GTBIF - Earnings call transcript Q1 2021 | Green Thumb Industries Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Green Thumb Industries’ First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Ms. Officer. Strategy Chief Dooley, Jennifer Please go ahead.

Jennifer Dooley

reconciliation here directly And EBITDA and included in everyone. dollars can today’s reflect Throughout arise our EBITDA. financial assumes date call. operating Green financial is Officer, A Good the Thank differ the Thumb forward-looking uncertainties the of could uncertainties all earnings materially reports actual cause Today’s to from SEDAR Thumb’s with non-GAAP and Thanks, United under in any of discussion welcome refer financial tomorrow. information Chief Thumb results after These filings. Securities most and Ben. statements, press discussion, Executive statements Regulators, the Green Exchange are unless to statements. indicated. and Section and to revise now, with report including responses may release, including non-GAAP detailed the are and and our we that measures, will Investors which quarter provided This you, be Founder this Commission, Officer, SEC Company’s expect XXXX may U.S. website. include and Georgiadis. XX-Q Chief today our which to Canadian these filed Lee. or risks earnings comparable filed first risks here earnings along or adjusted circumstances to forward-looking obligation am measures be Securities subject report, quarterly that and is various no the found our Green measures release States otherwise GAAP Form of to questions on and with afternoon, call. update in Anthony Kovler; Ben to events and is Financial press Please note to I to

Benjamin Kovler

in remarks earnings relatively quarter I year. quarter Thanks, we our my Jennifer. relevant to what the months will call. brief than ahead two ago, you in business everyone, XXXX of and for less afternoon, first Strong continued keep we Good fiscal see our together into momentum Since this thank joining and were XXXX. first

fourth our XXXX, grew to third posted and positive flow million XX% a first or increase Following consecutive quarter of almost in We year-over-year. of million. GAAP $XX a XX% $XXX million than quarter $XX cash our of solid EBITDA revenue income more net $XX adjusted million, of from operations free quarter-over-quarter operating quarter

but our as long-term. the offense. balance we We for in puts to are successful are balance of the sheet equity cash know building rates. quarter, rates, a Today's result which debt pleased our million This play excellent $XXX position over with something quarter’s follows the we is first

XXXX, are the the ahead in to of a we the are We very balance off and about for excited opportunity start more year. even strong

to We but is growth believe have exist American said Many of We it situated story. times, century. aligned well shareholders. America as for Green with assured stakeholders. advantage that our things of take Rest this in worth themes great cannabis in is American owners in changing business classic years of Thumb believe the last We are cannabis and repeating. over many America are we the the the of story ourselves, is in XXX change it the next the large

people's and the former turning prison for wellbeing leverage fueled jobs, cannabis. Green is lot self-contained hundreds New of it assumptions capacity. a a Jersey, lot opportunity. enable York generate we to tax In production by demand York of how on see New expanding As We our a will we economic adult-use the cannabis. of of we the a opportunity. full A for is remove will cannabis moment for U.S., see are in map of revenue, once facility. Thumb look package incarcerated people into federal at that completed, as position When a New we this the stimulus and cannabis mind create Top circle the continue industry, everyone's

in opening is and in is two in a Nevada Coast, Island, Americans back Paterson a and Paramus months. connection. open to experience Tourism the crave the third Massachusetts This in like as coming store Pennsylvania, and the We addition along and potential stores Maryland Connecticut, few. places Rhode coming have East to to name

At this Strip a Las opening we the lot anticipate this of will we with grand week, be Cookies and trip the on team is timed. to Vegas with this Cookies of positioned Friday well and and celebrate, Our a excitement the nicely on opening. end Berner flagship

while and became map, XXXX large essential, market. became was Virginia have sense that the a announced Virginia Thumb but a country this changing. acquisition there in the is Dharma part the of Green the is mover say at again adult-use. is just still a And dispensary April, not common In to the in Looking one does it first cannabis state operates facility, Dharma XXth over ago, week a cultivation as of access, Pharmaceuticals.

open the this the ability gives Following license five stores. close, additional to us

bullish the cannabis on in are demand We Southeast.

as to capture Our opportunity track roadmap for record the ahead. at how a Illinois serves

methodical the business has changed. on the price right opened takes listen wants. the and we execution when at consumer cultivation right with production to and what to open retail potential and pace Most highly Our and desirable the market, planning then means, strategy with careful capacity scale not market at importantly, That a the our the consumer a entered We large products. and time, support capital. through focus right which stores,

real products to fundamental We has a quality with the for Our has core believe quantity been always about consumer. been leader objective over experiences cannabis it it be always is is create us, has our real It been success. long-term in this relationships than more today. and that important and to never

scale, seeking are best, people. delivering at most and products to We safest the exciting quality high

honest, which several fold. we and expect in trusted production, P&L high-quality We will with CPG contribution are beauty The pleased is the accelerate. the revenue from continue products the to momentum of creating and retail

First, Dogwalkers by after people great drive stores, name. our off-the Brownie dispensaries to or and sought Rhythm’s whether it's are others. products shelves Scout flies brands and

ways there to consumers so of grow flavor, specifically recent our to introduction and a for under which our help form factor, experience. portfolio developed Second, through the A night's was many to Snoozzzeberry incredibles example are is looking continue brand, better sleep.

through pipeline meet have our to robust Cann, the team partnership We portfolio, specific to always Last creative our one ways California’s a beverage. for new well-beings with and partnerships. innovation with across cannabis delight number quarter, consumer looking we ways the announced their or is

our Ahead an of will in alternative our alcohol to by awesome consumers launched Illinois X/XX Cann we We seeking We beverages. are offering begin reception Cann across and to to beverage expand excited to markets. an rollout

glimpse We and into future. are pleased this is the believe momentum with a the consumer

For over, Illinois, it those in of XX and try. give a you

can You it. do

We and have infrastructure. am assets reach, of resource-oriented for the based an option. be a portfolio but Thumb can our day, it talking or lot all Green the standard of of that guardrails not decisions. assets, our I our opportunities market current in rather end conditions, around an At geographic trophy puts M&A, about high our consumer-focused, team, brand is and growth portfolio by on the leveraging attractive acquiring execution-driven,

a I we also for you, makes shareholders. And a said balance stakeholders. table if know over the potential that, many the turn sense always everything our Anthony have must to on to strong our deliver engaging to invest it returns while financial sheet, in we fortunate strong dollar With every for review, I'll As commentary. Anthony? that his for and call is you times have are the before, position

Anthony Georgiadis

Thanks, hello, public earnings Ben, and everyone. XXth a to is what company. now Welcome our calls as

record delivered CPG by team revenue and operating with $XXX net quarter our retail million both highlighted, $XX first results, were Total XX% revenue generating in adjusted revenue just gross Ben and of over As topline quarter-over-quarter growing X%. financial million EBITDA.

a performance. for is gross the between As drivers key strong The and our revenue. reminder, revenue continued difference intercompany net

strong growing demand First, for cannabis. and

cannabis upward operate. across be several in an are appear country. strategic which we doubt that best paying The we ago is the dividends. We There seeing no particularly true to this consumption years markets within in is play the trend

are we products buy $XXX. and cultivating choosing people are flower Second, producing product our that CPG with portfolio, to

Our starting the leads our design market. well differentiation facility the in over focuses efforts as strategy on is true with quality on establish that quantity, that to consumer as product

that's at do. This to Third, execution. industry already. few has with concepts This with live here at daily to lives. commitment simple by going an one, we true teammate. a Number Thumb. do Whether the consulting are start. in down Green particularly simple to This patients, holds boils or complexity you go internal say consumers our making you business enough let's what Two, route, another

the team. our is that before embrace We team said greatest asset. it our Third,

win. that Back financial for We knowledge have and Set us. through run of to thirst spirit differently, all speech. we passion, competitive like and the to

tired robust QX strong XX%. know company our or was it, hearing In continues to in coming intrinsic the XX% are at but addition to with above to metric long-term. topline post probably over me goal margin of at say this performance, keep I gross the folks

to costs A excluding year operating company's million On million, quarter. ours increase the the normalized $X $XX SG&A was infrastructure. the stock-based last we totaled this $XX and build comp, million side, D&A of for over key posted goal

senior I warrant largely interest with anticipate charges expense the other in SG&A driven increase million, QX non-cash would quarters. continue approximated by in debt. to associated So coming gross $X our Total our to in spend and expense

adjusted in EBITDA, result, As to operating revenue. XX% company $XX close million over the of a generated

quarter positive generated addition, our EPS. over we $XX million net income, third of In in consecutive

it’s to sometimes February, With have capital positive that the threat. do build of maximize [indiscernible] from million ended flexibility manage the the of or over flow our the we our the sizable mood the Net the cash in equity to front, $XXX raised with million of sheet ability operational of cash. balance $XXX we version in favorite buy, operations, we and way triple On quarter nothing. we cash a our continued balance

is X% industry-leading couldn't that and over since first an a the to put the basis, value Low As an to [Grossman] company The regulatory $XXX and balance work as at market approved the million on $XX $XXX cohort of our the change. a is sheet, news. amount a balance of has excited $XXX continues invest billion XXXX, the number advance our in current receivable, their cash excess fantastic. technical payables rates, aggressively relative the end, you shareholders down way new puts bank million folks accounts more work fees quarter sheet ratio our for to to balance we net forma dollars create pro to sustainable our inventory raised cash. you sub that company million time to adding accounting rate. On of debt for and the self-conducting see Subsequent following. We these of your interest be significant completed

results, quarter focus of on hires, this [indiscernible] can’t first we our of innings new proud early the we help still are We we industry. tell While are the in future. and very

the remove Back to So Ben. buckle and our demand of In will on cannabis. we hang with our run entitle stakeholders, all up, execute mapping meantime, to our all U.S. and for continue map tight planning labor to growth you assumptions.

Benjamin Kovler

Thank you, Anthony.

and stronger than ever. the We to a We brick-by-brick are strong few a building position off foundation start excited last spent about is and our years XXXX. great today

customers sweep will fresh our As to Green so to and hard opportunity cannabis. and wellbeing keep to Green continues around and their still we through day our every more It the ways to country, business optimism find the new legislation. federal to at a delight there innovative strengthen one journey state is at is and taking on look wave Thumb,

We this are to industry. we drive a industries firmly and in It privileged is today one impact to meaningful growing the has the of social which participate America fastest ability into. very are in

first-day to community store. to We a donate continue open profits we new where every

delay timely of social look have soon. been Many We advocating new whom to the been respect forward in Hopefully, to hardest created for adult-use in have equity for we equity have program our beginning rescue Illinois, this Illinois substantial licensing licenses XXXX by York, to is And starting burdens donation and Bailey in York X, in to the not process home had In we law forward believe Fund expanded new manner be shall support also state to with by incumbent new social social issuing but our get to Legacy to for licenses the program potential equity per weighted who organizations. the this pandemic. January has Illinois. New hit dispensary the by on started in heavily lottery a New animal the candidates. of financial The can only include Dogwalkers have the entrepreneurs. licensees operators, move lead process

and are the of students She governance trustee World committed member Board of is that study and supports American Rhodes voter outstanding pleased exceptional to Finally, Swati strengthen a democracy. to increased charity they Trust, for especially Mylavarapu Board to a we is Oxford at our are renowned University. corporate educational a to welcome also turnout Swati Directors. Vote.org,

clearly ever every better than core is We principles. your and we aligned With day. on In that, are stronger our to your company becoming closing, welcome committed questions.

Operator

first of Azer. [Operator Vivien question from Instructions] the Your line comes

is line ahead. Please Your now open. go

Vivien Azer

sales? afternoon. bit in continued on for Can you growth as more It's whether you. commentary Anthony, please behind first Thank you little is of a or much your My question, Good housekeeping absolute dollars the you clarify very for Thank expectations about the as of you’re you. SG&A in invest for a SG&A business. a percentage around talking item.

Anthony Georgiadis

hey question there. Great and Vivien, Thanks.

can in maintain anticipate time percentage. the to we'll kind dollar coming leverage continue within see operating we nice referring was much I not Yes, think but the to but topline, I spend, dollars we how increase of quarters. the we business, gross gross the grow over spending So SG&A over

Vivien Azer

marketplace you a on kind Scout the hearing you, it and run. it's the the you and of That's and a is it least your number then very been little side Canada, strategic for or a of of Brownie quarters very, business consumer Canadian my terms that clear. Clearly, some business for off-guard. Understood. learnings And now. of but of that I follow-up of that quickly than home more operators flower it’s one at flower pivot, like unfortunate that. preferences out very a your pretty the Ben, can the guys run one. the recognized We've of question, about in Canadian way U.S. for bit the business, has been Thank is strains caught different seems of

offer your guys sense I'm Thank on account Scout of percentage you just of So then the of flower keep in pulse do would any terms That And you sales if finger Brownie you. helpful. the could for? preference? curious, of how the be strain overall your kind that

Benjamin Kovler

things you're Great Tastes and question Yes. and Sure. evolve insightful strains that. evolve like right. and and

the strain breeding, the portfolio, So invested for strains best heavily we're in around. delivering very evolving essentially and consumers

the which Jack now so don't the And and while East out There well. since whether Sour a in that Durban Orange other there, lot the doing to great White we is things lot we portfolio. recently Sativa are of strains about a the or released like in talk the about Diesel, just Coast. We of talk one portfolio, so it's right it great, does

supermarket consumers why percentage In more, for effect Certainly that piece and a one I of not more, I that's kind, terms to that the for last nuance the which relax huge, the it of realize the could of know the mean, very and a in significant But stands the a offhand. couple have space. Canadian is the medical strains not for of told any to revenue, the delivers nice want the matter the out. company betting not want strain, even and effect single but patient certainly it on that a California it’s of it’s matter you we're decades, Indica the the genetics is important it,

Camilo Lyon

It's one great. to you that much. you’re materially Thank very great not Okay, strain. to know over-indexed

Benjamin Kovler

Sure. you. Thank

Operator

Thank you.

Matt of line comes the question McGinley. next Your from

Your line is now open.

Matthew McGinley

Thank you.

factor looks product sort a stores you mix that CPG On sold would of product have sell nicely value the in And you've internally? would amount business, you sold product you you're or But modestly. the decline is the slight I decreased selling in shift what gross that it something increased like mix with the your wholesale internally the sequentially. of in product that and But produced. wants customer caused that or geographic that not there necessarily hope

Anthony Georgiadis

of that on naturally Yes. that It's here. of evolves kind the once It lot unpack But Matt. It's that kind a that, flat within Anthony towards. relatively given target in. of just going of or really a kind a there's each one actually markets within we we managed Hey, not nuance, business. operate was state you number the the quarter-over-quarter.

And don't have our so historically, based kind we're on kind same clip revenue see it of at grow read just [indiscernible]. we of didn't we while too within seeing much what company the the we into that state

Matthew McGinley

Okay.

I even between that more cash On more spend heavily able raises equity But equity balances debt brought would proven in yours all consideration. and very Virginia deal, the weighted generate you year-to-date, a and you only deals the million we've would the seen did including on that M&A, improve. $XXX is and if over capital year and raises CapEx, you've cash as been to this the in this almost expect to you've you lot

question industry you balances to much know So reaching And company like on sit business? that you the need have we where point just you them this bigger you know on are just sit larger run they'll because balances. with deploy where a need do big tech don't the is the how may they and don't next balances bigger cash the of where or these these they kind company pivot to may that and you when

amount and cash thinking this what's So to you drive? of business just and the need run that holistically right like

Benjamin Kovler

This It's Matt. an not science. exact Ben. is Thanks, Sure.

cannabis being is And against locations. immense. illegal even really the sleep federally others the opportunity lowest like of sheet fortress You think domiciled with federally well in illegal balance we and cost capital the with

I over Connecticut, Pennsylvania, make We Ohio, to Jersey, Illinois, balance of seeing the look mean, see the it when the York, on $XX number capital Maryland, So would a state way business. New aggressively $XX lot New have sheet, the sense billion. keeps going. into annualized going we're numbers it opportunities, and crossing the investing across billion,

based if conservative of even have or on market take the them the you cut it of significant by XX% growth assumption and size All XX%. your

We're really business people here, own to we're that. want We're cash an our not and double away. split, value Obviously the We we're significant income can do part give doing would believe the on through count it the wouldn't the it's business, for triple on but them, we're to carefully very stocks The the want down So whichever we we want we happy the managing multiple which accretive measure well. Otherwise, of treasure managing we’ve and don't as with statement create put that. got. M&A. equity We or flattered to by a with you capital. amount comfortable of it. were share that in

business liked the don't cash where one and we are So and we know a thought other the want situation. moment but that. haven't pretty to capital And We will day in have I currently. that to happen invest the going. we And safe much balance. things fantastic is are going the change, it listing and Sure, markets cash for too continue given to current

Matthew McGinley

you much. Thank very Okay.

Benjamin Kovler

Thank No problem. you.

Operator

you. Thank

your on, comes question Des from Eric of Moving next Lauriers the from line Craig-Hallum.

line is now open. Your

Eric Des Lauriers

impressive another here. quarter on Congrats

Matt's of a to here. question follow-up bit So

lowering of non-brokered guys capital at negatively restrictions. raises. the by same in And and time, institutional done capital continue job impacted You the great these general be yes through capital a cannabis cost significant trading your to stocks

compliance U.S. of taking institutions cannabis or you're on any beyond provide just warming the if are seeing shying some idea type exposure? whether whether So public seeing to I that markets broad the risk the and you was wondering changes of on in up appetite away here could institutional demand color you're

Benjamin Kovler

say attention issue I folks name This are Ben. the releases, for is things that's their core a a part that And in simple. putting more are of that because that's that. insightful there's I'll Yes. would really press question And take here. not great

is new and and what at raise you bring literally see the us do know Green every capital that too. others do single into you However, space Thumb

still bringing still to literally not supply bringing institutional or on aligned the are high-quality, in a There raises of needs We different doesn't companies. broker, very these that's be management, clarity. going. where capital the movement. talk it's It's prime we're new more it's about of slower relationships, whether properly capital And it. But is stock are in, you cover on it can't but with out other the very CNBC each one is custody, and cannabis buy situation. it Robinhood. gray, tricky Things a long-term,

a and sort investment the up it these that bottom Georgia, now Jersey slow on structural you analysts and – fast those the, and it there's call had continues New of the legalized, PMs in accelerated inefficiency sort time irregularity New I of mean, hopefully or of you we business you market the talk it by cannot the surprised are I who motion other New in places. to whether and York, in ground in in and think nature there's and seems Virginia, accelerating. unbelievably to be when and At excited be see are Mexico, had in more and got the fact, happening that more is maybe just licenses motion. Mississippi,

So absolute ground and an slow market the down dichotomy we the on see capital acceleration. between inefficiency

long-term that we're and So the about market business very, to aligned unprecedented. other we're I everybody, differently. capital. aligned new speak can't or that's a else shareholders, shareholders is We're the doing U.S. a of into are shareholders. in why size fired other whatever it or with very all in investing companies and the for it's We're not capital we one because opportunity Not with situation. the the fits we it is people countries, want somewhat happening bringing cash for a building tons business with the up think

think we're stage. of feel bringing kind but I So the of the privileged markets are their We nascent hard capital the having in sort we're broadly not spot time capital. a right in very in,

Eric Des Lauriers

you how you of color insight a flow generation. and your sort with largest new Could take your you increase continuing of maybe smaller some projects, to projects, some then or that cash provide whether projects help sort bit scale being Great Thanks. the guys of And as Okay, of great. sort to follow-up, to just us understand you some and increase That's and span, helpful. balance of on new about spread or how start then there. cash the color scale on guys that guys around a you cash decide sort trade-off think that there? geographies, of

Benjamin Kovler

We put about what to the for different allocation and is in The is where capital capital the things. and right? how it going this with is and the kinds like, what I it we returns and ultimate of it think Yes. mean, game, we put of really like. and situation when of will be business what look and Board a states markets multidimensional kind And lots

the [indiscernible]. we're So everybody we And product. million possible. of And to a up. creation. can’t fortunately, value the simple fact trade million is this to Kelly it can make to XXX look principle for or And over think whatever cards, are guess on $XXX places about really say Well, demand talked Americans we're There wagers it work? you work take playing at are we one market create based when basic market who putting XXX. at XX, four, at multiple EBITDA our to million and create most These our we the bets make make under millions, another where that up, investment put about a where see in the the remember or formula XXX we $XX of want else's that [indiscernible] I that shareholders, money. or because math is of we call you million billion cards. to the how EBITDA behalf the $X.X plus one think we our principles make put to we of a table there's that it or many, can way interested many of at tens chips there's can on what, to were really, going of trying one – this make $XX Where

So symbol up as of set it's the possible. about a

want out So of have we success Lee? there. on the are chips to we highest the where based that just play probability

Operator

Yes. All you. right. Thank

next Moving on, your from Lyon from Camilo comes BTIG. question

is line now open. Your

Camilo Lyon

of of was, after What call a out color I'm relative XX% far coming as Particularly helpful. how so light up, you've you. share rates QX. quarter Thank to the to QX in seen February curious Congrats. guys. exit could know XX%? very into in thus sequential nice any you to difficult growth that that it Very be And was would the momentum putting a quarter

Benjamin Kovler

Yes. It's insightful. the up. XX, say, day out, of a woke sat seat, it the I business Day, heard in I March It's the changed who've the Saint same came here March the was would the Patrick's data, stimulus as we Wednesday, market and back think half in great it the others checks question. you've literally seen it from things

to elevated I sort up it take and wouldn't So and XX, see the And data, Illinois show data is you and popping say above. XX, state that above by caught February of state to can it. really being back market low, then state up we track the

that that. change the which material of really think the a don’t happening. price the if in is Illinois, Green of back about are end at not particularly year. coverage acceleration some stores holiday know stronger I towards you you but We talked April, just and beginning versus the coming half every have opening, Thumb’s data can think XX saw and is year, you first something of see little and coming But state everything. gives what's We more kind situation Green of specific, a the rate on March So dramatic markets, than XXXX. quarter is the usually purposes, exit flat the still for is for more run your the night's of at Thumb look I we under

Camilo Lyon

actually second question about that your to for leads that. my expansion Ben back you, plans. Thank And half

ability are projects just that very robust in understanding half of it about That'd comes be this back what the and we starting please at think kind to coming have cultivation of quarter, you should wrong. maintaining in incorrectly, really delivered us said particularly margin to Anthony in about the the I'm the the remind this XX baseline, as second could year. If but seems thinking in And an like online, States? balance where to seems sort be that I'm you the through rate XX% margin really half, me more it of harvesting of point If maintain online the that how helpful. correct about – you least that what the plus you

Benjamin Kovler

Yes.

think that's right. I

we're and what We the And we do kind And if into is, want lot trend? think we our the more would people we have to scale XX%? to of a ground, Anthony this products. were XX%, there's to we coming we lot with more demand. were like business to we're a because I there's the do there's targeting a buy And like comfortable mentioned, production Where get simply feel lot On has investing of like instead demand, say our gross how lot okay more more XX%. more thing. margin

it be thinking to have We about that in way.

the if So into focus. we're means margin goes down, core the that a investments fine. business it very comfortable not It's making

amazing work they're that also margin and we the infrastructure an on scale revenues trying with And accelerating gross As to is build line yields. the start thing. the really to more SG&A the hits

start to we So see real details.

Virginia indoor there's New on But a country we're XXXX that. in have not to where just we we alone. that's really exact We that's that Canada demand capital the can as don't big details and upside a next it's to putting basic And business and it it, the coincidence on based we model, about believe quarter, inside XXXX, we possible. the as have make And premium national is don't scale go working I York we consumers as the the Jersey, talk based on more the to see, as this believe and we and know. and bring business, – New up because the on want in we're sometimes across who flower

there's to think access XX DC we XX I lot be be currently. it to it's a us the few hopefully capital a and sets got there's There's got around gets pretty in but more mover or doing well. things, only then think people only first up industry. to maybe there a And to licenses and

Camilo Lyon

very much. Thanks luck. Good

Benjamin Kovler

questions. Good Sure.

Operator

you. Thank

Sandler. Michael line from of comes question Piper next Your from the Lavery

open. now is line Your

Michael Lavery

Good afternoon. you. Thank

Benjamin Kovler

Michael. Hey,

Michael Lavery

you balance you're The accelerating to you something with legalization XXXX? a for well. Just so us much how little ability think maybe wanted about sheet a range is just quantify point what follow-up momentum sense give a obviously and about this any to your year CapEx Can and really industry certainly to for thinking at bit. an of up and sets for

Anthony Georgiadis

Hey, Anthony take Michael. here, I'll it.

of in the about So spend kind spend million sale our QX about last reimbursement, year. gross of we was $XX gross [indiscernible] before $XXX XXXX spend the million. kind leaseback

was spend last I our be gross CapEx it this So to anticipate certainly year. than greater would year

sheet not pretty going we're to to agree changes but specifics, and we know, coming, in have you that with to the with the likes we're that lean have regulatory the As balance markets we talking going in aggressively.

QX, accelerate said that I anticipate I would QX number. from prepared As in through XX the remarks, CapEx my should that

Michael Lavery

Okay. That’s helpful.

there can But a any at is the in of sense – And run which needle debt somewhat Is you what the to got give the follow-up, sort kind take What debt can cost rate? you think from among that just related on, maybe the How type far this touch industry. guys capital improvement would for best baseline again? obviously to is still you you've move X%, of of by stay? of it about just into do the there? expect settles where we

Benjamin Kovler

thing just based on the that's Yes. I the you could play day mean, not around where is. for a pricing our purposes,

to way get a year. there our For quickly. when that grade. we're X% us X%. I If Look, option us, year-end, X%, more next markets. We looking capital debt re-buy X%. with And an U.S. on about we think to costs capital. the not investment is normalized we to is looks providers, sub X%, time at of more sort We've you the performance three have of the fourth is for the sheet look years, P&L and on exposed it's the could the investment where really told if for structure The balance we think re-buy alignment been we we're talked grade, business

to like look even minus. well months it's of Xx, or the are. more you If it. Xx so certainly debt up EBITDA are characteristics you taxes XXX. where we And the plus And we wonky the sleep we it can for pretty under levered the XX trailing we flex is if growth say We There's like interest. with at business, see, really and the

pay a the need sense. the to doesn't cash don't more balance just make on interest of on sitting You sheet, lot

fill rest year a the opportunities. have have you out to If the of it, we

are think that the hopeful but all capital down be I'm that drive to markets thin able I continue the as seen. should cost of as happen, we've And to everybody also. else to in capital industry

going we work can be about the So we and that XXXX, cannabis. And position. to It’s for on us our get world is to equity XXXX. a back were thing talking XXXX where little same to plan debt we're now with happened – the the to people because like only in surprised in we

Michael Lavery

helpful Thanks so color. really That's much.

Benjamin Kovler

Sure.

Operator

Thank you.

from next Partners. Grey the question Global line Alliance Your comes from of Aaron

Your line is now open.

Aaron Grey

questions. on Congrats Thanks evening. for Good Hi. quarter. the the

Benjamin Kovler

Aaron. Hey,

Aaron Grey

And Great near-term the at first level of or started you and think Hey, couple terms to the chance of in in the love it your how there a level. particularly M&A coming in to There's we'd through Thanks. additional to lens moves being online acquisition about been is how your that that? your So thoughts some anticipation of next might who years how's out there others a be some about for the – me bit changes have make M&A. you in in peers see to there the of the get federal but question guys acquisitions? going? of federal or change with flowers some on little adult-use potential perspective around Virginia think starting, in the there

Benjamin Kovler

Ben, is This I’ll take Sure. that.

if the the So in we've a knowing U.S. pretty on look, focused. thesis what's for everything's table level having said on that aggressive is that awhile. sense, very We're going makes – in We're high space. the

the as pretty will and I Capital efficient think think is have. story. what an walk country, world States. U.S. we markets here the this we think the the American that United We industry an a action executes And are here. is as in and Spiderman

comfortable that. we're So with

history, raised fun cycle of If business, you debt The and we're part our in markets. capital the of at on hyper-speed. what's happening is look our cannabis at looking we invested and at the just

and had to thesis you that we're and downs, and with shareholders comfortable the do based talked M&A ups would to us accretive feast famine that. say exact and for we've I we've should that’s on So look about.

under the do recipe current So the we whether we which by it's and an like active pretty Anthony personality-driven make favorite, that. therefore the The think your for Last situation. And little of part us going We it's a bet, to where by like we or which what's very going that year lot. with store we or of whatever decisions, what's all do Connecticut, on is scale, we going U.S. good carefully. point, be a following been years, that's bit we going. business business six others how we the about nothing, bought legislatively-driven, the on use. sometimes, our like gives we're just that's five, understand on And to data-driven or that's said, whether ground. information to sometimes Board like see which scales edge is an a a the We've Virginia do a strategic and whatever, think cannabis it plays in last enter in

think not the we're of I'm We with capital of the that threat. later. want play it. might excited into lot we want tens like put millions of but So and We lot it offense, don't at right something cannabis opportunity a And have feel moment, to where not happen is Americans likely to of change, there's a that. about now. We

really So to. we that's up what need good. to make And really fast, it we're

Aaron Grey

question Thanks. super And helpful a Great. color. That's then me. second for

a of more some couple you balance Hasn't in acquisitions had about market states. balance priority some ton we've you high of terms in talked recently talked and this been the strength just given guys But for your longer-term. year. in obviously sheet, strength often down there the just So given about you've action other allocated there there's where times, been Florida a you sheet, like

there and kind on does the that in ballot some Thanks. of with going the to there, be grow is put to give being capital So of that look you market potential XXXX? use towards the especially

Benjamin Kovler

Yes.

I think that's Yes. insightful.

job We period in people high lot done through sit a cash a there. As nice we you looked of million lead that lens XX for not cash that to interest with And going think had good exactly, of that conclusion. see more a Americans very long very yes, and we're down time. of have would at a right. has market, who We it to just a

So studying market an it's and we it. interesting were

Aaron Grey

jump I'll All in Thanks. queue. right. the Great.

Benjamin Kovler

Sure.

Operator

Thank you.

Zuanic comes from from of Pablo next Your question Fitzgerald. line the Cantor

Your open. is now line

Pablo Zuanic

I I context sales is Thanks. but a and of lot this the give growing can levers, same-store or sequentially, Ben, ask maybe industry interpret it, growing, growth number. could about about is surprised know understand eventually same-store new some I other opened context the that many can I Pennsylvania, the only a have X% states, too have stores market – number? you mean, rank I'm around give please? some Can recently. X% around sales stores. you Illinois I can go you

Benjamin Kovler

in major it's I quarter These There turn-ons whether would don't I issues The at fourth giving like states, first quarter or that Ben. Yes. hasn't do with sometimes start. fourth we over but quarter a any of is ourselves first store what's there. new the to openings quarter Pablo, ebbs or of it’s see look are new Sure. flows the see thing can up stateXover-state, happened don't and share. market. in by business. market give any or tailwind the things We conversions, been or adult-use lot

February nobody until country. doubt day I go wasn’t to month. open rough four like pretty pretty Pennsylvania, First New snow days XX-day multiple it. and Jersey, was slow the store a And of wanted quarter XX. every Ohio, March Like and of it's snow. in There think and the was feet was no about had a out

there. is see it XX came stores. read-through don't but I real any X% strong, on So March

The it's a other thing base. is big big

have now you and base over a a numbers, comp the of of sequential a So XX XX. year

amount and of doing us. in the across going moving before of bigger So quarterly share, big front tough. needle yet terms monthly, market's heading They're in a stores, Business quadruple we're all market than the retail big it That's a in was daily, basis business of you're on the mean. barge not I is to states. of XX much XX%

Pablo Zuanic

just have that flower you. medical New if York. view when the timing there to to And eight of stores, Thank you. steps a that? you taken about then follow-up you open in on Thank thinking on views start to terms selling some have you insights on have the Right. potential do How your and are

side? medical the On

Benjamin Kovler

think doing. things focused And doing pretty the job. licenses nice industry, new on would could the it. no there York to log then – instead just do There's believe They open on in put part that can and X/X/XX, date a entrepreneurs market good about they're enter and not incumbents only, a with intent product We awesome up New of and also. to New We've I those grandfathering. a the real such they a dart have it's it York that new where you licenses on read It’s to has market of successful. now execution. Ben. based take New which And could them and XXXX social seen commission Sure. get day the current that chance GTI be that's focus with new sets out applications a then chance rules a equity. in X, Illinois, in adult-use. execution And still all yet York wealth. have it's the people think an And infrastructure, emerge the We yet. generate one, well, big could is can a a Look, you of is new January we that on one would is timeline the based no

the plenty heard bring demand. rules wellbeing. should space. have of be executed into [indiscernible] obviously go access flower, the of on York that tough. the we've market this with are load. work be patients market, to the And yet of law way sense, can has of for sure it. that a to any could carrying really a In that the eight said, who hard about. forward our yes, three in are We'll terms for because lot medical dual, pretty really new common are to flower we're to great others Regulators Its stores, education, obviously which New a But There's go pushing

Pablo Zuanic

Thank you.

Benjamin Kovler

Sure.

Operator

you. Thank

of comes Eight Graeme Kreindler question line from Capital. the from next Your

so open. is line Your

Graeme Kreindler

GTI the early at your how the looking respect into talk Hi, I served potential on of online, expand made element and the and distribution to you're more. scale, good follow-up the to much setup demand markets question. the at to state very you potential cultivation for my to a coast. the coming that's you existing your base afternoon, coast of wanted The does existing commerce I'm of across interstate And to and where situation Worcester distribution factor much existing potentially The been has There's Ben in little brand elaborate little thank very story see days asset it. a more the there. on bit with you GTI basis type a could on much. distribution significant this coming parties some you or chain? from do require the you the while. taking greenfield to using But or over regional Thank really in about earlier market comments portfolio the that the talked if large leverage scale. investment a of ads branded wondering at really and opportunities But any of when third some infrastructure you diversification last supply event would very about

Benjamin Kovler

what good situation. We talked the the mean, story. within Yes. certainly there's to business looks XX making XX, is an chain million under need think to threat scale you make and the opportunity I million the the people, interstate, fragment consumers over. today current there's becoming very products a more got to are. with something more, about them have with be scale. chain We out know we than people think but XX opportunities is more at a supply truth more in about not in at and markets able like that the sleep markets. win this we Sure. lot them California. it's want Hey like call, we We're on the in The XX last call, We there. We same there's that said huge the is brands of lose the exactly I think And demand what Graeme. supply our million people,

obviously regionality there's there's are of and those products there's models markets So of things. that sorts things. other have other huge that But consumer and these built

like spot So are. we're a form. pretty we shape in where think we behind feel don't and in or We like way we're good any

what's of the I also product. is really think the consistency crucial

you then product everywhere refined easier, it you away further of the move it [indiscernible], make get just can't into you it, like ship products the to and very important. but the especially as its flowers, is to go, consistency closer You and

Graeme Kreindler

respect Thank Virginia, of Understood. there's brought much. Appreciate forward. Dharma a And some potential timing in acquisition chatter to being the just follow-up insight. With very the as been here. you that of about start of then the quick and adult-use

in for capital that get As might outlined very built deploying capital decisions how has could you your you relates call, how Thank or Dharma based that to drawn allocation to and CapEx expansion? much up significant start plan the they've that directly expectations quickly much. were potential the what or of that on earlier Virginia

Benjamin Kovler

federal the or being which is Ben. Sure. What's trailing I like a happening many This times, said don't legislation more legislation with shy. the is indicator. federal, be state think Anthony, so I in

like $X it's not this billion approach? really plan. for the place million so to going saw – million now consumers demand, We've we We're We a enough make But decision. product and we know around, them pleasure that a serve to done scale coming million lots But X.X nuances There's really of are to market people, how that to of a understand adult-use, putting do an people So we're for your works. and what the is medical, how thinking amount the this a no chance does demand. regionality plus capital understand big the Virginia We in it's to people. deal. to scaled had wreck. a is enter we X.X of huge cannabis the that know multi-phase area and lot does branded doesn't see impact at pieces a We great many have a states. at it’s also not X.X it it. sign We we it's in and country What's how change of look see states that and that what might into think market. question. that's plan happens

Graeme Kreindler

Understood. it. very you Got Thank much.

Benjamin Kovler

Sure.

Operator

you. Thank

GMP. question from Your Partheniou Stifel next of comes the Andrew from line

Your line open. is now

Andrew Partheniou

what was was capture the now tough X/XX strong and highly than What January a May look normal QX. that my Could taking dynamics you pricing can environment? People and good question congrats bit for a Thanks discussion does Hi. talk if quarter and about stimulus after check receiving February. after to if promotional and on April anticipated. little wondering traffic And promotion in the like? checks or there back the guys. higher Maybe come like to And March I does of the look period? a stimulus the into

Anthony Georgiadis

that. take here, Anthony Andrew. I’ll Hey,

So to trying early to you're bit, the March I read ran quarter. think in the little your in what essentially that I'm combat part of softness into saw of promotions a we kind asking if the question we

not the case. really So that's

is environments, lot have of run one other the of number appetite operators remind don't continue a benefits promotional of supply kind in and We you a so even to just a that of our to huge still do I'll business. kind we of the business for activity. that operate constraint

natural about more we discussion kind there table we that, just Some to kind anything we're evolution, where hey, do competitive, need and setting of that's watching was of are a that but nothing of obviously the we on but markets did the getting or something this. that, abnormal saying, had

So did kind similar what exactly checks been. playbook came of business, we the in ran and and people ran the

call, they only Ben during we last product. think, that. As mentioned weren't more the beneficiary probably purchased our And of I

Andrew Partheniou

York about The little And that. haven't out New yet. talking for Thanks regulations maybe been bit a more. just

production any of there. the place the lot law, caps gives secured for already Within restrictions. a of And platform or to regulator you've it kind your power

thoughts if and your little you color us will think curious into give be will regulations footprint how Whether on that? play a acquired bit strategy already out? your production place the how you on production could with there think you've you that any caps your more Just

Benjamin Kovler

going want we think Ben. to is new not can it. talked take much of can high I'm make. I We’ve quality products immense news the an This Sure. amount sure there's to be there it. we We We demand. about how build is. know

intent States well. a on an have strong I here this new it were in we're spend all partner The make some rules current they to – Like in There's not work as it out getting on committee lot pretty help. hard capital work website. kind work has We think the side. And aggressive that’s and ROs the a to of We early of and of mentioned, plan. the together issued make we're with pretty a yet. entrance. along the flower

assistance which it's what did to we LEAP hard license. with a is similar application for in Illinois so And to a program, program, apply

three, work. day in a invested our going lobbying. we can set bring make. goal, three, It's dart a earlier any and exact throwing to six three, think the going know can it’s or If just on same for what others space, zero I mistakes to someone it educate we're one, York. would had product. like New two, folks I who's I months not stores, that's you make XXXX, what or of are lofty have this have we make version hopefully it as on we others we can science everybody months and really in well. with we and one, to for in industry based aggressively mistakes and build really, later, going on lot we based pretty four that well up six hope when We But think we're on can so And mentioned, not Like a the the how start stores. made into make the coming

Andrew Partheniou

that. get again. in Thanks the back for I'll Congrats queue.

Benjamin Kovler

Sure.

Operator

Thank you.

Fortune. Your from Scott comes next question

now Your open. line is

Scott Fortune

color you on the know and opened California. building California And at there, thoughts testing brief, out but around Any took real I'll trends you're be I thoughts it on kind Ben, up while, all? momentum of quick a store. there.

Benjamin Kovler

Thanks, of We in a California. Scott. going lot restrictions COVID still Yes. on see

nice that's start with to I up. off a up the until momentum opening right. think Store good is

we As menu at looking will selection, aggressively state. going on we in build what's the continue say, in loyalty refine to We're California.

that spend like a capital are there. mentioned watching, we'll the now, studying, California, I think we not places risk. we they But will sense lot but like for aggressive it make would won't, which spending. aggressively not foolish be is to, Things the not in go our of or we're we're position, we're so

Scott Fortune

things states Got sense Illinois, that up are I into to move makes standpoint? it. seeing other think you mentioned going states trends you’ve open states favorable Nevada And of Cann and then investment, like two is These Massachusetts, the other forward want from states mostly some two as here, out forward? other you side

Benjamin Kovler

retail, plan there, We scale give with difference more expand transparency We see need of We're to into really and to we We Yes. not production. products one. market. and little Massachusetts a our between Nevada plan sitting strong that and Massachusetts. remain administrative.

come Nevada, So look to business – heavily for to action Massachusetts. leveraged see In been tourism. our we has in not

the soften did. doing we're didn't monthly you great. the on heavy way Berner that's think it basis, XX tourism, a on with it And we now with Cookies lot XX play see is a So that a of what obviously surge, and which

one good back, more products momentum to give in then the in We stores pricing year there's Nevada. and we of states a this a are plan we pipeline. can Reno, monthly which in and is in both one but firm in States. as others just open the see we'll have basis should more lot that, those transparency pretty growth markets. a a for play There's both area, couple those So And on Vegas come have in good both our

Scott Fortune

Great. Appreciate the color. Thanks.

Benjamin Kovler

Sure.

Operator

you. Thank

Your next Echelon Semple question comes from the Andrew Markets. of Capital line from

now line Your open. is

Andrew Semple

and terms afternoon, everyone, prioritize of you're of you list congrats quarter. spend. on a capital and priority us your think ago I Hi. kind Good markets certain Ben, capital looking allocation where solid of to in couple months another gave

York and developments Virginia on that since and is those update, at more And think, sense give New priorities? you the could a Virginia? that in of terms the and slot those do in bit you clarity a in kind York kind of of kind given New fits Just of us maybe of list little where top of

Benjamin Kovler

both mean, of size Yes. math X.X billion in I problem, mean, X market capital it's people, current people come strong them and I what's XX million Tier allocation the [indiscernible]. opportunities. a or pretty basic

legislation right before, to potencies meaning some structural structure for of people million thing or New have just a products as or well, get major red Most demand. no There they're movie vertical of the there it's set amount not wonky. to or that literally pretty in how going no Jersey wait of huge enroll, Illinois the this seen for X waiting or how right, rules on called these product or markets and irregularity much – fancy, something going and – about anything it's it's flags that It's like want. consumers You've Pennsylvania. sort about is

Andrew Semple

I'm very your That's margin Do ticking on The follow-up, start wanted There's the ask to every been we wondering just I great. since been just up QX gross gross to on margins thoughts trend. a XXXX. of And have find where profile. on nice period? of you to quarter continue kind as margin level do think to normalized kind your gross QX move for forward? going we're latent Or yet to that profile kind in room cultivation the that scale see and you activities? the of you of production higher approaching

Benjamin Kovler

It's Yes. Look, answer. great question. it's a really a question hard to

the – have side business. given the we on of is growth reason in the are the going business, we CPG the of obviously part is So heavily because investing we're on what

of relatively is the business. you the overall become gross margin kind get time kind right. over So margin, that percentage of should where unpack margin when static, the greater of kind real within of And business. of gross the a is can gross retail CPG you leverage

and scale. sites these kind on turn of a to then However, get while take to

continuing that the you facilities same and if of call efficient, have just unpack same, and out, And scale not terribly you And operating is not number you get at then breath, now are lay facilities scale so that what are in a it have more number you the efficient. turning of have to right you a are at achieving portfolio, the that them also or right. refine on, when

So they're that I a on gross bit drag, margin of guess, a line.

off tell to the of you it's item think the are with that here solid from think healthy sit kind it's here that and now. benefits where going margin we've that can will and where three the number. manage other and I difficult that doing bets I we got I sit gross make in flow We from a So to specific And States have to for cash in balance. luxury operations have We at the of operating true and we to the think businesses years scale. where potential are line me cash two kind of what know of pay the or don't these is that,

an really us even puts puts in position. it so shareholders in nice It And better a the position.

us where lean we leverage. And of get so in time kind gross that business on of CPG continue the see know over more the to margin I think you'll side we can

Andrew Semple

appreciate And congrats again. That's color. Anthony, great that.

Anthony Georgiadis

Thanks.

Operator

Benchmark The question Mike line from the Hickey comes Company. of from next Your

Your line is open. now

Michael Hickey

guys. Andy. Nice. quick Hey, ones Ben, quarter for Congrats the on Anthony, Jennifer, Two me.

obviously of of opportunity about you exciting. assets or ancillary category line with for initial or there in the your sounds outside how lifestyle And potential But curious maybe think Thanks Cann it then product cannabis sort maybe or guys. launching cannabis, of development California? in Just double-click of curious, you? demand media secondly, Illinois, just investment on in growth terms the learnings beverage an manufacturing,

Benjamin Kovler

Sure.

about the Cann, Just taking excited we're first, launch. second one the

on-prem everybody for except news went this major that. You socially that's all slowly. is have want We've versus part tried cannabis didn't changing for see to well, it's any should, We of about of product category. And light dosed, not that. share big milligram. you a haven't don't it, of continue you where that be part we the to made for some fantastic. those I we a We like two a are place – off-prem off-prem and talked to the beverages is think because launch is

two to Canns, going XX the which would be drink accidentally equivalent gummies. not You're to

is not eat half. could and to You over-serving. Whereas, that might be accidentally be you one might gummies a have going over, two Cann

So to bringing excellent it an have a situation it’s job, up product, the aren't in people messed and whatever formulating the very, done Those entry love or incident works. people up ends pot, get brand, guys attractive where too and that an that and don't smoke don't the very really familiar with flavor. want

that's what it. attracted As us you know, to

open, a what's conversations we first cannabis don't unique in of a here perspective, are there's more lot everybody's your assets broadly. like sense. That know. on Seems I on the to and Turning happening on. question interested I going on series media makes everything table. would say assets, with We're a is

So of we're open to lots conversations.

Michael Hickey

Thank you.

Benjamin Kovler

the for Thanks question. Sure.

Operator

And no are you. at Presenters, may Thank continue. questions you further there this time.

Benjamin Kovler

everybody you enjoy in the a for Thank be you. We'll XX We'll few ride dialing Thank days. Great. the months. over in back next you Vegas and in. see

Operator

you your call. this gentlemen, conference participation. for today's Thank and concludes Ladies

You may now disconnect.

Green Thumb Industries (GTBIF) 13 May 212021 Q1 Earnings call transcript