ITHUF - Earnings call transcript Q2 2019 | iAnthus Capital Holdings, Inc.

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Operator

Good morning and welcome to the iAnthus Q2 2019 earnings conference call. At this time, all participants are in listen-only mode. Instructions for the question-and-answer session will be provided following the listen-only portion of the call.

Before beginning formal remarks, iAnthus would like to remind listeners that today's discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties and could cause actual results to differ materially from those projected in these forward-looking statements. to forward-looking undertake required. except not does update statements any as iAnthus would that XX, on everyone to XXXX. call I remind recorded today's like is being August

I Hadley over Please will ahead. the of go CEO iAnthus. to now turn Ford, call

Hadley Ford

Democrats, today, them, all Thank my our may market fundamental also Republicans what's In hates you places COO, dog hate value Tiernan. hate We quantum CFO, with no are particle them, them. our have Bear the today. and them, I markets you progressive, Kalcevich fun. strange and markets. very Pat a at even be of world cannabis much investors, happening technical me in that's the traders. Julius bear I two once hate hate physics, and in

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stocks so their peers far where today. Our good cannabis earnings The This the business are I is can at we read as physics, time. quantum stocks season, In is are words, all. if don't the realities but Two my at not existing I I of facts, have well. see the same during fine, off it. the doing the put just can up separate understand numbers but

dollars the they for future the cash young in potential look that ups of there risk. Remember and young mobile acquisition cable pitched of isn't the a its downs. to great even also it industry channels and today see revenues and through the the see were but here at phones and and on, Apple is goes billion. into rich out and flow we an billions $XX XX industry nothing Investors new man's that of price Every banker, AT&T as with toy industries

Will the buy someone knows. widget? Who

down iAnthus there potential next. That to today. cause how as But future three in movements other volatility. revenue valuation swings industries you have one flow cash can new up new perception we one such huge difference of year and in is in the stock this times why the industries. be key XX% small That's like industry can and in So look versus out the in the future is our

proven Mexico. We are is transfer an selling Chapo orderly the There guys We is people El reason wealth of bad marijuana. There cannabis. from There pay curve. a for was know demand good one man in of guys. a richest to is

money marijuana. You make selling

something people want. You selling make money

make selling demand into proven a You money curve.

$X alone State represents New base as have In market York of trillion. the and today that market heard has or say dramatically penetration the customer the and even $XXX north XX% valuation of only ultimate ahs the $X of billion the legalized in north gone sector cannabis rate adult XX%, cannabis, has that been estimated U.S. use of me past the illegal market much maybe XX% up every the penetration XX%, XX%. existing to revenue maybe in that Year-over-year population across the a as in opportunity of the U.S. billion have today that

you very look you every month, would two should Buy don't did. a everyone buy at sale. clear now. actually It's great in a you buy of invest the into right a But ever. share price, a sale from Investors the and everyone. the given share to iAnthus. average is buy get on one today them are investment that potential, that of glad should Well, stocks years opportunities cannabis stock And opportunity the and now, share you cannabis it's be three like great The two-for-one all of idea. basis of

investor an Of is to executing customers. course, with see things on its needs of the its of that the promise proven demand delighting company curve, is a one

Our was quarter one with complete iAnthus company. MPX as and our first second quarter

Florida first quarter and bright expanding store, our the Operations in THC per margins G&A looked dispensary sequential on December, second we today. in business revenue opening XX% highest our looks third last earnings share our market Our opened terms to of incremental just saw volume our gross grown last even and call state limited X.X% eighth and growth, expenses. were the store. in the it Since brighter

store adult New progress the store now in toward And are launch Worcester significant the mark national in will Brooklyn state. flagship In our street in a retail Center Be. by the Massachusetts, rollout. followed we opening across the carried fall XX% first opening of new products stores and Barclays use with have the from made our our of this brand York, store of our the

are driven X,XXX are our MPX shelves Maryland, products In carried strong the in For XX% from by the our in stores Revenue products over in our nationwide. XX% up stores growth now now of the state, is stores Nevada states in for in products. MPX now carried continues three And of over to demand brand consumer XXX be fact, CBD quarter. that and in across Life first

our more the to will our prioritize expense we out to we revenue And footprint. to prudent This lower As recently million and to capital of we with continue strong balance us to look Senior our Loan always, to growth, will capital of build returns Term store capital reducing Capital. cost expect focus give remains investments and Torian access openings, our continue for very management see as of shareholders. to the announced company cost we over pleased operating XXXX, Secured maximize out and have are a $XX

excited continued of your support. very about and remainder appreciate the are XXXX We

for turn some more to detail I Julius will it the now on quarter. over

Julius Kalcevich

Thanks Hadley. morning everyone. Good

acquisition this first This would has for in sector through walk the in of in transaction I was like successfully antitrust that U.S. transformational and passed to Hart-Scott-Rodino oversight. deal MPX Before space U.S. our first closed the and that Act our largest February. cannabis results, transaction public-to-public I the reiterate the

and months approved less than four announcement date. was transaction closed the in from The

for our as transaction MPX CBD release, do of the for Due consolidated materially operations have Life have Life to in Table For closing, of and both results but a timing results in Our forma pro our iAnthus included of not adjustment reported press For reflect we results the QX period. results detailed them CBD entire the X

XXXX. For and our the XXX% from second reported up quarter than XXXX, our X,XXX% of up of was second quarter first $XX.X million, QX revenue XXXX from more

the revenues Our in release, forma pro million includes for the number, press which the forma more Life operations the was as This Colorado quarter. we was of states reflection consolidated XX% as quarter, For X impact are Arizona, a transaction of $XX of and/or our Mexico. under beginning accurate full CBD management of is unable which quarter, up in the which revenue, previous as pro New IFRS. and contracts from if detailed Managed Table the quarter have include to licensed as it consolidate of managed is over the operations revenues we well the where of

to unadjusted XX%. gross was our profit gross $X.X margin profit, a Moving gross million profit for quarter with of the

of in value which into achieved revenue margin the $XX.X recognized million inventory gross reflective of as released reflects being during the for the profit part MPX of $XXX,XXX over XX%, These scale of adjustment we that the adjusted from to to-date states a transaction figures profit of was COGS have adjusted period. an fair acquired to is where Investors with are Our and increase significant key a or $X.X as a results was gross share gross can see continue achieved XX%. of our this million market represent operations. in expand continue caliber our our our existing QX margin scale and margins we

operating of brings million $X.X figure related to of non-cash expenses quarter and for expenses. This company our us the for a the to expenses, million normalized expenses of acquisition million $XX quarter. recorded nonrecurring Within $XX.X costs $XX.X of of million the cash which

Life lines and results, the expansion of continued quarter onboarding our $X.X quickly consolidate is able to last In on to of be of months. of than want CBD weak by continue that how only the which doubled we MPX, our of of drivers and team. QX, comment over For size to to XX% our this synergies our two Quarter-over-quarter, walk G&A months and focused business increase. million the through QX MPX more few were we increased one you due we I of to efficiencies the expense integration

were Additionally, payments entities for approximately obviously paid April $X the tax fall various season which during of million tax QX. during

is Our two consolidation our increase to QX to months salaries XX% $X.X by once management. in and driven benefits the The of mainly by million employee fact continue MPX. increased had QX workforce only we again as and expand that

We at across approximately people iAnthus. are XXX now

in of work of the associated XX% brand professional to quarter-over-quarter Our Be. a M&A. continued marketing expenses of entities, continued increased involved former $X.X pursuit unified by the our the MPX and with legal dispensary result million launch fees as

the Given be reporting the of fees end at the significant year-end year be three quarter legal timing mentioned, business XX%, were of QX These expense by tends scale to should we accounting our same grew as strong second controls. April, compared across lines, and audit, to the and for QX which I reported expense respectively that which well. which of leverage maintain most XX% XX% operating and demonstrates as XXX% up which revenues, our period over our the

statement, press a outlined for million, release. X% details of lastly, to equates improvement X a from EBITDA our net $X.XX reflecting of in for which income QX. $X.X an was quarter our loss net the the $X.X loss are Our quarter was our The for And loss Table million share.

further scale quarter thus we position ideal, loss represents the means incurred net during have no by our QX the improvement the demonstrating is achieved a XX% While far. from loss

of the Florida. million support quarter, in of operations $XX.X markets, deployed of we in in buildout especially During key capital approximately continued

$XXX XXXX, year outstanding options to million. also the received million The $XX million from end the amounted million company's total based June quarter. is expiry warrants receive dates. end balance assets of the exercise of of and be over the $XX.X approximately strike has of expected As which of by at the the prices $XXX was potential to to company cash XX, The on and

approximately fixed our value. to to which also out and seek we we and Our asset as preserve continue shareholder is is financing believe real base fund in plans sources at explore million estate beneficial non-dilutive $XXX expansion

bear exceeds of option year interest announced will months coverage. term Capital prepay after have and a premium of million strike and secure XX% for to with price announced of a to XX our if the closing three quarterly, volume the closing at Partners part financing. on million. the duration XX% of period last week, and The payable XX-day structure. the a And equal $XX issued X% can XX intent within to we our by of tranches XX% warrants will with loan rate days As finally loan be and price the per the warrants warrant the in daily of to as the interest be company years price called the exceeds struck loan date XX average VWAP two $XX the trading Torian The a capital

diluted A shares Our common count which share includes XXX and fully securities. XX.X XXX.X shares, Class current million million million diluted is XX.X shares million

to COO, I Tiernan. now would over hand to Pat our it like

Pat Tiernan

Thanks Julius. Good or to out morning everybody there. day good

the I growth. mandate start, the my around had really at to high just I profitable as operations their fans scan the with pretty that best-in-class which its a innovation I where and would Before processes quality, breweries like give job U.S., one no innovation and it of as Brewing, consistency the the and largest was focus so key matter Stone my the that desire. same up operations, refresh role a a engine and was company. bold on beer simple, COO beer aggressive is mandate, quality the got you prior develop craft from, ramping company's My COO same in scalable In through you its

about West And under channels to in that new company people times several to from and the hundred that two-and-a-half the company's from drove fourfold to and scaled over just a retail Europe serve has And it We $XXX footprint. increase while X,XXX. hospitality into we million demand, we created on collective East we the facilities established Coast, over the distribution Coast triple output parallel than reengineering its that XX operations in in countries. to more international and expanded added production and meet nationally

Our it simple, data priority that kept was focused. was transparency internally pretty us

to an growth On customers in our parallel incredible tremendous this cannabis operations kept I to exciting space. my was the market. beer outside, it in It's from this see is craft brand taking to of was in current. past my role level. to a look engaged forward the next new a that Only, that and company's the innovation, product support keeping edge our while it industry great more analogy I and

second the execution quarter to roadmap milestones. So and let's company's the planned get against

First around then really the all the in with markets. hit strengthening in of the regions. going first momentum, and MPX pleased especially I our say, hit really integration this infrastructure am I and am West will will to I region the region. across two our and East I

So starting Florida. with

side, dispensaries permitting pending quarter, finished operational local total OMMU August, since Lakeland. retail opened Orlando XX a good and five added have the of open, January since refresher Florida say, in XX July we most Hadley heard and us and Miami, course, We operators, XX recently, just success and approvals. the By there. you second On have we licensed to and Gainesville and to regulatory released that the only very the as dispensaries. dispensaries of three, Daytona have Late XXXX, then And operational have had expect with have the we quarter a brief up of eight. bringing

And Harvey we three the feels terms of THC only on is had it overall of third that subsidiary is total report, sold. in just terms OMMU dispensary. Fifth amazing since really in sales. me, milligrams are dispensaries. flower THC open, dispensary in of on, to stride. which of of last ranked GrowHealthy Based And we Seventh of Sixth Florida terms quarter, as flower our in sold barely in milligrams our per sold most for terms hitting terms open per eighth hinted

down Florida we in really am here transformation the state. just days see doing today amazing fact, company, In the it's Mike the team, over driven couple and of reviews Florida with next the and I to in have

heads have been seven milestones and is there numbers cultivation the our see the On the campus the All Wales team progress here the or by November state. it's in off allow the numerous see during It's Julius target shade hit Mike, just on core milestones buildings of production and real pay that just pleasure the achieved in quarter production really the side, four we noted and and the and November harvest the we Ray our basically focused eight. period. house the for and planned in output us CapEx all that our when complete. in spent Numerous our Florida budget of in Lake times to increase us will XX-acre greenhouse, market have will was our been down time in to five, spend.

the use Moving to Massachusetts quarter, is in on in of fourth the Control from Cannabis retail side. We the area received approval million. in the Commission. got which is for the Worcester, a dispensary just the MCCC the under It's expected the Massachusetts Building adult city of approval metropolitan Worcester largest second state. pending city a

quarter early and next are of Mass quarter in Our the running up have three locations state excited and strongest as in first fourth rec amongst and all in them dispensaries are the we the full to year.

big of continues ours. That side, On a to pay the strategy off. wholesale focus

increase increase XX% of allow in seen production that us there. side, the have our nearly our market going And nailed seven-fold. milestones are penetration a the the have to process on quarter-over-quarter we We capacity to

With So The our going to the base, really fourth for facility and allow position opening River Fall good customer that's to than been in that in growing see. more state. production and to state. the is our capacity to capacity that double timely us us quarter planned of is win wholesale will cultivation be the

Moving to Maryland.

coming from just particularly is job. Marsh. a seen have White three strong dispensaries, growth from Baltimore team The fantastic doing month-over-month We all continuous and results there

a revenue increase seen over QX. XX% in We retail have

XX% side, quarter-over-quarter. penetration wholesale has rate increased that the On

of from XX% the sort now state, of about quarter. up the licensed in are the dispensaries in We first XX%

our notion set release Balance April formulated our the hit The are hit side, MPX for the women This with in allowed that innovation, a and the We second our first from products success On seeing venture extensions to believe year. us Blissiva. collaboration that us Pen, allowed have another by is moment. milestones of markets allow of that that cartridges the project the the the side, that and double joint in we throughout that July. milestones of us production ours. and have relevance we market the the we is to in we partnership product on and at for been that we and a is example, production and again, planned And unique the successfully we quarter fun capacity to product milestone in will the launch quarter by play held got branded end key our exciting during has great is established of product set a essentially and collaboration that

quarter we In only that the for New will allow and across street located to retail the began retail roughly construction York that's the which dispensary the is Be. and have achieved in one Center. opening expected there been quarter. outlet is we And and half this expected Staten its flagship buildout that opening signed us Brooklyn, lease during of milestones that That our our the the a directly Island the from In planned the fall. will Barclays residents. open million on fourth side, be serving

Tompkins It, of fourth we We schools of Cornell. well-known license couple around a successfully have from County has dispensary hosts of also transferred County like a the course, population to have that which Chemung XXX,XXX.

both order await the On to programs. of expenditure state capital further our the programs clarity the in to recreational refine medical the we eagerly and production as development the side, within

has slow regulatory changes. while And huge the market beginning by is at the black I excited the am medical $X the on in program market pending those the As state, horizon the Hadley mentioned call, of that been potential has billion. within on significant, the York the New

Jersey, New New facility that. and after space. of will of In our Jersey processing it The about cultivation square square add I of XX,XXX feet feet and Once expansion, follow underway. gives processing will completed, cultivation production Phase which X is Pleasantville, another us XX,XXX Phase

program we developed our customer CBD opened base retail we the pending first there the for but dispensary being integration side, training to and the in offices our engagement have XXXX, and significant hope support approval. Life On Bank side, well. For on as order regulatory only is in Atlantic City And very not there early customer Red open to a quarter

an quarter. in that's development the So exciting for us been

out growth which in most on open have we so had region, the is businesses strategy, relaunched paid us, showing is the really to has Our starting of portfolio, four last the off the MPX we region single see you significant West. market The have Western over are our the and program state, we spent and focus wholesale now time moving Southwest in In were quarter. a that is and lots Arizona, completely jewel where crown our located, effort hovers wholesale there. dispensaries Again, share XX% the in digits can some high the a benefits. mature imagine for

milestones product value sauce releasing space, gummies, side, new three resin the have we for segment the well in On new as hit and product offerings live categories as cartridge cartridges including

thus seen really July us positive release finance. as and and Those response a milestones have from planned products products allow to had the in far we we our

our sales, partner own focus our affinity and with innovation, their sought-after well expansion ability Sciences a reputable high our have strains that own. base broaden to of as with retail offering the local, our established highlighting brands product and are customer Grow a as on collaboration also again for and We unique

cultivation, improvement gains On XX% about side, cured slightly while products. planned over-performed, quarter resin we producing MPX achieved yield during for the XX% about more the production in hitting also actually

customer demonstrating week, and growth channel in focus the achieved Nevada growth, In revenue XX% XX% quarter-over-quarter on deeper penetration in we increase state.

drive is strategy toll the of is most signed stronger. continue have wholesale with coming which been am their The the aspect a operationally, for toll We paying to in have player respected new think put momentum. together. plans initiatives processing also year feel I rest place out of in I we become manufacture very are value market the beyond. in and the have asserts never the the super our wholesaler to The we in and excited I the state in a key partnership The market, our off. well we key put in and concentrate team And place.

operations. think point, questions this for for And open we back a that's wrap Hadley. at turn and to it can up I I will

Hadley Ford

Pat. Thanks

We are now open for Q&A.

Operator

[Operator Instructions].

the from line Kreindler. Your first question Graeme comes of

open. Your is line

Graeme Kreindler

Yes. was come to that profit terms into on taking is East thanks play out any expected the seasonality lot West to side Hi. on gross East Good of there sort for morning reporting sort I the on as the segmented regions. production the profit the wanted profit Very of wondering, the affects my And profiles is here. there the given just happening strong that region? the that one, region. gross region region, of of might of things. I in have questions well, West to the profit ask a and compared gross would gross be if flipped of across ramp probably just

want So moving a expect color I in forward. of terms to what just to of there Thanks. get bit

Julius Kalcevich

of a it's No you me Yes, color. let problem. Hi so Graeme, little Julius. give bit

I take those will Eastern first off, of especially, region. the that around one some So observations,

operational in in cultivation continue the though region, be to Massachusetts, from case especially for ramping across cases or facility perspective since the So has the been some that very of beginning open even XXXX. Eastern up cultivation of and a across state that we generally

already operating So lot cases, of in months. been a XX-plus it's for

there has tremendous amount of a already runway. been So

are around observation getting is they facilities Your going. of sort

been of sort that facility that around where or Florida similarly inverted in months. of has months. profit. you for tremendous of kind probably You remind XX the that's But of kind case been there XX producing is gross that product just also XX a And want I see open to ramp-up,

there what there of already of the is they the at So cycle. quite play. a happening factors are bit has a in case region, couple been Western into In their

some are of Eastern where to case of on sort those allowed ability Arizona, the In the buying product of own. obviously you unlike that circumstances, basically your Western have have integrated First to of drive the you buy a lot the third-party especially on in either you profit, region gross in vertically especially be where obviously where Arizona, cases. you to everything margins, in especially are the margins third-party don't or region, same cultivating those higher off,

in that region, there to continue the also clean the hit Western the gross one-time as in some some we the margin quarter products historic margin some that in the other Also Western sort have depressed have historic we up of of of inventory Western slightly region. in would Arizona, that were region, charges the this gross especially

that helps. Hopefully

Graeme Kreindler

appreciate Florida, respect thanks. a plan With that. number XXXX. space just are cultivation And of Yes, Okay. hear additional that square XXX,XXX going dispensaries follow-up they feet be they question. and around to to we open adding up I to January by

expected what rollout, Thanks. the wondering future Just When store on is capacity? timeline for affecting and is am And license expected growth? do come capacity some on the within competitors to that mentioning your on? what that could backdrop constraints just of state I couple additional the like of it

Pat Tiernan

that? You want me to take

Hadley Ford

Go Yes. Pat. ahead,

Pat Tiernan

Sure. Yes.

in have we which we out core infrastructure So to the be earnest rehabilitated. Florida that in had been the of developing has have

high that the timeframe biomass online throughout great and quality challenge. of I the we re existing some of by that been going in be dispensaries aspects with the timeframe. are a opening would bringing our the to November availability to has facility in to we that footprint of summer So believe state mentioned in the that up all rightsizing there, we shelves to supply all coming XX be those addition create to our very But just unique low-cost were ways from it

that month-by-month So more grow. and and grind we are in are more on bringing it's a we

way So It for increase the five. increase example, building that we guess plant plant was And it us started got five. about to planning of November. in building XX opened growth by significant a growth July, up I on

until a we constraints by have we the mode full tiers then, believe now we up regardless got So well basically will we November. have have unconstrained from market notches not but pretty been by the being and hitting

Graeme Kreindler

appreciate jump queue. Okay. back I color. the in will the I you. Thank

Operator

next Robert line of Fagan. from comes the Your question

is open. line Your

Your of next question comes Brett from the Hundley. line

line Your open. is

Brett Hundley

for my Hadley. Hi. morning Julius, Thanks one and two maybe for then Good guys. you questions. first for Pat taking just or

QX? if first, put Julius, was MPX revenue in from as down give And of performed that you I you QX, how business am can at if we talking us look So QX, QX? want apples-to-apples to up all MPX directionally in performance or sequentially contribution just in

Julius Kalcevich

mostly there sort necessarily assets QX. that Sure. it across QX we but segments on former can Nevada. is It driven driven into QX in was the QX entity. was by you see in But in But growth coming growth was between based business former of the segmenting growth Nevada. the assets, that are and from QX was of the mostly was by not MPX Nevada up versus iAnthus. largely yes, in MPX Most There color growth as some

Brett Hundley

what Okay. in quarters comfortable absolute giving comment. some could you us be look or okay would ahead dollar appreciate Yes. that maybe And then next CapEx of in so? whatever like are terms CapEx, standpoint or and the an you I with on from guidance year

Julius Kalcevich

it's and made sort and are that are obviously Pat Jersey, to some obviously to And are more specifically some is York on expense and sort But year will dramatically the in wait sort going disclosure look be New those So dollar continuing sequential more through these of generally programs determine to going around cases, it's going detail the just but continued whether of comments end-markets what the in what the large actually help there. states whether or to guidance, obviously quite. look around of of ultimately around New that's quarter-over-quarter there CapEx remainder Florida. like some directional of

XX. continued a little to bit obviously on I last need buildout eight and has Jersey York of big those over side. then of And Some CapEx be cultivation of But think will will step But to a see of like QX, and more more the that component, the guidance QX, is terms what then them. look that and our regulatory bit of across sort the ups. one the cost the of dispensary from two release in of company as New detailed that's Obviously with guidance starting moved actually year. will sort the remainder build continue New out expensed slugs of that's what some that in will we those be more we that's before much more will when associated plans that there, and I we waiting think the on we a the those little are then buildout about programs

Brett Hundley

I I will bypass really Massachusetts for ask Hadley New York Jersey That's now or for and Pat. New and question on a helpful. guess

outside a then that? whether might QX? question. sense will you. my Any Do you us have or there understanding the Worcester government is all floor. we use to be it And part QX, there? that late needs That's lines the on in stores first think as your early that conversion of And So more it opening relates directly, Thank local I you read quicker of the that at to store seen move of kind the the store adult think can Massachusetts. pace on a you give store yield

Hadley Ford

specifically Sure. take I the Pat first then piece talk Thanks. will store. the timing Worcester of let and I will the about

referendum Massachusetts of a use, we on The As actually and the very I guess it day still guess Nevada years for relates voters same adult open for in of full voters and little couple allowing processes. historical aspect Massachusetts, the stores lengthy to and I have limited a a passed the local government ago context. of

process authorities, long and But set essentially very authority state up the think taxing process good makes local the I intention. just way So and local between governments the giving arduous. the them the that have is

of the still city in instance, are through process. For our Boston we going

for part We our have store full we had medical getting time. open quite been year. about for approval with the rec of have city talking a some And better

the It's are confident more of moved timing. expeditiously. we internal occur. are little will of a a just We XXX% Worcester the matter has the It's that city under. politics

full have we approval construction. we have So gotten and there begun

We great have a location.

open that the quarter. in whether Pat on ask Pat? we will And comment fourth I have can to

Pat Tiernan

planning it the am I fourth late on quarter. Yes. having in open

target would I December. So

Brett Hundley

All right.

Operator

from comes line the question of next Fagan. Robert Your

open. is line Your

Robert Fagan

my taking for question Thanks guys.

before. the about Sorry technical difficulty

just I how for the of that to that margin gross about the quarter-over-quarter in we on bit see the How forward? we be wondering So much and kind again going should ask improvement evolution to of part asked little a improvement question and wanted see? Graeme explanation follow-up able like, more may

Julius Kalcevich

it's Julius. Sure. Robert, Hi

is, there a of that it's going new for facility ourselves any other little is obviously a ramp-up of bring be you whether online, there or sort two. MSO, as or any quarter bit to So

going are of in blips plants Those be to going the couple some bring little quarter-to-quarter. over And on of sometimes as is you some happening come long MPX going to going cases. are obviously, term on. big there that be that's as going I to going sort is two cultivation the facilities Massachusetts, be of movement, what's next there as next these to be quarters, facility on. be to and in benefits provide are in obviously some to So in amounts Similar bringing the coming look we Florida, but of

low the be view going some to Again is be continue cultivation to gross to view will that to we and couple drive adjustments, to blips we we isolate the try sort new our in the and make and able Florida that moving some facility over some additions strongly note out of are point now provide going margin of footprint capacity long we gross of very cost we over see of may where one those the term specific other calls the at our that on into these efficiencies next there them been the any is, MPX Our Mass have guidance. may margin, where our point any of are putting quarters. because or around capacity and of we as and movements on always will bring that of are

margins, view network. going that online, this caliber the our But to be we is is these we that across have gross to have the demonstrating going the which are of cultivation that facilities are

facilities. I ranges in other bringing on confident, directionally new reasonably think as margins general gross we So feel movements than we are these some

Robert Fagan

the MPX. legal around someone was But comments this that for some you Great. in. in while I And work next I question Julius, you that the Thanks apologize Julius. for highlighted, additional noticed re-logging already asked I OpEx color, if had

SG&A expenses had. you for the otherwise little how we forward as then marketing fee expect which the at wondering further and gain if Or had a sales? we launch bit legal percent than in should need you just Be. SG&A the of have to a guys perhaps You more increases about might the have scale think can operating some going base continuing achieved kind if you leverage?

Julius Kalcevich

I the always corporate Obviously at that the to continue to point. great we the a additions this of business. marketing say around sort the One area people and what see side, of is question. And management to a is side is some that side team there It's margins. robust would that you add directionally, Sure. on is

where company quickly are feels item XXX quarter. that's I directionally be we side, some taxes there in little a a that for marketing now sort has been which I So of up And say, it But of as the that and there has right that of is sales going bundled under component hits then blips sort always probably on obviously into this scaled is people this G&A and sales made seasonal movement bit on line SG&A. that sort of a get of point, would around X,XXX. to the like some as our incorporated will scale

it's this sort on well our and here size. Some sales side the these directionally business sort at movements bit feels of of like there, we little scaled for a a seasonal but levels, more are where

Robert Fagan

I I you I helpful. is, MPX. into very queue the release noticed had one back That's guess in before California get press mentioned last guys' Great. that for entry the

more Just Hadley color on some give wondering can maybe that?

Hadley Ford

Yes. Sure.

Our by then need the they New across strategy York you can't is means live be have traffic United then Vegas and That means footprint become and time to brands. over We also customers like to and names and need straightforward. and household products it but California. have without those want to drive delight to in pretty be Miami products States. in and you We them cities a meaningful want in cities

small is probably And toll fruition. have the It's a to largest California market a the planet. that for on And strategy key legal hold big there. we market have

presence arrangement, half have but little both more we do state be launch the a MPX need We do the we this help some the a in have of that the of a back will got us And state. will year to in products co-pack in things and in meaningful more meaningful manner.

Robert Fagan

Great.

Okay.

to Thanks us. forward for Looking that. having

Operator

of next Your question the comes from Pallotta. line Matthew

Your line open. is

Matthew Pallotta

for guys. Hi Thanks taking the call.

on Just wholesale the distribution. a question

not that believe other country. has also been You MPX across you dispensaries. your states commented But yet products included last commented XXX in were other products there. dispensaries that only if that not I are am that MPX or there quarter is in your where sure out, XXX products the rolled but was MPX I

was I wondering just be on could of outside those dispensaries were just this all front comment if point? the So of products nationally how brands, you wholesale many MPX, your at

Hadley Ford

that on how comment strategy and to we are rolling like out the various states? wholesale you would Pat, into

Pat Tiernan

Yes, sure.

of and be and how here of side only to of need customers, markets. product. retail filling in part wholesale strategy we same it's there becoming we on to out the about treat all the player consistency our do the So the big known sort Well, thing to able about dependable think and is

our So it's been strategy. a bit part of

about frank, from. last XXX to know totally to that be we where As number time, came number the don't

comment So there. I can't

have was would across Maryland, at However, if penetration particular broader across looking baseline we I Arizona, say than probably in it's that. across the had the gains Nevada, that

count So you to to come what back have the I overall would on is.

Matthew Pallotta

Okay.

Julius Kalcevich

just And that commentary little is well, for Julius. little Pat, bit Matt, a as this add will a And of I to your benefit.

over XX-month was we we across number, to it's states. XXX now, right, the of I we that in it have wholesale every are are made sold that that In some not dispensaries within that side those that dispensary period, of on way So we dispensaries that look sort to unique higher. be by number the at a shipping of to or is that whether or some sort of numbers cases, selling XXX the calculated If quarter. touched that would

we to within on sheds whatever dispensary unique that some the reason on tends ones higher, either and buying obviously but Hopefully be purchasing these have patterns. out touched quarter. of that as number in So wholesale their right, it, people side it's some states light any the to that are across that for

Matthew Pallotta

yes? then just And Okay. on --

Hadley Ford

Yes.

XXX It a number. is occurrence. of we dispensaries MPX. is were now one that just sort Mayflower. which dispensaries last Just XXX more into products just comment the The The random quarter distributing included around XXX

on layer So brand additional a an the there with Mayflower distribution is well. wholesale as

Matthew Pallotta

I Yes. figured. That's what

we for to for I all all states? number brand up the what able are can offline. to You pick That's that of But compare get kind apples-to-apples was looking across there. yes,

I bottlenecks there other of, demand terms the that guys in of other other in to where The in cultivation now opening November. any dry and mean capacity expecting question produce you spoke one flowers is part to just I right quickly are to and of existing there dispensary, in capacity are sort dispensaries? seeing the bottleneck see of states the the open? be Are ramp-up Florida XX as in seeing you you have any in it serving your you just production demand there, with serving where more for states a am states some dispensaries are sure guys existing but the you cultivation the

Hadley Ford

you across talk to cultivation would states? various like our Pat, about the

Pat Tiernan

Yes. the have and smaller through Arizona of side in the it's the are The nature indicative on is in Southwest Nevada. we was grows primary area acquired in the footprint The MPX. and of that that

biomass, in high dynamics up. is flower of to ourselves cultivation open can space get extractions changing. markets partners to we we right rapidly the each but get actively a right right biomass Anybody that quality for So terp the challenge those are want, for deliver the looking to been products new both and and the has

couple biomass the They providers and their side ago. of the didn't products. on branded flower biggest of of Some have own quarters wholesale a now

Sciences is relationship So very, have us of Grow programs of there benefit collective synergies are gain of personal relevant very go-to-market locally ongoing of have synergistic a the and the is between market. us base. allow dynamics for There that it's well-known guys who with lots our a got relationships. is in is brands, sort there mentioned. in in market. to I sort professional larger ourselves, both These And and the to that we very customer But There shared partner both are of changing we relationships. Southwest

of So moment address the we get supply. that partnerships and different cultivation one to high are are through quality at two, ways that source we arrangements challenge, through structuring finding that to

Matthew Pallotta

I Pat. Thanks appreciate Great. that. Okay. me. for That's all

Operator

Your next Bottomley. Matt the question of line comes from

open. line Your is

Matt Bottomley

Yes. everyone. Good morning

kind of revenue line. of couple the a on Just questions

the had months you or about revenues. quarter million of off last April think at Hadley, mentioned, $X.X that I started Julius

forma any wondering just or months and up that if million how number? you lines your three to getting number seasonality the to pro So within there and final the ups was downs $XX

Julius Kalcevich

Hi Sure. Matt.

top state, of with the holiday year April, we being in tends to that for had of this to tick obviously of year every in terms that be yes, sort every terms close a in that So monthly as sector, in X/XX sales. have April

us So calendar or been was was May best That's or higher month April June. this March year. the definitely relative for to that whether was

little continuing of are yes, we of directionally sort off April there, as seasonality of expand we in just as is was of sort specials bit that the seeing So we what continue now a level are to tick that that of we that some sort and given moving QX, but But the to X/XX are X/XX, that obviously through otherwise. top of build of. sort is

Matt Bottomley

the And you some do as Colorado the of Is you changes Makes up more? delta, couple tighten to three regulatory forma there, maybe when expect there. the little there consolidate then bit that. of for allowed on are sense. IFRS And gap Thanks a then in is states, most significant? given pro states to the that are that a just

Julius Kalcevich

Sure.

million in couple is delta around so quarter, right. the is for there the $X which that actually roughly So in terms are of there, of components a

So there CBD quarter a Life. is For of pro full forma the adjustment of

that months, seasonal, Colorado summer, revenue. be be be that but gets during busiest roughly is busy key one There of to as a perhaps features tends lumped component it. little which Colorado seven that's would around bit that to into right. managed the typically going is, So It's a not

operators So Life that various our in to The our some who it's brand relates revenue This work license actually within managed contracts component there some developers CBD former For on and Arizona. management are is where facility, have businesses largest rely we MPX with. Colorado.

dollars management we That's the not sort consolidate a XX% revenue. obviously We company in pickup a managed we Mexico the there from of of there. largest them. of that able are to asset own then component small smaller from thousand just is also hundred couple and our And component just picked which is a New up

Matt Bottomley

your the And are proportion the you CBD Or of that, $X million? $X growth? be normalizing million of actual more for overall expecting but going of consistent For managed a are or it obviously is stay Life, revenues, expecting at you sort to to that

Julius Kalcevich

Yes.

be of So of what I to we the next year, sort say But Colorado QX for next safely at at beginning would year not going beginning the sooner. next see if of is are of definitely going into to switch our revenues one reported shift CBD points made year. from going That managed reported that's the XXX% That's all will Obviously over component into revenue. around revenue. For Life. our to

And components business. the Arizona MPX to some relate that the of in former

platform. Arizona We our continue grow to

Pat just the to points cultivation there. continuing made about grow our

robustly reported to just But I component. we Arizona, and our managed less sort that to a going in a over a our as six total revenue there think X%, smaller proportion be are the that of time reported revenue to I in revenue that's slightly very over think to to either than or going a revenues of a next where shrink a nine growing is revenue quickly kind I be going the percentage range. managed will our as over that revenue XX% be see think going percentage I it's point XX%, months, or to in move managed of Arizona is

Matt Bottomley

update me. total for looked, give of know don't you any Thank you. are it's if last post it forma I dispensary in but December if I one have. just it's XX, might your pro might and a just also where you count year? of you Can apologies And have you what giving leaving an your if the as think comfortable And this then goal be of today? broken filings

Julius Kalcevich

as right now, now So XX. as it's of right of

law. we In are is components year-end, In is of the number, where regulatory some are going obviously Florida, as recreational sort think Massachusetts, going sort to it I be obviously the more we to timeframe. of terms confirmatory to that around relates around January the Matt, month of that's But as December, be provided at obviously have going moving we guidance. to between there upgrades little bit medical where a more get going to over in next some or and a guidance there be are two and we

Matt Bottomley

here earnings are end that, here. the of are We in tail you in

I Thank if But the So confused MSOs got I with other you. my there, number. apologies.

Operator

Your next question comes from the line of Stanley. Russell

Your line is open.

Russell Stanley

for Good morning and thanks taking questions. my

Nevada. on First

your that there? plan see those view, this latest recent is develop I ability wondering the would Just on what the envision the you to your how ruling retail and of game injunction given impact partial and you out playing guess, licenses

Hadley Ford

typically that being Nevada judge ruling A just Sure, process, that yesterday, run everyone. day to award context came licenses. a put with And it It's before Russ. sued. for little out There in that lost a was who Hadley. The dispensary a new day, of was cannabis, a process legal people process in and ensure to open going whatnot. access will at more have end the be we work of a are through we lawsuits, lot That means But to the to on pause. more a guess these the to licenses My have imperiled. things is, appeals.

not it's get think lawsuits over the out state. can't a of unexpected by divvied value that but unfortunate, we I So of industry variety that in. the the hasn't assets that of are state had a the given

Russell Stanley

just guess, to And Great. moving on, Arizona. I

for up Arizona. front to ballot XXXX? I kind especially potential given have of active the be be other on at that the comments your well? there, the November market, seen as that adult have on think Given look in some might Is MSOs you use they a taking we the acquisition of bid Or route

Hadley Ford

Yes.

additional component is so finding a incorporated and M&A, typically strategy of big locations. Our footprint

are we that most of active the So might imagine. in states you

We are looking at opportunities.

Your think is sure right do opportunity you something I location. that true. that right Arizona want the the where you to observation was that couldn't But they are you accretive. prices But higher don't to get make have progressed the of point and

look of we we in So states. any a and take number always look

Russell Stanley

for you. That's for now. it Thank Great. me

Operator

Your last question comes from Zandberg. Jason line of the

Your open. line is

Jason Zandberg

just my taking wanted for touch Thanks question. I Okay. to on CapEx.

just spent second under You $XX million the in quarter.

possibly second you early XXXX, if wondering this any of if Just give could year for it's outlook half possible? sort the and of

Julius Kalcevich

Julius. Hi Jason, it's

So a components with the regulatory is York couple and New earlier sort programs mentioned the obviously one Jersey of there on some as of questions, I New moving of there.

on from guidance be scaling We to out look that state what sort the continue are around we based regulatory will receive going to programs of those their like.

more actually comes a that little We to out. guidance are outlook going be providing as bit

be is There going obviously to will So we refresh the sort be. in spend view will continued of a Florida. what

have another we Pat We open and nine. There at will another is got eight least dispensaries mentioned. There continue. that nine is has

that numbers. one see openings But of is going be he there is some as going we of continued going be per probably dispensaries then couple to quarter is for to just continue that obviously Florida. obviously in with bit to So of made out a continue deployment CapEx to a those clear. will a little are of ones And be of next states. the had going there, But we That's mentioned, of again, CapEx across of for network. as range component. buildout buildout million there guidance it's is bit to we provide large And those other the whether we to those refreshing $XX ramp-up there some But there. quarters, kind more to the be little sort those the in $XX some more larger will programs are there million

Jason Zandberg

Great. much. very Okay. Thanks

Hadley Ford

All right. Hadley. And this is

minute one left. got have We

for your up to we to thank So look thank We much. wake time. for your thank work dialing wealth you creating we hard to support We you your you for And and thank everyone you the for trust. thank forward behalf. opportunity company. very the day balance and We We thank on on your every year into in shareholder you run We in. I your for XXXX. this of very want and

Operator

call. This conference today's concludes

may disconnect. now You

Hadley Ford	Chief Executive Officer, Director
Julius Kalcevich	Chief Financial Officer, Director
Pat Tiernan	Chief Operating Officer
Graeme Kreindler	Eight Capital
Brett Hundley	Seaport Global
Robert Fagan	GMP Securities
Matthew Pallotta	Echelon Wealth Partners
Matt Bottomley	Canaccord Genuity
Russell Stanley	Beacon Securities
Jason Zandberg	PI Financial Corp

iAnthus Capital (ITHUF) 27 Aug 192019 Q2 Earnings call transcript