CURLF - Earnings call transcript Q2 2022

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Operator

Good afternoon, and welcome to the Curaleaf Holdings Second Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Manager of Investor Relations, Jakob Feinstein. Jakob, please go ahead.

Jakob Feinstein

welcome Holdings and conference quarter everyone, call. afternoon, to second Curaleaf XXXX Good joined Executive and Boris Executive we by Today, are Jordan, Chief Officer. Matt Chief Interim Vice Darin, Chairman; Executive Davidson, Officer Neil Financial Chairman; Lusardi, Joe

predictions are involve to States Before you comments by Securities include materially and to the results implied statements a Laws, speak or be forward-looking successful a expressed that plans, should were certain date in of drawing forecast and or applicable such will statements uncertainties integration future can forward-looking risks of meaning material as in otherwise, goals, upon this nature, making new remind within factors forecasts we assumptions, only These of information, as as of which call not statements. would that acquisitions, no the events We forward-looking the undertake today's estimates, and Canadian conclusion a of and assumptions as or call by required the including in or any of outcomes I from the forward-looking relied whether conference subject except cause that actual revise to begin, result projections, on like events. update law. or on and to their United future obligation statements differ statements, those

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

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

Boris Jordan

us. $XXX X% afternoon, record I'm for Good quarter of Curaleaf And pleased to quarter-over-quarter. thank second everyone. that joining to had a million you report growth breaking you, Thank Jakob. revenue with

out momentum points strong EBITDA million. were by of with XX% points continued increased XXX raise able to basis XX% and basis in coming two. quarter EBITDA to Our we margins by quarter the grew to by $XX to Gross Adjusted last margins performance XXX XX%. adjusted

that eight continuing and performance seeing in on also are scale, our power core retail we benefits and Our and Curaleaf the our accounts you size, flow demonstrates multi-state platform, Europe, the leadership We're the operational operators. wholesale in countries scale early our products, XXX plus states vertical platform tell the in on strength XX focus X,XXX about of in the of competitive are investments The advantages and cash and integration, among locations, sheet markets. excellence returns realizing Matt later. balance will Curaleaf

historically extend the up to allowing our have of build the business. capital to reach operations picking the rates us We raised industry, while at accretive at lowest assets cost organically, in

and the our opportunistic positions strategy, that the industry. of continue cash wave to Curaleaf plus generation financing be debt our hit selectively long-term Our consolidations to inevitably future will growth flow

and but today and Cannabis always brands, story, leadership arrived. are legislation has initiatives, CSR the legislative is reform quality our product a with We cannabis in just this safety, early our U.S. development. emerging global and built value in not innovation investments We industry. scale, creation leadership global on global original as talent on vision efforts, leader focused and and is of have now been the long-term Curaleaf

undoubtedly of the We the point, billion estimated strong emerging as have $XXX and market Europe Europe intend XX opportunity way to is and in Curaleaf in big around medical this with in adult world. is adult established population several countries. to program XXXX. in next presence an the the a that and headway leading powerhouse model early of take economic To making with use million notably use reform markets EU, the with Germany the cannabis Most expected Germany, is in

focus a critical and growth asset Curaleaf Europe formidable on strategic driver of the of a We and foundation one markets. Europe has global early beyond. and Our major as given industry's XXXX in see our strong

and In to to this engaged leverage International we fact, are build across use government at the all with eight adult Europe I'm legal levels and continent medical Curaleaf our and in emerging the and positioned we regulatory continent, markets. oversight spending platform more traveling reform continues regard opportunity. to time on enormous ensure in best markets, with to are

be the as to Washington In pressured reform, for We feeling is making prospects legislative are we about act. soon. expect to being U.S., meaningful some optimistic increasingly exciting the announcements

energized and With SAFE shift of and support a passing. one desire moving of to reform the a the Opportunity introduction Act in industry. pass better finally Congress from July, Cannabis proposal for by the Administration the has fast all legalization our chance fully meaningful that can votes for XX necessary We're legislative bipartisan to for garnering

SAFE bipartisan banking. recent support for have We increasing

a Marijuana we of reform to is of another cannabis. advocacy Curaleaf passed This last Also, to on meaningful than in sanctioned Research future of in Washington, can change support the Act, record went lobbying, considered calling remain our Jersey Just important the bill and a to the significant and very is our effects of House SAFE industry is an just it of Booker was of legislation. allow research this confident the year. and ever. key having bullish Cannabidiol bill scientific that this of critical Cory the come bipartisan that New Medical legalization, who study our federally is closer the industry Expansion impact leader Senator week, sign piece Plus, It's industry's efficacy and for obstacle a users success that a major

sales we are business aggressively forward leave look the meanwhile, be But we the pieces exploring soon. cannabis to channel very launch, expected. Regarding become next will our details venture of excited, Curaleaf as vertically may Bayern, than generation we category sooner originally this the with winning this later ahead our companies. this, Joe than global integrated of providing strategies place I'll of distribution opportunity is put cannabis in We and multi-channel by an of new operational omni business spearheaded CPG bigger final you

All a environment pressure cost of standing considering That inflation rates us to all tightening pressures, pricing conditions by are aggressive at West in at record and improving profitability Curaleaf taken the savings, are opportunities quarter, said our to improved performance uncertain markets. interest expenses with pursuing continue backdrop our especially we're our our costs the Curaleaf are environment. all such appropriately rationalizing equity about states reduce contracting, low actions pleased with is breaking example travel recessionary rising, recessionary preparing for idle. being businesses. improve at this margin we Coast and putting on have belts, results We're macroeconomic closely not debt chains, Colorado. we as markets withstand California and any economic headcount, to controllable closely supply -- of looking primarily we And An and record

natural lows Jersey, is wholesale in have the lower be light wait end to having today Curaleaf, cannabis, to members, about that participate the after regulatory macro exciting drivers New in now, opening growth poised In us, store massive and that a first for no it's what's our reward now and building, states, and presence in to domestically revenue be long-term our years. cash all expect behavior have will impacted their and margin $X.X for and brand hard years in critical I of and our markets these the couldn't company opportunity of And rational where I to store. we that in our our growth believe of complete to While also to customers and markets this closer to in businesses. the shareholders profitability delays business successful front our be generation. trends, I in opportunities $X.X in we is highs of excited economic in proactive and with of the future rebalancing. the believe would prefer and I world accomplishments for global leverage in to over building to the in these pricing working internationally, experienced team come. not bottom are need most coupled of I right Otherwise, we the billion years this Curaleaf our the emerging rationalize preserve shareholders see a these markets still decision to of XX both Bordentown the billion more with guidance. with

to make XX why the that the for pleased in factor CEO has distinguishing exciting believe sails assembled impact briefly the I'm quarter. announcements key the our I of chair this that On have first a Matt is in to days introduce, highlights Darin wind some the and of note, Curaleaf best team leadership we industry. on some Finally,

Matt Darin

I'd Thanks operational quality quarter. exciting like three leadership on and on built successful record I besides areas begin organizations culture. the When us CEO breaking some securely for us. and I are excellence, role know focused for and the news days all products assume that key with to We ago, XX leadership culture, of at delivering scale.

she's Make I want process. Beats companies leader of our for joined Over and May will including season second day at will wealth Tyneeha well Financial an Ed the and impact an and and a at role. made dealmaker company as help the to be in success background and Chief executive experience cannabis, new recent and People the stability long-term the the for to Mitch Wall since leader announce industry first Kremer, GAAP one. for transition brings R&D to team past his the Today, to leadership staying years of is joining our Officer Oakley, and period conversion as dedication Camilo and thank am Gap] Davidson as [Audio such in SEC with the our months, leadership Dre, for none onboard Neil Ed continued welcome team and a officer. Rivers as cannabis three a our functions. sure Kremer assembling will and Curaleaf we and a Lyon to registration public additions that dynamic I on in three reorganized pleased Ed on Chief in to and by Street CFO M&A of strategist outstanding Officer. Curaleaf Hara. executive Neil partnership have be as Curaleaf. international be industry. experience as us U.S. by his

outsource of we increase priority strategies gross cannabis integrated several automation, basis secondary with a Curaleaf costs, Ed, company building integrated and has for focus business. and and a excellence labor communication building to point executive already. improvement a and to and operations, mature optimize non-value executed throughout on in operational strategies advanced making, as area that initiatives excited continuous exciting in team strategies, building contributed second made capabilities Camilo, enhance in and productivity, leadership enterprise have add hires added have data and as very the XX% these delivered the planning and leading to focus invest vertically teams significantly and Mitch CEO systems strategy. to My With increase. the These organization. market our functions, in key consolidate We've multi-channel inventory major team We've of formed. more has discipline global world. that's I'm for securely decisions. have using finance, the key analytics the our data supply join investment execution, XXX margin We've make cost management. using strides made scalable processes business in a optimization quarter, the especially have speed chains to the reduce on and sequential culture and to this informed wholesale retail, a been We've decision business

shared enhanced is sophisticated with reporting, a into visibility and providing cultivation, team performance. Our operations increasingly retail, producing leaders services

behaviors. presence key the scale retail their Curaleaf and wholesale markets provides preferences in the in and biggest Our channels with and U.S. window throughout both consumers on

marketing commercialization, developing to apply the and strategic market strategy. We assets ability proprietary the intelligence our company across in are insights and our R&D, and rapidly

first about commercialization. current of in with our days our as am and pipeline Another paying and and in excited are innovations. products R&D XX I well standards of leading very quality focus innovation off was Early of industry my brands. products brands, suite investments as

innovative We're world into and the few extraction the in Let distribution me the in one building product a areas. vape power number hardware, Select our and brand by development. of platform leveraging key technology, investing highlight

flower growth we successfully taken approaching indoor expand including more known since a U.S. In throughout XXX% for now high and plan quality We market flower and premium revenue in expanded to Coast regional acquisition. are brand four concentrates to West have XX into states have premium the brand achieving to our Europe, states executing come with on grassroots the

extremely Our the markets Florida. launch California two of Massachusetts well. Nevada way markets More key new and and including going grassroots is in on are

We're Additionally, in players a program a testament our small and of together legacy legacy farmers the We talent been in ecosystem. At partnerships. success. legal large we diverse line. grow farmers Colorado to California partner and Rosin into year. licensed California a later great ACE industry power select and working to welcoming very plan product has and to premium the the very, with of We these Northern in continue in this proprietary extraction Florida Live this proud end, our launched system using the and solventless launch

more the XX% strong of very are focused line where with now system the we states. the new second platform on making health horizon. greater pleased building Select a XX markets innovative has seven in written the that introduced repeat rate. value than in consumer enjoying we product All investment line opportunities new We strong in with Select and very continued loyalty launched Cliq to Our pod a the the come. many with fruits three in months. essential purchase in brand. and it coming consumer available We're on in Curaleaf told, available and states built more wellness performance and on it's we're is our quarter, resonating are is the the have This

the specific of and the coast expect sold pilot serve low consumer successful variety Endless segments. a coming THC with to precision dose product very launch coast May had for wellness is to we a of at we high market. cannabinoids. and expect our popular minor the Our endless categories line will designed we The with category in shell combined grow all is years of first plant its absorption favorite launched be precision with Beverage kind in seltzer the out a dispensaries. and time

roll step coming But the highlights expect We turn I'd back will in quarter it year. states coasts numbers endless the few a like out in more some to the and minutes. of you before to over, Neal to second I quarter. in take share

New adult-use of Jersey industry's since launched the bright XX. has been one sales spots April on

largest and the growth cannabis doubled already outside wholesaler and horizon. we Our returns New Generating the Jersey year-over-year are business has more the on in retailer state. with

New high demand market product experience destination Our the great Belmar to the executed quarter-over-quarter in New service than with one well teams testament one was securely dispensary is The best also delivering Jersey. launch day thereafter with our the customer huge state strength up experience. the number with doubling organization. transactions and customers more and and Jersey of adult-use of Faced a a quality a to exceptionally stepped in and booming in

dispensaries approach quarter. execution We dispensary the XX and strong second to during Tampa operator expect Florida in opened in yearend. week by last XXst Our continued our

Our performance in quarter is best-in-class.

productive focusing the what meets providing are want. by High with on state and most by supported assortment the an innovative are needs quality product customers gaining that market dispensaries we share all products Our they exciting, launches. in

solid a position and Florida. have profitable growth be continue We to share very and in

seeing we we the manufacturing facility. expansion Our are cultivation and as and locations in up new the our expansion of Illinois, benefits facility ground there. top are dispensaries broken our invest opening In state to throughout retail continue Litchfield of the we of

key products. to other launch additional markets new in with of production X% We're have building pleased there year relationships in growth adult-use in have by we growth needs We we've continued advance of in July, their sequential XXX since social as also have seen to wholesale equity scale we opportunities openings, drive continued encouraged locations owners licenses doubled our an in are XXXX. we and been that And and the Illinois. of the vertical We're grassroots margin serve in expect market and expansion early beginning selecting in market the mix retail these with which expansion the the issued.

coming expected adult-use Connecticut some New with have in catalysts launch in the We significant the and York. Northeast of

opportunities in largest X% to billion an New leader in continue represents advance these and York, quarter-over-quarter market. preparing with for And We've are in QX. already invest established and estimated player strong both We growth states. the Connecticut in market the momentum versus seen we which $X are

The significant alone. basis the our showed point growth. new quarters of business over a We XX XX.X% improvement saw Retail quarter retail improvement our XXX focus retail Our paying was locations added on quarter. off. last up second seven We closing this quarter-over-quarter vertical the consecutive quarter mix is with dispensaries XXX nationally. revenue

Curaleaf our of a consists is retail XX% advantage. of important We competitive this product brands. significant As think

wholesale the reduction rationalization our Offsetting we is these improving margins. Jersey on Colorado. result in growing saw focused price our core the a line quarter-over-quarter. largely revenue revenue as X% and top quarter, a as wholesale as This declines states increasing during coming small in we're side, led of to share profitable continued XXX% with On growth market New in cost and California

use executing on Finally to year-over-year adult driver for movers and with will cannabis on the see increase be year-over-year, as resources the counts chain we're the right U.S. leveraging XX% up International, advance presence was Germany the we're for International we've U.K. developed the and Germany, XX% first XXX% distribution. up be quarter-over-quarter. with investing In expansion. in are We and Europe experience patient Curaleaf in XXX% U.K. and use announcements and Europe a a growing industry Clinics and an In brands next leading more revenue and growth frontier for to building as with in a of advance supply adult European for cannabis. the of seen market as in establish have larger market at follow to global campus Curaleaf and and fully leading recently quality to In flower Sapphire acquired countries use. in cultivation Across adult continent, expansion resources and to driven capacity to Europe. medical our Europe industry export improvements major legalize capture on through the U.K., bring are share cannabis the to our legalization in our we've we're Portugal, time as considerable high eventually leader plan and soon. the focus operational products

products EU licenses by is two including of European continuing and Portugal in strategic invest largest the our We times Overall, production market and of and XX our the a our for we pressures and America. fundamentals brands despite facility at extraction asset Europe our Spanish to macro cannabis of into manufacturing are have remains for strong there. increased medical other additional capacity of on consumer. Our footprint, markets, Israel, outside all aspects North the campus operations and secured business GMP

However, in uncertainty, inflation shifts in of the behavior current distinctive on. are economic optimizing we seeing some and that customer environment we're

to Our the frequently, XX% in is transactions more spending dispensaries, are our but driven cycle in with partial to typical of a little less consumer times uncertainty. a traffic behavior driving the brands customers they're coming visit. aligns each economic more increasing which seen shift quarter-over-quarter, This

good And products repeat the we indicates In showing where economy, seen news we're and their are recession stickiness that service. best-in-class seeing some products, our to that even promotions, continue strategic buyers. staple. they oriented people behavior current customer customer meet value markets, with politics premium with is disruptions culture, other the in The We've business cannabis. and resistant is despite want that a

with focusing Curaleaf's to very and drive brands the By I'm our continue future. leadership culture, other for we There to of it leadership and no resources be force powerful cement operational and even strategy to profitability. a the scale, long-term I'm this quality excited know will company platform, will as on products the and improve delivering quarter's at about margins power execute cannabis industry drive come. our pleased years grow, we While to simply commitment more our is excellence and with and results, the

call Davidson. the turn CFO, Neil to like I'd Now Neil? to over

Neil Davidson

you, Thank Matt.

have senior joining role Ed the the best A some thank people XXXX. in to I of played of CFO my since and life. most proud to want update for importantly, want one amazing to a I'm the And York role the our and of I've the First, in company's experiences I the everyone we part welcome Calgary on PKF quarter GAAP, firm, of U.S. success. on Curaleaf at of in PKF our continued eventual as quick will be to no plan met accounting later accounting our transitioning to to Office a listing connection Exchange, U.S. National an XXXX office. of New with firm first Stock than from transition

and revenues $XXX million million With for X%. results. hard of second some XXXX years I were that, resulting wholesale such, Davies XX%, record board. to wholesale result second for let was PKF XX% rationalization Sequentially, a details retail in million Total $XXX the continued representing and representing of to states. O'Connor PKF the $XX welcome. retail provide growth. quarter-over-quarter sequential Retail while declined team year-over-year wanted margin year-over-year the the revenues our on Wholesale compared and with lower me in As work their XXXX a all revenue XX% of quarter quarter decreased over revenue representing our revenue thank in was growth on up growth, revenue. million XXth our business $XXX of quarter Terry's year-over-year X%, quarter X% total of of

XX.X%, first expense profit both largely vertically points from $XXX profit the revenues states. and was in of higher use on headcount The the compared adult margin travel $XXX of $XXX prior-quarter, in was wholesale and levels of from prior revenue, New our as in a the million margin related in compared was a quarter, Jersey, development to Moreover, $XX year-ago for the gross period. profit cannabis $XXX increase due and sales revenue margin dispensaries and an in to and XX.X% of despite sales gross and was sold improved million sequentially. year-over-year decline quarter gross year-over-year revenue current Sequentially to margins store with cannabis as from Our X% the in XX% the million mix of products travel integrated wholesale SG&A second gross during and on higher revenue quarter, the XX.X% XX.X% in period. million. reflects in new sales to quarter. and year-ago XXX the XX% Gross increased basis higher increase in primarily activities, expenses and percentage increase the spend launch in support the facing in and in openings the research period. SG&A marketing in year-ago million costs a resumes, SG&A XX% increased

second million Our quarter approximately adjusted backs, EBITDA the $X.X add in of million versus included SG&A $X.X prior-quarter.

Excluding as prior-quarter. the Sequentially, add backs, $XX our SG&A EBITDA in was The offset previously was for increase reasons basis million million XX%. the quarter the a excluding XXX and year-over-year the represented attributable increasing add increased XX% increase gross the the margins of mentioned. over first million, points total current X% for backs adjusted SG&A to EBITDA revenue profit by in by prior-quarter Adjusted increase. discussed or $XX $X.X

points basis quarter. markets consolidated XXX versus the basis by EBITDA investment XXX including Our Europe margins approximately first adjusted points, in impacted our

and sheet flow. balance our to Turning cash

was of our remains $XX and balance our unamortized of outstanding Our of almost equivalents end $XX debt June $XXX as debt with X.X% quarter, million outstanding due weighted of At second XX until net three and capital total million million. of sheet XXXX. December quarter Net a rate interest not were during to million, bringing expenditures costs the the quarters our average strong year-to-date discounts, debt, had cash of the debt issuance cash $XXX and with XXXX.

on presence. as to well retail investments our as focused Our strategically processing increasing capacity, expanding and be cultivation continue

focused now operating number approximate a our investments, on and generating expenditures projects of positive evaluating position, beyond. flow of our capital prioritizing as this remain to result our a full-year as expect on well year We As cash $XXX million. we and certain cash

flow ended In declined the our flow contributing quarter June to was this to and cash cash $X million. from capital fact, operations operating positive months six XX expansion. XXXX, Inventory for $XX million working

was as assets, flow. tax quarter, our capital the expected to biological cash operating payment during made and neutral as inventory Excluding well working the

XXXX We be flow expect to cover full-year sufficient positive generate current continue obligations capital expenditures. expect cash for anticipated and to the trends our substantial will and operating to which these

stores. margin monitor front, in increase wholesale and the margin markets our we growth mix states lower our Overweight in expenses. On retail revenue vertical SG&A continue to higher in retail rationalize states, margin our

As in of further a sequentially EBITDA result, we quarters XXXX. remaining expanding leverage the expect adjusted margins to in see

revenue initiated March guidance on $X.X the Finally, we in this fell environment, XXXX and we macro with full-year approvals. dependent of timing largely economic this of of the to in range billion billion year regulatory where $X.X being

we sequentially expect strike. we turn be the we quarter know line operator to single with flat range, today, what to the accelerating still open digits within that, Given close third to up for call as quarter expect the to revenue low lower fourth this albeit and at end, to I'll the With back the questions.

Operator

Thank you.

from [Operator Please begin the Our comes of will first Azer We now today question Instructions] question-and-answer Vivien session. Cowen. go ahead.

Vivien Azer

Good Hi, thanks. afternoon.

lift commendable. if certainly takes little margin that of is You But unpack tension margin outlook, bit your which guys from de-prioritizing some are wondering just clearly you Colorado, which a California are in and great. being clearly was puts is and very I Jersey. proactive about of balancing New a a managing you lot could got

that'd those different the levers about year, I in of you help if think dimensionalizing we great. us think about you. half back the be as So that can think Thank

Neil Davidson

that? Matt, to you wanted take

Matt Darin

continuing Yes, that. I take states. so our focused think are we I'll growth to very on high drive in margin

see continue focus markets certainly catalyst on margin in places and And Arizona we lot really But to is a more with upside Jersey a continued opening other like opportunities. dispensary been a number high and quarter. Bordentown and one of and those there's wholesale that Illinois New has Florida, we second of the major our and those.

that the some yes margin really focusing it that And given been on, more ensure So those markets. continuing states mix on of of it's we're where wholesale being a even growth margins, has business, that I diversified to managing markets, we're West the are in customers, think challenging, other high really cetera the a some really our drive judicious exist. with our we to way headwinds bit et we're maximizing of

improving. through you're that's doing what been we've margin of is a the so seeing And that in that fall lot profile

Operator

Andrew from of Partheniou comes question next go GMP. ahead. The Please Stifel

Andrew Partheniou

quarter evening. Congrats the questions. for and my strong good taking thanks Hi, on

your detail to well at store looking and EBITDA QX? New in XXXX guidance, what in you for assumptions Thanks. could embedded that as the Jersey in Just and do major you that contribute are namely, sales could Borden when guidance, think your expect fully in you track your open

Matt Darin

Neil. Good,

Neil Davidson

do would our Yes, showing end of range, you've margins. bottom to our so looking the largely revenues, which seen, are the rationalizing guiding I say, benefits at our towards already as in wholesale has with

more that's regulatory Borden a bit The second some around the a benefit expecting then consumer. the really we're around everybody's QX. are about what simply approval, piece Jersey assumptions conservative respect so that a Town, little seen being And macro, just with full we general in to New

together QX full that expect into So big flat the to expect kind growth of, of robust off in of. a is led obviously do then all to do full QX, low step function quarter which going of And Bordentown, course there QX. bundled X% single-digit as the the which Tryke, a we we thinking quarter increase I then and us think

Operator

Matt from Please comes Needham. of McGinley go ahead. question next The

Matt McGinley

that I'll CapEx thank bundled in and Great, you. a together Maybe two taxes payable.

Looks payable. a on of question overall million. cash in state, quarter, of and my the but you're related made dropping balance from million some projects? payment only you're And -- that a about like in second for is taxes an of Are the X.X still the reassessing sitting that need none they $XXX in to $XX tax capital to CapEx mentioned your investment you XXX. a timing shift You

forward? flow you're If and why on not cash and yourself to ability penalties cash confident your and the the hand, time save pay on have you going generate

Neil Davidson

those to haves so versus of And of always going to CapEx, the the on scaled respect capital we've XXXX. some with that in return to are expenditures. on on the this investment of Yes, environment, want things immediacy given the back we've some in just at first or impact the growth looked some one

able carve just to $XXX payment. million. tax we've lens respect different and a the down So taken it slightly cash been With to to

file I payment $XXX once closer think tomorrow, actually the you XX-Q to million. our tax see is

the But think including the current you're We provided quarterly payments. as quarters provision number I are tax well. you what reassessing that is in

that generated with the even or for six million months still positive and payment, tax cash $XX million $XXX -- flow make did for sorry. the we full-year, So

Operator

Genuity. comes of question from Please The Matt go ahead. Bottomley next Canaccord

Matt Bottomley

quarter. Good strong all. Congrats on the evening

wholesale of just Coast. There's like your balanced Just decline brand tapering margin before contribution overall West wanted curious, how the the commentary was the of Select, wholesale brand the when look markets versus of decisions sort near-term just some to some you exposure around because, I'm see of for and between with building in mitigation obviously Pacific short-term risk that California on a brand safeguarding to back your long-term a back sort margin. wondering arguably I given that your guess, pivot on some the that back contribution I'm and in be buying building. you'd to decision the your anecdotally beneficial you everywhere, of view. will

just question, wondering those two, those that So two elements? how you balance

Neil Davidson

Matt?

Matt Darin

yes. Sure,

we look, Select to So I X as call, think, in we the states. on touched from brought XX

focused on on growth, under think So that I in products brand, and terms executed on really and very launch very that. the new of Select continuing to the is we're well brand, that focused of growth

of we margin, kind accounts to that are a continuing closer it near-term on here. at the are hundreds hundreds managing lens focus As of taking California, we're to how we different especially like ensure in and relates to markets

exposure, a in markets. certainly Select the brands these continuing the right, our other You're large are and focused to on distribution we keep brand and of

in focus Europe. to and high focused making be servicing that we're counting that. that And so a customers to But throughout sure continuing the are of the in more seem and properly overall. do on and the ours, that also large accounts think honored doors and is in 'XX and value we really country But I we're we're

Operator

Grey comes of Aaron question ahead. Global Alliance go next Please Partners. from The

Aaron Grey

evening, thank good you Hi, question. for the and

the on just So guidance.

shifting over Just to quarter, the right. fourth

said You top X% about standing XQ flat in XQ. a million to $XX increase by,

your top in know the have I was to want the contribution It XXXX. terms terms Tryke. XQ. think you. you about Just in acquisition a in might believe expectations some have expectations in about sales we terms Can that how closing? Thank on those to turned you million, uptick of Is organic, anything for comment and of of in? $XXX on the Maybe that of

Neil Davidson

expecting Tryke the fourth contribution approximate quarter. million in $XX Yes, on we're

the growth extrapolate the organic side. you So can on

Operator

from question comes next ahead. Please go The of Roth Fortune Scott Capital.

Scott Fortune

there and -- you -- dig you that still more from little strong you side, good, but the of more a a XXXX. kind through, getting Jersey, weighing store more bit of step real cadence can one look into you at you're open better wholesale Good XXXX New is as sell it through you end afternoon. if the in in Little can bit originally than little thought

and the there to to leading the and Jersey here. from little positioning overall continue more A opportunity that, that'd going great? wholesaler New You're Jersey be on for New forward opportunity be color the

Neil Davidson

openings, So to the more market we obviously store grow. with breadth anticipate

we so in are have as they have we having players although capacity opportunity. -- competition extra And for Today well. the wholesale some other more wholesalers two the we'll With largest market, much purposes. wholesale

Obviously town. and town is thorough one will easy single wholesale biggest opportunity will anticipate store, quarter. access the stores in opening Trenton, more board It's And strategically a it's open that will also it's every northern As like up of in The very for centers the most a very be major on New big we also very Board the close more be on Jersey. grow. our population stores opening up large our in store. side get to way to. store located so us to

XX So I think it's foot a XX,XXX POS square stations. store,

And cannibalize amount it's that won't enough store. to business that we're tremendous people it Belmar. north our of able so store the through And Belmar from process a in

at look Edgewater, two and those Belmar are quite other. to If you stores close each

XX north. level one And cannibalization, much lot of small more is this about apart, minutes a they're whereas so there's of

And very, very be so And store. won't a cannibalized. very, good it's

additional of as opportunity in board wholesale have heavily both invested the And opening side. in so very on stores on. well town we the Curaleaf up as cultivation early

And the we we continue capacity product have our provide so have more to importantly, to we only have great inventory, expand marketplace. not to but ability to do good

Jersey very up days a early market. it Jersey. New billion We It's so think stores will single think quarter. open we as start, grow to continue $X about and every excited is that New And we're in terms its of

Operator

comes Capital. Ty The of Please next Collin go ahead. question Eight from

Ty Collin

International. are Curaleaf this a you needed level there questions investment would missing of there. additional us to Europe and I'm adult at facilities from point? understand it be could on in a is if any or major or talent perspective what wondering supply help play Hi Specifically, use markets? pieces My plug basically

Neil Davidson

going that October. chain of we're our So capacity in supply devise based on Germany out come the to rules

early with expanding At the market Israel program. capacity to use in pieces So that guesses mid-October. that order based on draft demand first of of an and point have to time, Obviously, that adult we'll U.K., terms capacity educated from in to to on anticipate in out if the that. in to we're expecting we need or coming able But legislation use, be we what our the in going make current already tripled, meet be not that capacity will on adult building Germany. we're doubled,

out our very, We have very some information coming of business shortly. European

to use will about in be that. $X market. will a adult over a year four the program more a billion period are anticipating increase $X we on transparency But give to billion German So the that year first moving

with market large significant very very penetration. a it's So

or in the in build have to to current to we Portugal do German But there. that so we anticipate export capital in XXX,XXX order Germany to grow is anywhere light feet from the extent be ability it's of each the one that facility supply of our that to don't to triple square we we'll can news good marketplace. and states probably build a able need that to And

all that law we'll the And the whether the to to the however of our rules, point we to final the so, terms time, the going the or for had we make not months, order there or out and enough teams going need the final we to adult-use in et have are, see make assessing law build and in to out in land out what come are we're power, be two German to draft waiting and enough have market. the supply seeing last come In investment assessment to rules cetera. imports. At facilities,

Operator

next Lauriers Craig-Hallum Des Capital The Please question Eric ahead. from go comes of Group.

Eric Des Lauriers

is on my My taking question for you the side. wholesale question. Thank Great.

just plus Colorado then help growth but you wholesale then you that the are either also maybe focus growth as us you vertical of the wholesale, how with you've some Great, wholesale as and the flattening pricing where vertical or understand continued So increasing help mix impacted there there. well? experiencing wholesale, Can could identify sales in you. see both your increasing pricing quantify But the expect retail this of quarter? markets you some sales. like rationalizing California we markets us pretty of maybe total on on extensively mix, in commented and thank terms some And

Neil Davidson

my I'll I of let you over margin hand Yes, and wholesale you profit increased me give prepared to But gross increased, gross about a also Matt. remarks, tidbit, slightly. will one but tell quick on our saw revenues, decrease dollars, then I we in it said X%

X% growth? a want So it contribution decline that of on modeling, you revenue helps the to or margin. gross comment as think but hopefully, that Matt, same basically you in about with

Matt Darin

vertical certainly been has so look, Yes, mix focus. a

retail mix larger QX mentioned, our XXX some our to vertical in retail continue an for markets. we opportunity, across see is that As especially as XX%, and I of locations,

different We like also additional Jersey markets, some ones, of see in in tremendous same markets side, dispensaries that. those Illinois, just and that wholesale One opportunity to on prompted many different new places going is really are opening by catalysts. few and be the key like and New a

those on opportunities to well. of online anticipation that knowing So was coming to innovation Connecticut then those and in service. York new all and markets. also like customers wholesale of product to a use Certainly are as the many other wholesale going number horizon customers places to in adult And more create New we've in things and able capacity, of there are be in be going for that us to invested

So very we're prepared being well. focused on as those for

Operator

of from Partners. question MKM ahead. go comes Bill next Kirk Please The

Bill Kirk

Thank you.

if Florida I do for me early thoughts filed forgive initiative on the have missed But any you the So XXXX ballot? it.

Neil Davidson

it's like We We've to it. an exercise, week recently this fact cheap from we're so be a to We meeting the be in not that it, had it, the going initiative very about of a to at still looking to been with Matt program a ago, going expensive. get Curaleaf Florida. discussed they just introduced it's adult-use there's very, going think CEO

industry of to to difficult. in the get need past, to Curaleaf industry hoping to be do to adult very use will getting CEO would a chip on in the Curaleaf Florida. in the the program the in everybody whole going efforts getting we're my has efforts Certainly, chip So more I'm been in of it. Washington In better together. supportive have luck however,

Operator

the the Seeing question-and-answer to Boris Chairman, would Executive This remarks. session. turn to queue. our in over I any for Jordan closing back no more concludes conference like questions

Boris Jordan

the everyone for And investors reach may I'd thank quarter. you any We're very much. through IR or can out with delighted joining our like call. you questions our Department. to other DM us have Thank

Operator

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

may now disconnect. You

Curaleaf (CURLF) 9 Aug 222022 Q2 Earnings call transcript