Earnings call transcript Q1 2023

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Operator

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

First Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After [Operator Instructions]

to would Thank Vice turn Relations now the I President the conference Investor West, to Steve like you. conference. Mr. over of begin to

Steve West

everyone. call. morning, XXXX And first MariMed’s Good quarter to earnings welcome

on Chief are Jon website. today and call being Financial Officer; Officer. Chief Levine, and Officer; will call Chief on recorded Relations our This Shaw, Operating the our be Susan me our Executive Joining Tim Villare, Investor archived our is

forward-looking forward-looking to Today’s or discussion may and contains other SEC with events as and we no today expectations call statements. statements our results our assume the and and website. of A available differ Actual forward-looking factors law. these to required and uncertainties. in is filings by of Any risks materially unless various from reflect update these statements are them obligation contained which management’s release, subject are earnings on our risks

refer supplemental financial measures is certain will financial our release earnings Additionally, non-GAAP in non-GAAP this our and information call. reconciliation these included we to slides. A of on

XXXX, morning our our will at XXXX earnings release X, issued after analyst is subsequent Finally, X of the the August market second X, be on a.m. August scheduled held to call closes tentatively quarter be and XXXX

now I call over turn the will to Jon.

Jon Levine

MariMed business report value. committed Thank quarter continue remain everyone. our long-term you, shareholder morning, Steve, plan. expand had execution the through another solid that of good creating pleased to I’m we to our to We and as strategic

XX the numbers. my one floor wear from. always actually XX stay and uniform. Buildings XXth Well, is have of many a on that it’s number number away You won’t favorite know most the athletes personal should people don’t think been you

I fact, another to wear reason it. did now soccer as and pride youth In embrace a player I with

which XX% For XXth consecutive EBITDA, sequentially. we adjusted positive quarter, grew the reported

only our to remaining we of this cash favorite over I’m Another report fourth is positive operating proud and time. cannabis say the track of is my of on to consecutive cash positive MariMed generate companies period the are year of to extended flows. four number flow one

quarter, closed at to facility credit compared peers. our During a $XX we industry favorable the first million terms

growth of this from flow capable capital to funding infusion us was cash its our immediately growth long-term MariMed plans allowed through While operations, plans. accelerate

after fact, a In license a a medical consolidation Massachusetts. facility, announced operation Quincy, little and in over the the month acquisition we closing vertical of

three Subsequent to the announced end the of additional milestones. we quarter, operational

GMP our in we certification of kitchen production Maryland. First, received

in once received we sell Second, approval again. edibles Maryland produce to high-dose and

in position number months. our the Before recapturing the state, high-dose edible our on that and were Betty’s in changed Maryland the rules the upcoming set Eddies regulator one market selling sights we

of now Third, opening and We this Stay I last could beyond. our tuned. we exciting received more not We the our be adult-use we having dispensary regulatory operating in in during the finally and grand Massachusetts year excited three full potential. have news had revenue anticipate long-awaited about Beverly, and their April. in week dispensaries in approval more Massachusetts

update. operational turn now over call I to his for that, With the Tim

Tim Shaw

Thank good and you, everyone. John, morning,

Let review to due and of increased seasonality business, our start X% increased me decreased normal revenue retail and compared quarter XXXX, the my with competition. where operational fourth to X% sequentially year-over-year

MariMed throughout thereby than quarter were industry We continue basis data, competition X.X% more beating X.X% first to Illinois up BDSA outperform According experienced sales the points. the XXX while in our footprint. growth, to year-over-year,

exceeded business our Additionally, competition. in Massachusetts, total significantly

dispensary. at which an offsetting with will obtaining medical our to in medical Beverly anticipate license slightly at include by adult-use However, these nearby Beverly increased our the our initiatives We a adult-use retail and traffic-driving license dispensary of include obtaining traffic ramping several dispensaries dispensaries. impacts two was Quincy impacted and number new Quincy,

made a exclusively possible three sell locations, also We’ll in significant an delivery of that position Massachusetts. in ownership be our delivery by dispensaries implementing from existing will three taking products our at business all

outfitted set full are fully are vans and to Our we commence operations month. this

X% revenue let’s our in primarily sequentially, of driven that Now XX% and business. acquisition as XXXX, closed strong by year-over-year in discuss our Maryland wholesale April Wholesale a as increased well Massachusetts. growth

our and wholesale many growth experiencing. first clearly compression seasonality quarter a Sequentially, typical booked the price that not competition so effect by impacted was and are of peers

new and this the our business. watermark within wholesale higher third quarter we revenue In set consecutive was quarter the of wholesale sequentially a fact, record where consecutive fifth high

We the I our growth bar sales our in as they outsized hard branded be quarter. products raising every their pressing force and to keep these Massachusetts are continue to maintain for not demand states. tremendous single for could strong in we our see both and of Maryland, proud work

quickly progress initiatives on update growth this for the year. me towards Let you our

completed our the During of in dispensaries quarter, Massachusetts. were we expansion two projects, which of the two eight opening

adult-use year, the an we Illinois, Ohio, processing mentioned, in medical craft Jon planned and including in both of and facility which this cultivation the expansion a anticipate in more six projects Maryland facilities. in dispensary news, kitchen cultivation processing and processing Missouri Massachusetts for includes our remaining Illinois, dispensary a a growth exciting and

for This marketing out we celebrates our strains future of Heritage Keep popular rolled and it It will for front, Nature’s a the new hope brand to buzz its very tremendous launch campaign reinforce On the premium most strains. Fresh generate marketing cool our we positioning. campaign

have and in local We strain Dunkin’ brought already a artist. and by dispensaries, experience Hatch, social animations advertising designed Massachusetts illustrations the through life media to

of on our this social campaign, been an for media to to has our out eye strains Lemon Tasty We encourage we will keep response initial we celebrated latest Share The Cherry these just later I you and all celebrating. utilizing and the hook. strain strain, plan Gelato month, Cake be off celebrate this

to very new Heritage to Government Delaware. ice successful products the two for include our bringing expect Vapes, we from finally, flavors months excited Maryland And Massachusetts Eddies’ live launch I’m both new say resin to we in-house and in are Nature’s and next Disposable Betty’s few cream several to

I Susan. turn over to now operations call the concludes review. will That my

Susan Villare

Thank results. XX% $XX.X financial Total first you, morning, overview to year-over-year good which was sequentially. and would increased a Tim, like of brief X% decreased quarter start revenue everyone. XXXX I and with our million,

was fees Our and lower wholesale operations, year-over-year growth the such Maryland income by sources from management retail partially as offset rental from revenue by consolidation driven and our other of operations. our

Our to sequential and decline retail due increased typical seasonality was competition.

Moving gross to margin.

XX%, non-GAAP margin compared XX% period comparable in was Our gross in the to XXXX.

headcount due margin and consolidating gross to our our costs, higher First shift Maryland quarter management the output fees increased margin of from away operations. inflation declined after

quarter on to improving margin remain We fully we operational. our XX% XXXX. in-play focused margins XX% versus We points assets increased basis were reported laser once non-GAAP to back pleased the XXX gross the see fourth in are of

to expenses. now non-GAAP operating Moving

the Our quarter marketing support compared operating strength comparable to debt in non-GAAP initiatives. increase personnel programs operating in $X.X the $X.X non-GAAP XX% of Non-GAAP bad our million compared increases period million XXXX to million, lower was expenses due in XXXX. The primarily OpEx or to expense. both due decreased and to expenses were $X.X fourth in planned to

our revenue support adjusted increases operations. million due $X.X mix $XX.X to Our well in of as shift the in EBITDA This expenses was the operating period as million, compared planned XXXX. growth Maryland to due initiatives, consolidation our to comparable in in to was the

fourth sequentially XX%. XX% compared quarter way, seasonality. adjusted XXXX XX% than to normal despite increased our margin Said of EBITDA improved XXXX, of first the lower XXX our margin fourth due compared to EBITDA the adjusted basis quarter another to of Our more quarter revenue sequentially points

our quarter Now and turning to our fourth equivalents, quarter increased million. which the balance million XXXX of first versus balance ended $X.X cash cash We sheet. of with $XX.X ending

to $XX.X million, and payments of Our from end taxes net working the for compared included cash a million million, of use capital $X.X at of of $XX.X net cash Cash quarter $X.X operations of which million XXXX. $X.X increased fourth million. to interest was the flow

to financial Now outlook. moving on XXXX our

at our business Tim increased impacted Considering business another factors, our As least in EBITDA improvement, year comfortable sequential quarter. XXXX feel which our consistent least record million and non-GAAP maintaining and in with revenue, with million margin XX%, $XXX in retail our adjusted these margin discussed, targets gross million combined had CapEx. wholesale of at by $XX was we $XX non-GAAP full XXXX, was competition financial

quarter. about adult-use increase sales second of will to opening. and will ahead It to want will Xst. sequentially on I revenue OpEx the be commence is Finally, on facilities up insight new think Maryland give how our some believe We that becoming modeling July probable more

our To cash during will that position to space. up on we’re inventory inventory are a production ramping end, by Xx building almost and demand meet quarter. anticipated impact short-term have second the likely and the This

While million when taxes as largely be increase estimated will as we cash compared current are will build. payments $XX.X for comparable This on cash in the we period. usage of our to last year inventory tax paid offset

his to year full our the and results like concluding financial our now back I of review for to remarks. call turn my concludes That outlook. would Jon

Jon Levine

Thank you, Susan.

industry to to continue the the have of We as in one it conservative sheets relates debt most leverage. balance

growing addition remain existing shareholder long-term In grow well transactions acquisitions. we that to footprint remain We positioned and steadfast improved organically, additional be to must value. through accretive our all

business the of past balance intend years and the accretive Massachusetts, utilized to to We acquisitions strength couple utilizing sheet. of through Maryland, Illinois our Missouri. our continue transform fully in We

cautiously back this are committee in Hill. the meaningful Time house during optimistic again, we Capitol has recent result to front, tell regulatory will the Senate coming will fact the from On which hearing. if about anything news week’s

see to states positive that nothing the to most Maryland’s sales very commencing should in in been have Adult particularly level, of state adult commence news. months. a February. impact since a in we continue matter Program MariMed, In Missouri, few At short

closely yet, or progress our Ohio is with only assets adult-use a the state adult-use are next in First Additionally, the approved that and not has footprint of This and Delaware the Compaction. Delaware’s weeks in our watching there as that approved indication approve we ago year legislature partner, couple so. could leaves Day

standards. manage balance further to continue day, every our financial We our strengthen sheet

doors, to future. growth strong balance for the allowing open sheet has accelerate earnings foreseeable our Our us

opportunities through industry the way. come our am I for continued am We the years with amazing take challenges many to that worked over prospects other static year. create and purely prospects. advantage these are we poised challenges, the to any long-term pleased our our to I start growth of hard Despite

in compared Basket out Tournament. make a quarter, several our with come of MariMed Bal Last I the stories nowhere of splash NCAA who to

to waste beaten major greatest I’d NHL attention see Florida only the of say, in analogy. offer the round a playoffs, hometown Panthers, the My were no first it playoffs go a quarter, much when group they history, in all This underdo who to season symbol paid by the one has regular NHL to.

Well, of the attention matters MSOs. MariMed pay industry cannabis putting the most. Panthers when to ingredients win like together all the But bigger it most to continue eyes to the

expertise level MariMed take We to have brands award-winning next the necessary the capital, beyond. financial and discipline, operating and

our Quincy in say Beverly I would to welcome our operations. all closing, new and employees like to In abroad Massachusetts

would And like the dedication say I finally, day. their improve help employees all lives hard of work and people the for to MariMed to also and every

remain the Your efforts in us a industry. cannabis operator help leading

questions. you open the Operator, lines may for

Operator

sir. you, Markets. Your question Semple come Instructions] [Operator Thank Capital from will Echelon first at Andrew

Andrew Semple

there. QX Hi, and on Good the results. morning congrats

provided does the guess, maintained. I was is could set in half in more the last to have initially And or adult-use mentioned I that sales Since the than you guidance, your a XXXX and been to would First prepared just July that please on question date start conservative just as to been has be guidance is, know bit make the that the and the confirm this for guidance here, second want for before. it year looks of let for it which the not that? Xst. issued just adult-use guidance us Maryland’s you year. if you potentially I And still that the out since the point guidance, want sales, update remarks,

Susan Villare

and a you. see the we Yeah. Susan. at Yes. little of and have This adult-use that look Maryland we existing do is competition. bit in retail we consider states did Thank We did

put amount going better upside be. that’s be for adult-use to in is very million there we we’ve a what guidance. not we So sense about until and will the It and modest of considerable have in it think $X going gets

with increase as to we is goal our adult-use. get So going it

Andrew Semple

similarly also which some Delaware, last since Great. want update. That’s towards progress I helpful. cannabis to then on ask And just legalizing made adult-use

Does clarity a state. to for As in you some adult-use legislation that capital planning allocations that passed, stay any that year change model. you those plans the you’d more allowed made any Are within legalizing and the consolidate be state potentially you to mentioned, one of whether with was for-profit operators larger the ahead? fully that operations

Jon Levine

Andrew, good morning. Levine. morning. you call the joining Jon It’s Thank for this Yeah.

needs capital all We’re that The excited news state very Delaware. already. the about is into we good the put

and switch don’t reading able state. [Audio wrote the We yet to the they know sorry, law the Gap] be to supply ready as necessary medicine, produce cannabis that because We’re flip as whole much to

Operator

Water Tower Research. Please go ahead.

Jesse Redmond

about on learn know, historically, the Heritage. well you’ve I Congratulations but wholesale Nature’s a guys. quarter. little was with done to looking more Hey, a been Massachusetts. bit market, I harder that’s there

seeing increased So just bigger and in side competition if you’re looking sounds that Nature’s retail like on the wondering if competition? on for that some outperformance you’re specific Massachusetts. Heritage what on new still issue front you is in of an help to update I It was the then the can do to and where was areas that combat located dispensaries also and

Tim Shaw

you. is Hi, I Shaw. question. Jesse. Tim appreciate Thanks This the for

win to the race. Heritage, it’s to So, a in state, high-quality well-sought-after it Massachusetts, Nature’s yeah, is runner front the going in brand, flower continues the always be

standing definitely to a of price the in this the bottom. we’re the to We and is compression the not sideline, stay There being state rate continue on fray. above part

far is more is coming as the online. retail real. and as the more And competition increased goes, dispensaries There

seen our facility. some year, up pop we stores. to have improvements made last We But back our and to some created we traffic come we the around as adjusted, did

bullish retain able be on our base. We’re customer that we’ll to that,

Jesse Redmond

it losing Illinois one there, people cannabis. on seeing if come of as into have Missouri Illinois. open Missouri. revenue looks aren’t about have to -- don’t get but know your that from any just up of you their MSOs looks like And less I just more some stores most too those other of to the coming is like Thanks. close It curious as pressure talked in are border you’re people

Jon Levine

Yeah. most pressure. enough of Levine. and far we great joining Yeah. morning much stores very questions. haven’t we away Jesse, our for you Jon Thank some us seen this are that offering on Illinois,

border. one very bullish little in our stores, maintained seen a again business which closer still But which Illinois we’re on year, month-over-month is We some store we’re is the Tim pressure of have earlier. as on an our adding another in increase has that Anna, to and this said

opportunity market exciting into able Illinois, very an with operations being that we’re up it’s to there. opening being Missouri So get but bullish our and on adult-use

Jesse Redmond

Great. Thank much. very you

Operator

from Regan at Your ahead. will Equities. Instructions] next Mike question [Operator come Excelsior Please go

Mike Regan

taking for Thanks question. everyone. Hi, the

or business up can us drivers either first margin currently question, the the between the in for underutilized? assets are the of new expanding Just you help gross understand half pricing the second ramping that

Susan Villare

Sure. Hi, Mike. This is Susan.

this as And you quarter, question. acquired, ramp Quincy store. great the and we a it’s did So know, past up

and So we brands. out obviously, -- there, personnel we out revenue with the changed have before change the menu, et cetera, arm

before as folks we Beverly, are before so Jon the six grow gets a focused in approval Similarly, Illinois as on throughout course got processing, had about, be for two almost the as up, pretty of of lot had operations and we’ll talked hiring to do well open, year as actually opening we to and store weeks that months large selling. the had final about the we’re

are those XX% at even maybe that we ahead and mark of -- so will Missouri, what with that. place be Similarly, definitely

laser-focused the as of it ramping highest these little But maintaining drag we’re on operational. until bit assets, our input, produce growing fully and headcount we they’re are a to be will quality. So a

Mike Regan

it. Got

Okay.

on noted on So, And yeah, of quick the question selling product and the they’re drag or -- have saying stores, sense. of merchandise on sort you level In is then the difference sort if you’ve those which as of is you’re pricing those having the competition. traffic that on, less underutilized is the that think turned mix declines obviously or between are of from past, assets your impact Massachusetts. higher of some competition makes actually craft shift how impacts in manifesting versus another you actual it do a more the itself? price until sort new those margin you’re an that And avoided Massachusetts you

Tim Shaw

is This Mike. Hey, Tim.

you’re yes, traffic If the is retail the price the speaking driving it down. stores, ticket about is and economy

buy shops economy more the number and a promotions try ticket prices really our drive of the it’s reasonable But lower. deals. to the more with to that’s a get great people price and to continue to competition lot back doing is to driving We’re ticket game to

Mike Regan

Got it.

taking thanks lot the Well, for Great. Okay. questions. a

Susan Villare

you. Thank

Operator

questions, this please guests to conclude Ladies we ask time, and speakers, thank will MariMed further participating. this morning’s everyone disconnect as this your for would you gentlemen, And at conference and like we have call. lines. no

MariMed (MRMD) 9 May 232023 Q1 Earnings call transcript