TRTC - Earnings call transcript Q3 2020

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Phil Carlson

Good afternoon. And welcome to Terra Tech’s Third 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. from based of expectations may risks results differ are to are cause statements to number a and materially forward-looking on that current subject actual These expectations. uncertainties that the These risks filings. factor of our risk are SEC section in outlined be statement light in should of Any factors. considered forward-looking these we today. also Please outlook as present we Safe a -- note, is any Harbor, represent as of future. obligation not revise any the undertake in any to does Management statements forward-looking With the today Mr. are me on call Chief Mike Officer; Executive Nahass, Mr. Tech’s Terra and Chief Tech’s Terra Jeffrey Officer. Batliner, Financial With I to it that, now would hand over like to Mr. Nahass. Mike, ahead. please go

Mike Nahass

today’s you, everyone. Thank Hello Thank Phil. you for joining call.

of year want I remainder Chief business its Operating brought some introduce on you And to our going too capacity different and of has with discuss Terra the our roles inception, Treasurer, of for Secretary, aware, challenges. Tech my we’re a Director, us outlook President, myself, cost XXXX. produce the we’re past our update As call, shareholder XXXX since On and you value. events to few will know, months officers, bring to lean, units, today’s business now the different all and I in the several CEO. several strategy in served that effective as

share the -- with working strong to our and sharing and However, a along a with today. way upheaval with we future have excited I’m have through you -- to vision the for

months. the on go recent over background the Let’s

had adapt ability took new Oakland May didn’t of Leandro reopen the customers October July considering was this, them being burglary, closed the our revenues as it due them to longer Blüm that as its damage been reopened it the XX amount end part That well and and like of underlying not grow until year strong Leandro to Blüm our COVID which financials the as both on it finalize to Since this quarter, for a assets XX area. Oakland impacted opened Our after XXth, performance following up said, our little and retail burglary San following see contributing normal. were as Despite took on May the of that confident repairs to patients the we’re stores as and unrest, -- the rebuild a little XX, that us in had them. only social that May and has we’d QX been our we leverage in customers patients revenue took, civil picking unrest its we’re quarter and than saw as -- sales civil to we on for by San are delighted Xrd, We facility in to related obstacles. expected and to as be. that strong return us remain

Our cultivation the cannabis throughout quarter. sell and manufacturing facilities in wholesale Nevada continue to

brands Our across the dispensaries state. remain popular at

this team and Our last has months the respectively. versus than greater increasing extraordinary over XX% year job, first an Nevada of nine quarter revenue year for done by XX%, the in

Oakland become broaden in and and us for exciting flower final its expected it facility the IVXX California. and is construction concentrates operational enable as cultivation stages across Hegenberger our patients us will to really cannabis selection project to in XXXX. note, of positive Another a is end to consumers branded of the This by of our more

our margins between revenue stores, Hegenberger X gives to and the well as sorry. million California topline in produce greater a million in higher facility X -- store number, as XXXX, We us expect in

to effective cost will executing progress seen making volatile brands. grow in business many the well streamline the we’ve the the structure THC -- opportunities refocus our be and -- and our believe cost we have of solid Despite made strategy it’s we’re So future. around our market our value been to near by certainly our challenging a encouraged the so business we’re far, there year progress

fund to bring are significantly to will addition expenses. reducing In overheads we our asset sales, making strategic capital in several which

progress, positive company positioning the the of -- I with we transition evolution. next Tech Terra as the am pleased through this Given its with the chapter of

million Let’s Hydrofarm We the discussed growing significant their XXXX. very hydroponic invested We we sales has well generation. in we million in, capital since $X warrants. expanding which equipments, stake previous have purchased manufacturer million a performed and which X talk quarters. which about shares is we’ve of footprints. a then their and a Hydrofarm in

adult and the go -- of use the for excess company position two weeks medical in legalize this think on election. the more expansion industry. in on continue as cannabis well markets business and continued seen the four investment in industry over it’s week’s cannabis public next states themselves this and bode they -- expect we to continue We few equity capital position sector. states in going We the -- to and the the legalized Hydrofarm We’ve the on will capitalize -- the

this will our execute any We of generated growth to cash strategy. the investment use from on

talk the sale of Let’s about assets.

We of have our Nevada. completed -- we’re locations in three completing Blüm the sale

world. expect -- products cannabis popularity on -- Healing the market California and in our in of include Fremont, as in Street to operational well cannabis in We the Our this the share our time. Blüm and our other being are of assets make will non-core that as attached, company’s in in fundamentals expect we at months. we Las in Cal the core sold the our balance. of our which excess will cash capitalize to property license six Carnegie to grow of further the anticipated which injection, the retail With or brands our next one largest in encompassing, crucial changes scope there process on property Collective, the Vegas IVXX the additional of further cannabis will so to streamlined markets Avenue is be next that XX plenty stores All and in strengthen that $XX that entrench believe with Tree intend Fourth have I months market, this cost structure, the and stake to our cash contribute million

include facility with Ana, Our and believe distancing social open California, and especially think is unique plan well sales which that best we new Orange in the will a in resonate constrained cannabis road us we in location to Santa County. by at enable concept customers being to Southern Dyer without generate measures it’s

to ramp IVXX time. be cultivation expect starting revenue as the by early will wholesale also that We and running facility XXXX Hegenberger up up

are see them we’ve in grow IVXX to medical continue sell several that and months to dispensaries resonate and new cultivation well products to sales. confident to the past our Over continued will and opportunities use both bring scaling markets through adult third-party pleased are

on turn want financials I want briefly just to to Batliner comment through I the the OneQor financials Before walk subsidiary. I walk to over Jeff just Jeff -- the call our through before

calls, changing As CBD mentioned pandemic, retailers is dynamics, forced pivoting This on market to including to a the the response from the market. away the previous Covid-XX we orders the purchase CBD strategic of arm in business. which delay many

revenues, as of business the well IVXX Tech must its clear Blüm popularity Terra everyone in both on THC and become long-term near-term the focus growing sustainability. as brands, that it’s to Given our order to maximize

to shareholder and in established that leverage build we our the volatility play, established dynamics it have market the most Given makes at market value. to niche the THC sense company for

this subsidiary. towards For working discontinuing reason, we’re the OneQor

I’ll Jeff talk you who walk the will the over third -- the call Now financials turn to will who for through quarter.

Jeffrey Batliner

and afternoon. Thanks, good Mike,

This million, of XX, months ended XX.X%. we September the months $X.XX a was $X.XX three the for revenues XX, of XXXX, For XXXX. million compared September generated decrease $X.XX million three to or ended

for Mike traffic The enhance the has decrease of COVID-XX civil July our quarter. impact and the our resulted the half the of other one our month customer of and was As combined mentioned, the closure sales due volume, entire the civil reduced for unrest in and unrest. of third damage COVID-XX the to while dispensaries

compared of quarter the a gross gross profit was million the million, third XXXX $X.XX quarter Our to for profit for $X.XX XXXX. third of

was cost impacted due lower million traffic, volume, pushed decrease our up in So higher sales suboptimal turn costs. by the unit decrease, sales. negatively XX.X%. gross which impacted of was The to by purchasing revenue but margin a customer cost which of mainly to or of led The also were decrease in $X.XX

general is compared selling, This $X.XX the for $X.XX expenses to administrative and months Our three for three million. XXXX, were ended months the XX, XX, million September XXXX. September ended

of decrease the $X.XX So or million XX%.

operations decrease following legal in charges, of smaller footprint. in goodwill were down $XXX,XXX quarter ended a as XX, expense SG&A the summary, an in for loss to Now million three $XXX,XXX $XXX,XXX an corporate our which was for in lower professional same months professional and on was by approximately decrease was and due footprint increase expenses the $XX.XX three last spending decrease review. compared and $XX.X the in XX, XXXX XX, less decrease XXXX, million $XXX,XXX $XXX,XXX intangible interest was of expense decrease expense. the an primarily months million goodwill $X.XX loss insurance months advertising result realized this September $X.X operations for from three September operating from expenses, due In the compared loss decrease and XXXX, expense the by ended an smaller down year the XXXX. that three $X.XX salaries XXXX. decrease operating and of and in to This for the million. in impairment a sale a operating XX.X%, ended to of promotional $XXX,XXX annual quarter expense bank was Other service This in months of options for was to wages, in attributable expense, $XXX,XXX. increased We of and September asset ended decrease million stemmed in -- the fees, intangibles $XXX,XXX and $X.XX the in significantly expenses to the items, charges, XX, XXXX. a here million Other or loss September This in support

million of had of change third quarter XXXX. of assets the a loss an For operations, is third realized primarily year-over-year in for loss This quarter of $XXX,XXX. $X.XX over loss million XXXX. our impairment increase OneQor $X.X when This was an the to of discontinued the here operating the we XXXX, we of due in

compared $X.XX September its for total, September increase to Management XXXX, for share we ended $XX.XX net XXXX. per loss the or will share million ended lower $X.XX a a loss continue in and three $X.XX months XX, million net So efforts to of months of expenses XX, or operating per three incurred revenue.

We to marketing a and with the operations further in education invest our of our comprehensive potential promoting accelerating clients of will the campaign name and and expanding continue our goal products.

revenue of fixed most are With revenue percentage as a Given the like call those will expenses turn Thank nature, that, decrease. or quasi-fixed the of operating question-and-answer over significantly session. as the to the fact for I’d expenses to that expects have management that back you. increases, a Phil

Phil Carlson

Jeff. Thanks,

still question, First of is business? the OneQor a Mike, part

Mike Nahass

is OneQor of business. part still the Yeah.

get are down. We switch. It’s not to as as willing flipping easy a

down and then, And now We weird wind will with by which be this lot we’ve we year complete happens of unless year. something the between a end. in hope experienced

our closed have expectation is year to it end. by So out

Phil Carlson

Okay. be products will of two, made number what Question out Hegenberger?

Mike Nahass

gets and there. So flower any Hegenberger is a cultivation facility manufactured

So flour business do I our oil have our available, ability But and like concentrate there. excess joins in that you gives out and us bags well it enhances business. is what can things the of which as mean, to

wholesale product out greater from California in will mix broad it come retail flower our of but and and will there, stores. give mainly both us margins more us give to there sell So a

Phil Carlson

Okay.

Third at passed if state, would what Jersey, cannabis all? to strategy Terra question, New in expand now in be legalization the that Tech’s

Mike Nahass

ready we were New and when Jersey Well, knows we and history Murphy we in then applied to -- the everybody got thereafter. elected, roll

as depends on So, a expand and so change a they’re in process with have we’ll monitor know, New partnerships what we going and legislation we monitor the there Jersey what’s will when you starts, to going few just capital do -- the and as application have things there well how history we’ll what restrictions act as to as what and barrier we how the footprint, the risk entry and And that want use business in there. medical be in on accordingly. and is. It business Jersey much to there is adult the the to

Phil Carlson

Okay. XX company give little Last on you the months. current can where see and guidance a question, in you assets

Mike Nahass

And continue the plan not to bit. a little do Nevada did retail on we up fully manufacturing, before, vertical. other But have complete we attached San as a with a just slate distribution then vertical the which facility is which a -- reiterate wholesale, it’s running location near manufacturing. in I’ll It’s retail. licenses we’re and well, not on now. we and we have cultivation Oakland Sure. What right will Leandro, future. expanding and

margins are They’ve business. really over in revenues Our team corner turned there. and has great wholesale the for increased there. done our Nevada Things

which increase building increased. our our Hegenberger excited two California which on $X $X in which that. And we’re County that ago. is only location cannabis. distribution foot -- best Santana, has our also million city bought the So well we in revenue location about street -- square produce million is It’s year and main a Dyer X will to think will coming we be margins is that legal in which only California. in Southern XX,XXX as online, locations, our only And the it’s at will all Orange years that’s as the Road, next lead wholesale

that going we about will all be To a So few have excited run, in when be and retail we we’re coming to it which running. very well, public of up fund home the as Hydrofarm a we that’s wise, think offering, that so get weeks.

to that there The expect are are complete. Nevada to a out on the that comps the the in sales nice and excitement space. We considering see close return

from end the we’ll and environments all that. more about secure in and our year and expectation and more some money have that within of get And months post $XX Strengthen done next we’ll over come to six those sheet, on be work the then by business, million is months grow thereafter. the there. give of cash us the next off expect then just We stable the then will balance of remainder six to that

else dig and in that, look So current assets of Phil. anything that’s on going like the more, is future gist what the if please to and there’s

Phil Carlson

Okay. you Mike. Well, turn remarks. thank back for over your you, I’ll closing to it

Mike Nahass

for the is joining Well, you in an today. exciting evolution This really Terra all of of thank you again, time Tech. us

business we remain future. we ahead, the California long-term maximize the in the Nevada. revenues near-term fundamentals improving and Looking on focused And our for to and of for growth our THC sustainable want company

with to sell IVXX products revenue Leandro that in San leading cannabis as growth, both asset to a from value. for solid the ramp time significantly and sales, will the all up and you your sales, Blüm continue our we running, the of expect and profit market. and a balance presence Moreover, to for Dyer and for Nevada locations company. structure -- with that, patience more near-term should popular contribution expect appreciate contribute close and shareholder we up trust. us With lean our foundation the player We to committed growing to your impending to importantly, remain sheet our cost our wholesale in and continued we’ll by be followed XXXX thank With improved, our which together and facilities, our Hegenberger Oakland brand products your and provide build now efficient

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