AAWH - Earnings call transcript Q4 2021 | Ascend Wellness Holdings, Inc.

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Operator

Good evening and thank you for standing by. Welcome to AWH Fourth Quarter and Full Year 2021 Investor Call. I'd now like to hand over the conference to your first speaker today, Rebecca Koar, VP of Investor Relations. Please go ahead.

Rebecca Koar

Thank you. evening. Good AWHs full to call. XXXX quarter fourth welcome year and investor And presentation can www.awholdings.com/investors. call accompanies found The this website, be that on our I’d having to slides, encourage go and you the download the if trouble. any website are you to

the our Before to our that are week. we Form registration next cautionary contained statement several you and file SEC and other there in and on proceed, our like XX-K, factors SEDAR remind expect would statements I within which to we risk filings, S-X including

We and this will risk cautionary other factors not review those statements on call.

you cause remarks are constitute statements encourage concerning forward-looking on we expectations, to we call may forward-looking These subject However, read to them Various this prospects statements. that risks carefully. or to revise forward-looking predictions, and update make and plans to Any view statements that make future. from results. in current management's or results forward-looking or obligation and reflect differ we no the additional only historical anticipated such statements undertake statements actual uncertainties

On Founder we our President today's other Abner Kurtin, that, have I'll today's in our Chairman, With be During measures reconciled non-GAAP in comparable CFO. appendix. the by used AWH Co-Founder not and titles over call defined materials and measures, Abner. to companies. Perullo, Frank Neville, be CEO; referring measures, call These as and similar may call, Daniel to to defined turn earnings and by non-GAAP with will as the we

Abner Kurtin

mission evening, one's call. stakeholders from with Good our of everyone, to all QX earnings support our I we life Rebecca. Thanks continued 'XX welcome bettering fulfill cannabis. as full the our and and appreciate year of

XXXX accomplished everything come of by when completed Illinois. and an with our exceptional sensational Earlier where revenue we year for trading proud us of and the cultivation public more long am over MSO and AWH in acquired we in year marked Some we stack year team than a we initial just CSE go We've margins. way facility XXXX. SEC, in the on I We our doubled offering, May years, U.S. first in three strong Ascend an for have from than the milestones. the making delivered was license significant EBITDA X. been beginning Barrie, a commenced RTO. to a the or on by filing first by several public It S-X and with OTC was rather in the you

the near more six new to term. canopy our the delivery in represents strongest three separate We industry. store of on We sheet, the We sheets now are Massachusetts During and year equivalents This delivery senior program future. and balance the tremendous stock we completed in than to year XXX% portfolio. and is count bringing acquisitions ended We by a the XXX in with geographical all our eventually financing, million was no of XXX over one and raising debt the with excited states of million to our balance strengthened Michigan in bring and of and expansion. marked maturities growth We the trading. new cash the XX. 'XX acquisitions two year of launched our across dispensers, restrictions Ohio freely our promising markets cultivation doubling of total lockup feet XXX,XXX the released stores the capacity. all stock added year. entered the through of this additional opened

operational asset growing will scaling of expansion As margin footprint But our will continued our focus and base. also improvements. and through scale continue we we enter 'XX, economies we on

reach the states over or cannabis over for performance cannabis over XX% XX want XX%, grew company's the adult industry U.S. to 'XX. growth impressive highlight discuss in sector of use 'XX, billion programs. putting by generated. 'XX, the I in I legal have on the In has industry track to and the traction medical sales the Today Before that

current off entirely becomes the competition We appear anticipated to as of public markets. more the on a little the Industry mature. be to industry market. expected cannabis by albeit than participants This the current guard is state price sooner also comment caught want competition in

some In addition, growth has been stalled key in states.

XX% in U.S. has growth and delayed a adjusted massive reflect EBITDA on declined the opportunities and approvals, is [ph] the the on our industry tranche licenses XXXX of EBITDA based in considerable opportunity, analysts to adjusted Illinois Ascend estimates Xx to that analysts on trades in year estimates. to MSOs. an discount for uneven and instance, XXX% today, second EBITDA, trades that, choppy. industry ago We now doesn't the growth and in of about opinion discount despite estimates XX% about space. growth hit of and any investors awaits industry. This the 'XX The state since For multiples the growth an XXX because been absolute of That peers a the has growth cheap other Xx sector our be to for long-term provides basis and to over Further for XXXX. about at knew relative XX market. analyst Notwithstanding opportunity entering the comparable [strings] would AWH the reliance as for always at regulatory

added in time more barbers sales I This industry there cosmetologists are growth combined. the the hurdle be formidable we lockup this continue that restrictions industry. the only before happy will investors Net from a almost face people our reason can million we far institutional is that liquidity only small in industry's and recently have of We to past, state-by-state. EBITDA imposed year. million. growth Retail a solidifying from improve. driven the for opening liquidity. increased value the Ascends full as pre-released medium-term. a Revenue in in IPO. people. hairstyles, flow. matter industry. XXX the begin are in existing by people was are According we in the will year for stock and see XX of isn't represents address a than also stores are We're it's going that to large Leafly one This now to at pre-IPOs anywhere at In because these restrictions realized our of store surpassed as cannabis player. and of over for of that our investors to to hangover and the million grow institutional hopeful the Adjusted Cannabis workers stores the percentage industry work half enter was growth without XXXX. XXXX, position been growth, hopeful I'm legalize change our and six This recent discount the the XXX% employed want we as year. was valuation the now traffic that participate industry XXX% cannabis remaining more from and some A to outnumber will free space. the There report

persist our to state-of-the-art line, number pleased we retail to priorities. margins will slower began this cultivation wholesale focus than Slide increasing the cost pricing focus operations of Improving crucial MSOs digit In be expand into our come declines scale turn despite With let's five competitive we growth, United are margins our adjusted of conditions. we asset optimizing our year on assets We among the to need has to achieving EBITDA and us and facilities, will QX, competitive margin across allow Even on before on year-over-year be ‘XX, that will reductions. Premier QX. States expected will price and high-single see assets. full trend to more existing and a base In to seen review profitable key while locations more continue lever to a of XX%. our

our factors. competitive in margin assets represents expansion. stairstep year, coming new primary out options segments. form this these also get we when ongoing step the markets. come continue revenue half offering new as of next provide in providing year, facilities this a a Branding to start execute will in we of stair expansion in in all will remain often to customer a priority, the any best the our of our competitive. it Due full lack I better our New online year from as Rather, say conditions second of more business growth new suite adult brand sales help operations harvesting these markets into portfolio We online to New half anticipate in industry us will manufacturing to this market open. focus or to and growth committed benefit capabilities Building first be with markets our on the not cultivation We good new Jersey. use coming key that as Canopy to Jersey broaden expanded will the scale is the do of assets and and

priorities player among as and To top are position robust conditions, this will cost critical competitive and our implementing Jersey Solidifying we a market New for the top emerging program. the a offset in be market year. is cutting delays in our

more have program. in we environment. cash also this to will position, dynamic as my have a the cash Although, on to take cutting stock preserve elected I cost detail strong XX comp Dan all provide

While New key of area focus will start Jersey recreational sales. be the

in expansion also will We existing markets. our to look

three acquire ability more the Illinois reaching tax. before dispensaries dispensaries and in have more We Ohio in to two state

succeed markets to competitive are six in Slide we review the to which We believe positioned our increasingly in portfolio. current operate Let's industry. review better an

to be highly in are adult that by with restrictions license populous capital expected deploy imposed to remains use thesis regulators. or states state already Our cap

grow markets. We contiguous current limited are our see strong and opportunities still very to happy footprint into with license

public pursuing are While given to it's do actively difficult still MSO we acquisitions strategic acquisitions. multiples,

transaction from our license, to Before pending New under address New York. we moving are an I related purchase to York contract on, to ongoing want litigation MedMen the

office which claims. agreed through is MedMen Ascend make included two counter and anything more governor's false beginning get of regarding disparaging original try the to least accelerated MedMen have MedMen [ph] and of an it’s trial with will you we fundraiser, without just representatives to make a that no at the us. MedMen the case At to different. their dropped from litigation to remorse, us we realize throw back case the we better a MedMen This filed deal. can't sink buck, quick lawsuit plain out lawsuit agreement. The is likely against and is desperate In a regarding simple, what in you of attempt false seller's a agreed at of to money with could a Today status everything trial. until that any termination together allegations at meeting know, of This a January for accusations our can that further sale a are home say MedMen, As schedule. the including action proof in you once we invalid their the basis you is the our parties maintain investment kitchen just was but gotten after in quo [canvas]

and status marketing Just MedMen filed letter is yesterday, stop a desist quo. a brazen we attempt violate cease to from which asset, the the to

in our the the for New We adult assets while to patients MedMen expansion York dispute the so the license. in our we failed can and confident position the legal plans will owning has is proceed end are its and building MedMen for obligated in time do the to start the use Canopy medical reading in we lawsuit with proceed agreement intend Once under of the of to business is proceed for doubt no MedMen obligations that sales our New with resolved, have transaction honor as our the favor, It with benefit fees. York. very pay to and we

move market. adult let's New the to XXXX Jersey. updates year the will of Slide seven Jersey market to New Now awaited be to use in relating long discuss on

market March X to Jersey centers begin size cannabis to will X approve to has Regulatory The use sell be XXXX. is XX, over alternative a where hope Cannabis adult billion close treatment that million XX-day to some meet Commission after we a projected people New period. expected by waiting they to and

have the five among is Jersey, ATCs the substantive state. with New in process their applications in which completed Ascend review and are

New adult the use benefit likely. to from different without earnings XX, assets our as seems are use adult New our we not XX Jersey sales until discussed budgeting on of call. the Although more we timeline of the summer view from use of is prepare the for we days reading This are start not Jersey first for materially March

and Garden the the area in just operating and Jersey Our York Rochelle second open mall State park also of approval of store from We've in the largest XX Plaza, New received points New third sale. greater City for largest minutes from town adult the with use. is Rochelle Park

formalize its Montclair our break for the municipality expansion use of to support We are waiting adult resolution to on market. store the ground to and the

expansion sale in square store. more and Our our of points the will Montclair than double footage

country. construction potential stores the Bridge. on has George in the store one artery top a The minutes of just the under Washington exciting be adult is in early will Lee the central Jersey from New year use. as complete to the be the five patients Fort still summer. is While store for by It XXXX with to be expected of opening customers and an

important to player We in market. an be are excited the

like Now of founded to over the the I in played I the Frank pivotal Ascend. turn Frank to company in a call Frank would together role Perullo. XXXX. success and

in be helping has construction the as securing the and are aspects Over regulatory years, we and several Frank’s We served build the critical as Frank acquisitions overseeing where well Officer past without company. Strategy partnerships, to Chief today company. role of wouldn't three pivotal as

can allocation strategic company Frank of that, alternatives. on I'll responsible marketing margin turn be as into operations forward will the phase. move no growth With responsible I while goals, to capital than He expansion the for day-to-day and focus steward be Frank. I better next teams. the to Frank will sales over Going it operating AWHs with we and continue will see and retail for forward,

Frank Perullo

that, to new operation Ascends the as Abner. pleasure on a It's of plans my to role here the for community excited today. investment am be for Thanks I President. status and update

and revenue approach health already I and more and operations. As rigorous managing existing overseeing be President, business to much for now in of will a to implement have managing the business. refine responsible our the practices our begun I the generation procedures

measure on have goals these will clear hold goals for people cadence. and accountable internal frequent We organization and each more to set a

improved quality to we and product As a result, expect cost see enhanced improved sales. structure,

our the have mentioned, the our business and competitive we over in competition challenges market. As business recently, past focused sales become more our as markets put years. acutely increased on to More competitive a demand, production pressure Massachusetts several new have to Abner struggled supply been wholesale scale and up geographies And in catches into have business. on Illinois we scaling expanding wholesale

and offset We our demands. vertically Illinois, the the XXXX are talent, in greenhouse. stacked To-date were all on this to depicts QX. emphasis into online. December, Illinois recently in greenhouse market quadrant indoor, with these operations, the our and plants first feet in confident in our headwinds and is feet states, built In competitive been combined greenhouse our We in XX,XXX houses plants to ground, with focus retail in completed that brand of in canopy our double alone. product enhanced The and approach greater our foray more we planted cultivation new positioning greenhouses. picture top-rated help Canopy. our these management each let's the We the we in with XXX,XXX we phase nine approval top on wholesale on discuss have has vegetative to off of left coming Slide the that, Canopy, ended first the the to year in five XXXX in square With in of move which plant plan the which harvest operating kicked Canopy received our of will square newly of crops XXX,XXX

has feet the last been plant XX,XXX the Massachusetts We percentages with in several terpene approval we Earlier HVAC square year. month flower our square we ended now this are climate months We to over received Canopy. testing better greenhouse flower, process our feet past XX,XXX start higher significantly an since AB the and of quality incremental of systems rough flower to control. higher to of profiles. have completed The year of Canopy. in Massachusetts, In of improving the adding enhance

to we the week in space. plant new last began Just

quadrant. new one cultivation completed our that rooms see our in canopy the continued build and left the XXXX of can flower You Michigan bottom in procedures. We in earlier refine to

As improvement a and back significant result half XXXX. in in of saw the we yield quality

have In Jersey, New phase Here flower completing on from are August focused XX,XXX XX. see of the you canopy acutely feet the most recent operational of square Phase which Canopy have QX. we adult next harvest, square sales. will launch Canopy done build and will Jersey the in the for be New preparation by use of feet complete, we XX,XXX will Once in two of end anticipate of a

Let's the up Year-over-year a XX retail the update. more to board. And our business well traffic average move Slide traffic for across traffic to retail performed The throughout year-over-year, retail over weekly saw web alexaascend.com was year. our we drove page increase on which stores. XXX%

sales and we all and State market as Illinois, out We manufactured. number of come of in-house product has having were we from the sales within labs of Despite example, to or add pressure We target we this a products down as partner build our XX% Illinois for early in kitchens sales into continued expanding retail XX% see products. from XXXX. have QX In trend offerings. came continue January in share This our In whole capabilities gained state. month-over-month. XX%

However, in Ascend were only market share. XX% a implying gain sales down

blockbusters. Illinois After the high concentrates Illinois have extensive want spectrum to stores in Southern Our the be R&D, broad we products. continue potency, to serve who consumers market launched

store Boston also open offerings delivery. recently introduced We plan portfolio. In improve Friend resin elevate in We weeks. added product floor store to we in Downtown across the pre-rolls Massachusetts, our to Street our and second live and the continues expand continue and to coming of the the

have withstanding Not adult two Newton market. we up our we Montclair New stores use, was earlier in awaiting above assets In traffic is In our year-over-year, level. QX, well store Massachusetts. names integrating Ohio, we traction XX% and adult in second XX% we offering size The the continuing of continues start Jersey to acquired we November, for over be discussed do the XXXX. out The use, experience positive an are a hopeful Newton, potential the standouts store. averaging over are contributes brand an provide two medical impressive has the adult the program movement program Abner to sales and medical In are statewide see basket in and launched been will delivery Instagramable migrated use tremendous. our gaining to open the elevated to of anxiously are and assets floor our XXXX our market, an service brand. Ohio $XXX. in enviable, for Ascend and of towards our

Ann delivery of our stores. radius XX-mile a the of Michigan, we plan Arbor delivery are quarter. Grand we the to throughout out of the rest within Finally Rapids where launched a the delivering recently in program over dispensaries We the and state launch

We have completed over all provisions branding Michigan to also from supplying Ascend.

Slide have Let's to launching an CPG XX with always we to are we in that to brand discuss Simply see. better gap market market the fill Herb, approach. a a good the like best exciting new segmented we move

brand. Our Ozone consumer category, reserve premium product brand plays good factor. we looking plays our And who the Canacona a in a have been product cannabis to at quality wants our best lacked To-date, Ozone in products gap for great category everyday category catering to better consumer as premium brand oriented offering a trusted a in form the the the catering price. a value a store with has great

week, special easy have is frills. going to weed that knows a that, XX it’s at Herb Simply Herb industry who the value why an from been to Herb need a void. by Simply It of the driven a consumers pipeline time brand occasion, getting to Today high come for simple, With Slide for we occasion. to Simply are increased tremendous is and Herb to isn't target product. good That for There's we launched new to let's The sales assets We for everyday doesn't we fill that move offer driven offering. value have in affordable great review brand everyone be the the category. the of price. every retailers launched to for Simply a no This is markets meant with for value a us XXXX. demand clean cannabis XX% consumer. operate

to our sell We first benefit downtown completed our the have in to do to Dan XXXX. open the this plan any of a we meaningful half year. review to us stores capabilities product we're and coming that in We space. By online allows robust and year. of I'll revenue in we awaiting the second to plan From Boston a year, a to the to kitchen. over floor dispensary. With lot not complete offerings. it expansions additional New turn the Canopy produce approval full Adding And a factors the come anticipate of in We four have phase end financials. to complete Jersey, that, online lab of suite wholesale of assets assets these throughout the of perspective, two form recently

Daniel Neville

Thanks, Frank. Good evening, everyone.

mentioned, As performance pleased company's are Abner year. the we the with for full

margins. revenue revenue business Michigan the by to QX, decline, sales. and realized of alluded million, a year-over-year. dispensaries improvement volumes we sequential quarter-over-quarter last base wholesale Net Despite in new and X.X% to year-over-year open the per sequential retail case Massachusetts, Massachusetts, sequential wholesale traffic sequential Total Illinois, increased XX% The we offset Illinois X.X% increased lower representing experienced volumes net revenue, New at six sales headwinds, in $XXX as Adjusted our driven GAAP unit Massachusetts sold wholesale during ahead wholesale was is partially intercompany a because as wholesale decline, products up healthy sequentially. margin million would we particularly and staffed of accounted be And up by a lower by of an which of line. call. expansions and represented pricing, We our XX.X business. these products of but but were Illinois offset XXX decreased Since financials, However, in and gross points revenue in incurred was partially XX% profit wholesale majority basis own wholesale earnings this decreased million. by the Jersey in which realized lower as in gross margin. dispensaries the in excludes for the and system our approximately higher pricing QX, was decline in was a X.X retail above not sale and increased which are the volume was million wholesale rent COGS XX.X%. or related lower facilities quarter-over-quarter to Illinois of decrease QX most driven XX% leasebacks. gross These of existing margins Adjusted impacting XX.X declines of higher provide and IFRS, to million, was represents EBITDA we expense for the in X.X dispensaries

XXX by was Our G&A with increased year support as of basis ended margin was gross adjusted in with decrease Despite represents negative EBITDA impact. reduce This points, to for margin of decline by by points, margin business. which scaling leverage EBITDA we employees year-over-year the supporting points. exacerbated We which approximately QX adjusted basis margin basis the sequential XX.X%, services. sequential XX% over XXX a total, sequential XXX shared to XXXX the decline, ramping the staff the helped this

model. The our for have at finding we're efficiently. our the this most structure restructuring site shared the corporate more duplicative services significant be These we Let's straightforward remove will to initiatives plan market XX, optimization in and savings million move market $XX staffing initiatives Throughout original our over XXXX, to will these savings on saving by to to level, We span will offset be of moved Mass, and headcount, where the to and procurement, headcount reorg infrastructure, services. rehab, dynamics. relatively spend some competitive execute. organizational business. IT operate started professional Most Slide savings to over of our to cost discuss from driven HR,

procurement to inventory We significant and savings moving a see cannabis also non-cannabis for both from function centralized and supplies. to expect

third-party better services providers. we'll consumables professional the finally, scope our We operate And will centralized packaging, and planned decisions buying used operating to leverage and reduce purchasing other and certain business. of across vendors supplies

compared and net Annualized move per up Total on This million in XXXX. by Ohio slightly to to Growth overall QX an sequentially at was driven of Newton decreased and representing stores. impact Slide dispensary increase and XX increased Massachusetts decreased revenue as discuss Carroll, existing represented net Carroll, the the was million, our revenue revenue. was down retail and wholesale XX% XX.X stores, businesses. XX.X quarter-over-quarter. the of we medical increased to XX% XX% Newton of of Notably the XX.X to X.X% revenue retail to XX% Let's traffic November, ticking revenue to revenue retail portfolio. dispensary Ohio added our wholesale and opened million, which wholesale approximately

revenue wholesale Michigan Declines in price as per XX% Importantly, Illinois, was partially higher the Illinois exacerbated sold and New decline sales also unit intercompany Massachusetts, reduced were offset by sequentially. in driven grew by Jersey. in net and reduced in and volumes volumes

decline is of remainder gain work the share market to throughout disappointing, the Although we'll XXXX.

to million total discuss Slide cash sheet. Let's $XXX of of move to million. the million on of XX strength debt quarter net the debt and our $XXX balance XXX with ended We equivalents, and in

operations increased quarter to cash The use of Our from large tax outstanding from compared QX, fully diluted of million prior made in payment the October. shares are XXX In million. as a cash we federal used we XX approximately operations.

X of During $X CapEx expansions. CapEx net XX reimbursements. was QX, cultivation million improvement Ohio, was and support of million namely of we used net to invested our tenant million in This related XX which to million, was acquisitions, which primarily

the year, by cash, driven our million in invested was expansions full the cultivation million Massachusetts, throughout over of PI $XX For year. we net $XXX received $XX by Michigan. of New CapEx partially in reimbursements which These offset Jersey were Illinois, million and

in start their As budgeted of wholesale Jersey, material the sales until Frank occur use stepping adult persist which next Abner through this pressure stair foresee pricing to in mentioned remarks, and July we to in revenue the XXXX. don't We New of anticipate we year.

XXX started In the We over summary, cash year we with expect $XX million. to ended and XXXX with million CapEx close $XX net be million. to in

position. We are pleased with cash our strong

of We number $XX to debt expansion feature attractive million have loan and cannabis continue the a rates. markets open completed pursue in remain of with see the are recent our term deals to the debt option happy to

Our focus good on allocation stewards remains capital and has capital being disciplined approach. this a been of and maintaining

at decisions. We to capital keep the forefront continue of deployment will our ROI

growth we still expansion. to expect look we meaningful As margin and XXXX,

Jersey retail With thrilled be New state. three exciting in sales over call of thank And positioned best until turn recreational we like we'd the for with of to for located will commence. ride. the you an be However, questions. all Jersey occur We're to don't recreational joining operator in assets now well it the sales New to that, the to I'll anticipate supporting The start and this of us.

Operator

question first Thank you. Neal ahead. go [Operator And Instructions] Haywood Securities. Gilmer at your Please be will

Neal Gilmer

Yes, further thanks I'm dig questions. bit to Good for on very my try to much afternoon. little Maybe a XXXX. your of taking going perspective

referred you're headwinds in And Massachusetts taking approach that to you're and refined you Illinois, that. to some the of saying

QX of number growth see declines the I year? you your sort half potential to these expansions revenue in referenced year? what guess to you that you're the and Massachusetts is, sighted expecting the coming to question in couple Illinois fair And the of you levels assume are before going here. growth pick in You driving slight second of is, two and up or going that's one be is QX? or of wondering maintaining that second also Are do to a and the online, it part I New Jersey. I'm primarily for seeing half, the at growth trends the guess second Number in we see, rate half

Abner Kurtin

well own market as New best growth for opportunity. and all But huge. penetration have wholesale and Hey, completed gets and feet feet a and of thanks the is think the harvested Jersey, additional that and market present growing And predict. have don't both second it's we then that we into XX,XXX is in it's But we stores. going markets, for kind ball, That an the mean, in in additional absorb our time half, form to stores of that as exciting competitive be doubling it’s sales. a very to of three And expansion Look, have a question. have material have Illinois to over one We we those that states strategy drive I biomass our Abner, the Canopy XX,XXX biomass. New we without that that think we of to hard said Jersey is those and it Massachusetts. meaningful factors crystal

in stores We for like year. Illinois in is $XX was opportunities. project the our potential part? have But similar us million argue store New the I And second What really Our don't that. three that Jersey that's 'XX. type anything a upside could

Neal Gilmer

of XX No, you've achieve sort perspective follow cost the XX on, up inflationary million of you I the I've across to structure just And impact a ability of on maybe covered the inflation looking profile? achieve on will sort the board. on Obviously, the to pressures whether margin follow-up. one think anything most it, we're that seeing improved or on off any slight million, your

Abner Kurtin

I'll talk on inflation, Dan based the our million look, I'll the Look, XX say, projections, let about is right.

think we've all So that kind additional everything got for short-term this to of you we an best target do margins. competitive we part get with margin get Dan, but talk reduced inflation? to we started with can. just to an can't want growth, XX do as at to of cost We that pressures, XX% to plan the we year is want their and growing, that's we achieve million. about try have do. some And better that And structure we quickly it as by the industry to rationalizing of

Daniel Neville

just wouldn't But environment think competitive a as there's a of where for certainly I of building we're it's much. Board. the inflationary kind more construction seeing pressures, materials on I the things, side which the across talents on I impact Yes, say what mean, P&L obviously

these cost over feel wage any these We savings I initiatives, built be enough and of realized. comfortable XX% and achieve year have continue every that straightforward out that of just to to and we go able for we're of these the to to target day. there the XX, a on about we battle to have chase course the realized March issues savings going But we'll relatively quarter-after-quarter without get shape the think, By year. fighting in, being are And into cushion here.

Abner Kurtin

to Because risk tank Ascend, money the I their be this think to right? have that's if when going filling in for money on customer customer right? the the store. gas to the industry in get us, is they're money has biggest And less less they the up to been more their inflationary has if side, that's wallet, customer less

the product. a that's becoming that's that lot I cannabis a risk. something essential is That biggest feel said, really and me, desired to to is people of So

extreme having us see sensitivity, don't customers I us. the So clearly but important to pocketbook is

Neal Gilmer

my taking for questions. Thanks great. That's

Operator

you. Thank

Needham. from McGinley at Matt Next will be Please ahead. go question

Matt McGinley

you. Thank

wholesale recent So for quarter added additions Illinois, capacity you much with in you the revenue the markets. made do of the the those you capacity dip have may in gives the in experienced states Massachusetts, those too that in any size you concern

a amount some with that addition, additional Massachusetts probably I'm at same you necessarily in will be up where would tremendous that's but have issue sure that think of issue timing the put argue retail not of there's retail I a more Illinois, point. could

Abner Kurtin

factor be look, And a What, think billion going going in to I goal going think We every there's as a can wholesaler to is bring every going there's XXX to something week are think there's and Yes, not share. dispensary lot go people market to able we be do, we market also after Illinois, in to more. to that. be to I billion. going it's our XXX form cap, we're every X.X of stores, and to a do be X the we mean, market,

going think we're opportunity there the of in there's There Illinois and aren't a name people there's scale that for to be and that. scale five many operators, four Illinois. be do the operators, tremendous or existing is in to that the game, I can going

the X can our market, billion biomass We to X% true can higher very the in I Canopy retail a -- to minimis operators going think of de Massachusetts, with share. it with, get have. can in a operator the is absorb XX,XXX like favor a take challenged And that competitive of holds same scale have it in think all share, is more that market be are that that's we hurdle. and not We we smaller feet worked a any environment. thing we and

great excel. as think, it's great as particularly have think, our and And a for resources biodiversity, scores. this, extremely biomass other and opportunity with to We environment. I operational in more we the with with it capabilities right it us we've we industry, good those scale, And And [ph] favor [TAC] had mass, competitive of and look in works think every to So, it's us MSOs. works is we've now. real also, a and that’s

additional adding We form lab additional great a factors. think and are we're We in shape. kitchen a

Frank Perullo

think flower been I that last Yes, well. We've think in point, selling Illinois. I factors is form important too, only as

fulsome the lab year, to half to will kitchen help. which comes sell a second enable definitely us market, in So assortment the online first half, in the that comes the of the online will more the

Matt McGinley

it flat? revenue Massachusetts, margins use Can some your Okay, that got Illinois, given fourth question inventory drag flow amount give we on it. is build My given Ops the also in will the should from generate trends? but that, of be that where Jersey? the of think on second quarter, about and that were in tax on you substantial like adult your inventory. roughly Is mostly built a weaker cash cash for more ability the is looks year, you half the Ops Dan, that a in about first that the insight of occurring? to payments expectations New from building How Is flow

Daniel Neville

Yes.

the so in a board, the that in weaker the kind Illinois So of math things. weighted more it's up adult use, was across there little than have Illinois a of but the we there, ahead the to some do Jersey building inventory side build is Massachusetts, and things side trends New also building, of given of of bit

that adult inventory step in capital there. no half up, of use year So quarter, Jersey was expect, say, I'd that's we of expansions, build at either New or That the looking the of the the performance working kind the from with Canopy use meaningful the first sales.

or first the that flow kind of setback year. and half moved that operating I back in the generation, of cash think, to move performance with

I better which adult New sales in margins turn half second think revisit that in higher in online, have coming Canopy place with we'll expansions on with a that these come the much be to combined use will Jersey. with

Abner Kurtin

mean, $XX dispensaries to more going form of week mean, on Yes, the only I quarter. form our not look, inventory, inventory. our to inventory in need We're every running we're about million We're In lot of mouth all I build it's situation. factors. to goal factors build hand in all an a order markets, in pursue to a

inventory masters market provide stage to factors to hit but are come we're range of Michigan -- the we're Now and in as goals. online business, we to where inventory build of inventory sales, still in form wholesale as build more a early kind our we of there course, and a going full need

Daniel Neville

Great. Thank you.

Operator

Thank you.

ahead. ATB be will question Capital from go at Please Tyghe Next Markets. Kenric

Kenric Tyghe

Herb market XXXX. the as and gap you half to. second share look you in cultivation, together, see remarks, if your is? and you the Simply important volume in additional Ozone all and Herb you called And low good available referred through sort important to gains speak trend Thank that Ozone, state. how your of share of in to you, and and good In is evening. would out Simply your that will in pressures filling an trend how putting Could to expect pricing the despite and plus How that context Illinois we be positioning traction terms Ozone

Abner Kurtin

going to good some that turn answers for you. Yes. got who's Frank, We're over to

Frank Perullo

the sorry, Illinois was market. I'm that

Kenric Tyghe

Right? thanks. was that Yes,

Frank Perullo

those each Yes. We're of factors. focused form quality building on at

addressing, So produce as and consumer getting to or you've brand. quality highest you the with that's of more the growing to more, largest of largest more But more, shelves of the value hit reserved produce recently, population able now ozone Ozone with again, and And segment been to a producing look consumers. the got we've to the on XX% has segment the brand been better. positioned the more perfectly

the it proper us to the So right for biomass us our into put gets to at segment get this, consumer the right and this price.

Abner Kurtin

That's think markets with makes they're supply. I other sense a the other just we allow a open up enter we simply product, in consumers it the think the going mean, great the to country. And to largest $XX well. right. have with and to relative job demand want $XX. Cresco, lower it's And has that in in high. high to high segment. I state online, And to comes a player product I to their They've would come to started biomass Look spur as really [indiscernible] too Yes. market. on as great too are Illinois done the that most price more it's

Kenric Tyghe

and pivot use X Jersey ramp sake quick you to May do a to New reconcile and potential as up, if when want the Jersey, see about that for the How us barriers? of think we to potential help refer progression of just contribution on you I that I of only a could, up the a And that and perhaps we're start, it, sure bridge understanding you could step adult to your make and us that. you to gap expectations New between start see July? when discussion, the in step Appreciate help gap between expect

Abner Kurtin

us approved Operational aspects want be ready who have days for the XX to of our to March be and on to states for later. business open XX

we X, May So for to have be ready that.

because that's X July the June this the the in start in delays we're projecting industry Given or of sector of a industry, has way history the rolled. start, kind just

the that's So at way look it. we

open In particularly going up, your is terms be never on based able of additional exactly two stores. and Illinois, the to when know to store you ramp the

try So of the we open we're but encouraging the to up hopeful and New be in on May Jersey to terms ready X, ramp doors to conservative we're go.

Kenric Tyghe

luck. Great. good Thank and you

Operator

Next be Securities. Beacon Instructions] will [Operator Thank Stanley Russell you. at

Russell Stanley

thanks for question. taking and my Hello,

that resolution sell into? will doors of the play licenses. might legal a when you're But for the how battle to Just again, competition out? And see it thinking And how around seeing think that given you ongoing crystal new to you wholesale and retail about we question. preparing business back Illinois do just kind coming you What are open and for? your battle are there ball

Abner Kurtin

legal would then the of more legal outcome and number the Illinois problems, issued states, We've that the right. of New others a licenses, of that based been a on or resolution would without for the issue while whatnot. Maryland, Jersey, licenses There's hoped licenses issue have

chosen not do Your that. has Illinois to

As don't know. a for year. we're framework But we result, later it's legal very this hard predict the to hoping

Frank Perullo

to add just get you to issue months, online permitting to to quickest way reasonably and that, today, if and licenses Yes. were six the XX I think months, months. mean, the licensing, I I what's eight with construction

we is that this I But as Illinois issue it. can probably licenses social deserve those of as end rosy let's So that applicants to the the also think be clear, should give. equity year

Abner Kurtin

were been mean, the many their the these with keep for their they estate, them estate -- that long, lost gone unable they've afford applicants to that to the delays is of Illinois, originally right? in problem real or much I Also, just on It's they that all use pretty so that real for for planning store.

also are issued. the unfortunate. It's the But to that stores new will licenses going Illinois when opening So get do is story. delay come. the a great

Russell Stanley

Thanks Okay. for color. the

Operator

Capital. Thank from will Ty be you. Please Last Collin Eighth question go at ahead.

Ty Collin

help of outcome just of your Hi, Thanks, out thanks there. your I my litigation you of top think building for competitors wait kind for of months sort to behind favorable case you us being taking York question. a the the in market? that appreciate I call today. Will Can through at assuming New that on implications the guess settle? the commentary in

Abner Kurtin

acknowledge to do we litigious moves its that that own have think we're hopeful, resolutions. I this legal behavior. expedited a And get We New York we hopeful sometime year Look, the at pace. long We're sellers agree of history that trial. an the system

summary case, shut know never judgment a kind appeals an might what outcome. we and think is this they So of and is result quick and you possible pursue. open But therefore

adult behind, we're through substantial have being in with when a everything actions to working it Canopy shape. that doing. good We join we we're we disclose opens can't use, of now. we're terms on good In think opportunity But think we

very to litigation. in York the going able we're despite hopeful here to be we're New be current Thank great that position So in you.

Ty Collin

you. right. All Thank

Operator

over Thank turn to back you. I would Koar. portion for call. conclude This like question now does conference the today's Rebecca the to

Rebecca Koar

and any thanks free All with follow us to right. you up other questions. joining us for feel everyone, interest have if today. We everyone's Well, appreciate

Operator

again, your lines. gentlemen, please for you conference time, you indeed does we conclude attending. thank And do and ask Ladies Once this today. that you. for Thank at call this disconnect your

Ascend Wellness (AAWH) 9 Mar 222021 Q4 Earnings call transcript