CURLF - Earnings call transcript Q2 2021

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Operator

Good afternoon and welcome to the Curaleaf Second Quarter 2021 Conference Call. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Carlos Madrazo, Head of Investor Relations. Please go ahead.

Carlos Madrazo

Good afternoon, everyone and welcome to Curaleaf Holdings, Second Quarter 2021 conference call. Chief Boris Bayern, Chairman, Davidson, Chief Officer, Ranjan by Vice Lusardi, Chief joined and Joe Chairman, Executive Kalia, we're Jordan, Joseph Executive Executive Operating Today Officer. Financial Officer, Neil

undertake today's that and forward-looking to I could estimates, begin, projections, nature the within remind comments Including a only factors forward-looking and statements. or assumptions any of were forward-looking as like integration new Before there laws, acquisitions call should to risks in of upon that successful future this outcomes and applicable which subject differ of obligation update making no law. sort we include predictions statements Canadian expressed would events, future not forecasting information, will a uncertainties meaning involve security revise These or certain applied as you conference speak is plans, actual otherwise, or events. to forecasts, from and that goals, drawing required as assumptions. date to except cause by where on or on U.S of the of of statements, or statements. the their results relied call those statements be our material result conclusion materially in We On the a forward-looking of by

Company's found the the the the and forward-looking of Exchange. in basis and statements on the forming factors Additional assumptions about risk can and Securities information be factors material press Canadian and SEDAR filings releases

over in unless Executive of that meaning refer Chairman, adjusted Jordan. such prescribed found release. not Conference that call is information indicated. that, U.S. any Boris Curaleaf EBITDA, the which to Please With standardized press do in be as will financial all today's our measures IFRS, non-IFRS like may now I'd Call, During the earnings to dollars definitions to turn by have otherwise note provided

Boris Jordan

Quarter earnings our results joining thank Good us call. you And today for afternoon, Second for everyone.

to Before welcome at Chief Having Ranjan want team experience brings to financial Financial our and the positions of I CFO, companies, him We would Michael CPG contributions. of also I a wish Officer. Ranjan Kalia, thank all recovery. multiple to former for Carlotti, and him we're breadth join and the have his I begin, our technology like speedy new held very happy Company. to prompt a

profitability. continued Our as success sales market and all-time of strategy the of unrivaled 's delivered EBITDA levels again record we of results second-quarter reach, positioning Curaleaf reflect high in the once strategic scale, adjusted and U.S.-Canada's

for which long-term an us presence leader Europe, We and cannabis establishes market revenue pure-play major also acquired growth another and provides Curaleaf in the by reach. unmatched lever our as geographic business global

and total During growth quarter, with growth XX% the we to a rising delivered year-on-year guidance revenue on of to sequential equivalent million, second XXX%. of XXX our

Curaleaf which our increased for international Excluding $XXX million. consolidating to time business, we started revenue our the first new this quarter,

In record here terms of well. driving profitability, posted results as we

in and be at over time. X annualized and XXX months. that states next several group will million more in least joining profitability this we as X operate group many relevant expanded sequentially, become business, adjusted markets. XXX And all up increasing EBITDA entrants reached And into margin basis deep U.S. sequentially. EBITDA we core our more XX% margin leading have Executing ahead. basis will operating that the we national that contributors in to revenue our delivering are ground we early captured focused from our remain a state Not the on we U.S. and strategy, growth opportunities lie the impressive gains, key built benefited XXX capability approximately points our operational to revenue Our scale are major only XX%, margin in adjusted we Today, contribute the and efficiencies. points Cannabis on but

a X and the closing us solid the strengthen in the market expand help billion+ adult-use better cannabis where acquire boost Colorado U.S. our today. May, established our are states cultivation agreed U.S. Suenos, markets programs medical we'll to XX producer in and market the To transaction, Colorado, adult-use Los Cannabis and The in other presence low-cost in in position vertically XX-acre this tremendous annual in well we as serve capacity, business, continue our a ourselves medical Upon state, further the to operation the we significantly and have U.S. grow profitability with second-largest to as where evolve. integrate potential outdoor leading

equity across There for spectrum social They Cannabis unprecedented version bill. final to regulation, minority should transaction efforts Curaleaf industries At and motivation initiatives. expect Bill. of long-awaited agree a support negotiate federal soon. reform push multiple and close Comprehensive to sensible and by led taxation, Schumer Senator for sector We including political strong the the expanded Federal Republicans to Democrats uplisting, for the banking, this is access and groups. industry to has and month, Cannabis stock introduced the level reform, last exchange to and provide

We minimally and elections. which account months place, before banking expect of the taking in The scope underlines wide investor around of in the coming long-term a flexible various strategy will include some reform debate will having plenty safeguards the details level outcomes. the midterm potential into importance believe of of the the passed bill and be

consideration. multiple this into and have horizons plant long-term much Our taken strategy very

with shields potential federal the our of to of into the very state research of those maintained roadblocks the Los us it's Congress full cultivation the that scientific interstate wholesale biomass customers medical cost-efficient, commerce. facility, and of and therapeutic a ultimately from by of month, needs provides of investment, an existing Suenos state plant, noting example, laws Department. For provision cannabis, and today. But at scale the the supplying both regional for effects approved removal in level, biomass Justice last marijuana on high-quality a the capable the event our Also low, intervention supply in

month late adult-use accelerating. market we New sales are early XXXX XXXX. to suite and that into seeing regulations liberalization state-level this We look and full draft regulatory preparing the up have trends fully Jersey, ramp in Just address of for been In with this to anticipate importantly forward for a to products. as begin will near-term growth, adult-use sales

Our regularly, harvesting processing the state. to facilities our in and cultivation position intend we and maintain leadership new

Xrd second forward We dispensary Bordentown, south just sales opening to also will this of we look adult-use our in anticipate the XXXX. Connecticut, of In begin Trenton in month. quarter

In cultivation a customer by secure set manufacturing sales the have XXXX. adult-use We a retail York, expect we maintaining significant adult-use to are and in process early addressing position. forward of to our of commencement. expansion the We our new and in additional sites advance begin to program commissioned facilities look New leading

New of We patients law to is are flower matter and consumers on the codified not the by future it's begin Senate desk regulations. expected to waiting the into so for a whole when. demanded Governor's awaiting It's confirm by The if, long on appointees approval. but York working

another a view population We our of every million have leading tourists presence of The around capacity the estimated tri-state square additional cultivation as of a regulations XX as market ramp get to and receives potential And have million, commissioned X XXXs XXX,XXX opportunity of we where year. billion. timing. has will clearer annual a a market feet we complex and up combined region

incremental with it brand among that The these also potential X will and of around capacity, population one today estimated XXXX, to expands region forecast XX a number represent opportunity. retail X approve up. another a positioned adult-use share combined major these will next to And are cannabis million. the in they states market Given Curaleaf purely market. additional the market Maryland, become billion in data uniquely strong and beyond BDSA, we're combined network, largest states the market, Xth likely our the By states. X ramp is markets to adult-use, annual we're of estimated strong main and from these this Northeast be Northeast robust presence Pennsylvania identity, the beneficiaries be of to Once address the has according

Bayern. another successful acquisition largest Curaleaf's Cannabis the our of the in of the was integrated, entry during in with quarter April our major second U.S. Cannabis still the me presence, trends revenue high beyond Company hit which and turn CEO, IFRS vertically tremendous we growth solid track for over to independent Europe Looking create positive EMMAC, innings in developments on Curaleaf more and of has guidance completion national billion Europe, have is been the near shareholders. have the never With our today; and for rebranded we into see X.X Joe about milestone to for our an of that International. operations. the We global are will Based market early of industry that, on that value for now their the significant the growth. the Curaleaf call we the in as business. confidence outlooks long-term Overall, has we Overall, consolidated on been and potential. strategy full-year market-leading let opportunity seize to optimistic our U.S. and potential execution remain our very And X.X an midpoint

Joe Bayern

say? and the industry a great everyone. I What afternoon, Curaleaf Boris, It cannabis can whole. for was you, a and Thank quarter good as

that extremely quarter is also happy commercialization the to definitive in we're advances development. working. our We incredibly about product are I'm and our with as and excited continuing research strategy significant for it make the is record proof results

more pillars continue to competitive some on detail of in and of the of most these initiatives capabilities provide will are Our one areas exciting unmatched in later the I'll industry our call. as in long-term our advantage. act

my Let retail at walk-through level. the me start

U.S. selectively footprint. continue expanding our We market-leading

Maine, location July opening adult-use and next today. in in We on followed quarter XXX quantity another X we dispensary the new of bringing dispensaries Illinois, on we X the As in second our premium XXrd, as X store continue total including to Pennsylvania, phase right in adding and over quality of the Maine stores our U.S. move into retail Jersey, New first by in flagship expansion, locations. focus count and opened Wells, only in to are in our

to Pennsylvania. During open dispensaries the expect across we Curaleaf and an Jersey, New remainder retail Florida, of additional X Arizona, XXXX, new

and have build a this share XX dispensaries store total we plan and in gained this of in to Florida We of by have market XXXX. on new the state with to steadily end openings expect

we as mentioned patients, our process but in past, the welcoming well which are reflect adult-use believe dispensaries a relevant is we've of more contemporary to As as to our in the rebranding medical legacy consumers. of also we look, all

complete We rebranding by end September. of the be the to expect

Our on positive, Including XX% medical was use, up revenue side operating the with second-quarter retail number transactions of financial total sequentially. and adult-use the second the were very during growing retail metrics quarter. both and XX%

second the business, grow, the wholesale X,XXX At On expanding level, March, helped to of X% wholesale number U.S. of during XX%. which patients quarter while number total X% side of by drive grew order month of we the the accounts sequential value. revenue of by the from during the June continues accounts, average surpass medical active to approximately growth maintaining the

competitive distribution is Our pillars of of wholesale another advantage. sustainable platform our

As we to a widest the CPG-focused believe continue array invest to we the continue in that of brands consumers. in reaches and a power Cannabis portfolio of Company,

quarter, Noble demographics. Curaleaf Stones and the launched Maryland, Select relationships and we and drive introduced leveraging partnerships Massachusetts visibility This Rolling and strategic partnership preference in Select and we in Nevada the new B brand to to

capacity, new harvesting Florida, cultivation we Pennsylvania, cultivation centers of Arizona, terms In Jersey. New in Maine, our from and began

brought expansion canopy these of square half of online of of expansions, XXX,XXX expected first nearly now year. feet annual flower the feet have With our square the we during XXX,XXX

as capacity will Operating square the of the additional commission in but half. margins catalyst not half additional for help in a to feet accelerated improve also XX,XXX an our expect the We serve growth second This only will year. second

the York, We New states, additional are key also commissioned of and will in be of Pennsylvania. that New process in building XXXX number Jersey, Florida, Connecticut, including a capacity in

We are the excited year. about our the balance of prospects for

our site store in For growth. help And cultivation to dispensary full wholesale In our we the will Massachusetts, state. market our state. business in half of superior second new in continue Xrd should continued Maryland, ramp wholesale we're this to site open imminently, quarter example, will from processing the by dispensaries share expansion locations that our in to in new the year. of the process drive expect up larger In gaining continue cultivation openings of will in driven moving of a our Jersey, business cultivation benefit we Florida, our and the New and expect and and a

and commercialization have a underway. we product and initiatives onto development, exciting of Moving number research

we in bring roll investors, testing out expect we of As final said new the our previous to which calls stages proprietary in extraction XXXX. early are down cost which technology, to of should in our production, pilot we substantially

along Gummy Classic way the over improved experience. we the and including they proprietary to Nano flavors nanotechnology, Squeeze line. new faster-acting to bring our fresh launch even will choice to than their variety enjoy which quarter This consumers our line, innovation is the technology continue to and provide the Gummy our Also, to with nanotechnology, we utilizing current control innovative latest ultimate add

on exploring multiple and innovation also developing CBN, and the through such cannabinoids, of clinical other potential delivery formulations benefits been working have We CBG technologies and studies. unique THCV, as

bring We of these incorporate market expect half XXXX. cannabinoids to the products that to in second

In and across products addition, categories and new products XXX little in we improving fill that many innovation. Squeeze vape, think develop where we actively market. the beverage, our of ready-to-drink over was launched I and innovation assortment concentrate, the the proprietary Little developing i. our XXXX. terms big we little of forth. our products out within to past When months. of so think innovative bring topical over launched packaging I, innovation, a will were We've of are footprint, a we which of be majority first new big texture, technology and XX to portfolio am product flavor, The to oral, example

have our we new provide research that factors form over of months. exciting technologies new ramped is next innovation full and the funnel of and development XX will stream Now products up that capabilities steady a our

demand. European In growth to small our our we United cannabis on operation, important significant still in strain while Moving second a making revenue, to flower continues Kingdom, patient contributor the International, medical Curaleaf launched of meet to the strides.

We pharma Spain product in flower received now in and with cannabis witnessed a for alchemy of GMP cannabis increase partnership Germany. cannabis Spain, in purposes. strategic in announced flowers. It distribute a of certification clinics. investigational cannabis year. throughout EU pharmaceutical leader patient this additional in processing have Uvigo, treatment we called XXX% a and Company by can was product distributed lab our entered Also, manufactured in the paying of recently March In medical the first disease. product by co-branded launch since numbers in and medical the our specialized of Curaleaf Germany into commercialization Zambon, June, Parkinson's adopted International UK a We medical a The launched X the for products and medical manufacture as

under further sold and Only been very new out end the currently exported we second regulation. and to tons flowers product being of to Europe, is each Company Beyond does X.X month. so by track The medical on Cannabis has Israel of Israel. the received adding has is the X,XXX patients a well August. over XXX,XXX

do important the and Finally, with moving Portugal CBD of Cannabis forward we're the responsibility. initiatives the French like with quarter suppliers, adult-use to discussion business some XX Court the and processes other legalization their a legality and partners. ended things on with are with the We I'd around possible and Spain advocacy Malta our doing on of France. in as to forward Supreme close social updates Cannabis. moving communities. products medical matters industry brands, gave important underrepresented establishing the from program is very ciliary the judgment organizations In leader in political with Wellness respective of Cannabis

by we opportunities In B directly the impacted funding Noble our of dedicated and providing Maryland drugs. in to to in equity addition, on social Massachusetts July advancing with sales pre-rolls and to dedicated those a local launched organizations, portion war

evaluate that female-funded force On Greentech to the Curaleaf carbon task we environmental carbon an to audit of assembled a the becoming has I'm neutral. complete startup have And pleased footprint. share strategies front, hired for our to Map-Collective,

call over Now, Ranjan. let the to me turn

Ranjan Kalia

of the mentioned, Revenue the you, during achieved milestones. XX% we which represented growth and revenue revenue sequential of everyone. to financial you, million, Thank a $XXX revenue. growth and Boris And good growth many for Joe And warm welcome. record recorded quarter, Retail and afternoon thank We reached XX% Boris, of of Joe. retail growth represented $XXX year-over-year of XXX%. year-over-year of sequential million, XXX%. total XX.X%,

was sequential strong and increase acquisition repeat in an customers. growth new by primarily customer Our driven

grew Additionally, This and a art the to of by and increased productivity. year sequentially increasing of to million, The This year-over-year XX%, opening accounts Wholesale from XX% the X revenue. growth of online sales basis, selective of during facilities total XX.X% revenue increased Basis in to gross cultivation e-commerce Gross margin stores XXX% we in margin and penetration. new addition approximately benefited coming on was points new of the and increase an XX driven XXX and due sequential Basis new from existing locations points. in represented year. possible quarter. On increased XX the increase facilities an the was state yields

expect the a SG&A of continue expense trends XXX-basis in of or half consolidated the quarter. benefiting We XX.X% year. first was XX.X% to from points versus reduction the XX in these million second revenue,

EBITDA $XX.X SG&A reached year-over-year, our business, and adjusted XXX was Looking operating we basis Adjusted consolidated sequentially. of primarily revenue, XX.X% processes. sequentially, the strong XX across even diligently leverage. XX.X% XXX% basis, reduction U.S. up EBITDA up an solely in increased all capture by a XX%, driven million at or revenue million, work of sequential and business growth greater reached efficiencies to On basis XXX points, as margin operating SG&A points

full-year be Our we expect basis of margin adjusted With margin an XX.X%, prior adjusted XXX an our gain our EBITDA core EBITDA points line with greater saw for up it regard U.S. U.S. even reaching in sequentially. to business to the business, guidance.

million was the one-time related margins Provision significantly on closing EMMAC due expect the Quarter decreased significantly loss the Quarter, Consolidated business the First U.S. in allocated from million, in X have Second loss in expected $X.X consolidated expenses as Second Quarter transaction. was margins, quarter. are to in a to primarily this XX.X charges to which gross Curaleaf Quarter Net fourth the million to XX.X million. impact Quarter but taxes diluted Second compared addition, decline The for we International slightly In includes Curaleaf to impact to First profit. $XX to higher Net and million

to during debt. cash cultivation focused end opportunities prepare of facilities XX% $XXX well and on full-year closing, We and as 'XX discounts, margin EBITDA adjusted and presence plan we're outstanding invest up $XXX XX growth continued increasing from approximately XXXX growth continue debt in unamortized $XXX the performance balance order Investments to equivalents million and We our million were on to million. an debt a with are sheet beyond. capital quarter. our first basis, the quarter as selectively our Net continue net of processing debt, refinance strong expenditures quarter, retail pleased markets. the January be cash in our opportunity delivered footprint $XX.X and sequential processing, strong for expected our down million. the of with On of second quarter. of Capital $XXX In maintain improvement. our expenditures was prior in XXX points basis capacity, were revenue to expanding at retail we to we expect million to explore bring as strategic the cost the for cultivation, in and financial this revenue organic we in At to

operating flow which continue in will coming to the trend in this year. expect quarters, of We the cash us second quarter help the drive

the Joe. back Now, to me let call turn

Joe Bayern

top-line, science. open call like always, form and that, as on for I'll formulations adding We factors focus turn new closing, their creating line Curaleaf With back and cultivation growing to value. thank for the a shareholder focus to team to innovative the Operator expanding the In I'd on committed continued the entire And backed questions. with execution. profitability, our capacity, Thank developing Ranjan. you, to remain by

Operator

Pablo Fitzgerald. comes session. [Operator Our We Instructions] question Cantor today question-and-answer will the now first Zuanic begin with from

Pablo Zuanic

I Thank you. question guess just first. Boris, one

spoken in and level expanding trying same state have at the interstate made You in for at you're the the capacity But ready of East. Colorado. in time, you that past to get trade aggressively acquisition the

is in of a term, past I cultivation Mississippi economical said in the to trade. think be so that not interstate the in market you've may long in

to trying two just the put things together. I'm So,

a these. Thank you that four, could by federal-level so there but reconcile happen. believe reform, You to you're expanding the five don't you interstate hence, two expect have Can I'm you. just things? guessing mid-terms, the we be years trade still It out,

Boris Jordan

right. April by I do think, you having We Pablo, exactly it year. reform of anticipate significant have next

process be the issues. full justice have don't more mean, this the given going involved That's around reform, we're federal where happen. However, could the is to believe York. in East it ready we we our safe New believe about I that's to point incredible at that, and pretty tax in given for I that social risk banking, always mean going And up that's We but close government time happen There's believe is don't commerce. it a to on that's and pretty at the demand we intimately. what's moment. thinking the Coast, come interstate

our New Connecticut, in whom of for XX New be demand, represent Jersey, As York, we of be we about soon said market billion to potential to report, what prepared all Maryland, will $XX and need million Pennsylvania think XX that. we -

are Jersey. we New expanding So, in

already the have be expanding we We're a recently margins from expanding to those expanding facilities in are coming more. the on bit York. But payback growth in businesses that New so those Connecticut. expect quickly. great We're We expanded. We're

markets. preparing those for we are So,

have maintain that also want interstate the And come market to comp is be able next our We markets. to unlikely to share. we We performance this in those to package. believe supply

Pablo Zuanic

just quick think one. I just -- I one

the end lower market gets lower Pennsylvania. supply operators the This Florida the than of me some buy mainstream a Florida, doing in some there's promotions faster pressure one week. prices, Pennsylvania, at there case in competitive retailers increasing flower of that means In about landscape some there of Just terms able free type more an update we're of right? in telling than in been terms they've one Because demand. hearing in to of and are that for and buy

color in terms competitive Florida Thank you. of Pennsylvania quick and landscape. Just

Boris Jordan

developed that they're in both capacity different similar And cultivation this different. Florida are markets those Pennsylvania. has of and is that medical. that in point they more both at more than They're are So,

We feel that have market and at pricing continues expand. in not time. to in that seen Pennsylvania We grow to point this pressures continues

Boris Jordan

However, Florida the though lot fall. leave have in we growing, seen pricing do of some even be come to because tend summer they state first Florida and And all, pressures months in of people the in Florida. do is slower a back the

However, and share we in at I EBITDA this seem hasn't isn't reiterate competing very our AltMed, way. that continue strong. definitely And want to but and see main in robust to of that Surterra market It are very I -- still our affected hand operators, at get business. to be do point The But Florida out Florida competition X again, Leaf, spot. margins margin this for all margins time, out there's to point in time. True the I in for the any Curaleaf, top think going of

Pablo Zuanic

you. Got it. Thank

Operator

Cowen. Our next question comes Vivien Azer with

Vivien Azer

Hi. Thank you.

in to progression any medium-term how the give in guys you Obviously, that the over update you. here? about thinking Can in very an and Is there be color just there improvement the helpful? low-cost particular, relative but and your us peers is given gross You margin some any -- would opportunity, to novel methodology. processes on in the margin a work putting quarter, gross an Thank these on approach new cultivation place. you're from your optimizing nice

Boris Jordan

and some just margin. beginning much a the at we our which is of we anticipate XX%. has One at EBITDA We year we're Vivien, continuing margin needs eventually XX% outlined European XX% Right And that are a Gross to business. targets meeting the margin. about Curaleaf, a that the Sure. Gross our expand the we now, competitors, wider have footprint. now to of XX% to unlike remember

little there. bit for get sheer the and And so, the growth us But to compensate really business it's of size just a taking longer that.

that both And priority. stipulated operating basis on at getting I've at growth the for margin comfortable very be brands me, always a end next believe a year. I that will XX+% national very, very a is our we is global throughout of out But are that so, important. and day, EBITDA the we year the there

Vivien Azer

Florida XXXX. is And, XX you you, of in believe for I dispensaries end I heard say you. Understood. Thank Joe, follow-up my you're the targeting please. by

on in phasing you. more of gap? just any commented additions also in the of new on bridging You Can the color XX Thank XXXX. doors back you offer have I door the Florida you half believe today.

Joe Bayern

Yeah.

prerecorded to focus I new Florida. really think in mentioned started store as quantity as on as well of openings I my quality we've comments, in

already also on alluded of to includes ourselves product, to sure want it's we're as that volume products, to And possible. of preparing competitive we've call, As higher more this greater the that getting as quality our stores. make effectively locations we and compete but retail

We expect to then new in open X somewhere between this those And Florida. in stores year be XXXX. of would X and balance the

Vivien Azer

you. Thank Perfect.

Operator

from with comes Camilo Our next question BTIG. Lyon

Camilo Lyon

Thank you. Good afternoon.

great So first, it's very to quarter, see the XX% strong indeed.

give QX, to the how us you QX will between online can any -- can understand us projects and cadence to and color should catalyze unfold, differences cultivation and You kept how intact. come that QX? help help the your full-year -- how you Anything us guidance and the QX revenue he between

Boris Jordan

knows We QX pressure of mainly is that I everybody Croptober. There market always coming historically, QX cannabis is continued growth into strong and and with the on cannabis mean, California QX. out Oregon. anticipate illicit

little careful we And what so, make we're we always a that do. don't can bit to sure overestimate

Boris Jordan

by were authorities know York it one drop, September, would would to August, drop signed. it and in that quarter. going fourth did that think signed told issue get didn't, it's We the get the going We there's late just don't whether New obviously. the it's to New whether early in when of York. July. It whole that factor, drop in going flower's more We is Also, to

the on all as with X. got earlier, has codified of to deal the It's so is a Governor's question law. call not Cannabis if, said why. a But question on probably other understand because in Governor we the but the of issues is think not number I desk, it's moment, at we when it's the it

base raised. to meet the in just Otherwise, being of European terms very to until that. that online still some definitely top which regarding out our be to see the U.S. doesn't be fourth get -- year trying flower. the a work to X.X So, little New supplier the largest third for obviously flower And of well that and of between at we that that got factors of to And billion on we big which to honest, stores. quarter in of the it. the comfortable and is bit our Curaleaf obviously of very lot harvesting our coming say we're we've own we'll some careful going the trying a But in business whole midpoint on We're to we beginning December. we're the whole as out. the on just confident be market, fourth is quarters guided wholesale come how conservative quarter as we number believe business on And of where with new on the York flower in cultivations, the coming I which X.X be we we're online, third growth, cultivation given revenue. of really a continue is why properly really organic And start we're will

chain this of in a does job great month. of that number obviously Obviously, it the a hit back, of fourth how the of month that one that year. to first of market the change held is about some in come got terms the are so than picture say none much sort next fact will would quarter the delayed in team of projects 'XX. although the question those supply January we But that I quarter recognize of them year some facilities in this [Indiscernible] actually slightly will cultivation the the flowers of more versus So, versus and cultivation of stress out globally, is have the

the we why the So outlining. middle that's we We're we that in be make guided to range. sure just can That's in meet came of trying to that why we that there. numbers definitely understand the we're cautious

Camilo Lyon

more the And to earlier And the seeing? established changed has that Yes. margins, catch back of on market? sure starting the up, Thanks nascent level those you missing. that last markets, established of your wanted that color. the nascent progression question that asked the more there the markets. are to get margins going markets quarter, for are think seems the for I around your wasn't ones anything It anything then kind I high margins of in it's we're was just more you're to in Grouping younger make like terms I

Boris Jordan

seen brought are robust had we growth, just some see we smaller store Arizona, like cultivation, haven't start flower the we've on as through like No, expand major a Jersey, and bring in stores own margin on any New stoning going New We could to the in our margin from our keep in established we we in states for still markets, markets. expansion we markets sell cultivation which had other pressure And time. rather York that obviously than that's our flower as our to growers. more

that's so And well. going help to margins as

that's we in that already facilities square the I facility, in Joe just this Florida, X harvesting fourth quarter. would now large harvesting XX,XXX one X cannabis one brought said, feet on The a late be think As and facilities year,

So, all to things to those the continue will margin. add of

Illinois, facility harvesting the in in coming and online that quarter. third the in a new will Pennsylvania in fourth also be quarter have We sometime

into to first facilities late margin quarter, third -- quarter expansion So, these of all early should 'XX. fourth add of the the

Operator

Partheniou comes GMT. Our with next question Stifel from Andrew

Andrew Partheniou

my on Thank and the questions great Hi. congrats you quarter. for taking

you unique And the wondering, a consumer some is guys of in so coming being with only pretty presence one back terms easing insights behavior? could Any level. on purchasing seeing be one high-level I'm of rather trends. restrictions or consumer the footprint understand a back, real it's talk coming the than to what about different useful with whether you're behavior, many the national have advantages could COVID normal, comments little a in states. interesting bit and You consumption life

into their devoting cannabis share people of to were looking Going increased you of and there and what forward, COVID, do wallet was expect? consumption more kind

Boris Jordan

wellness that It side as Listen, base on on the well obviously widened very COVID the the I think for was as good side. adult-use both Cannabis. customer

that XX from between covers had -- saw, I We COVID the that BDS increased in definitely we XXXX. demand Analytics we May definitely shows have original had during in top a definitely saw that and You of -- states the some flare-up slowdown the and June. BDS peak think

a traveling They have numbers we don't come too they and long-term over sales. a year for started XX you that to decrease or going look that think homes think We most competition, People that abroad. wallet. were showed much in of a they vacations; on -- demand that out, at that see venture that were a think We was recent the slight were their share If up states demand out. their you'll that's of issue, cooped a in trend.

between their cards they are people so vacations. moving around on so, states, couldn't And use

definitely of little so, And nothing in but bit saw change dramatic. we habit, a a

the sort doesn't the that into Cannabis in demand beyond start come we numbers variant by a and Illinois we get green is positive early think and We'd as in quarter, normalize third, Just work, if we view to the could we going definitive like some flare before up get Europe, view. start or September forbid bit XXXX. quarter. showed substantial reflect in of lockdown, can we But God because the potentially we fourth for Obviously, go July. late actually that COVID should, very assuming see of another that fourth July. pick shoots again home some a numbers softness. to up back we've make of got to products substantial hit that could increase into the happened what reported that reaction little we a seen to Curaleaf's think into people Delta very, should And a in other same back and

remain because it's we was our demand was So operator what BDS early Curaleaf our then for the slowdown, I the guidance states May right the we still in saw that can guide in of it you reflects in the in were felt barometer positive. meet be very country publicly to just be XX second a the states in important when We the and did that a to all continue to in mentioned that the the to statistics reflect around our Back not that key market. an proved overall, to going year. actually we we're being show see, And were feel transparent country. across with we And did only we official able as quarter meet able to numbers. But confirm. slowdown

Andrew Partheniou

Thanks for that very gears detailed the switching answer. call. on Maybe

the mentioned In where of of at cost all that a already locked-in of in an Could you XXXX. remind markets potentially kind now? debt You was you because debt where targeting of sale-leasebacks? are bit What terms it? us amounts there color of substantial interesting might the mortgages potential see any you and seeing that I Just be refinancing traditional Could extra guys in we now with are color real or the your debt. estate of your thought early little you're in comment.

Boris Jordan

Listen, that a we've XX debt to at always to another transparent We X a a back substantially rate. our non-call XXXX. were issue note been -- the a non very million of in about warrants year any without position. January -- X-year added first reduced - We notes

second issued X%, see companies than single And in there's we Curaleaf. seen going scale we get, size competitive position market, the a now, we more generation there I market XX% flow to are being our strong other the we'll digits expect given to at -- and some in that a obviously, exactly and the when and of of further this January since the was don't given Our are deals substantial but think in we're the of want smaller quarter, we this in the market today, than in what anticipate [Indiscernible] the creditworthiness. a We've back half year. right rate even cash couple be notes. in go refinance initial our the predict at note contraction much in Cannabis where to of in XX January year, deals before very in that to

the obviously our will financing to add to Because a it's substantially. of tremendous that bottom So the reduce line. flow going amount of cash cost

of On the refinancing. leaf side, some our

for our have have can't do refinance. But the certain part, at is so, it. pretty about here a of them up. can we than not information in ability the that that competition, refinance, we we we're don't time for the certainly time, feel I done a we exactly long-term refinancing’s point Curaleaf the good when at So, are most and were that refinance. those will lower that most fussed level of notes do too some We

Operator

you limit one and remind to yourselves follow-up. to [Operator instructions] We'd question one to like

Group. with Des Capital Lauriers Our next Eric from comes Craig-Hallum question

Eric Des Lauriers

Great. Congrats Thanks questions. strong growth quarter. the the for my in on taking

appreciate remains your lot you most about understand where focus strategy in pipeline. a on your us New help any with us there would price? focusing it flower good But York, Is with to a of just of on I quality premium So, and king products flower guys talked pricing? love derivative great quality, online the flower? compete reminding be guys guys coming you flower Just Thanks. you would Are Select. innovation at color color premium you've kind and on continuing out build you markets helpful. your to in like while are etc., capacity, the brands can

Boris Jordan

that? you will take Joe, Hey,

Joe Bayern

Yeah.

the large reasonable not a a the see very as today. and yields our but our that we on flowers. And in great as of proposition of yet, are who high any that's ourselves flower. only the very ourselves a markets with we're strategy, I our cultivator, focuses of niche of reasonable other we Whether consumers. on product that to see who And a our certainly got think targeting it's haven't has flower as I that's the format improve high great currently boutique, the I cornerstone ability And our pricing don't at really we've value quality that. We're somebody flower achieving of to is or think price continuing the just quality products But to want at achieved cornerstone quantity grower price. in high-end most really to produce the a think way in and flowers we great delivering, that strategy. markets consistency, we the we're to our produce and we

Eric Des Lauriers

in back bit a an here. previous I mentioned, generation cash elusive. Year-to-date, then the EBITDA. million Appreciate in from of follow-up And have Boris, guess flow follow-up XXX That's significant impressive of a you on cash you that. here, But year you seems some flow helpful. generated half question. the Okay, expect my the guys great. operations

You you just and the to to flow Can get XX take positive? cash difference it's us what guys understand help loss Thanks. had million. of going guys to a there you

Boris Jordan

want cover do you Ranjan, to that?

Ranjan Kalia

Sure. Sure, man. thanks,

did going increase QX, That's flow we So, cross we're you're adjusted mark negative EBITDA as continue really margins XX% for QX mean, have in to for to cash margins but are down and drop coming lot cash really down. the QX. the not We right. needs our to to OCF, a to the where continue I Inventory from the half. QX, going for needed really going new also flows Capex much be of Capex the to in go the into support that demand back QX did also in and build investments. That's a expecting to

for help to So cash OCF. flow from that's also going

positive to in especially So, will we flow QX, be start the believe half, cash too. in back we

Operator

Our next question comes from with Matt McGinley Needham.

Matt McGinley

Thank is Great. regard in My to Capex. question you.

we're Florida, further expect have Capex in think or New at big going I do at, continued that we projects? said, that think you going to in But at guide New today. expansion, your year, or I as in said redeploy prepared Are with are XXXX capacity the [Indiscernible] growth planned like York, this Capex TA have XXX number it's this 'XX amounts and dollars to of to to asset Capex You Jersey, you're new to stop you Capex look peak you going you peak Connecticut, year? in base think in to remarks you do beyond, a million your

Boris Jordan

several let New New spend least allow in we building continue know Capex at made time was to will to now demand going York But will facilities rather of from in. also year we definitely York, a decision the We've -- limit to XXXX. that go York tremendous to New sites. XXX,XXX hear they we'll expansion year, capital, to than months that then State than we the canopy, just then have, the place, expand go this they have secured And it as point and we out in going a of call us given number out for I'll that that New more the build further big that. start commission is I'll York. us feet this If this put square really don't further get allow in -- think the of think January at and I that over next Joe have until us amount

out have why people that time. announcing point drawings. frowning We're We and have as been build at fact has capacity ready state this over state in where point that all has award at they're probably above we everybody go to going indicated in upon what and to time, locations build the decided the they to going well to that go are the the to that we've this but just as

to building million, around not XXX,XXX know and the at order $XX upset the to level of with there discussion which what regulator the existing where canopy we've that. to set that then are got moment standing Capex if plenty in are got taken up our was around changes, in for that a locations is the we time has the so, And we them, to And stay RO's. we build the That number we've now. good down

Matt McGinley

Okay. Thanks.

Joe Bayern

if I what behind York for we're New steady-state build reinforce marketplace, programs. in Boris time to additional course If To capital cultivation we're growth I million a XXX would But going of the opportunities it. good opportunities. see the sorry. think capacity, to allows we proxy spend accelerated And those say -- is in our prepared the said.

Joe Bayern

you'll think capital We also see shift look I our three-time horizons. we've But really about. qualitatively at talked across as program a

Jersey, the even to We footprint our spending out in we also build Arizona. and York of are New markets continue like central key existing business. the on nationality New But

I feasible spend. seeing start projects projects in XXX more good longer-term projects, in marketplace. an for proxy capital hopefully, to is qualitative shorter-term we'll a the annual capital think But the shift a become as those So,

Matt McGinley

the alluded you can a cost how an On to, this like learn down where on today. more top applied of is your be footprint hoping harmonize and and facilities national the the had much is to maybe to beyond, more term? unit to then production your immediately costs from you costs these individual other that or the Boris but driving achieve more think think in opportunity I And of you. over that, Thank anything are facilities there cultivation footprint facility low big an 'XX production across is into of down? long you it that swing don't picture what I drive opportunity on costs purchasing get because Where of this upside to question

Boris Jordan

Greg -- Joe

Joe Bayern

Neil you assuming to to Boris, Suenos who start as then Davidson Neil who think I we're hoping I'm the I'll to Los call. and two actually talked the But is that do also is me one, about -- on goals. -- with projects with also accomplish what want defer we've like is

to The like first a provide goal in shared. is, capacity, Colorado, much-needed we're a and under we are going market market, which is big capacity

products primarily to we And to think existing of providing types the market lowest outdoor, and blend total to is products. for in lowest where biomass the primarily hoping our of And for right high-end, a shared. course, get total producing flower very cultivation basis, of total we're to of the -- to is used have longer-term the with On trying in delivery our THC delivered feedstock attractive biomass. and the marketplace. And which blend facilities, that includes so, those cost. by overall high a of primarily cost under we're technologies, for in-door, we're certain creating That delivered which is greenhouse, biomass cost formulated we capable formulated get we're products then, as

that be scale an that also U.S. to that cost providing on cultivation We'll outdoor perfecting and can the our used total current genetics technology we're do across to delivery. And able will by Colorado potentially needs. of use in our be We of outdoor lower then basis

to excited with So, to for to about do Suenos us, make in it's our business. step-change strategic Los work ability the And we're a very very that. opportunity a

Operator

comes question Matt today Canaccord Bottomley Genuity. from final with Our

Matt Bottomley

Good congrats all. and success evening. continued the And on

some any Boris on of to on your wanted the had I've of taken out you and removal commentary more net comment put and And to curious that into is, to on to there also, taxation the in discussion. not wanted it's focus there view a of to out business the pivot pass. of your getting that things is maybe the a on lot the the important potentially in on tax back I'm stay look as Schumer just guys bill on if or the thoughts you line? how bill order to that's impact of as to from Just what potential XX% that to needs put think fundamental to of been have but Chuck be what if investors does draft were know fundamentals federal EAN tax you XXX day-over-day, that I feedback

Boris Jordan

right? in going the is got loss extensively. discussed what pieces it's look all down it put to it. this I senators and quite the think was like, list very think a it's was to was on right I it early So, wish from X that paper discuss internally And

rate go tax I Obviously, industry. very, now. think a federal would for be negotiation XX% into it's to XX% going of the very good to

today ABU going our X dramatically. status. the we can down More mean, over company to XX the importantly, paying fact it bring the I will write helpful. of expenses well is It's because the XX% taxes, average XX that cost to very, very just off be call

look rate, like? will lower what alcohol taxed bigger levels for it lower I where structured? it the that's is negotiation. content lot think how alcohol which the is question be suspect taxed up going And be to similar And going something to is, a discussion, a rate, at very at is that's look going alcohol, a I the higher cannabis. are to higher excise like is to tax

to in commerce So, I the be I that at good of for in think are this focused this think as that don't Republicans banking a with very know Outside going the be think going -- Senate the for time. said, the going problem that in point the I to time. I law. issue that be on to that going lot ready discussion to of is more do we're point biggest the that, had. very, that's law at think is I interstate I that's But safe votes just be

say floor now. ever past. we've it's basically approval support, I I [Indiscernible] don't the to bipartisan want that closest is there So, came to if to to would say but the it's XXX% been get

for quite don't That's law which see that the interstate well that's think a I done comfortable be been booker are as commerce." why really same can huge, widened industry and its whole laws they determine democrats lot that the I the not comfortable couldn't with accomplishment as Schumer seen yet -- that under Basically, operates a the that's a "Hey, structure -- law, we're of submitted we're gambling. want. put by that to get ready U.S. of and by And pressure. allows with for a the in the what gambling we've Senator state that Republicans really the this banking think a lot SAFE lobbying saying, Cannabis. I huge

has is. just see on work in bipartisan don't We're it's matter I a news if starting And everybody but infrastructure. But know DC. everything as some so, I it noticed is, of this, negotiations think to good seeing we're the

and on it debt to going the we're the ceiling budget. think I see on

We're the nice big the law the debt good. issue ceiling, it's and next So, a environment, into and once where budget big is Cannabis. infrastructure through next -- going the we're

being to the is benefit I so, work work the bipartisan think going those done Cannabis. laws, on that's And on

Matt Bottomley

just on markets, that. a on fundamentals X and then And follow-up just core particular, and here, New appreciate understand -- in Arizona York. more I the

pretty So, of product market being onboarding healthy Arizona, York. friendly New given use, that the with is respect the existing forms. ramp of to be just just very on fact commentary seemed Seems any the going? that those And to recreational the types medical other how to

potential are hoping just expectations maybe mentioned curious there, or there. to where magnitude markets about your flower Florida what And you've You I'm other experienced come to on online that. relative

locations, in York, Just feel not many to at typical dispensaries. I've least like your not given been New really the the They're in the overall. clinics. state Clearly, that more that ones

flowers of into So channels. will wondering think addition just material new to driver the a the if customers you coming legal be

Boris Jordan

rather the and introduced flower the where really that will demand picture. People every the state when safe flour whole flower most laced buy, They It's in product still throughout are be form, in quite is dramatically. that. with because There's something they're street whole change that for in no bud honest, question flower a than let's the store up on has into. is very country picks been part It the like know the something they has approved. a or getting getting consistent what

increase does is four safety with help number a Obviously, it of each help. the more direct biggest problem now stores. XX would it The perspective, stores even legalization from would because throughout right So, operators the it state. you've got

with to going it building the New and New would in be Curaleaf expect ready In quite earlier, of it's the as favorable likely in that Jersey, is is And pickup Cuomo mentioned and to to as York, And good is very comfortable understanding is his resigns, Governor impeached if substantial And has in pretty we Curaleaf flower We're have been unfortunately coming will on be does issue. into the soon place terms a access understandable is very the New that, is the to cash and is Congressmen really is Senators, in and whole New Governor in quickly signs states flow this time products to -- that Jersey, have in stuck the what's one he of in sign a going it's issues for in as wreck middle going largest Cannabis pretty and around Governors we of routine the operations a that it. office. towards right? the November, a be regular state. to or our news York and be law becoming it Cannabis right the [Indiscernible] happen. that it's of taking either other focus but to We're now and part, that's getting Ranjan big what country, quite this or honest, Lieutenant for change, course, the be going most so do because demand. in and that And after is limiting who scandals cultivation the be

quarter but if So, that we the pushed that's could there's faster to September happen much into think one them going things reside. of probably over fourth you get the it

Operator

the call Madrazo would for remarks. over This session. closing concludes question-and-answer our to I to like Carlos some hand back

Carlos Madrazo

Investor look today. Relations our Results which In we make be on number for to meantime, forward that Quarter to with through like Third note X:XX our Investor Call. events, Financial launched chat for AM, virtual Canaccord our well you at all access. of XXXX tomorrow safe. We webcast participating Cannabis you visit Boris, I'd which side a conferences joining Thank the Twitter well time, today. Relations dedicated be and Conference at these will sure as follow us updating our our as Eastern website, and progress live. Stay in flyers will account events, to Please Virtual including all Curaleaf on upcoming further

Operator

now conference for Thank The today's presentation. concluded. attending has you

disconnect. You now may

Curaleaf (CURLF) 10 Aug 212021 Q2 Earnings call transcript