MRMD - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the MariMed Inc.

Second Quarter 2022 Financial Results Conference Call. [Operator Instructions]. you. Thank like conference now Mr. over turn to would call the to I West, Relations Investor President MariMed. Steve of for Vice Please go ahead.

Steve West

Good morning, Conference XXXX Second MariMed's everyone, and Call. welcome to Quarter

statements uncertainties could discussed Chief most differ our These Joining Officer; Financial to other the by his Officer. Chief Susan Levine, our XX-Q. regrets, are the our me risks, other Chief our today's Fireman, Officer, various securities forward-looking today Villare, forward-looking our Tim Operating obligation and Chief XX-K Executive Shaw, Bob of Officer; as recent assume risks as and with and required Jon Form them has Administrative to and factors sends update Investor expectations call and our in cause actual Relations be applicable is statements. including Form call statements to matter date, us join family those archived from Today's cannot that documents on at results attend may be and website management's to our are recorded ir.marimedinc.com. we than contains laws. as being no subject reflect morning. a uncertainties and to will filed materially This this Any forward-looking SEC, he

to financial available on financial our non-GAAP on In will supplemental are which as the addition, slides, earnings we present well Investor measures in release, website. this applicable call. our information included Reconciliations GAAP are as in Relations

morning release to XXXX. quarter call turn the earnings analyst XXXX, over third Jon. Now held our market X, our X, November I the is scheduled be for on and to will November now your scheduling future issued call the closes XXXX tentatively will be after purposes, of subsequent

Jon Levine

to had good of I am solid report results. operational Thank you, quarter morning, everyone. Steve, MariMed and financial and another pleased

Our grew versus last year. revenue

grew X% reported tenth for EBITDA the revenue positive consecutive our we and adjusted sequentially, quarter. importantly, More

our third. facets several on delivered the the into of quarter and growth already during we plan Additionally, second

cannabis wholesale new soon vertical a our Annapolis. Kind be of closed of acquisition operation, First, with which the Therapeutics, Maryland in we a dispensary opening will medical

our and an license we on processing Mt. complete, products. our in Illinois, XX,XXX closed a Illinois Vernon, grow enabling margins. distribution craft square acquisition we in as our the will we branded for retrofit of a and Second, cultivation will of Once be a award-winning facility foot building to which in us purchased improve vertical

to in XXXX. visitors of seventh Maine's Maine Third, we most to Betty's and license medical state plan partnership began produce the which which to fruit populous we every sell deal in medical of we the early We in year. the are development in is our licensing fourth, a in state, distribute Ohio, Eddies market, lottery. Tiffen, And Betty's chews with tourism attracts awarded complements dispensary new market. in a existing completed open the Maine our adult license millions

adopted Eddies by Our momentum portfolio for Massachusetts. enabling state in the kitchen quarter. to launched our announced in the Heritage entire Hagerstown, award-winning the in our facility, is expansion flower and ice adult-use We be the processing this live expected and which to We continues bring third Nature's of to cream us sales, time a Maryland fall. brands Betty's voters of significant

line kitchen. a of expanded of in Maryland our gummies new launched have out We

state. pending and well from social selected a cultivation in We also on Canada, which This the to a Canadian Connecticut, as license. retail will completed receive approval partnered And processing the Security as easier investors our throughout we liquidity the with listing North America. equity final we in believe which investors institutional give and dual is was to applicant award increase access Exchange,

dual institutional MariMed. this taking the positions already listing investors seen in benefit have with new We equity of

our yesterday in acquisition announced the fifth dispensary Illinois. we of Finally,

base. We plan. on dispensary another add to brands financial executing Thrive strategic building great discipline, dispensary our remain We and growth thrilled focused are to retail our successful

despite picking his business is operational retail you. pressures. been wholesale update. the Thank our I the for never core and business stronger, Our has With pricing over Tim turn that, call up to now

Timothy Shaw

Jon. in revenue growth retail, Beginning with last had we a you, Thank XX% year. versus

XX% increased new customers. Massachusetts, by transactions and extended and sales store of versus are year, while home to Our programs ticket marketing and last consistently We're average improve working the recently hours our have we experience X%. In approximately offering revenue delivery. on declined strategies our increase

convenient more have customers our products. our access So to

billboard the also and Massachusetts going from in to to initiated attract more summer during campaign We cape months. commuters the

we're new continue do and second traffic. well, the to new half in programs drive year Our exceedingly of the maintain customer implementing Thrive Illinois marketing in and dispensaries to

our We are Massachusetts. at new still and will dispensaries remain be optimistic in approvals months. operations the But begin we in coming Maryland before we operational can awaiting both regulatory

of Our wholesale increased revenue. primarily to wholesale sequentially Maryland Kind's revenues due the XX% addition

Fortunately, our retain commitment to high-quality pricing. flower us has our enabled to premium

provides the award-winning of pre-rolls significant derivative increased launched are economic line our we The in oversupply holding The tough value the our For up other of edibles and the have which expansion flower is including to cannabis to concentrates. more products Maryland, led ability our to due compression has affected sales. all to X,XXX and vapes, already branded to ultimately good products, are times, kitchen sales. nearly a In who well. of products, customers price of are flower, square and Maryland upgrading produce news and price-sensitive contributing feet our

development our experienced new Illinois. construction cultivation delays On in on processing and we facilities the front,

fast XXXX. possible Illinois the in We on are pushing and the hope have as facility early to operational as kitchen

will by starting be The this will final This will facility of Additionally, canopy and fall. in than Massachusetts, more phase approximately current production. processing expansion begin in ultimately expansion our our XXXX, increase will XX%. our and the initial double cultivation we flower

product at I've cream. Eddies you best update I ever THC our cream under Panacea with Last Let more ice ice to partnership me Emack try & ice is cream Bolio's now on It brand tasted. dispensary we launches. the encourage the week, you recent infused some our launched Betty's in it.

at flash flower delivers our launched the freezing also Nature's proprietary We're the Heritage We which flavorful, freshest, cure brand under flower Massachusetts. available. the in colorful, smooth most The live process harvest. includes buds process, smoking utilizing right new fresh product

process costs. the the and X in to increased on concludes our production over to my drying operational she'll call That outlook. turn our lower traditional results an weeks eliminates I which now financial provide of versus X do and flower, Additionally, review. update Susan, financial results will

Susan Villare

Total everyone. you increased our would to like financial sequentially. morning, which recap was X% million, $X Thank brief of is you, a with today. quarter. for this start good Tim, be I all a results and real It pleasure with to revenue past

quarter. growth wholesale this our As business. sequential by gross XX% to operations Tim margin dispensary discussed, driven strong XX% was last and compared Non-GAAP our was

margin Our decline factors. to was in several gross due

which we income management our in margin, underwent at significant XXX% wholesale once and a a replaced acquisition. business revenue we model had lower First, Maryland lower at rental closed by change the We was Kind margin.

materials to Second, inflation. higher and freight due costs we experienced raw significant for

Betty's some new half and our be quarter chews, old certain anticipate Vibations several company under machine fourth fruit new And on as for certain flower and inventory XX% new and testing we did and quarter above the was for our margin will quarter, equipment Betty's believe fixed they by discontinued operational. this required margins expect before hemp. watermark Eddies such the don't products machines sequentially extensive of second This could year. Eddies last, which drink in ice this past which fine-tuning to included Third, increase wrote-off low our production absorption online live the mixes our to we climb we gross in continue of of cream. costs, result This second We improve year. and brought

our OpEx. Moving to non-GAAP

spending. be to continue with our We very disciplined discretionary

quarter. $X sequentially spend this million and Our decreased past $XXX,XXX was

was does million, margin. represent Our $X.X EBITDA which adjusted XX% a

to equivalents. on $X.X our $X.X of turning second in sheet. result tax remained ended the We cash balance Now our at as for million. payments. cash a as the primarily hand, in quarter of balance positive working acquisitions, The net was decline payments and sequential the Despite income cash cash million well capital with decline

be of as strength in generate do full remains year. to from track we our the to illustrated and flow for ability year-to-date MariMed operations, remain cash on cash positive Our cash flow a positive

an on Now I'd like update XXXX to our guidance. year full provide

annual X/X construction of than revenue $XXX to year-over-year million guidance $XXX in was a be XX%. range reduction This and to our of million. the direct revising More represents in XX% the approvals. to result both are growth delays We a rate of of regulatory

Our outlook non-GAAP year approximately now margin at full XX%. is gross

to in now target And adjusted to my lowering will range Jon non-GAAP $XX to margin million million, construction prepared from remarks. our a guidance the to XX%. now concluding is the I call his turn over of to which concludes $XX remarks. our million CapEx XX% are $XX finally, projects. the represents due $XX we EBITDA delays million for of in That Our

Jon Levine

you, Thank Susan.

financial We into integrated performance strongest MariMed X company great number industry. is first and testament the our great at we quarter. dispensary the dispensaries facing being successfully some these are the from increased key-to-sale we and headwinds years, consultants while the This versus in to the our incredibly we Actually, The maintain the still of the did reported of we at MSO. traffic transforming a amazing is vertically it every proud products of despite of we industry, operations, fact financials our culture create. past X

a that we in would XXXX accelerate a said, earnings we year investing year position would before All MariMed, which revenue, to a XXXX. of ourselves that be had in be at growth said to company as foundational

the help revenue We assets have are under running very new drive excited about we will to next year. new

been if time. and growth estimate derail can businesses growing point footprint, working in important We outside In current our to took against sitting plan, just without goal our our both line we retail wholesale over the we on this, focus out action and us. fact, idly that making all address Bottom the over It's forces is acquisitions, of significant macro by have any are across allowing in to we of that not our decisive generate great facets we progress. industry. million we $XXX revenue to forces

is operate solid and with and have raise to ability manner in continue us cash positive efficient disciplined that have no to will made capital. We a flow, debt the has profitable, an sheet what essentially financial balance

to revenue-producing great and our investors to summarize, us over has a to allow years, analysts. businesses will To established to last accelerate performance of growth. great allow MariMed's capable financial us be acquiring organically new industry credibility foundation have of or the assets continue X We among grow

and financially We growth employed success. for solid long-term are continued

We our are ever we XXXX. another breakout in future as optimistic as have to in year plan

to put to the in leader company pedal grow industry. the the cannabis We the metal be will our continue to and

all dedication. the their hard may of me all country Before thank and lines MariMed I close, open the for work questions. for you around the let employees Operator,

Operator

[Operator Instructions].

Craig-Hallum Capital with Lauriers question Eric first Group. Your comes from

Eric Lauriers

for one me. First

just pressures On the you versus impact increases? you the that talk you And cost the can how fared these then pricing margin headwinds, premium of can extent pricing us help your about over has data, average have the understand throughout headwinds? to

Susan Villare

Sure. question. the is you Susan. This Thank for

acquisition that bit previously. we transpired would overhead say yes, then I and over of we that XX% have And So prepared a the pricing a we that the remaining online Kind more XXX%. XX% is in which went took closed, And we versus equipment had due of the the what is with tremendous compression my to amount was remarks, margins about we margins. brought really had a did of than probably wholesale

about old least, don't overhead we was forward. Tim, then going year. we've this we in not inventory, we we've the XX% do you but that et off, at pricing? get hemp guidance that But cetera, which QX talk written will had the by think So some want anticipate least provided, we underabsorbed. to of more did that have I And had last to

Timothy Shaw

Thanks Tim. for is Eric. question, this Yes, your

average As products, markets. our we're all the well pricing staying as above our on far in what premium is

market. So slight $X,XXX to still pressure, be but specific we're from holding a $X,XXX we're in pound, down around feeling the

So we're than much feeling doing better are some pressure. most, we but

Eric Lauriers

impressive Last for still question Yes, there. me. figures certainly,

more that do you the this now and margins terms the kitchen, sort you term? near just Or near-term with to up volumes? kitchen mix of vertical we starts? should the volumes this increasing running of sales buy I have help expanded until is and Maryland this market spot from adult expect drive in guess, of more about and think how in So sort use about in

Jon Levine

the the Bubby's happy to into using I'd Tim branded We'll I'll and expansion up Maryland pick We're Jon. the Vibations. of after. eventually be is expand let market. answer our and We're the This cream. to the first, bring bringing the kitchen ice in products

us the having overall. gummy revenue though. help that but to kitchen talk also to let bigger the our Tim new all expand margins is through a I'll This branded We launched will have market. in more and by these increase specifics, the our products, the ability

Timothy Shaw

the able to built Thanks, Jon. you X, a much noticing out to that to Yes, about through add dose GMP to be important and kitchen. certification kitchen. currently, with edibles that be participate they're be higher velocity We've Maryland in We're this to that are the another having participating certified. only products certified to requires prior specs. regulation GMP piece of GMP we're higher Maryland companies regulations. to going X this has kitchen a maybe There's those these in a

our sell-through. large Betty's a Some of portfolio dose portion the of higher was in

with products So our Betty's we market certified high-dose so. to are we look our do forward once to lead regaining

Operator

Ladenburg. with Mattson Glenn from comes question next Your

Glenn Mattson

of Illinois Maybe just kind paid for to like around especially that in acquiring continuing on curious licenses of that environment as asset light getting an share the kind the you you So or congratulations if coming dynamics what could just are of the dispensary, you curious grow deal. on about all that think online. for -- that, another footprint

Jon Levine

able coming question. the yet. the for announced that in excited speak filed are market into get we price of that the we're No, of that seeing and have bunch coming we very these a looking been line big and is be the market just licenses are there Thank with But price expand reduction. we'll deal has X market, where what some we're Illinois, the Yes. can't that revenue specifics we're not we as paperwork on growing it, prices you, Sure. I presently good market Glenn, the in have all a a to feel at at. the our quickly, other more we and for to in ones getting we a about

Glenn Mattson

Great.

market -- a a pressure market a in there time. under home Is give follow-up, for deteriorate to of it the the is when some you Massachusetts? sense how has pricing are do things Or you can Just kind as a as on The us your an in background dynamics? general going see continuing it you can timing improvement any little supply/demand and and bit? to just have of been

Jon Levine

I'll Tim, part. answer you let this

Timothy Shaw

having great our in the for products, capture very price that brought Betty's value value. the and line is Glenn, this of Shaw. a we've done creating We've Massachusetts job for Heritage, the most highly new a Nature's a with inflation market products, that compression Tim us. continues of some Eddies. brand is our some be feeling to the really are to with with sought-after a folks -- And in looking market strong helping strong

coming and attention capture that the products to being haven't trying we're other to The online. market in past. paid extra that enough with demographic is flooded more So we flower necessarily and more

just where that our awaiting happens, seed-to-sale we'll full ours online. We're have in However, outlet dispensary coming have we'll approval. to fare for vertical regulatory have another the have also well. products. continued we And Beverly very Once

for So that be also. very our helpful should margins

Operator

comes with Echelon from question Markets. next Andrew Your Capital Semple

Andrew Semple

pushed would wanted regulatory of Maybe of back where some are is the Just to the specific to CapEx and could guidance. of construction clarify potentially help XXXX. if being the in states some back some approvals go and assets you delays those where seeing and you it to

Jon Levine

you kitchen have to very and been again. and where building we just Thank The to build happens be into markets construction delays much, Maryland, Sure. approval Andrew. up to regulatory been which completed. running talk out we've you trying Nice and we this to that Massachusetts

open get waiting in have for our to CO, off. on CO, in and supplies being to able our to will cultivation can weeks by it's this state. additional the delayed to final in but And Illinois, in construction the approval complete used and X still processing get Massachusetts, usual, which center our were you by as that waiting We've with our regulatory we Tim. same of being got fully Susan supplies for the open that X that's months took in been of what's dispensary come emergency have just have the going us in It's slightly going approvals. And get requiring worked shortage we're Massachusetts to weeks being to wait. get is inspections told sign final Annapolis make mostly we to CO. vertical, we and due delayed example We us but taking X we're on inspector are the have timing out there. We're an able to. X, on the to the then and to The before and with as those to to additional got what timely to an due delayed as be X the I shutoff be having locations

chain supply issues that our delayed are those but CapEx. the seeing we're So major throughout have country, projects the

Andrew Semple

the appreciate just for color of margins the returning little maybe additional topic helpful. bit. then there. a And to very That's I

within testing current able terms You into more such then listed others, the lingering And from as secondly, Would like current in and of had the quarter? impacts the to several be appear any factors the which Would you that those among there those largest temporary be impact third behind the it pressure within new some be rank of of aspects to temporary. would quarter? quarter. felt margin pressure the factors, machine inventory

Susan Villare

Yes. No, is Susan. thanks. This

really that as of that as largest think online. equipment was far I magnitude, all yes, was this So the coming

to had for we and closed. also tremendous a us was test, it the Kind So amount

busy So kitchen. we with that were

then inventory but have, the And moving we did of purchased. hemp really off some is So lingering old every the that reviewed month, inventory we kind the They're et all that have fully cetera. are was behind that of one-off. Everything shelves we us. we machines those operational, all

So is be else would nothing there there margins. that impacting

point, very much And efficient. at online drive from actually operationally. the this nicely. us margins very are streamlined with X should more So seed we new should sale, make that dispensaries the coming to equipment The new

believe it we year. we of So don't half these unusual do the in second had that that happen a quarter the temporary is events to we expect

Andrew Semple

may. here, a question Great, I then And if great. third

and quickly, some the on Just products. pretty innovative cream launches, of touch ice I to product new live flower, some want

that build really you As its the for and go are is on some and organically nicely you there products, demand Or own? factor wholesale seeing of out build to demand education happen? an these has

Timothy Shaw

This of a launched dispensary, into Andrew. It's we a staff strong is which these products. Tim, new our little have own We and has bit trained both. is deeply at been very helpful, that

is HX purchase. team tour, of bring education not to but to make the these awareness in and we facilities the the treating purchase, brand ambassador a this first sure that with brand Our like second and support launching into kind we're new just help have,

So of far. a for thus both definitely little successful they've happening there's launches, bit been both both and

Operator

[Operator Instructions].

Your comes Global Aaron next from Alliance question Partners. Grey with

Aaron Grey

first So me. for question

certain You had guys focus historical on a markets, mentioned value premium. brands always in some

how to kind term, allocate term? consumer? the sits portfolio the as acknowledging consumer brand maybe certain of and So longer on the of wallet in to evolving we Can deal brand And in guys, today. with within where you're just near the markets that you'd near value, the want constrained how potentially potentially the you want but talk obviously, kind seeing focus for you still premium, you about maybe

Timothy Shaw

from and from important has more competitive to concentrates, vape Thank with dovetailing and Aaron. more -- keeping X a brands. the disposable the of some putting proven that and has price. and our It's it and it's at the value where to brands have all hurt pen trend at launched products complement in really value vape of our have is and and that successful, a really each premium running, different product demographic, is it And new product both into different Massachusetts, in than -- to we and And pre-rolls to very really of portfolio. that high-velocity and Tim. the equipment maximize to becoming market soon the able Great. pen the This flower price. brand been different be become our rather live There's product premium we're putting cheap belong. dispensaries we've and Maryland buying a you, Yes, market helped back locations navigate a

for it's portfolio. help an So incremental been our

Aaron Grey

Okay. Great. for And then second me.

really any touched of from harder online because couple on on a retail times You in getting I you of your any you're any some and own and just own wholesale. the getting shelf in their on that come get more not heard of going markets, get end with seeing vertical, some it that be own have stores. to verticals to you their might the where obviously is terms got more already But be in more commentary the need not Illinois -- of vertical? to around to know your you of really own? retail are on to any some accelerate noticing Illinois. operations bringing Does their and same end there with But terms of your the impact it case cause right you'll getting we've within products, have are Or wholesale now? need to of more MSOs

Jon Levine

Go Tim. ahead,

Timothy Shaw

It's margins, to obviously, important to full going have just say, better to great. vertical. always get the much was own It's place. I it's your

we been been demand at able -- craft a we've definitely to We've scale, and to pressure highest strong. some quality is large the the products, out for there. make cannabis we continue have Our hold of There product.

we So demand the our it's that margins, the but seen very open other question. of a in the important I much really get dispensaries branded products. help if haven't to don't know answers for Yes, decrease to with

Jon Levine

licenses. in. our their as in we're to limited that the states strategy is build just of I'll Part growth each Jon. out add And Aaron, this is of in

up expand and We important in getting award-winning getting our in of our there of can states into brands I it's us each and each, building we think more out grab states. and so and the that to margin dispensaries were increase us of for that that those some in do margin. allowed very will at own brands limited states maintain So to and And dispensaries keep each number the to these have each top. those up in just always the help they're margins

Operator

questions. There are Please no further proceed.

Jon Levine

you, Thank today. everybody I us and operator, thank for joining

Timothy Shaw

thank everyone. you, and operator, you, Thank

Operator

your this for today. call gentlemen, thank and ask Ladies for lines. conference We you please your that and concludes you participating disconnect

MariMed (MRMD) 9 Aug 222022 Q2 Earnings call transcript