TRTC - Earnings call transcript Q2 2020

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Phil Carlson

Good afternoon and welcome to Terra Tech's Second Quarter 2020 Financial Results Conference Call. My name is Phil Carlson from KCSA Strategic Communications. A replay of this call will be available at www.smallcapvoice.com and it will be archived on the Investors Relations section of the Terra Tech website.

Before we begin, please let me remind you that during the course of this conference call, Terra Tech's management may make forward-looking statements. These forward-looking statements are based on current expectations that are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. in factor outlined SEC of are filings. risks the section risk our These should light considered forward-looking be Any statement in of factors. these as note, also we as Safe of is Harbor, today. Please any a present outlook any obligation future. Management does not to any in forward-looking revise the statements undertake on today are Mr. the call me With Matt Tech's Officer; Chief and Tech's Jimenez, Terra Morgan, Financial Officer. Terra Chief Executive Megan With Mr. it over that, to I would now like hand to Matt. ahead. go please Matt,

Matt Morgan

here I'm few today of call Thank update and on thank pleased Hello to joining for the Phil. our be you, on today’s us. to events you business months. to you the everyone and past

As we with very these last we dealing volatile experienced discussed a on our challenges. are market and call,

lean the company the the then give second call, Jimenez, to around of business remainder XXXX I'll centered strategy and who and off financial is CFO speak from overview On greater So a will the our to I where it of Megan today then today's through results to an company's hand strategy for and will beyond. quarter. the walk cost-effective popular produce well-known THC brands. the

closed decreased COVID-XX revenues of two closed $X.X were since reopened. were XX they due the by compared We dispensaries to May resulting market approximately in California. yet after damaged Oakland unfortunately, wake QX and been has our quarter Second has recent were in XXXX, in $X.X the burglarized Blüm civil million to footfall reduced impacted unrest restrictions. conditions. to And and not from million approximately of

a This until that contribute San impact Leandro locations on XX on pending for the both quarter unfortunately had quarter the June, XXXX, Blüm significant which of finalize towards meant entire and July all these insurance May in working has claims. month burglarized reopening XX. third second are our remained closed results. revenues didn't We of was of

mitigate during and staff incurred. the Fortunately, anticipate that were none our will protected, us injured this we policies are the keeping and our total unrest of insurance loss

our of the managed were products. brand IVXX unrest Our cultivation production and during not have impacted cannabis sellers civil of to continue

sell shift Despite have remain from uncertainty products business. This dispensaries. recent we'll to dispensaries overall market, in continue a margins. with challenges build strategy, revenue out continued towards We margin the sustainable them and focused on mix third-party wholesale less reduced revenue the our lean and lower through retail in our to we

Looking the improving ahead, fundamentals revenues. our focused California we on business to maximize THC in in near-term remain

emerging and continue player to committed brand leading popular will products of to wholesale a in and We consumer-niche this sell IVXX remain market. our presence our growing

dispensary Dyer the In of are in adapted our strategy cannabis as addition an retail new the to of Road facility, Blüm current the suit to reopening prioritizing climate. but was This East originally our planned Ana. in opening event center, Santa Oakland, we've we our

IVXX flower. cars leave which our customers California, Bay the So given We're production cannabis. purchase people with to cultivation with the will line increase We also have of to current our Area conditions. significantly the won't finish believe well approaching in will of this their facility Hegenberger resonate climate

highest position in our assets so and lucrative our strategy uncertainty. the base strengthening redirect to second we in In our of face expect resources, we the XXXX, sales shedding THC discussed and capital of generate half in returns the As build in business. capital to less last deploy a our streamlining pursuing that call, assets by we adapt structure to business Nevada can cost including essence, of asset the that number in cash our

assets three This non-core We our Blüm replayed sales Holdings Blüm to anticipate Ana, investment next Furthermore, and Nevada, closed. Santa expect cannabis retail in recently California. in realizing our Hydrofarm have of $XX in property. in It Carnegie as the approximately in bring course assets the such months. which license, Avenue announced includes has our asset million retail we store collectively our sales the of over previously year nine

Healing generate a are which and Collective, balance. structures. Jimenez, value to that believe to recap to available investments sales without that growth the potential to expect over I'll cash our results. call contribute capital in Our fuel now our property significant our has stake pleased we positioned turn Fremont, to Fourth recent impacting committed light our our and strategy on corporate company Street, of capital demonstrated We a path And believe adapt remain will financial in with setting Megan? Megan Tree to Nevada, CFO XXXX. we We with the headwinds. out from ability the and will significantly our profitability are the in of uniquely asset the we to amount our

Megan Jimenez

Matt. you, Thank

well charges of million. realized impacted months being XXXX compared Gallery would months negatively also the Oak unrest, compared to by for impairment For XX.X% charges, to XXXX. damage administrative XX, XX.X%, cost sales of ended approximately million our XXXX. the June $X integrated Terra versus a June XX, Tech's classified June loss months million our basic $X.XX XX, decrease three of expense. the civil $XX.X resulted like the a were or $X.X the due the greater of the approximately gross Phil XXXX to $X.X for being and June In was our share per Gross ended the June June approximately only $X.X to civil continued units. was COVID-XX, three a ended million June the attributed for The diluted $X.X non-cash in result ended XXXX to or ended and reporting in a to that, a XX, civil The back and interest primarily million, were three $XX.X June to recorded months approximately for and the company Oakland. ended from The to XX, second XX, of million. was XXXX million negative selling, ended decrease per months resulted Tech an a XXXX, XX, June of the purchasing closure three turn impairment quarter XXXX. XX, million. continuing labor non-cash compared to The one impairment $X.XX for June and and of which asset $X.X June June. approximately profit percentage the ended operating Absent $XX.X traffic rather XXXX. of three million Black ended ended for XXXX generated for ended unrest in a ended for $XX.X for our prior loss unit revenues operations $X.X due I'd quarter These the as The session. volume, of pandemic quarter, operating $XX.X June approximately cost non-cash suboptimal company pushing in shift Selling, months combined year, months to diluted to $X.X to than approximately net margin increase quarter question-and-answer the month in Other three ended result from compared fully general share, for of compared over of pandemic, XXXX the were approximately reduced due XX, compared volume of costs attributable as million to three XX, to the decrease million, retail from which operating three approximately We approximately have impacts The approximately COVID-XX of ended $X.X in revenues million our With million, $X.X XX, to Terra the a for was for Bay June the loss million overhead due intangible Non-operating June primarily XX, area. loss quarter the XX, in the decrease primarily the a been comparison, for basic in costs. continuing unrest $X.X $X.X increased in $X.X the XX, million for million, and gross XXXX, sold approximately expenses XX, $X.X by and second to XXXX, million asset decrease $X.X million to of general from has up for declining two charges. XXXX customer an impact in was in XXXX. as saw of the compared the the of sales XXXX quarter $XX.X continuing expenses primarily quarter approximately intangible and the COVID-XX June charges dispensaries operations quarter call being XXXX million, expenses. profit purely ended of three XX, ended charges the months XXXX, million goods administrative of impairment for million June operating and of months quarter of net approximately attributed the operations loss for as was expenses

Phil Carlson

Thank you, Megan.

it it First in any reported or the that Terra the this near to effect have has cannabis created has question had industry Has will a supply been we have, effect market. Tech the illegal surplus any future? to

Matt Morgan

affecting of taxes the all black has legal sales merchants. Yes and unfortunately to lot beyond, expensive due a has the and very become this so, market market cannabis driven into

educated more understand the market However health people cannabis. starting are become relate negative black and to to now aspects

I reevaluated to Phil. a the think for regulated increase education market that we trending and competitive. be see to in needs tax direction, to continue need And to become

Phil Carlson

Thanks, Matt.

prepare Next pandemic? the question, to market for conditions the doing uncertain by what proactively the company is presented COVID-XX

Matt Morgan

continuing great great that's today. our made on there Yes, reductions, cost work a to We're strides we've question.

margin opportunities we are unprecedented and environment. scale these balance and to an to Most survive sustain can opened eye sheet to free to we leveraging the through – an working The Hegenberger facility more the on active partnerships are has economies and of running sure company get make as bottom and and merchant drop line. up well. increase times importantly our increase flow cash the to We company's

So we're open just ourselves. trying options to keep all

Phil Carlson

Okay.

of are strategy the retail company's the Next question, in what California? competitive advantages

Matt Morgan

that We're working delivery about curbside traffic, allows facility the in us social We’re the to significant we us benefits it give going to facility open as that advantage of really to distancing as maintaining strategic large Orange requirements. feel accommodate a dire can are significant possible. facility capture foot County, the up and excited marketplace. opening soon while in The California footprint it's sales

Phil Carlson

All right.

with how rates? from revenue up match current question, asset burn proposed will and Next sales the

Matt Morgan

we Between the for than Hydrofarm expected investment to stock, Nevada asset sales more expect enough foreseeable ability and monetize future, liquidity Phil. the our sustain our

So…

Phil Carlson

turn to remarks. over Okay, I'll call the Matt back thank now you. closing his for

Matt Morgan

in who to sent Great. questions. everyone Thank you

in products player abate also in us for nimble that to this the the assets second profitability consumers. a our of to lucrative most Directors, with and THC I well team, in and employees in half support company, to the give Terra with deliver market. maximize the will several challenges we in a great us to our repositioning look as all wrap to to a you Tech’s Board XXXX, thanks the many Tech Terra to in shareholders strengthening to and of the support. a We're to company to Your confident position and all forward past well pleased in cannabis of future, costs path and means like brand put innovative cutting have continued business and I'd we seek that Terra we of here, in competitive Tech the your experienced leading the as progress special accounting the the and the and expect we've deal short-term the value as our as competencies XXXX. lean This a core resonate months serve market and up

future I with to guys close forward And that to going guys, on So with you we're our look on updates the calls. lines. progress providing quarterly

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