief Financial Officer. Our remarks today include forward-looking statements, including statements with respect to the company's outlook, including the company's expected financial results, for the second quarter of 2026, and for future periods, including the third quarter of 2026, and the estimates and assumptions relating thereto.

Speaker #2: The company's expectations regarding its growth prospects in new and existing markets, such as Ohio and New Jersey, its M&A strategy, the company's share of repurchase program, and capital allocation priorities, the proposed share consolidation and special meeting of shareholders, the company's plans regarding a potential uplisting to a US exchange, and the expectations regarding regulatory reform, including hemp regulation, and the potential benefits thereof.

Speaker #2: Each forward-looking statement discussed in today's call is subject to risk and uncertainty 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. 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 the company's website at terrascend.com. The forward-looking statements in this call speak as of today's date. 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 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 Cedar Plus, and on the company's website at terrasend.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. The reconciliation of non-GAAP to GAAP measures is included in today's earnings press release and our quarterly report on Form 10-Q for the quarter ended June 30, 2026, which you can find on the company's investor relations website or on the SEC and SEDAR+ websites.

Valter Pinto: Also, during the call, the company may present both GAAP and non-GAAP financial measures. The reconciliation of non-GAAP to GAAP measures is included in today's earnings press release and our quarterly report on Form 10-Q for the quarter ended 30 June 2026, which you can find in the company's investor relations website or on the SEC and SEDAR+ websites. I’d now like to introduce Mr. Jason Wild. Please go ahead, Jason.

Speaker #2: I'd now like to introduce Mr. Jason Wilde. Please go ahead, Jason.

Speaker #3: Good afternoon, everyone, and thank you for joining us. Our second quarter EBITDA increased sequentially and year over year, exceeding our expectations. Revenue from continual operations totaled $67.1 million, representing sequential growth of 2.4% and year-over-year growth of 3.3%.

Jason Wild: Good afternoon, everyone, and thank you for joining us. Our Q2 revenue, gross margin, and adjusted EBITDA increased sequentially and year-over-year, exceeding our expectations. Revenue from continuing operations totaled $67.1 million, representing sequential growth of 2.4% and year-over-year growth of 3.3%. Gross margin for the quarter was 54%, compared to 52.8% in the Q1 2026 and 51.1% in the Q2 2025, reflecting continued strength and operational efficiency across our vertically integrated Northeast markets.

Speaker #3: Gross margin for the quarter was $54% compared to $52.8% in the first quarter of 2026 and $51.1% in the second quarter of 2025, reflecting continued strength and operational efficiency across our vertically integrated Northeast markets.

Speaker #3: Adjusted EBITDA from continuing operations was $17.7 million, representing a margin of 26.3% compared to $17.4 million and a margin of 26.5% in the first quarter of 2026 and $16 million and a margin of 24.6% in the second quarter of 2025.

Jason Wild: Adjusted EBITDA from continuing operations was $17.7 million, representing a margin of 26.3%, compared to $17.4 million at a margin of 26.5% in the Q1 2026 and $16 million and a margin of 24.6% in the Q2 2025. Our Q2 adjusted EBITDA from continuing operations represents 11% year-over-year growth. We generated $7.4 million of net cash from continuing operations and $5.7 million of free cash flow during the quarter, marking our 16th consecutive quarter of positive operating cash flow and 12th consecutive quarter of positive free cash flow. Turning to our balance sheet. During the quarter, we completed an oversubscribed convertible debenture financing, raising $21.8 million in aggregate gross proceeds.

Speaker #3: Our Q2 adjusted EBITDA from continuing operations represents 11% year-over-year growth. We generated $7.4 million of net cash from continuing operations and $5.7 million of free cash flow during the quarter, marking our 16th consecutive quarter of positive operating cash flow and 12th consecutive quarter of positive free cash flow.

Speaker #3: Turning to our balance sheet, during the quarter we completed an oversubscribed convertible-to-venture financing raising $21.8 million in aggregate gross proceeds. Of that amount, $11.1 million was used to retire existing higher-interest convertible-to-ventures with the remaining proceeds available to support accretive M&A.

Jason Wild: Of that amount, $11.1 million was used to retire existing higher interest convertible debentures, with the remaining proceeds available to support accretive M&A. This financing retired our near-term convertible debt, reduced our blended interest cost, and extended the maturity of our convertible debentures to 2031. Separately, the strength of our operating and free cash flow generation allowed us to repay an additional $10 million on the principal of our term loan during the quarter. Our continued free cash flow generation, strong balance sheet, and our ability to access additional capital through our term loan facility provides us with the flexibility to act on attractive opportunities. We intend to put our capital to work through accretive acquisitions in markets where we already have scale and operational infrastructure, providing increased vertical revenue and further operating leverage. Next, I want to provide an update on regulatory reform.

Speaker #3: This financing retired our near-term convertible debt, reduced our blended interest cost, and extended the maturity of our convertible-to-ventures to 2031. Separately, the strength of our operating and free cash flow generation allowed us to repay an additional $10 million on the principal of our term loan during the quarter.

Speaker #3: Our continued free cash flow generation strong balance sheet and our ability to access additional capital through our term loan facility provides us with the flexibility to act on attractive opportunities.

Speaker #3: We intend to put our capital to work through accretive acquisitions in markets where we already have scale and operational infrastructure providing increased vertical revenue and further operating leverage.

Speaker #3: Next, I want to provide an update on regulatory reform. We are encouraged to see the momentum we described last quarter has continued to build.

Jason Wild: We are encouraged to see the momentum we described last quarter has continued to build. The rescheduling of state-licensed medical cannabis to Schedule III represents a monumental inflection point for our industry. The most immediate impact has been an elimination of the 280E tax burden on medical cannabis. This change will materially improve profitability, further strengthen our balance sheet, and will lower our cost of capital over time. There is also the potential for retroactive tax relief, which could represent a significant upside opportunity that we do not believe is currently reflected in market valuations. Since our last earnings call, the DEA held its formal hearing on the broader rescheduling of cannabis. For the first time in decades, the federal government presented affirmative, science-backed testimony that cannabis has an accepted medical use, and the DEA itself served as a proponent in support of rescheduling.

Speaker #3: The rescheduling of state-licensed medical cannabis to schedule 3 represents a monumental inflection point for our industry. The most immediate impact has been an elimination of the 280(e) tax burden on medical cannabis.

Speaker #3: This change will materially improve profitability further strengthen our balance sheet, and will lower our cost of capital over time. There is also the potential for retroactive tax relief, which could represent a significant upside opportunity that we do not believe is currently reflected in market valuations.

Speaker #3: Since our last earnings call, the DEA held its formal hearing on the broader rescheduling of cannabis. For the first time in decades, the federal government presented affirmative science-backed testimony that cannabis has an accepted medical use proponent in support of rescheduling.

Speaker #3: While a ruling is not yet been issued and we do not know the timing or outcome at this stage, based on what the administration has promised and delivered to date, we are confident that we will see further progress from here.

Jason Wild: While a ruling has not yet been issued, and we do not know the timing or outcome at this stage, based on what the administration has promised and delivered to date, we are confident that we will see further progress from here. We are also seeing momentum on other important fronts, including the SAFE Banking Act, which was reintroduced in both chambers of Congress with bipartisan support. While timing and scope of further changes remain uncertain, we operate the business independent of regulatory reform, and successful reform such as this represents upside. We believe the full rescheduling of cannabis will position TerrAscend to uplist to a major US exchange, and we are currently in active dialogue with the Nasdaq and NYSE and are taking the necessary steps required to meet all listing requirements. As part of this process, we have a special meeting of shareholders scheduled for 24 August.

Speaker #3: We are also seeing momentum on other important fronts, including the safe banking act, which was reintroduced in both chambers of Congress with bipartisan support.

Speaker #3: While timing and scope of further changes remain uncertain, we operate the business independent of regulatory reform and successful reform, such as this represents upside.

Speaker #3: We believe the full rescheduling of cannabis will position Terrasend to uplift to a major U.S. exchange, and we are currently in active dialogue with the NASDAQ and NYSE and are taking the necessary steps required to meet all listing requirements.

Speaker #3: As part of this process, we have a special meeting of shareholders scheduled for August 24. At the meeting, shareholders will be asked to approve a proposed share consolidation.

Jason Wild: At the meeting, shareholders will be asked to approve a proposed share consolidation. On the M&A front, our philosophy remains unchanged. While the current environment presents opportunities both within our core markets and in select new markets, we are focused on accretive acquisitions and have been disciplined in passing on acquisitions that did not meet our investment criteria. I would remind investors that our patience has been prudent, and valuations across the board have continued to trend in our favor. Before I hand over the call, I'm pleased to share that we have appointed Ziad to our board of directors. Ziad has been a strong leader and contributor to our strategy since joining our team, and the board and I look forward to his continued insights and guidance. With that, I will now turn the call over to Ziad to provide an update across our key markets.

Speaker #3: On the M&A front, our philosophy remains unchanged. While the current environment presents opportunities, both within our core markets and in select new markets, we are focused on accretive acquisitions and have been disciplined in passing on acquisitions that did not meet our investment criteria.

Speaker #3: I would remind investors that our patience has been prudent and valuations across the board have continued to trend in our favor. Before I hand over the call, I'm pleased to share that we have appointed Ziad to our board of directors.

Speaker #3: Ziad has been a strong leader and contributor to our strategy since joining our team, and the board and I look forward to his continued insights and guidance.

Speaker #3: With that, I will now turn the call over to Ziad to provide an update across our key markets.

Speaker #2: Thank you, Jason, for the confidence you and the board have shown in me. Let me walk you through our performance in each of our key markets this quarter, beginning with New Jersey.

Ziad Ghanem: Thank you, Jason, for the confidence you and the board have shown in me. Let me walk you through our performance in each of our key markets this quarter, beginning with New Jersey. New Jersey performed well during the quarter, with revenue increasing 1.7% sequentially, led by continued strength in our retail business, while wholesale revenue remained essentially flat quarter-over-quarter. Gross margins remained strong at 58.5%, reflecting the benefits of our vertically integrated operating model. At the state level, TerrAscend maintained a leading position in New Jersey with 7.2% market share, driven by gains in both sales and market share across our key product categories, demonstrating the strength of our brands and quality of our products. Kind Tree, Legend, and Valhalla all delivered another strong quarter.

Speaker #2: New Jersey performed well during the quarter, with revenue increasing 1.7% sequentially led by continued strength in our retail business, while wholesale revenue remained essentially flat quarter over quarter.

Speaker #2: Gross margins remained strong at 58.5%, reflecting the benefits of our vertically integrated operating model. At the state level, TerrAscend maintained a leading position in New Jersey, with a 7.2% market share driven by gains in both sales and market share across our key products and categories, demonstrating the strength of our brands and the quality of our products.

Speaker #2: Time 3: Legend and Valhalla all delivered another strong quarter. Legend is now the number 4 brand across all product categories in New Jersey, while Kind 3 remains one of the state's leading flower brands.

Ziad Ghanem: Legend is now the number four brand across all product categories in New Jersey, while Kind Tree remains one of the state's leading flower brands. We also continue to hold top five market share positions across several of our largest categories, including flower, vapes, pre-rolls, and extracts. At retail, all three Apothecarium locations ranked within the top 25 dispensaries in the state, with two improving their rankings quarter over quarter. Together with Union Chill, we have strengthened our position as the highest grossing retail in New Jersey. During the quarter, we announced an agreement to acquire ownership in our sixth New Jersey dispensary, Aunt Mary's. On closing, Aunt Mary's is expected to be immediately accretive on an EBITDA and free cash flow basis. Looking ahead, we remain focused on growth opportunities in New Jersey, including expanding capacity at our Boonton cultivation facility and evaluating additional retail expansion opportunities.

Speaker #2: We also continue to hold top 5 market share positions across several of our largest categories, including flower, vapes, pre-rolls, and extracts. At retail, all 3 apothecarium locations ranked within the top 25 dispensaries in the state, with 2 improving their rankings quarter over quarter.

Speaker #2: Together with Union Shell, we have strengthened our position as the highest grossing retail in New Jersey. During the quarter, we announced an agreement to acquire ownership in our 5th New Jersey dispensary, Aunt Mary's.

Speaker #2: On closing, Aunt Mary's is expected to be immediately accretive on an EBITDA and free cash flow basis. Looking ahead, we remain focused on growth opportunities in New Jersey, including expanding capacity at our Bounting Cultivation facility and evaluating additional retail expansion opportunities.

Speaker #2: Turning to Maryland, the business performed well during the quarter, with both revenue and gross margin improving sequentially and gross margins exceeding 60%. These results demonstrate the power of our vertically integrated operating model in the state, with disciplined execution across both cultivation and retail.

Ziad Ghanem: Turning to Maryland, the business performed well during the quarter, with both revenue and growth margin improving sequentially and gross margins exceeding 60%. These results demonstrate the power of our vertically integrated operating model in the state, with disciplined execution across both cultivation and retail. Despite changes in the competitive landscape following adult use legalization, we continue to grow profitability and cash flow. Our retail footprint also remained amongst the strongest in the state, with two of our four Apothecarium locations ranking among Maryland's top 10 dispensaries. On the brand side, we are seeing strong momentum across our portfolio with Kind Tree, Legend, Valhalla, and Tyson 2.0 all contributing to growth during the quarter while bringing to market new product innovation to support retail and wholesale. Our vertically integrated platform, established brands, and operational discipline position us well to maintain growth and profitability in the state.

Speaker #2: Despite changes in the competitive landscape following adult use legalization, we continue to grow profitability and cash flow. Our retail footprint also remained amongst the strongest in the state, with 2 of our 4 apothecarium locations ranking among dispensaries.

Speaker #2: On the brand side, we are seeing strong momentum across our portfolio, with Kind 3, Legend, Valhalla, and Tyson 2.0 all contributing to growth during the quarter, while bringing to market new product innovation to support retail and wholesale.

Speaker #2: Our vertically integrated platform, established brands, and operational discipline position us well to maintain growth and profitability in the state. Moving to Pennsylvania, it was once again one of our strongest performing markets during the quarter.

Ziad Ghanem: Moving to Pennsylvania, it was once again one of our strongest performing markets during the quarter. Revenue increased approximately 3.8% sequentially, driven by growth across both our retail and wholesale businesses. This marked our third consecutive quarter of sequential revenue growth and made Pennsylvania our fastest-growing core market during the quarter. Our retail operations performed well with five of our six Apothecarium locations ranking among the top 15 dispensaries in the state. We are generating industry-leading revenue per store in Pennsylvania, reflecting strong retail execution and high demand for our products. On the brand side, Kind Tree and Legend maintain leading market share positions in flower, vapes, and extracts, while we consistently strengthen our overall portfolio throughout the state through the release of new or improved SKUs. Pennsylvania is one of our most attractive long-term growth opportunities.

Speaker #2: Revenue increased approximately 3.8% sequentially, driven by growth across both our retail and wholesale businesses. This marked our third consecutive quarter of sequential revenue growth and made Pennsylvania our fastest-growing core market during the quarter.

Speaker #2: Our retail operations performed well, with 5 of our 6 apothecarium locations ranking among the top 15 dispensaries in the state. We are generating industry-leading revenue per store in Pennsylvania, reflecting strong retail execution and high demand for our products.

Speaker #2: On the brand side, Kind 3 and Legend maintained leading market share positions in flower, vapes, and extracts, while we consistently strengthened our overall portfolio throughout the state through the release of new or improved SKUs.

Speaker #2: Pennsylvania is one of our most attractive long-term growth opportunities. We have a fully built-out cultivation and manufacturing platform to scale, with no meaningful incremental capital investment required to support future growth.

Ziad Ghanem: We have a fully built-out cultivation and manufacturing platform to scale with no meaningful incremental capital investment required to support future growth. We brought additional cultivation capacity online earlier this year in Pennsylvania, with product reaching the market during Q2. That capacity supports growth in both our retail and wholesale channels, while position us well for the increased demand we expect on the eventual adult use. Turning to Ohio, Ratio is now fully integrated into our operations, and we are beginning to realize the benefits of that integration. As Jason mentioned earlier, our M&A strategy remains unchanged. We will pursue disciplined, accretive acquisitions that leverage our existing infrastructure and operating platform while expanding our retail presence over time. We believe this disciplined approach will drive improved utilization, operating leverage, and profitability in each of our key markets. Overall, I'm very pleased with our performance during Q2.

Speaker #2: We brought additional cultivation capacity online earlier this year in Pennsylvania, with product reaching the market during the second quarter. That capacity supports growth in both our retail and wholesale channels, while positioning us well for the increased demand we expect under eventual adult use.

Speaker #2: Turning to Ohio, Ratio is now fully integrated into our operations, and we are beginning to realize the benefits of that integration. As Jason mentioned earlier, our M&A strategy remains unchanged.

Speaker #2: We will pursue disciplined, accretive acquisitions that leverage our existing infrastructure and operating platform, while expanding our retail presence over time. We believe this disciplined approach will drive improved utilization of operating leverage and profitability in each of our key markets.

Speaker #2: Overall, I'm very pleased with our performance during the second quarter. Across our core markets, we delivered profitable gross while maintaining strong gross margins consistent adjusted EBITDA and positive operating and free cash flow.

Ziad Ghanem: Across our core markets, we delivered profitable growth while maintaining strong gross margins, consistent adjusted EBITDA, and positive operating and free cash flow. We are pleased with the foundation we have built, bolstered by our strong fundamentals, leading retail and wholesale assets in key high-quality markets, a target M&A strategy, no material debt maturing until H2 2028, consistent positive operating free cash flow generating quarter-over-quarter, representing an impressive 9.9% free cash flow yield in Q2, best-in-class sponsorship, and a strong leadership team. We are in the best position in our company history to capitalize on both industry and regulatory developments while continuing to create long-term value for our shareholders. With that, I'll turn the call over to Eric to walk through our financial results in more detail. Eric?

Speaker #2: We are pleased with the foundation we have built, bolstered by our strong fundamentals, leading retail and wholesale assets, and key high-quality markets a target M&A strategy no material debt maturing until the second half of 2028, consistent positive operating free cash flow generating quarter over quarter representing an impressive 9.9% free cash flow yield in Q2, best-in-class sponsorship, and a strong leadership team.

Speaker #2: We are in the best position in our company’s history to capitalize on both industry and regulatory developments, while continuing to create long-term value for our shareholders.

Speaker #2: With that, I'll turn the call over to Eric to walk through our financial results in more detail. Eric?

Speaker #1: Thank you, Ziyad. Good afternoon, everyone. Before I turn to the numbers, I want to take a moment now that I have my first full quarter as CFO behind me.

Eric Jackson: Thank you, Ziad. Good afternoon, everyone. Before I turn to the numbers, I want to take a moment now that I have my first full quarter as CFO behind me. When I joined, I spoke about what drew me to TerrAscend from the outside. Now that I am a part of the team, it's clear that our results aren't an accident, passion, discipline, and growth mindset are key catalysts that show up throughout the organization. Passion is evident in the level of care displayed, creating high-quality products and first-class patient and customer experiences, which you can see in our consistent sales strength. Discipline is not just a talking point here. It is how the business is run. Over the past quarter, I have witnessed it in the rigor around margin management, capital allocation, and in the way our teams execute across our core markets.

Speaker #1: When I joined, I spoke about what drew me to TerrAscend from the outside. Now that I am a part of the team, it's clear that our results aren't an accident and passion, discipline, and growth mindset are key catalysts that show up throughout the organization.

Speaker #1: Passion is evident in the level of care displayed creating high-quality products and first-class patient and customer experiences, which you can see in our consistent sales strength.

Speaker #1: Discipline is not just a talking point here. It is how the business is run. Over the past quarter, I have witnessed it in the rigor around margin management, capital allocation, and in the way our teams execute across our core markets.

Speaker #1: Growth mindset is clear, and shows up in a company-wide drive to get better every day, demonstrated by our near-industry-leading adjusted EBITDA margin and cash flow generation.

Eric Jackson: Growth mindset is clear and shows up in a company-wide drive to get better every day, demonstrated by our near industry-leading adjusted EBITDA margin and cash flow generation. These factors give me real confidence in what we can build from here. With that, let me walk you through our financial results for Q2. As a reminder, the results I'll be reviewing today have been filed on both SEDAR+ and with the SEC, and all figures are presented in US dollars. As a reminder, all financials discussed reflect results from continuing operations. Net revenue for Q2 2026 totaled $67.1 million, compared to $65.5 million in Q1 2026. Retail and wholesale revenue both increased sequentially, reflecting broad-based demand across our core Northeast markets. Gross margin for Q2 was 54%, compared to 52.8% in Q1 2026.

Speaker #1: These factors give me real confidence in what we can build from here. With that, let me walk you through our financial results for the second quarter.

Speaker #1: As a reminder, the results I'll be reviewing today have been filed on both Cedar Plus and with the SEC. And all figures are dollars.

Speaker #1: As a reminder, all financials discussed reflect results from continuing operations. Net revenue for the second quarter of 2026 totaled $67.1 million, compared to $65.5 million in the first quarter of 2026.

Speaker #1: Retail and wholesale revenue both increased sequentially, reflecting broad-based demand across our core Northeast markets. Growth margin for the second quarter was 54%, compared to 52.8% in the first quarter of 2026.

Speaker #1: Sequential performance reflects continued strength across our core Northeast markets. G&A expenses for the second quarter were $22.9 million, compared to $21.5 million in the first quarter, reflecting certain one-time costs as well as further merit-based investments in talent.

Eric Jackson: Sequential performance reflects continued strength across our core Northeast markets. G&A expenses for Q2 were $22.9 million, compared to $21.5 million in Q1, reflecting certain one-time costs, as well as further merit-based investments in talent. Net loss from continuing operations for Q2 was $10.1 million, compared with a net loss of $6.8 million in Q1. Adjusted EBITDA for Q2 was $17.7 million, or 26.3% of revenue, compared to $17.4 million, or 26.5% of revenue in Q1. Turning to the balance sheet and cash flow. Cash and cash equivalents were $42 million as of 30 June 2026, compared to $39.1 million as of 31 March 2026. Cash flow from continuing operations in Q2 was $7.4 million, representing our 16th consecutive quarter of positive operating cash flow.

Speaker #1: Net loss from continuing operations for the second quarter was $10.1 million, compared with a net loss of $6.8 million in the first quarter. Adjusted EBITDA for the second quarter was $17.7 million, or $26.3% of revenue.

Speaker #1: Compared to $17.4 million or $26.5% of revenue in the first quarter. Turning to the balance sheet and cash flow. Cash and cash equivalents were $42 million as of June 30, 2026, compared to $39.1 million as of March 31, 2026.

Speaker #1: Cash flow from continuing operations in the second quarter was $7.4 million, representing our 16th consecutive quarter of positive operating cash flow. Capital expenditures were $1.6 million in the second quarter, primarily related to ongoing cultivation and facility optimization projects.

Eric Jackson: Capital expenditures were $1.6 million in Q2, primarily related to ongoing cultivation and facility optimization projects. Free cash flow for Q2 was $5.7 million, representing our 12th consecutive quarter of positive free cash flow. During the quarter, we continued to allocate capital in a disciplined manner while maintaining a strong liquidity position. Similar to Q2, we expect Q3 year-over-year revenue growth of 2% to 3%. We also expect consistent strong gross margin performance. In summary, our Q2 results reflect continued operational momentum, improving profitability, and consistent cash flow generation, supported by disciplined cost management and a strong operating platform. We look forward to sharing continued progress in the quarters ahead. This concludes our prepared remarks. I'll now turn it back to the operator for questions.

Speaker #1: Free cash flow for the second quarter was $5.7 million. Representing our 12th consecutive quarter of positive free cash flow. During the quarter, we continued to allocate capital in a disciplined manner while maintaining a strong liquidity position.

Speaker #1: Similar to Q2, we expect Q3 year-over-year revenue growth of 2% to 3%. We also expect consistent, strong gross margin performance. In summary, our second quarter results reflect continued operational momentum, improving profitability, and consistent cash flow generation, supported by disciplined cost management and a strong operating platform.

Speaker #1: We look forward to sharing continued progress in the quarters ahead. This concludes our prepared remarks. I'll now turn it back to the operator for questions.

Speaker #3: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star 1 in your touchstone phone.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. 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 Frederico Gomes of ATB Capital Markets. Your line is already open.

Speaker #3: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star 2. If you're using a speakerphone, please lift the handset before pressing any keys.

Speaker #3: One moment, please, for your first question. Your first question comes from Frederico Gomez of ATB Cormark. Your line is already open.

Speaker #4: Good evening. Thanks for taking my questions, and congrats on the great quarter here. I want to ask about the gross margins—quite impressive sequential improvement. I'm looking at your filings, and you guys are disclosing the gross margin per, I guess, per state, which, you know—thanks for that.

Frederico Gomes: Good evening. Thanks for taking my questions. Congrats on the great quarter here. I want to ask about the gross margins. Quite impressive sequential improvement. I'm looking at your filings, and you guys are disclosing the gross margin, I guess, per state, which thanks for that. Appreciate that. How much of this is your own strategy, and how much of it is an improvement in broader market conditions? That's the first question. Secondly, it seems like Pennsylvania, you guys have expanded margins quite substantially year-over-year. How much more room do you think there is for gross margin expansion in that state? Thank you.

Speaker #4: Appreciate that. And how much of this is, I guess, your own strategy? And how much of it is an improvement in broader market conditions?

Speaker #4: That's the first question. And secondly, it seems like, you know, Pennsylvania, you guys have expanded margins quite substantially year over year. How much more room do you think there is for gross margin expansion in that state?

Speaker #4: Thank you.

Speaker #2: Yeah. Fred, thank you. Ziad here. Look, on the first part, is that the environment in the market or is it our strategy? Look, I when I look how some of our competitors are performing in some of the states that we are in, and when I compare our not only margins, margins, revenue, and market share, and our core market, Pennsylvania, New Jersey, and Maryland, you know, I've always said there's not one magic bullet that gets you there, but we have a combination of things that have really shielded us from some of the headwinds that exist in the market, especially the price compression.

Ziad Ghanem: Yeah, Fred. Thank you. Ziad here. Look, on the first part, is that the environment in the market or is it our strategy? Look, when I look at how some of our competitors are performing in some of the states that we are in, when I compare our not only margins, revenue and market share in our core market, Pennsylvania, New Jersey, and Maryland, I've always said there's not one magic bullet that gets you there, but we have a combination of things that have really shielded us from some of the headwinds that exist in the market, especially the price compression. You said we broke down the states, while Maryland and Pennsylvania saw an increase in gross margin both sequentially and year-over-year, New Jersey has grown sequentially, slightly down year-over-year.

Speaker #2: You said we broke down the states, and while Maryland and Pennsylvania saw increase in gross margin both sequentially and year over year, New Jersey was has grown sequentially slightly down year over year, but I call New Jersey a bigger success than the other because that gross margin of 58.5% in New Jersey came in on a 20-plus percent price compression over last year.

Eric Jackson: I call New Jersey a bigger success than the other, because that gross margin of 58.5% in New Jersey came in on a 20-plus% price compression over last year. It is really mainly I can attribute it to the outstanding job that the team has done. It is starting by the quality. Look, we always, and all of us like to brag and talk about our quality and our brands, but the real judge for the quality and the brands is the consumer. We look at our consumer retention, we look at our consumer acquisition, and we continue to see our foot traffic increasing, our basket size maintaining, and the consumers are rewarding us on this. I went to every store with Jason in Pennsylvania. The number one complaint we heard from all 6 stores is we cannot keep our own brands on the shelf. That

Ziad Ghanem: I call New Jersey a bigger success than the other, because that gross margin of 58.5% in New Jersey came in on a 20-plus% price compression over last year. It is really mainly I can attribute it to the outstanding job that the team has done. It is starting by the quality. Look, we always, and all of us like to brag and talk about our quality and our brands, but the real judge for the quality and the brands is the consumer. We look at our consumer retention, we look at our consumer acquisition, and we continue to see our foot traffic increasing, our basket size maintaining, and the consumers are rewarding us on this. I went to every store with Jason in Pennsylvania. The number one complaint we heard from all 6 stores is we cannot keep our own brands on the shelf.

Speaker #2: So it is really mainly, I can attribute it to the outstanding job that the team has done. It's starting by the quality. Look, we always and all of us like to brag and talk about our quality and our brands, but the real judge for the quality and the brands is the consumer.

Speaker #2: We look at our consumer retention, we look at our consumer acquisition, and we continue to see our foot traffic increasing, our basket size maintaining, and the consumers are rewarding us for this.

Speaker #2: I went to every store with Jason in Pennsylvania. The number one complaint we heard from all six stores is, "We can't keep our own brands on the shelf." And that has allowed us to increase our verticality by, depending on the state, somewhere between 2 to 7 percent.

Ziad Ghanem: That has allowed us to increase our verticality by, depending on the state, somewhere between 2% to 7%. The combination of all those is what really has caused this. As far as the room that we have in Pennsylvania, at the beginning of the year, we shared that our gross margin will continue to be between 52% and 54%. I look at the remaining of the year, and I am highly confident that we will deliver the same numbers. The 2-point spread is because few variables, inventory and pricing pressure, a 1-store competition that is more robust than other. The real number that we focus in, and we reversed that P&L, we look at the free cash flow from it, adjusted EBITDA, that we will deliver the mid-20, 25% to 26%, driven by 52% to 54% gross margin.

Ziad Ghanem: has allowed us to increase our verticality by, depending on the state, somewhere between 2% to 7%. The combination of all those is what really has caused this. As far as the room that we have in Pennsylvania, at the beginning of the year, we shared that our gross margin will continue to be between 52% and 54%. I look at the remaining of the year, and I am highly confident that we will deliver the same numbers. The 2-point spread is because few variables, inventory and pricing pressure, a 1-store competition that is more robust than other. The real number that we focus in, and we reversed that P&L, we look at the free cash flow from it, adjusted EBITDA, that we will deliver the mid-20, 25% to 26%, driven by 52% to 54% gross margin.

Speaker #2: So, the combination of all those is what really has caused this. As far as the room that we have in Pennsylvania, at the beginning of the year, we shared that our gross margin will continue to be between 52% and 54%.

Speaker #2: I look at the remaining of the year, and I'm highly confident that we'll deliver the same numbers. The two-point spread is because few variables: inventory and pricing pressure, a one-store competition that is more robust than other.

Speaker #2: But the real number that we focus in and we reversed that P&L, we look at the free cash flow from it adjusted EBITDA that we will deliver the mid-20s, 25 to 26 percent, driven by 52 to 54 percent gross margin.

Speaker #4: Thank you, Ziad. Appreciate that, caller. And I guess just a second question here. If you could comment more broadly on the M&A pipeline, has it improved since the, I guess, the medical rescheduling and ahead of the potential out-of-use rescheduling that we're expecting?

Frederico Gomes: Thank you, Ziad. Appreciate that color. Then, I guess, just a second question here. If you could comment more broadly on the M&A pipeline. Has it improved since the, I guess, the medical rescheduling and ahead of the potential adult use rescheduling that we are expecting and are sellers maybe waiting for the final ruling to decide what to do? Have multiples changed in any way or any other changes you have seen to that M&A pipeline? Thank you.

Speaker #4: And, you know, are sellers maybe waiting for the final ruling to decide what to do? You know, have multiples changed in any way? Or any other changes you've seen to that M&A pipeline?

Speaker #4: Thank you.

Speaker #2: Yeah. Look, we I'll focus on us and the partnership we have with Focus Gross, our lender. We don't call Focus Gross, our lender. We call them our partners because together we're constantly looking for opportunities where we can bring in a creative deals that we can buy a combination of cash and equity, and we can really structure it in any way better than anybody out there, especially with our balance sheet that allows us to do that.

Ziad Ghanem: Yeah, look, I will focus on us and the partnership we have with Focus Growth, our lender. We do not call Focus Growth our lender, we call them our partners because together we are constantly looking for opportunities where we can bring in accretive deals that we can buy a combination of cash and equity. We can really structure it in any way better than anybody out there, especially with our balance sheet that allows us to do that. How the sellers are behaving. Look, it is from unrealistic, no way to make a deal, that are still thinking they could get 7x to 8x EBITDA, to some that are in the 3x to 4x EBITDA that are and will be highly accretive. Now, we are not happy that we only closed on Ratio, Union, Chill, and we are waiting for Aunt Mary's.

Speaker #2: How the sellers are behaving, look, it's from a realistic no way to make a deal that are still thinking they could get 7 to 8 times EBITDA.

Speaker #2: To some that are in the 3 to 4 times EBITDA that are and will be highly accretive. Now, we are not happy that we only closed on ratio union shell and we're waiting for Aunt Mary's.

Speaker #2: We're happy with those three deals, but we're in constant conversations and we're open and our phone is available for anybody who is willing to tug their business into a highly efficient operation with a share stock currency that is ready for re-rating.

Ziad Ghanem: We're happy with those three deals, but we're in constant conversations, and we're open, and our phone is available for anybody who is willing to tuck their business into a highly efficient operation with a share stock currency that is ready for rerating. We're ready to talk to anybody.

Speaker #2: We're ready to talk to anybody.

Speaker #5: Ziad, should I give should I give your phone number here on the conference call?

Jason Wild: Ziad, should I give your phone number here on the conference call?

Ziad Ghanem: No, don't do that.

Speaker #2: No, don't do that.

Speaker #4: Thank you very much, guys. Congrats on the quarter again.

Frederico Gomes: Thank you very much, guys. Congrats on the quarter again.

Speaker #5: Thank you.

Jason Wild: Thank you.

Speaker #2: Thanks.

Ziad Ghanem: Thanks.

Speaker #1: Your next question comes from Kenrick Teig. Of Canaccord Genuity. Your line is already open.

Operator: Your next question comes from Kenric Tyghe of Canaccord Genuity. Your line is already open.

Speaker #4: Thank you, and good evening. Just want to follow up on the margin discussion before pivoting to a discussion around Pennsylvania. How are you managing the tensions in terms of the margin versus sales growth tension?

Kenric Tyghe: Thank you, and good evening. Just want to follow up on the margin discussion before pivoting to a discussion around Pennsylvania. How are you managing the tensions in terms of the margin versus sales growth tension? I mean, certainly, growth in the state has perhaps cooled quicker than expected on some of the changes. You've got a state growing mid-single digits sequentially in this last quarter. How do you think about balancing that tension of sort of driving margin expansion whilst also capturing share or at a minimum maintaining share in that market as intensity has increased?

Speaker #4: If you look to, you know, let's focus on Maryland as an example. I mean, certainly growth in the state is perhaps cooled quicker than expected on some of the changes.

Speaker #4: You've got a state growing mid-single digits sequentially in this last quarter. How do you think about balancing that tension of, sort of, you know, driving margin expansion, whilst also, you know, capturing share or at a minimum maintaining share in that market as intensity has increased?

Speaker #2: Yeah. We went, Kenrick, high. We went one corner at a time. You can't have a strategy for a store in Maryland that has three stores that open around it versus a store in New Jersey that is still performing at 32 million and constant and growing.

Ziad Ghanem: Yeah. Kenric, hi. We win one corner at a time. You can't have a strategy for a store in Maryland that has three stores that open around it versus a store in New Jersey that is still performing at $32 million and constant and growing. We look at every store, we see what the dynamic of the competition is. I can't emphasize enough how enabling the quality of the product is. When your quality is constant and the competition is putting 30% or 40% blanket discount, you have the ability to watch and protect your pricing through quality. That's what we've done, and that's really what has allowed us to protect our margin. Across the board in all three markets, we have increased verticality, as I said, up to 7% in some cases.

Speaker #2: So we look at every store, we see what the dynamic of the competition is. And, you know, I can't emphasize enough how enabling the quality of the product is.

Speaker #2: When your quality is constant and the competition is putting 30 or 40 percent blanket discount, you have the ability to watch and protect your pricing through quality.

Speaker #2: And that's what we've done. And that's really what has allowed us to protect our margin. Across the board in all three markets, we have increased verticality, as I said, up to 7 percent in some cases.

Speaker #2: And, look, it's easy to increase your quality your verticality, but unless you don't lose edge versus the dispensary across the street from a product portfolio diversity, then you're then you're okay.

Ziad Ghanem: Look, it's easy to increase your verticality, but unless you don't lose edge versus the dispensary across the street from a product portfolio diversity, then you're okay. That's what we have managed to do.

Speaker #2: And that's what we have managed to do.

Speaker #4: Thank you, Ziad. And maybe let's pivot to Pennsylvania for a second. Historically, or, you know, look, it's historically this was always a wholesale-led business in Pennsylvania with very, very strong cultivation.

Kenric Tyghe: Thank you, Ziad. Maybe let's pivot to Pennsylvania for a second. Historically, this was always a wholesale-led business in Pennsylvania with very, very strong cultivation. I'm intrigued to hear some of your comments around industry-leading revenue per store in Pennsylvania. When we look at your growth algorithm in Pennsylvania, do you think there's opportunity here for that to evolve and for you to perhaps start looking at or thinking about increased store count in the state? Not only to sort of better absorb your production, but also to potentially be opportunistic ahead of adult use given dynamics in the state currently.

Speaker #4: I'm intrigued to hear some of your comments around industry-leading revenue per store in Pennsylvania. So when we look at your growth algorithm in Pennsylvania, do you think there's opportunity here for that to evolve and for you to perhaps start looking at or thinking about increased store count in the state?

Speaker #4: Not only to sort of better absorb your production, but also to potentially be opportunistic ahead of adult use, given dynamics in the state currently.

Speaker #2: Yes. The answer is absolutely yes. We'd like to go deeper in Pennsylvania, not only we have a facility that is as big as all our facilities combined, fully paid for, fully ready to be flipped for adult use, we have had an attempt to go deeper by tripling almost our store level in Pennsylvania.

Ziad Ghanem: Yes. The answer is absolutely yes. We'd like to go deeper in Pennsylvania. Not only we have a facility that is as big as all our facilities combined, fully paid for, fully ready to be flipped for adult use. We have had an attempt to go deeper by tripling almost our store level in Pennsylvania. Unfortunately, we drew the line where we thought the deal made sense, and we ended up losing a deal to a competitor. Yes, we've proved that we would go deeper. We are interested in going deeper and then using the facility that we have and the foundation that we've built around quality and yield and strain selection and partnership, et cetera. I want to give an example one more time here on the expansion we've done in Pennsylvania.

Speaker #2: Unfortunately, we drew the line where we thought the deal made sense, and we ended up losing a deal to a competitor. So yes, we've proved that we would go deeper.

Speaker #2: We are interested in going deeper, and then using the facility that we have and the foundation that we've built around quality and yield, and strain selection and partnership, et cetera, et cetera.

Speaker #2: I want to give an example one more time here. On the expansion we've done in Pennsylvania, I was talking to the Tyson 2.0 CEO this morning, and really sharing some of the numbers that we've seen with the launch of this new partnership.

Ziad Ghanem: I was talking to the Tyson 2.0 CEO this morning and really sharing some of the numbers that we've seen with the launch of this new partnership. We are not the first company they launched with. They launched with half a dozen or a dozen companies in so many different states. While the name is the same, the support from the Tyson 2.0 the same, the major differentiator and the reason why this was the biggest and most successful launch is the magic that happened by our cultivation team on quality and by the fresh supply chain that we have, where our inventories are sold within 60 to 90 days and not letting any of it age.

Speaker #2: And we are not the first company they launched with. They launched with half a dozen or a dozen companies in so many different states.

Speaker #2: And while the name is the same, the support from the Tyson 2.0 is the same. The major differentiator and the reason why this was the biggest and most successful launch is the magic that happened by our cultivation team on quality.

Speaker #2: And by the fresh supply chain that we have, where our inventories are sold within 60 to 90 days and not letting any of it age.

Speaker #2: When I when Jason and I visited our cultivator, Jeremy and Nick, we said, "What's your wish list?" He said, "If you want this quality to be preserved, sell it within 60 to 90 days." So today, with our ERP and our IBP planning, we are planning the third and fourth quarter of 2027, and that leading planning is what's allowing us to keep our inventory fresh, new, bring in the innovation, the new product, and then protecting the quality for our consumers.

Ziad Ghanem: When Jason and I visited our cultivator, Jeremy and Nick, we said, What's your wish list? He said, If you want this quality to preserve, sell it within 60 to 90 days. Today, with our ERP and our IBP planning, we are planning the Q3 and Q4 of 2027, and that leading planning is what's allowing us to keep our inventory fresh, new, bringing the innovation, the new product, and then protecting the quality for our consumers.

Speaker #4: That's great. Thank you, Ziad. Maybe just a quick final one on Ohio and I realize I'm a little over my skis on this one.

Kenric Tyghe: That's great. Thank you. Maybe just a quick final one on Ohio, and I realize I'm a little out of my skis on this one. Certainly, the hemp unlock contributed to a very, very strong quarter in the market, and obviously that would be expected to sort of extend further or accelerate further through the H2 of this year. Could you share your thoughts just around Ohio market dynamics as you look to sort of build out and the potential acceleration of that hemp unlock through the back end of this year on your Ohio plans?

Speaker #4: But certainly, you know, the hemp unlock contributed to a very, very strong quarter in the market. And obviously, that would be expected to sort of extend further or accelerate further through the second half of this year.

Speaker #4: Could you share your thoughts just around Ohio market dynamics? You know, as you look to sort of build out and the potential acceleration of that hemp unlock, you know, through the back end of this year, on your sort of Ohio plans?

Speaker #2: Yeah. So Kenrick, I would say it's about freaking time. We do enforcement on what is common sense. Look, I've always said wrong will never be right, and right will always be right.

Ziad Ghanem: Yeah. Derek, I would say it's about freaking time we do enforcement on what is common sense. Look, I've always said wrong will never be right and right will always be right. This industry was growing at a rate that's pretty impressive 3, 4 years ago. The leak happened where the hemp, the intoxicated hemp the gas stations the smoke shops happened, that grew from connecting multiple points to be equal to our industry. Let's talk about facts, we can predict what's going to happen. From a fact perspective, we know that the hemp industry is $30, $40 billion industry just by connecting data. There are no data that is reported. We know that enforcement has started.

Speaker #2: This industry was growing at a rate that's pretty impressive, three, four years ago. Then the leak happened where the hemp, the intoxicated hemp, and the gas stations and the smoke shots happened, and then that grew from connecting multiple points to be equal to our industry.

Speaker #2: So let's talk about let's talk about facts, then we can predict what's going to happen. From a fact perspective, we know that we know that the hemp industry is 30, 40 billion dollars industry, just by connecting data.

Speaker #2: There are no data that is reported. We know that enforcement has started. We've seen it in different states, but we've seen it particularly in Ohio, where the state got the jump of the 30 percent that we've seen, and we've seen it in only a sample of one store in our corner in Ohio.

Ziad Ghanem: We've seen it in different states, we've seen it particularly in Ohio, where the state got the jump of the 30% that we're seeing, and we've seen it in only a sample of one store in our corner in Ohio. Look, those consumers that were using cannabis from the smoke shop the gas stations, if you stop that source for them, it's not like, all right, they're going to switch to alcohol. Those are individuals that got proof that are convinced that cannabis has helped them to win their life back and replace OxyContin and hydrocodone and alprazolam and Ambien and four controlled substances with a gummy, and they want their life back. Those consumers will have to find a channel where they can replace their medication or what has helped them. That's naturally going to be the cannabis industry.

Speaker #2: So look, those consumers that were using cannabis from the smoke shop and the gas stations, if you stop that source for them, it's not like, all right, they're going to switch to alcohol.

Speaker #2: Those are individuals that got proof that are convinced that cannabis has caused them to win their life back and replace OxyContin and hydrocodone and alprazolam and Ambien and four control substances with a gummy and they want their lives back.

Speaker #2: So those consumers will have to find a channel where they can replace their medication or what has helped them. And that's naturally going to be the cannabis industry.

Speaker #2: So, we are confident, and we heard well. We hope that Loop will be totally closed in November or December. We don't know what date it is, but we hear confirmation that it will.

Ziad Ghanem: We are confident. Well, we hope that loop will totally be closed in November and December. We don't know what date it is, but we hear confirmation that it will. When that happens, really you're talking about growth that will happen, a growth driver that come from hemp. You put this adjacent to the growth that come in from rescheduling for many conservative US citizens that have not jumped into cannabis and are still with alcohol. When they see that support, the science-based evidence of the benefit of cannabis, I think 2027 and 2028 could be major growth years for us. My expectation is with reinforcement, we're going to see influx, and we are measuring in some of our stores, those unique customers that are coming in, and we're really encouraged with this.

Speaker #2: And when that happens, really, you're talking about growth that will happen in our like a growth driver that come from hemp. You put this adjacent to the growth that come in from rescheduling for many conservative U.S.

Speaker #2: citizens that have not jumped into cannabis and are still with alcohol when they see that support, the science-based evidence of the benefit of cannabis.

Speaker #2: I think 2027 and 2028 could be major growth years for us. So my expectation is with reinforcement, we're going to see influx, and we are measuring in some of our store those unique customers that are coming in, and we're really encouraged with this.

Speaker #2: And I am super happy about excluding beverage from what will change in November because that will be one of our leading introduction and growth for our industry because we know you start with a drink and then you see the benefit, the stigma, disappear, the benefit increase, and you go then from there to an edible to a from a microdose in a drink all the way to a high dose and take benefit of the drug.

Ziad Ghanem: I am super happy about excluding beverage from what will change in November because that will be one of our leading introduction and growth for our industry. We know you start with a drink and then you see the benefit, the stigma disappears, the benefit increase, and you go then from there to an edible from a micro dose in a drink all the way to a high dose and take benefit of the drug.

Speaker #1: Yeah. Although.

Jason Wild: Yeah. Although I would add-

Kenric Tyghe: That's some great insight.

Speaker #4: That's some great insight.

Speaker #1: Yeah. Although I'll add, as of right now, there is no beverage carve-out. But as we've been discussing internally, we would be happy to see a beverage carve-out.

Jason Wild: Yeah. Although I'll add, as of right now, there is no beverage carve-out. As we've been discussing internally, we would be happy to see a beverage carve-out. We think maybe that it's the gateway towards consumers consuming our other products.

Speaker #1: We think it's just, you know, we think maybe that it's the gateway towards consumers consuming our other products.

Speaker #2: Yeah. It wasn't the funnel.

Ziad Ghanem: Yeah. It widens the funnel.

Eric Jackson: Yeah. It widens the funnel.

Speaker #1: Yeah.

Jason Wild: Yeah.

Kenric Tyghe: Makes a whole lot of sense. Great insight. I'll get back into queue. Thanks, gents.

Speaker #4: Makes a whole lot of sense. Great insight. I'll get back into Q questions.

Speaker #2: Thanks, Kenrick.

Ziad Ghanem: Thanks, Derek.

Speaker #5: Ladies and gentlemen, as a reminder, if you have a question, please press star one. There are no further questions at this time. I would hand over the call to Ziad Ganim for closing comments.

Operator: Ladies and gentlemen, as a reminder, if you have a question, please press star one. There are no further questions at this time. I would hand over the call to Ziad Ghanem for closing comments. Please go ahead.

Speaker #5: Please go ahead.

Speaker #2: Yeah. Thank you, everybody. We'll see you in November. We can't wait to share the progress of our strategy. Have a great summer.

Ziad Ghanem: Yeah. Thank you, everybody. We'll see you in November. We can't wait to share the progress of our strategy. Have a great summer.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

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