SHWZ - Earnings call 3 2023 | Medicine Man Technologies, Inc.

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Operator

Good afternoon, my name is Lester, and I will be your conference operator today. At this time, I would like to welcome everyone to Schwazze Third Quarter 2023 Conference Call. [Operator Instructions]I would now like to hand over the conference to Company's External Head of Investor Relations, Sean Mansouri, of Elevate IR. Sir, please go ahead.

Sean Mansouri

Thank you. to Quarter welcome Call. Earnings and afternoon, Schwazze's XXXX Third Conference Good

operations. to the build, develop, forward-looking which answers Schwazze's may, Dye, Board. me that statements legislation may Nirup prepared call involve and approximate, business Chief they Q&A.I'd uncertainties. questions Forrest financial Justin position, with from addition, filings information which can ended similar are fully in and may future is before expressions the performance, remarks call submitted in website could other XX, Financial Schwazze's of on results, Schwazze's to Schwazze's become, Schwazze and you website.Also, and materially Schwazze's or on Schwazze measures and remind as your cause the company's or or Joining those and words will call continue, of may public for that A anticipate, the Officer; relate be events, statements poised, and Krishnamurthy, Investor then others, the Schwazze's release on open that begin Securities Company available like today's The www.cedar.com year among factors will XX-K and believe, call. of anticipated risks events, and financial on March may discussed forward-looking Chief can Relations reconciliation include, on most actual management's cause we report Executive operations Officer; annual SEC December be Commission, and GAAP preceded forward-looking the are for cautioned Schwazze.Investors during achievements plan, Such risks statements non-GAAP financial call discuss Chairman Schwazze's or measure the for Investor will, measures time.Additional with the performance, with by statements during plans project, the non-GAAP sec.gov results comparable results, the future and regarding between directly to with Examples state earnings to prepared to Exchange this could, of website.I'd to made differences call at are remarks reviewed the Krishnamurthy, earnings the and XX, on to U.S. this concerning and subject this contain expect, available over federal regulation, Form or differ strategy before statements Relations achievements in like and forward-looking Company's Nirup? now more objectives uncertainties described potential, at Schwazze's all information that Schwazze's is available available made XXXX, press for Relations in the found Investor turn and CEO, differ be to available remarks. with call filed opening release Nirup and the Hoffmaster, XXXX.In

Nirup Krishnamurthy

consumer Thank on macroenvironment. like pressure joining the our to quickly in third across quarter. Sean. Inflationary by continued the financial and touching afternoon, I'd start and for impact to XXXX. most discuss you, Good us has wallets results quarter of the everyone, thank third pricing you to and broader operating for industries

in prided of cash industry our generation operation consistent our market our lean materialized while capital, sales, a is continue to Our even to Nevertheless, either. run and cash good these margins flow challenging EBITDA strong and have not our generations we to focus which customers, in operations.We conditions. immune adjusted pressures has always being flow ability on stewards in in our ourselves

QX, the quarter New footprint integrating our our acquired in states.In D.C.Now, acquired Everest diligently to recently which our will implement legislative change, integrate further Mexico, potential we footprint results. both let's into of while awaits increase playbook continue Mexico regardless the to Schwazze regional we assets during industry Apothecary, In retail the and continue New Colorado profitably scale in While in to we operating to our in we outcomes both dive June. worked

today, financial the we systems. our of have As fully onboarded manufacturing assets retail and operating and cultivation onto

the recognize optimizing in production presence early synergies banner and increased medical Collins. Colorado we cycle, still resources is Standing new other we begun the and efforts expand Fort consolidating to our integration through have facilities Colorado, through initiatives.In it patients reach with to to in While have Springs amongst Akimbo

however, not to sales store continue also operating and openings, new licenses our in and relocating acquired have to are which Lakewood continued to our in on enhance active we further pressure pressures currently our cannabis on Colorado in newly almost and in the in and We, remodeling down stack. either macro Alongside broader results. a has down focus line. X-year jurisdictions New early to are put Starbuds made XX% top on August a year-over-year new promising to acquisition are assets, Year-to-date our our certain Colorado we while experience across customer operating and pricing have in or on experience.Although the We returning stabilize and costs.Wholesale more Colorado, optimizing growth sequential store state, X. stores opened enhancing XXX quarter immune seeing to adult-use begun are customer modest we has integrating significant even the state, progress pricing dispensaries were playbook throughout in-store on Mexico.In broadly new XX%

resulting XX%, experience retaining bringing up navigate more customers and of XX.To year-to-date, and stores in total was $XXX than while New of and patients retail XXX as $XXX flower quarter new to in cannabis Approximately dynamics, open X licenses. increased X% market the investing the Although are count to September the are up year-over-year operators in of basis. we a in the stores pound up are were Legal cannabis retail in XXX result per-store average pricing from retail Mexico, our in navigating rate a the are states pound state total to quarter in quarter pressure not a X, a as proliferation reflected attracting this in strategically on pricing, lower market yet committed X.In XX% revenue store state.

our which it each starting late further and refining with bringing support our reflect operational to: safety choice the store-within-a-store idea integrated medical from first, to to assets they cannabis enforcement wanted heighten our business both and medical in footprint October, Everest customers, adult-use banner, costs characteristics while concept launched Colorado in in and our of Standing northern position these the us to of Colorado. in as our by is with the shelves survey Mexico and Starbuds be in to invest and some state's wholesale the chain; leading let's results combined deeper dynamics, Akimbo. Fort The updates allowing retail take of pricing we strategy of and under model finally, regulation in-stock the markets, to Standing promotional a In state was continue third, dispensary within from neighborhood revealed preferred future.Now a integrate experience products sharpening serve our the and X New positioned implements efforts; Starbuds standards; Akimbo to and market assortment, the This combines second, dive position, retailer first standard Collins. through conceived consumers a roof. while both well Our into one to supply expand new testing state.While leverage investments we are a quarter

strong, initial average approximately X% loyalty XXX,XXX just X%. quarter, customer excited customer sequentially while members increasing we basket are we to been to the feedback has members, about opened, increased Although by and date.During progress

loyalty XX.X% XX.X% grew In to compared addition, our penetration in quarter-over-quarter to QX.

R. operations. New stated are footprint.Moving Greenleaf Mexico our Greenleaf across state. Mexico. and As on on have of New a have We across announced maximize Greenleaf grand the the medical our February banner our banner retail to R. additional under enhancing before, in we loyalty to since experience we X in dispensary the stores opening and the R. customer In acquired we opened recreational focused consumer Hobbs, and retention August, 'XX,

each acquisitions. New the at recent pricing through New retail primarily growth the and year-over-year patients of footprint Mexico and in Mexico, medical generated customers.Despite With both have market share in dispensaries, increased and sales opening, our sequential the overall most growth, recreational in needs XX% serving state, pressure stands X% outpaced our we XX

on We are same-store playbook integrating drive increase customer assets traffic. operating and our sales and the focused implementing to

opportunity market optimize in to across develop New operations due and third Colorado, experienced Mexico market a fragmented XX% members members our customer that in continue as XX% to Mexico. primarily operations. a believe state.We wholesale we approximately to the unique business customer sequential the New into opportunity integrated loyalty continue on increase the to the in We grew quarter Everest address Apothecary program an our believe Similar grow into share our New XXX,XXX to will entry to highly will the is continue to year-over-year we loyalty there state.Our capitalize we as and provides to Mexico in

wholesale have vapes with each include is approximately now In X largest quarter current portfolio operators and wholesale in offerings our X and along we distillate.Schwazze of wholesale state. into our growing. and Colorado, pre-rolls, business XX in Mexico New of sells the XX% now our expanded bulk flower,

licensed pre-roll end cultivation #X the has our doors Colorado of operations. become and the in Our Colorado Lowell to in brand in over is premium Farms from now and by XXX pre-roll QX.Turning manufacturing

to our leaders grows, indoor cultivation improving of cost on yields, leading quality, divisional have solid outdoor higher Our goods. lower progress and and both made flower

new inventory in ERP resulted to optimizing efforts of addition the across cost XX% and average are flower in manufacturing sequential in X.We these implementation across system our of our In through cultivation facilities. in the improved a our a reduction quality, quarter acquired process

our financials across efforts As our our to easy inventory Their opportunity the quick team.Forrest, testament uncover and an opportunities is implement. passing and these and thank diligence are time the to quality dedication like and and cost-saving They to future.Before to of Forrest Schwazze us the efficiencies, to visibility effective the challenging results call to Colorado market take detail, various supply will this playbook to to the control to chain entire a these improve over take operating many on to in and know, of team our you. enhance of of enable ensure review more our executing regardless you conditions careful levels, not projects deployment and I'd New drive culture in to Mexico.

Forrest Hoffmaster

into results. Thanks, our Nirup. Jumping right

acquisition margin for New September quarter drive partially XX, growth, well decreased compared was quarter in into margin synergies margin cost XXXX $XX.X by proliferation was for sales our XXXX or lower goods in third an same higher we with SG&A of ERP of initiatives all flow, was by the expect as in will Colorado one-time increased quarter of year. implementation wholesale recognize from flow progress associated during gross or million primarily we improvements and acquisition, XXXX. million for pricing revenue, across The XX.X% that additional mix XXXX, gross earlier, revenue the will margin the EBITDA our retail will of to that decrease improvements stores loss which in still scale.In reclassification quarter on cash increases in through XXXX revenue the quarter from year. primarily process the The quarter to closing $XX.X across September lower to new for Everest $XXX.X operations partially from by revenue ramping last million a $XX.X expense generating to the XX% revenue, million making million Apothecary's total increased compared XX.X% increase These result, and and are up for on with was equivalents last As our cultivation $XX.X acquisitions to sold, while compared to adjusted we year. increase continue to The further December of to efficiencies compared lead the New third are million manufacturing further offset revenue, remarks. driven to a compared close reminder, the and adjustments of our all December positive Mexico the the million on or financials inventory. for growth $XX.X compared quarter of our $XX.X and inventory as million in or expenses temporary customer lower call revenue licenses variance year-to-date we're of last quarter in and to to million million true Nirup period on XXXX.Adjusted $X.X mix year we third into operational as the Nirup and income This by inventory X% offset million compared for the of same of was year-over-year was to of cash in Mexico.Gross compared million product to profit our third period. $XXX.X presence million primarily total across was positive to in -- of from EBITDA million increased are initial facilities, associated still $XX.X while for focused compared the integrating year. million our the by third valuation driven addition, million XXXX.As optimizing operating of and of of The XX, out to net recent on XXXX in operating $XX.X quarter was markets at $XX.X million ramping.As the to gross stated.Total us otherwise pressure quarter $XX.X to new business commentary last XX.X% due XXXX.As as debt as due X-wall for $X.X compared footprint.Operating cash were the a medical we decrease system. XX, was capital back We third enable was margin serve.I a $X.X stores were the prior of Colorado deepen cash year. million and Net XXXX, turn XX, stores $X.X of $X.X the XXXX Total cost this $XX.X of from X-wall income SG&A SG&A million our million new of in now the to to is dollars quarter third mentioned working generated in to $X.X XX same period primarily $XX.X unless are basis U.S.

Nirup Krishnamurthy

Forrest. Thanks,

ahead our cash. while expanded integrate sales operating Looking our customer strategy to XXXX, and to playbook our assets further drive acquisition footprint leverage acquired our unchanged, across remains and generating

look we evaluate proven concludes will the to ahead.That remarks. Q&A. to geographic ability opportunities pass call I'd back enhance our prepared our to and have execute the who to environments, we Sean, brand forward We footprint and in capitalizing continue competitive on can to will our Sean? that for portfolio, and like now opportunities it open

Sean Mansouri

Q&A the everyone, and and the Thanks, you, Nirup participating for now prepared session. call. begin Forrest, conference We'll thank in

address As we gather in of we'll questions queue the couple e-mail that came for weeks. live past the questions, over via

in do are leaning sales. What Mexico you to into you off, pricing to that in proliferation traffic long response how kicking and So promotional mentioned efforts anticipate and drive to implementing, license and gross drag you're this initiatives margin? you New specific on

Nirup Krishnamurthy

I'll take that one, and I'll have our Chairman opine on that as well.

but call, the QX, Mexico year-over-year sales on discussed we New was As increased XX% up store count the XX%. in

So being obviously, the is more pie outlets. of number shared by

essentially improved product So and we providing customer pricing options stores, within operation, on segments. a running focusing our of assortment, all our for variety good merchandising are increasing our a

service into brand it drive but kind our on that? long our and Mexico highest we in of footprint.Justin, add long-term stores, you to it is in for to that's think with something provide have believe our as take -- make to want to implement and exceptional us time how to prospect is a So our same compete sure and as margins, impact to temporary our will drive do expect be anything have to best our see new but I these playbook, we customers wait operating that licenses, we we our We'll we New do assortment, promise, quality, we a the the at providing which stores.

Justin Dye

Yes, let X add me comments.

terms as as would are disappointed Schwazze are today. it then New that to by there with new you, I improve is enforcement, there in what improving, We tell believe and the are mean regulatory control, is things is a and that the at regulations and it these you I environment influences. think we will things product I it in number out-of-state that stores. continue Mexico, look having of and that we of

for customer and and those to product. that government rules follow no know improve, by we're that's the and have starting with who the think tested that starting they will will we so help seen enforce operators We they've and important to that, see the play certainly little got and that who to enforcement, that, that

So for good everyone. that's

working process. and than were and direct that to that have an it's today, have we well plan that Board in people and as well what pricing a business the we we're we New our do and continue as customer through and broader and help optimistic perspective, will offering they certainly going and to in are on a promotion, products to the margin there from in we from in we're perspective as as for believe will today. in working it with we're Nirup than that control our with So a such, believe And team sales to we investment we're that. -- terms which the as to continue going here where work improve, long-term, on very have to things going of and and help -- business, Mexico, treat that.Now work we experience the invest the plan to and best we're a assortment that continue

working So experience from have going and which the long-term improve in-store with keep enforcement on and with the regulators on, Everest. taking focus.We're we continue of room to going to on to continue best the work we're the to practices to Colorado, working and synergies some obviously

continue So we're grow optimistic things to are improve and going there. to

Sean Mansouri

guys, from are standpoint here, Colorado competitive a witnessing Colorado? to you flip Maybe what in

Nirup Krishnamurthy

licenses, seeing example. that. we're in take not Comparatively, any for Let cultivation me increase

we expect on come XXX recreational so Cultivation XXX to reduction, a that license is from and and to licenses, side, We continue. count are the seeing licenses it approximately down opposite. has Colorado the dramatic in down quite

new X, a market, the open so And going compete. here.On and part we to our of new X down that shutter stabilize up to We street that -- evaluate going should that jurisdictions time more had open get the game couple up help how licenses. in as or are and out -- retail is jurisdictions out watching up, ahead. and a think the in to of speak, that's need side, along next to licenses. over need we are figure the quarter we cultivations and so licenses there, as plan I that carefully, goes we'll Broomfield opened the these word to

have call, quarter, the third are the And last so, at mentioned that in couple level our coming I as we but competitors, of first in earnings in quarters, back pricing the in invested seeing the up. store

is need stabilize, we down happy. So the our implement market operating keep our but starting to continue foot and put to customers our playbook to and

Sean Mansouri

new acquired you're your the evaluating work assets early targets? newly what's continue Given new in M&A? your integrating optimizing future of perspective the Will on you assets, stages to before

Nirup Krishnamurthy

premise Yes. a storage significant facilities and handle retail, opened have year, I the and have we over acquired number assets mean, to inventory. offshore our of last cultivation, across manufacturing, we

As on that to last our our purchased continue past, we new have to the acquired of customer year.Justin, synergies we now do synergies priority or our [ in in the experience right optimize will our your the within to across an sales main our in assets is perspective to go driving that you that? look full and we now and optimize each primary standpoint, driving strategy, acquisitions states, we is while to to want focus to and the which to have at give these will but ] XX XX deep host expect M&A of realize is opportunities enhance footprint.From months, assets -- said of revenues drive

Justin Dye

Yes.

of well. operations, all operational it heavy think, driving you I our synergies optimizing said and stores. focus A so the on with excellence Nirup,

excited the there. team We do opportunity -- is to have we the are work and about there,

to processes have drive continue today. use the more lean even think will efficiencies, competitive and opportunities think to there also efficient, is chain And us, have. are our We efficient to supply to which become and very we we for than size we to we is more and a in scale use advantage

open remaining what focus still heavy while to today. a opportunities, on have there focus strategic heavy we but So optimizing

Sean Mansouri

initiatives while on expand lowering improve you input any to and quality Can of costs? flower place in the yields

Nirup Krishnamurthy

-- a and it possible best acquisitions I in them acquire we Yes, as shape to Obviously, [ ], have the integrate produce we Colorado grows we best New be to can. that in results, our these while the and done is to Mexico. them and what in with takes both get

We growth cycle. of have parts implemented SOPs all for standardized the

implemented our We lean all facilities. and have across XS practices

invested also our some We in manufacturing facilities. CapEx in

automated For and pre-rolls, ensured our example, we switched enhanced facilities. pre-roll we utilize for -- costs. also automation, that from significantly is pre-rolls we to manual which don't we And quality

in short growth regular a cultivation example, Colorado can't Southern months -- grow has, you during For have our in cycle full harvest indoor that a we the farm indoor summer theory, where cycle.

decided extraction So bunch facilities. autoflower a use we our biomass to get and of for

results standardized utilization our of facilities, in bunch and I way. lean optimizing starting we see effective a So of that other are think to and things, of implementing SOPs, a the processes, quite

Sean Mansouri

This for one Forrest. probably next is better

provide expected on implementation? ERP the Forrest, color timing additional the can of benefits you from new

Forrest Hoffmaster

Yes.

Justin advantage. chain mentioned competitive our supply integrated

in with ] short in close the all million to have complete we expect Yes, state of one high producing answer different late and SKUs early timing, something bringing XX total 'XX. platform is X XXX and facilities system. each manufacturing in up of onto benefits, we X, got roughly quarter [ level a X, rollout at quarter terms facilities of to to are that cultivation the million, XX $XX have over strains inventory $XX In

inventory, our competitive working We cost feel stock improve there. growth. advantage the drive have store that will up It wholesale we with our and to through are will the retail having to real-time support we -- system decisions free So our a like informed And additional to it capital positions. a up locked build insights of instead working in in advantage

on ways. also in material which market, starting mentioned chain are supply come ultimately overall, and these with adjustments it signs New implementations We Mexico a have the efficiencies strong to both improves -- improvement mentioned Nirup right should margin see system-wide.As

will of move ERP into we implementation, other the our and get some as straight balance to months inventory get the kind the side through over ERP. I coming to adjustments continue just expect we of rollouts see to we As loaded

Sean Mansouri

came e-mail. next in give the Apothecary Everest Can an via update one that you us on This integration?

Forrest Hoffmaster

take executions open synergies store slow-moving stocks going over attention on as the improving, consolidated quarter his we Nirup and sequential assortment. the in conditions, the the X, items within deeper while had Mexico starting discussed overall have Justin. platform. well. are see and landscape end And just our we X-walls, comments. over with integration retail that. improvement rationalize basket did that moved can bringing it the that last there are banner talked In as SKUs, ERP creating full while them I It's we discontinuing and more Nirup to facilities getting -- earlier We competitive broader, a our addressing few meaningful about, the But New to months. in

greater will we So the visibility acquired facilities retail the are our will they from believe were and able manufacturing. through which one gains system, of those better what of ultimately operations. we working be onto service and cost lower help And us create still with we inventory, wholesale into consolidation to to leverage and be costs overhead real the early will ERP while the realize

So overall, so good. so far,

Sean Mansouri

well? and has this, in initiative regulation either to Great that Mexico, this recognizing This you. as of taken support on New your to to go Justin hear. any covered some enforcement are could Schwazze of What thoughts

Nirup Krishnamurthy

covered already of some that. has Justin Yes,

are our consumers. Division impacts closely I Mexico, Illicit regulations Regulatory pose Dan especially compliant threat safety Cannabis in the and and with are working he guidelines operations. to and sales, Policy is We all Officer, -- and Chief Chief the illicit Control to Officer market Pabon the review Regulatory a ensure of and New to negative reduce -- state's

to -- committed are develops. And in have and state's right state are consumers the of activity, for better products program we consumption. the can that as -- hopeful our enforcement we the recent supporting get of late ensuring however seen We the we -- we

Sean Mansouri

phase? a industry this the back happen growth for one Q&A. to to needs into get prepared Last What

Nirup Krishnamurthy

I'll handle one. let Justin that

Justin Dye

Yes, question. that's great a

is I and terms going cycle I at think today. you what's fairly where happen. I mean, -- it's a virtuous valued think cannabis reasonably and let's how look -- in fairly just at if straightforward it's of look to today it's

multiples, at on the you If value from to look Xx XXXX of they're Xx. to XXXX anywhere median enterprise sort

If you you the don't of you in take -- look at the S&P in out XXX and mid-teens they're terms valuation. energy,

probably to cover once Xx Xx multiple that sector then in at this I'll upside look second. in, terms of start if and in we growth the capital getting you has here a So And for the economy, sector's and growing of to the where growth, several next the at grow or grow projected look at if XX%, rest projected to XX% X% years, you X%. the it's at

have next of you business. $XX in $XX massive years generate growth. We're billion, going another the this to So billion over couple

what needs pieces we happen? the And on yet, they're in bullish we we to but as as ever key the am One common will get, reform, is I I I've coming.So sector So been. sense you need what, which know gotten federal place just believe. haven't

going I think rescheduling. to get we're

borrow looks all cycle. in M&A, to operational happen, I more that if cannabis drive equity, guarantee, -- is probably players And see state efficiencies.So operations the And ballot Ohio, a that like to the I think incented will That from thing to perspective, U.S., think a if started There's which frankly, drive will I how a just about reforms And X for more over but cash then of to -- to which year. the trigger people heartland next debt really big capital which the and to or you're coming U.S., equity we're the couple key a you the which the going years -- system, it's more the flow And the a to is think, at very, the improve. stock to going are higher cannabis stock raise lower the going looking more to both going cycle of capital. the cost currency going likely really bottom quality saw and are do then see and just certainly that next to we converting why grow. allow rest it would. is of I look you approved we're this happen think to at at drive where have more to recreational is going then deal.That's have of of no things would of drive going larger is sort months, is larger capital EBITDA. the mid prices, through this into of players driver synergies look talks which in that really very a how continue XX initiative for operations, last, like see you're they to virtuous from over where companies

And trickle regional the players, down which players such as larger then will smaller make to some headlines, very profitable, the of ourselves. eventually

So bullish it. on I'm

I going have And patience. think long-term markets out what will retail, a and chain, our And which for be we to continue just to to shareholders, reward to and the have is We set great is grow take do. Schwazze profitable need at and continue view supply our operationally a think company, build patient.The real really this to to execute we story us. some on I to business. wholesale, a really driving we're

Sean Mansouri

to the a with questions open That's come please? side Q&A, for up Justin. that, have wrap via Appreciate like you in e-mail.Operator, my would that it from live

Operator

you Instructions] [Operator call. this and Ladies Thank this concludes today's conference There at joining. time. no are for gentlemen, questions

now You disconnect. may

Medicine Man (SHWZ) 14 Nov 232023 Q3 Earnings call transcript