AAWH - Earnings call transcript Q1 2022 | Ascend Wellness Holdings, Inc.

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Operator

Good evening and thank you for standing by. Welcome to AWH's First Quarter 2022 Earnings Call. I now would like to hand the conference over to your first speaker today, Rebecca Koar, Head of Investor Relations. Please go ahead.

Rebecca Koar

Good evening and welcome to AWH's earnings call for the first quarter of 2022. this be accompanies website, on that www.awholding.com/investors. presentation call found can our The

I remind December contained like are we for our would Before proceed, Form on to and filings, factors XX-K other annual report SEC year several and you XXXX. cautionary our statements ending in the SEDAR including XX, risk there that

expect within the XXXX, to March ending XX, file We few the days. quarter XX-Q for the next

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

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

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

Abner Kurtin

results welcome our 'XX evening, call. Good and Thanks, to everyone, Rebecca. QX

XX as staple the the of a continue reach cannabis. team to the lives surpassed we with cannabis receive Cannabis is this officially motivate legal cannabis of mission XX. heights that Ascend by fact fastest-growing United all market country. one to State the sales is gratitude XXXX, remains sincere states express and despite every storm to reach the by partners Cannabis sold the in country the support fulfill I industry cannabis and sectors now legal with siloed various day. in from In Starbucks, of and flows by and new tremendous the year. subject would continues our only in States remain employees, by the sales the economies always, taking in industry As to cannabis the the our of to coffee and is like end the state, our U.S. state $XX ebbs The curves we demand supply billion customers, projected shareholders bettering to as evolve. and for

on economics most However, worst industry's the even the day, remain than sectors. stronger

structure strides on creative Notably, New license Although to a company U.S. York acquire New Etain, federal a the New Exchange-listed suggest York is in with legalization company acquire a a Stock assets. listed York to $XXX for remains New momentum. U.S. -- Exchange, far Exchange making million. to York companies industry leveraged QX, This meaningful says plant-touching Scotts not that afraid that horizon, the out Miracle-Gro, are plant-touching Stock the on positive me

the this does remain federal this the chances about a the by pessimistic transaction, indicates in renewed move one any acquirers for legislation While We signal interest sector. in direction strategic just cannabis of the that passing potential right investor year.

in space Congress, anything to While willing seem times, largely the have cannabis unable act. numerous as completely that sector the incorrect. investors full can't let Valuations can remain this House are Wyden a lack will been are in divorced the continue I solid nothing customer-related confident boycotting QX institutional measure completely the lay period legalization on Senate in to growth for year New a Like if and has and mixed The because be sure, they to never we completely reform. Schumer, legislative equity passed of continue challenging issues start was pricing but can the wholesale investors. the the derated the Congress. Illinois Quarter groundwork hope adult this in acknowledge financially, to said, federal Representatives proposals for We not the from this and lost foreseeable future. both of and in be of be continue the difficult this due get to while The volume, other fundamentals. through related we space change in very we and to expect this Booker the those State-backed markets beginning intermediate you has complete a me progress happen that term, Senator to failed we of of is Mass as has X analysis use. and proves is are that are It equities markets disaster. Jersey to to quarter buy on difficult, for which

the investments Jersey. a Rochelle proud the the but growing take in the in detailed the sales for in our pains giant team forward required transition of Park, on to to QX New provide Subsequent leap expansion am next dispensary New plan. we our reflect and adult-use Our Frank I near the adult commenced business our will later, to results update use. quarter, at flawless Jersey

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to this expanding and to needed updated quarter, we transaction close ensure for before for use fund the New We settle receive doing Slide in assets of are what we to we by 'XX. to ready Pennsylvania amount for to court prevailed market. view as X million transaction, our transactions $XX relation precedent in settled the providing will to in the on let's cash that existing in Although that hand review the York we footprint. to the We momentarily. announced to consolidated after we assets. we the the confident run, expected our long with a facility. so, nominal adult time additional the detail to access close recent turn year, decided the review plan more Also credit have vertical But us I transaction could in in be with

With MedMen behind soon we states Pennsylvania the say acquisition and to closed have footprint. X the be can litigation us, our in we

future looking Our greener. is

from focus recreational presence the to a recreational, through popular on remain We top the license, are we Midwest highly being Northeast operate, X player limited in with developing which committed states a and or the a each leading states. of near

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are we across dispensaries more As definitive sixth with XX X X York, the 'XX, operating plan and or including construction. grows end to of XX under of X Pennsylvania we today, and states. that have in dispensaries, agreements X the operating By the have New licenses

has scouting only enabling best which years the Pittsburgh is and over the position few remaining to allocators area only registrant to our to By X leverage suburbs for for highly with in place legalize in is pursue dispensaries dispensary stores being vertical location only affiliated the amenable thesis sought people market sales XXXX, the The closed potential X over of to ago, near Turning Philadelphia restricted Scranton. a recently strong XXX of PA, to that us be registrant uniqueness the licensed strategy the adult-use This X a and sales same retailers. seeking in and our store of to We Pennsylvania. were investment older after state term. attractive must locations believe stores we Core anywhere billion and capital, us generates is in our market licenses $X.X the new illustrates medical plan with and population in medical Pennsylvania, locations of the and XX to disciplined us cultivation our Story operating capabilities acquisition with million [indiscernible]. dispensaries. in municipalities cannabis that. able of recently of annually X of clinical clinical ability are X license as second-mover have school, has This X in in limited an limited-license the more recreational the become cited license quarter retail we in that state. in to that a of affords legal citing roughly the The that and advantage

the We shareholder existing want prior attractively you on we for closely. our to the levels credit in facility. of shares feet year. just to intend that agreement recognize a material dearly, for drawing acquired of application transaction Pennsylvania and with watching the by transaction XX,XXX PA accretive I Storey cultivation at sale only building cash. XX.X has a value heart state as as million invest We of this adult-use repriced valued. have opportunities the highly especially shifted both build-out viewed the past at that and a have the result, pricing. and of current balance Pursuing market been been million and stock Story have in nominal the since stock the we we assure We million, We fund supply to We demand PA that license we its square to of for by our and canopy decision wholesale to strategic $XX given $XX.X now prior expand retail And to the is before leaseback for support would making plan operations closing. market. the moderate an on We in strategy do. and what these issue And comprised the

to disappointed settlement get-go a to and am felt it because discuss the move I to was the We in we litigation very this by Slide have of New surrendered. now MedMen, York seller's case from that details. Let's remorse they X report were pleased

operations we acquired market. begin adult-use but medical court, patients in always decided in to York prevail the anticipation move to to supply improving supporting been we build with additional can forward the settle New of highly have confident so and would we begin We the to

significant While as that essentially it extortion the discount for, asking payment, this is a outrageous sums win. view we a an the so from $XX was is million MedMen

which close its almost receive will will be MedMen shortly. XXX% transaction As part of to for we of a settlement, the in will counterclaims million, subsequent the close, and the end, terms, at Under $XX of MedMen against we make interest we upon and million due revised this $XX the on all The through of withdraw smart sale cannabis expect transaction New how like $XX the million million, transaction, controlling in York value incredibly a we to recreational before still adult further in at prices revised dispensary. in Etain cheap state compared is and earlier, the create lead flip the to for recent first attractive medical the use. mentioned MedMen acquisitions illustrating I comps $XX markets payment

Perullo, to We and high-quality patients the are President cannabis to Cofounder, turn our we York. grow on New I of and us the delivering focus to retail would citizens portfolio, the Frank distraction like experience so further to X we With of updates. lawsuit that, into dispensaries a over the forward call and and integrating have dive my behind and to X to can look thrilled into

Frank Perullo

Jersey. developments you, the key the some Abner, evening, delighted starting Thank review I'm New and in with business, everyone. to of good

in on most treatment country, adult-use state Jersey, densely XX the April began sales XX. X at the New dispensers for populated alternative allowing centers

from Ascend market potential the New rendering in exposure on -- the smaller Jersey New the is benefit operating impact an outsized us to Jersey Jersey sales. recreational recreational the New adult-use to on

emphasis the who our of days, there located grossed $X.X were Additionally, of handle our enhance we I together optimized generated Sales that I to better high nearly Jersey. customers highly Adult-use the equipped credit had member thank We our nearly at Park On to in to to to and in Park store close have generated who our lines of than staff handle million in our stores, Jersey would and I up close locations among XXX nearly Rochelle with from XX us looking parking are continued high throughput the New the retail our state. the on points appointment first a XX,XXX valuable traffic which to In prominently traffic. XX across scheduling. of stores purposely sales customers. expect alone and in $XXX,XXX recreational for I X competitors. argue our heavy adult in maintain medical our patients the the location X to team transactions. quality day, sales. New no want in us. testament Despite that to X,XXX opening forward worked to built It experience, demand, is to our online with sale we selected first ordering Park optimize Rochelle retail first spots, to success every service customer for enabling $XXX,XXX Northern location. Ascend day, little am use stores to come have Rochelle other and

Regulatory Canada state hope for state the Montclair from state use in the the at Montclair patients to cannabis. medical May X, completed recreational for XX sales we've shortly at store then store Jersey currently New of in with we receive approval May On waiting We apply our at submitted Commission application our to would commence with sell state. the adopted are thereafter. X, recreational Montclair. We the the order been heart to downtown May On resolution our of approval We serving meeting.

parking Our The The treatment Washington alternative store York customer late anticipated remains from throw Fort and completion to summer. the George Bridge. have points centers City and demand. track on XX stone New the for to the any plans handle of sale is closest of the Lee by store a is of to significant location

cultivation retail Today, we own Jersey XX,XXX expand. continues have to of online to support network. canopy feet New our square Our

rest have purchases while from third-party our demand We to of partners made flower significant us the facility. our build meet of retail help out we

came and late X, lab by we summer. have online extraction Our producing the plan to edibles online April kitchen

our key XXXX New of For Jersey Ascend, driver is a growth.

immediately New commenced, been with is financials entered state. these our reason step. operation sales the each It's states name a sales, of resemble recreational case following the business. operations game of Jersey the the is of This with start at profitable. a As But until we the have operating why the becomes the recreational since loss stair the this

the Let's detailed on business a Slide for move more starting X update to operations, retail. with

brands. vertical store not. produce we followed or always goal product, our Whole customer No stores, the their Abner many leaves and of of Foods achieving favorite our from sell products We while year, have Target XX% we our a produced brands model. our own in we also without sell to or retail Last margins. whether discussed capture revenues other branded it AWH

Ozone so As our were SKUs our or of of sales Herb, retail ability our own Ozone, partners from goal. brands, have to our our brands produce. whom achieve our for XX% expanded, derived Reserve we the Simply QX, has In

as out that strengthen is confident achievable continue our and XX% are We build offerings the goal capability. we to our

million. close ahead, our most Our high-quality retail In on among to per to productive our approach continue retail was experiences revenue $XX our dispensary to our industry. retail locations, unwavering to the to in emphasis average prominent our attribute consistent I products. order finding elevated be access commitment and QX, providing to stores the this

We our continue strengthen of execution. improve and to retail pillars success these

state, the seeing locations selectively As far the we to in increase coming and in we to bring early store which by vertical would potential be and to will pipeline, our next Michigan us in as it retail open East advantageous became we Since Michigan Michigan. our verticality one retail in in expect state. to stores weeks X year, have store additional Lansing, the been add the

Massachusetts dispensary increase also on recreational which Massachusetts open our of fall, this the X new to footprint to stores. maximum would track We are Bedford,

of immersive creating the Boston opened an recently second Ascend experience location, explore customers Street floor for We our to offering. Friends the also

Jersey launch with price. and Jersey in Finally, brand the of want maximum as with we quarter, well mentioned expected consumers begin our for to addition location, New adult-use been stores was earlier, Last selling the Herb. X will quality value we the of New and Simply all to cannabis also affordable in a the opening brand, Lee, Fort market who the X received our months. our increase adult-use coming offering to discussed has our The welcome footprint

our Massachusetts including front, we in we our cultivation Michigan. lab also expand Slide on a our began brought sale turn in this in business, expect these ended the Canopy think we selling We new be proud Jersey Kitchen In broadening the Massachusetts with our ramp-up capabilities, our expanding markets the we believe the quarter, produce with awaits release competitive, that, Canopy sometime don't Barry, just Unfortunately, to I'll we I online progress and the begin saturated. incremental remain of in added resolved and in industry market we will we to XX. online to Along harvesting our and we and the our the and brought the state capability. the feet planting On pending our first were We out of Dan New and online We equity Illinois the working Canopy. Illinois, the that progress late factors Canopy we to licenses, across build make the of has to to the until from period Not a the temporarily markets are our this After is although XXXX. in were continued continue in square in to lawsuit With market. oversupplied Greenhouse. XXX,XXX are retail objectives. feet brought review Michigan, Also, continue we form of Canopy social only recently with while quarter our Illinois achieve but made we as over we built to lab am build detail, team each expect it space to initial of cultivation do operate. over are the longer summer. cultivation. canopy, square our all operating total XXXX our starting recently in XX,XXX Canopy of made states financials

Daniel Neville

Thanks, Frank. everyone. Good evening,

X% sites, XX% revenue a revenues, but that wholesale XX% sequential own representing for by sales each representing Illinois Ohio. in was million retail an QX, our support which X% foundational pricing of net was of of revenues, $XX financially, stores. Net in our we to were approximate the progress decline intercompany to across we to the expect our expanded we nearly was was revenue, increase by increase the wholesale wholesale a it to our invested Although which the sales. $XX wholesale increased sale to excludes about value Total growth X%. million, disappointing in except primarily revenue Massachusetts. an after made and pricing representing dispensaries, sequential revenue decreased of margins in retail offset by sequential the cultivation fully $XX.X million, driven year. wholesale average to represents own Total headwinds net growth as QX, as was paid in quarter-over-quarter the increased in Gross remainder due driven we XX% primarily for intercompany our to system revenue In flat business was product quarter-over-quarter, and year-over-year. year. a during baskets X sales, sales realize parts decline third-party This intercompany $XXX the decline million, lower which decline $XX in states was quarter-over-quarter intercompany Net primarily X.X% of of of million, of

continue agreements. products, by particularly a profit with as QX to retail consolidated margin pressure partially of mentioned, and verticalization. XX We million face and XX% decreased X.X% on wholesale Adjusted decreased XX.X% efforts expanding by Mass. decline. prices supply we to adjusted expect wholesale to pressure. a $X in to our offset $X.X gross EBITDA $XX.X $XX.X million wholesale to aim driven these for Mass, distribution partnering sizes or profit basis sequentially, which and abundance represents markets, sequential profit decline. both Illinois a million, sequential gross oversupplied are was increased wholesale Adjusted profit pressured network million, gross local Frank players the The gross by an with in this As our the and smaller sequentially result basket pricing and points to of business Retail increase

basis for points QX represents Our XXX which decrease was margin sequentially. XX.X%, a

of cost cost We continue to program our budget. compared optimization the realized announced quarter, we've to targeted about X/XX, our make progress on as half savings last initial and

expenses. a reminder, $X.X expense of which approximately As is to sale related leasebacks, million operating rent considered are

We this to as are course will becomes are as period to model. We New the positive shared the service a quarter we leverage now with which a employees, of contributor approximately year. that XXX grow valued EBITDA corporate better X,XXX continue the ended over Jersey entering in of

Let's XX. the Slide move sheet on to balance discuss on

our On of cash the standard slide, which quarter. QX top waterfall, bridges of at end cash the see to the the you'll

both During operations closed CapEx about build-out of small We million Based in for we million X we cash repayment. for for sale $XX million. million cash reduced used our the ended to million. we used approximately We in Midway $X debt net with expansion received and driven projections, seller and of a the net New for leasebacks. and the of in equivalents in of by completion prior Jersey, in primarily the from time dispensaries of leasebacks fund and for line proceeds $XX $X million by approximately financing payments current invest sale quarters the $XX and intend in of quarter, Illinois $XX of second in-flight planned quarter our million and $XXX investing, for to cash And acquisitions proceeds on financing, Ohio, finally, cultivation cash of from build-out Pennsylvania. OCC net

the financing securing Pennsylvania of and our expansion in the term under We for are York. in New loan feature final stages

fund we in and and seen support good from the expect have existing days. coming We new lenders, to

asset multistate balance a us unique sheet, with combined premier Our positions as our strong operator. footprint,

with Northeast into accelerate it operator to continuing Ascend for size estimated for to to a near-term everyone use. today and is adult Ascend. one you time of by to will growth growing for the for exposure markets over XXXX, the its questions. with to that, Thank the and I With turn support potential driven significant only MSOs the

Operator

first Your Stanley question -- Beacon Securities. at sorry, will Instructions] Russell be I'm [Operator Stanley from

Russell Stanley

Just in order if retailers suppliers of seeing wondering the the on consolidate there you saturation elaborate to you're that deal to? Illinois. they trim if And you you're in to costs and you're wholesale number with seeing perhaps can Wondering seeing start what pressure spoke the leverage on front? that

Abner Kurtin

or you there's I -- of years, ability equity a mean to got Mass, up The Illinois Yes. meet did those what I to when pricing we and of really, you what driving I operating there the of Michigan almost get years the licenses state X to not guess. retail in oversupply. licenses dispensers has over license the expanded not want Illinois all follow-up? think cultivators social Russell, XXX That's It's is new now, pressure have retailers equity open. an have social open. the opening to those demand see of be And is get still that. what's X-plus to been pressure. but They've caused

Russell Stanley

with? any follow-up I you that that that you question. yet? on my the -- by retailers? wholesale trimming just suppliers Is do Or they Are through Yes. number retailers guess the seeing coming of a Are consolidation happening? anticipate deal

Abner Kurtin

Abner. it's Yes,

products, but think our our same I announced expanding they're you're of that right? sales. as own seeing for they we the just increasing doing the that products, own that, share vertical to give they're space the trying first that were is shelf they we're think thing thing I always to the do their proudly I think

mean a that's -- to an So to independent I most it's see a an that's you in you not something likely. place distribution be. just tough -- if tough wholesaler be be. you mean in without I see Pennsylvania, market, is we're to but oversupplied place

had they facing think they grow people pressures. just I expansion. didn't Leaf are their some that those a pretty mentioned They brought grow. have online Pure small additional of --

a fill -- bit definitely that a more. able see, or the that be. we it X kind that's the shelves it's -- been be top the their are that to think and about little to one changes continues market see. But add of we I they'll So micro the Those market to players, that's X

Operator

be will question McGinley Needham. Next from at Matt

Matt McGinley

would mentioned Dave facility quarter Jersey and adjusted Massachusetts will so second operating performance. gross the I terms open, point? into great complete that now your valley a push in expansions it'd be in the at sales for is margin and higher are hard New So year pricing guess to improve that of Or that adult pressure first your begin quarter? the this the are rate use that be are to Illinois

Daniel Neville

Matt. Yes,

we the I see in have Obviously, But to Jersey it. should gross Jersey think across into is few start -- look we're should improve. are a the strong margins we margin weeks market. We New up New opening Canopy -- gross do some today.

stands recreational. today to kind our existing it We being store with footprint have XX,XXX is one of square feet of That as enough service flowering canopy.

buy verticalization of square feet. an the X we and us XX,XXX and up, to a Phase sales and kind to the allows biomass comes achieve have Fort online. prepare that quarter our to As sufficient in wholesale in Phase some meet additional Lee access and Montclair open the full biomass did adds before have expansion It business. X bulk state of

So I year help once an that think then stage what New some with additional an things this of we strong use on you'll And full side early see in is with verticalization margins. adult in uptick and pricing market. the achieve Jersey QX market in of

Abner Kurtin

and wholesaler, coming the without in a situation markets. online into the expanding different new Illinois, these It's pretty new really our the solid. pricing just we Mass largest fourth Yes. issue. stores The a coming really, capacity Illinois unfortunate have or is just on third I healthy, saturated also It's Mass of would market. side, coming the we're tough where capacity is especially the online. online say business remains

for oversupply, industry to Mass the people it. and expect be problem a to We real to exposed be

it's for small a However, us, business.

So market. a doesn't pick to we share It's trying for it losing about because we're the time small. being, not were saturated up -- us in like it's share

Matt McGinley

half on the year, you we a more you first much saved for did the of cost mentioned, into cost that that Got And I assume it. you the $XX by in savings March the XX. savings million second? And a should could full quarter? full actually How savings one if save it million dollars mentioned think was and run ask in rate in that you I $X

Daniel Neville

but much a associated that. had was we realize didn't with It it. some where flight progress of costs there We of separations, the Yes. in really earnings on got of kind too that there -- in some as was were work call, --

there to We that I in part you flowing through So P&L bit. much at get didn't a think starting the it little look a for of in QX can that. of QX to start state in New are at adding adding people grow. mean word -- added We of I we're But Jersey. additional just We're support. additional in We're new caution, a -- one expanding Pennsylvania.

also has headcount is additional in state. adult there some So we as back come new it and into expand flip use that to a

Operator

Your next question Kenric will at Tyghe be from ATB.

Kenric Tyghe

New initially adult that color fully Any York? could get level you cost, there, to only able get with Can in there even York of to earlier would to Your and adult appreciated. expect in New timely than is how what on than additional timely able in to there you to preparedness manner to start respect context York. expected expected greatly a just use be potential on was in that a what lower And with in be a was? but not your time comfort be more speak New Congrats outcome being use? the this would capitalize

Abner Kurtin

previous likely of calls, New York. Sure. most I mean, the I facility relocate all, in think we to on grow first said looking we're

we think the hitting will a we grow facility of That upgrades industrial quickly and be shell moved -- that power can secured and And meet we think use. work goals basis. adult very can already move We reason, a that our because better of that attractive can it's ahead start have original that other with. we with on for types of we've

to that they and New will of and move and basis. want what And that's wait CCB we'll hit market of stores terms mid-XXXX. saying is shooting be a social with going We not read and exactly don't in to that. confused, the on to and when start the how they're everybody to which to exactly accordingly. what to issue year, not York's work a any lot We want They is sure next York regs. OCM still have don't sure color. else going line In of hear have equity opened like licenses We're get get we, we the We're do great. think We're of New quickly, to right? plans, out use. of products suite We and for plan, we adult great we'll how any have think

Kenric Tyghe

perhaps will a south then able cultivation to that and the there look you what service York to respect at from with how will -- Just be XXXX? much expanded of follow-up New expanded will your your cultivation like in exiting

Abner Kurtin

New think moderate York. a say little to I too phase-up growth I it's would in give plan bit I that mean we early Yes. a the plan.

decision clarity, grow, more as you Phase see way and that a great of prudent are The We to there's high-quality building prudent on more generate refined The that right moving flower opportunity. and York or and think in a opportunity state. we're forward of for indoor that get -- New think the and we do in us. as if sales New operators is prudent we lot all it much indoor to is has view now, products. kind very operators highest return for high-risk markets. as to a the is we uncertain work -- state X it. has a -- the other opportunity our and vertical add in aren't really with us, We definitely premium plan biomass is to can the outdoor the X manufactured high-quality to flower But that of purchase we're take at of grow, Should indoor of like much that what markets, We flower premium in license looking for think other capital sense the there facility handle for to other it. a hemp great to Phase York prepared allow biomass makes most -- grow and

Operator

Semple Echelon from Next Andrew question will of Capital. be

Andrew Semple

into budget and to need credit you're into that facility drawdown CapEx additional to X new Pennsylvania, with incremental be there that just you X those XXXX? pretty XXXX that obviously could maybe go for associated states? CapEx time New portfolio and discussing some here, York able the the will one of heavy be CapEx. the states First How And anticipating, the lift some would cover to on all spend shift of will might the going to

Abner Kurtin

about transactions. is and I'll I'll the way New leaseback turn through CapEx Dan it to but conceptually, say sale in facilities to the Pennsylvania plan the think to York to we it grow that over run fund and with financing,

be have There us the the So just huge. sheet. be back some $XXX to million not but wouldn't obviously side, on net XXX will spending potentially balance the increase. under on retail dramatically could that We CapEx --

million available of accordingly. expand, us in the put on both to and those credit and line $XX we're of We have we shape, working capacity think good

Daniel Neville

Yes.

the sale then New that $XX And we to -- build really shouldn't part there's much dispensaries. out of million as million would too the pocket for dispensary as the million by in then on PA funded $XX And side $XX -- retail contemplate And leasebacks -- CapEx, side then net XXXX, Abner so is see on in expansion those out York. CapEx and by funded line. and CapEx for is that did come of that sale CapEx. dispensary We cultivation mentioned, of lease

yet. be Those not to CapEx have not fall out, in the bucket. most We retail would are are of cited for talk to York registered expect and finalized, getting -- dispensaries I the written would the Things additional into but built the but organizations. regs New there XXXX are of was

Andrew Semple

remainder should then think And probably as the as but basis? moving climbing year. Is of should say the the that half beginning we to sole there for absolute growth costs, to percentage there's as I back the of operating begin the How parts of the to quarter, an on Great. about to moderate well just return being year? a couple you. just to the worked with synergies it of revenue, that we a SG&A expectations to dollar -- want trajectory want fair ramp for next Got obviously SG&A I see for a spend.

Daniel Neville

Yes.

certainly some revenue. in be we're We'll comes fair. obviously We that added up states. PA to operating hire that picking in also I up. an think We're with New and advance new York, cost X of would have business picking which with MedMen, overhead

and square getting there's with in lot in continue to dimes, whether -- so offset is this just this the the terms things is when from additional going just additional quite growth of additional bills for we're XX,XXX and XXX% is attack multiple to We're grow. additional by offset They side here, little a and to we're the easier there turning expand would whether of on dollar facilities of are some these year more can pick driver MedMen, big million. in had it's turning heads. it side X will we at this on ain't have litigation revenue being -- some but cost than saving it's we there's growth lying going of the we adding foot we One I frankly, X pressures the like that great is SG&A were -- not that -- nickels cheap. lawyers and the and things, There's were just those it's all to we continuing $XX that as we bit structure, excellent. say on job states So stopping use do on have thing states. a I as But up the Matt, business. online, that heads, We're New the last mentioned to they a was But banking lot SG&A we're a other moderated fees, are company new like of York the in mention, quarter, the not going around did the stuff really stores when look, I cost the to -- think, states. Jersey, adult the year. X New X to be that

litigation cost severance cost to And so out the -- the are some had we between the about $X.X that million opportunities expense then the that $X that we spent of settled. And to or savings about we expenses issues had we quarter related million in on there realized. of related

Abner Kurtin

But side Midwest most look and potential to our Look, and of be year. our us beyond. related after-tax acquisitions, think questions. flow free at also not positive you what would cash are go look accretive lot areas they 'XX, had your value got in to a We're exciting strategic as the do, the core more acquisitions of half when potentially really is to there. New being area getting sector. a I operating the second Jersey growth the able shortly our We really to very 'XX, and lot we've to seeing strategic the say just the Mid-Atlantic, at Northeast, we're But of year. we to in of more on this going

medium-term are the New next, Ohio comes York on Pennsylvania horizon. and

new. amazing time is position it's positioned size We also opportunity. as that advantage short-term other ourselves do businesses, now industry of take our we We are the those advantage opportunity. that of We important, companies. you too but we with and years. But out cash This need look when results. don't free taking take leverage, well rapidly -- are to we are in be is to a grower accelerating Obviously, at the to operating to expanding still an this growth think really focus much that of on to flow the can advantage profile --

Operator

will Ty Collin And at Instructions] next your question Eight Capital. from [Operator be

Ty Collin

you've assortment, into Now the all best you share cost at higher living? that a you've more between given your good, you tiers seeing whether true introduced those around seen moving any can better, trade and of SKU customers Herb formats? you Simply have are And down value-oriented brands insights into your pricing any and

Frank Perullo

Thank Sure. for the you question.

about So THC so they're a shopping. only of or shoppers, like most data. month We have

our on up, larger the some formats we're Simply products by conclusions. we're But shoppers the to drastic really higher-end Herb So to seeing seeing and I shop don't THC want continuing pick THC. make

the to looking product Herb, majority a But for grams, to. to best the biomass where product value are going transitioning when they're the for of transition comes value the is Simply for X So wherever the shopper it XX your That's that. shoppers to for sticking into their high-quality or sure.

Abner Kurtin

I here, some issue also is growing the which are of and at better mean think kind product. another is looking pricing I the pressure that there's people consumer. industry

in were years in THC. buying a in quality XX% of You some of you the California, not ago to lot lower XX% or were you -- couple a popcorn product, if markets, maybe

a higher to get lot smart. The competitors or our their low for money. customer can customer have more percent of THC. products The is little they the as in We a knows bit

part here is equation the that as of well. So

Ty Collin

just place? own sort and ongoing running. up purchase agreement of that to maybe Okay. of until that to is your I'm New just And of from in you the you detail provide you one-off capacity biomass? back some place an then on secure that trying the get supply a just supply had Jersey. is Was Can purchase arrangements wholesale to market? circling how Do have sense offtake more a in

Abner Kurtin

they Look, has on gone to supply making at there was patients the going is sure medical exercise. focused They Every and through state that -- didn't enough state which availability want understandable. very looked protect into adult was totally use. shortages, we wanted the

a let's but have we Phase before X We online, gap comes grow, say, this great summer. have late in

and circumstances, modeled sure wholesale ourselves, think to are situation our large create who able we'd a contact state, TerrAscend, basis. that and wholesalers in friends were at conservative that will create adult supply inventory for the but do prior be to and were We to had we delays of scenario excellent we're market the to we and had Curaleaf by state. out that up to -- their purchases before. of So a months a use. And able X to building much we on wanted make increased make our to potentially market, selling. supposed able to them stores the would was fully a need we we need be it their out, what under we happen don't help any which very under I production possible because They because both to start to Those win-win parties. We of help X supply the for us companies able were by able too they buying, to, were were scenario think, were to

friends, to Going want we're they've of think We we to that, gap really forward, X situation Curaleaf, we day. We've that grow -- the competitor every Phase coming got our solves wholesale get until got our online. great But buying TerrAscend. products.

few is put on on good everybody already. that to I market wholesale think We up for going for everybody. the good shelf for the a That's to stores, plan be shelf. going customers, to think others over open the time. And we our our good

something the as us. be by for wholesale always Phase can quarter we said, get maybe is Frank them bulk. more as the market somebody and business an to that beginning And think the the don't bulk going. fourth supply extra we'll happy hope, in on first to to not attractive of or enter X supply we hone quarter That has we're do opportunistic. we that and If we're but work buy purchases, any producing, need So we're

Operator

And call at no go like this time, turn we have to Please further I Mr. ahead. the would Kurtin. over questions. back to

Abner Kurtin

you really We're Well, look, thank excited. guys for the taking time.

in business really it's financial it of happy of a you an on employees The to turn as New who've operator time. exciting good type great this those who I dealing positive are have ever put a we've the period forward in a town other level, industry huge. for the the a probably Jersey growth. and the to financially representatives really they're it to had. benefiting customers that for continue Jersey. store is about New I board. adult seen move is with Jersey. And it's really business states in helping numbers, It thrilled, everyone. And that in on put portfolio a kind -- forward plus both Pennsylvania I We the now. this weren't license is growth very about quarter ramped into build this with wholesale. I go mean we equity that quarter since a the While This experience was the carrying get and revenues -- up on it's on level look and a and use. anyone tax as state, obviously, some exciting new but best And for and been region we think against see thrilled, go been going year business And us working to people isn't impact York board, our markets, in, largest us, not we the social see in New are licenses on every right It in probably X would to is our of New the time. we've maps, up are the adult-use of them get enjoying personal definitely had to on was

you investors. won't for to We the margin I the are look the But best our We portfolio, value think and got create quarter. quarter best got we've incredibly have grow. well we've this when highest opportunity out, to -- and we're positioned next

thank you a everybody, and joining night. that, with us, So for have good

Operator

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

Ascend Wellness (AAWH) 12 May 222022 Q1 Earnings call transcript