VRNO.CN - Earnings call transcript Q3 2022

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Operator

Good morning. My name is Devin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Verano Corp.

Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Instructions] [Operator

Julianna Paterra

Founder; good call. to by Investment I Chief Officer and XXXX third George Officer; everyone. Financial our Executive conference Chief Corporate Operating earnings am and Rich Darren morning, Weiss, you, Miles, Officer; Verano's Welcome quarter Archos, Officer; Chief Thank Aaron Summerer, and Chief Tarapchak, Brett joined today Controller.

based such discuss of on actual make in company's or achievements materially quarter forward-looking or laws, events including the meaning to ended September applicable on During due expectations. and business results MD&A could statements developments XXXX. and the statements differ which current Such this SEDAR, and cause and and statements the involve unknown of filings management's outlook risks factors our are in call, the assumptions and our known the statements. financial our mentioned forward-looking business and that and may performance considerably we risks, securities EDGAR uncertainties US will Actual other implied Canadian forward-looking industry results, by to within differ from uncertainties and XX, those for

to supplemental website of prescribed measures. EBITDA, comparable considered company's which do in flow. today's release in In financial GAAP, measures. that refer most includes standardized the but non-GAAP we results not press believes are not Management at Adjusted financial enhance from our as by be financial meaning defined understanding our have These ongoing GAAP to these reconciliation substitute to of also discussion, available measures such the EBITDA, and and to any are cash GAAP non-GAAP on investors.verano.com, and will addition, throughout free these measures the as useful measures are performance, the should isolation or a non-GAAP for earnings

Lastly, currency is noted. US otherwise unless in all dollars

in addition Growth XXXX. company's in British filed we surrounding been already unable to litigation a commentary disclosed ongoing the October damages filed Holdings, lawsuit Inc., what the our seeking decision Goodness Verano. are XX, Goodness to has of terminate from in Growth has provide the Canada to X-K Given acquisition Columbia on

Our filed the to the go will over be George. I will with ahead. this response later court. Columbia turn call British Please now to suit today

George Archos

and joining including morning. discuss I a it growth. I on third X% and Verano’s commentary future of revenue a representing what before fourth to provide pass third deal quarter, I extremely Thank year growth sequential you for growth quarter allocation million, Today, $XXX am I’ll comments of detail, then capital cover in closing my with quarter strategy, financials and Brett we XX%. refinanced cover by the our outlook. few year highlighted of this to for us will on give more our updates finish in accomplished the debt to positioning over thoughts over of proud

in primarily the demand New by such third Pennsylvania Consistent with generated and growth of pricing Adaptive business to tier to which strong are other brands certain a grow margin Overall, quarter store items. of new macroeconomic and while markets, in other the accelerating for its drove however, operators, challenges. also cannabis quarter. Florida, and many prior or quarter it $XX the faced also pressures XX% in or progress deliver This the another $XX of of reflection million, We to XX%, ability is offset compared we industries growth million the were Jersey. of at adjusted and and offerings, including when value markets, as our EBITDA adapt operations, headcount included evolution, light current share of of a saw continually product contracting, to in mid focus and slightly industry measures time evaluating given relentless other environment. introduction has the launch the the quarter especially continues throughout we industry

an market and to adult-use Zen Neptune, Verano, dispensary, final consumers opening remains midway Leaf exceptional our Jersey third with for New the quarter.

are revenue wholesale and three over up wholesalers year, one times dispensaries over efficient the our remain prior of busy the in revenue with and the year. up times We state, the with versus prior top retail five

to summer the expect see We versus excitement the over especially quarters some as of off, normalization some coming adult-use wears peak initial months.

of inflation-driven basket believe wallet share recreational as Additionally, New in we both pressures categories. was quarter, fight increase other we decrease sales sizes prior slightly alongside which we the due the and Jersey to versus for saw proportion

However, we remain bullish about state. this

as of increase newly wholesale state approved in Looking the the come mix next ahead, slowly over expect dispensaries to online we our months. XX

we foremost our accounted grateful all Ian. for and following are first Florida, and Hurricane that employees of Regarding are safe

wish safe to their this the the swift dangerous during and tragic first for are of put continue such Florida and event a after who recovery lives risk a people grateful all We at time. responders

to We Florida our help any losses. month of and continue also personal to significant sustained employees announced last donation our that will relief a organization

While don’t anticipated market. which Florida two initially to months, medical expect market higher to quarter as future ourselves impact six for Of a matures. expect opening significant opened the full few for a the quarter to locations we of forcing as we strategically up of continue carried Florida our through growth opened historic this fourth so. about Most recovered the value or our week in we avoid line third damage the cultivation a quarter. certain hours new this, Despite quickly; we us anywhere adult-use in acceleration. our to store of position subsequently We generally locations all now dispensaries since dispensaries opening some incur see top of and note, but third enough generally we we of locations facility, did fortunate compared and XX close softness of to at running, were we to temporarily tapered, one seen dispensaries, into damage absorb and period patient have hurricane, see so to we ahead from more. are Outside an that a the during costs

footprint grow Looking of ahead, market, with expect we openings Florida slower increasingly comfortable we the dispensaries anticipate the we hold we growth in quarter medical versus a store our XX in but today. the quarter the still some fourth current as pace from third

Lastly, for while state’s in Florida, largescale given hurricane we has strong the been are quarter historically recovery the fourth the year. Tropical expectations and the ongoing Nicole, Storm from of tempering impacts our the remainder efforts

to challenges from the We in has pricing grown in continue Pennsylvania to XXXX. in versus dispensary XX% and increase count, perspective state demand face related about which a XXXX

introduced in keenly the it environment full three more, state. the in potential forward we accelerated combat we our all us brand, the quarter and to our complement has Throughout focus brand with We having brand, expect brand has the continuing now look in While in remain also macroeconomic this to phase realize launch wholesaling scaling dispensary additional out Savvy, the market value of and retail rolled the on this, to some our in the had our consumers. launch fully we added brands market as to to to mid-tier impact Agri-Kind are that namesake our the dispensaries premium affiliates, of Reserve opportunities, we value current out are open opportunity on also once the aware growth our and additional August. Essence have tiers offers three XX state pressure. count To shortly. and Through were runway we the

on pulled launch our of mentioned impact in As would on Savvy, that of call, value last our anticipation inflation we the customers. have the brand, growing forward our

and Ohio, Savvy also brand Massachusetts, Maryland. Nevada, Illinois, We Arizona, across introduced Florida, have the

we are will We results portfolio the are very the pleased based to Savvy, continue tailor our following with trends. upon seeing market of initial and we launch

Moving to prudent on that we reiterate the capital. allocation capital to to want strategy, our always towards are striving be I

taking first insulate we and are pressures, we the further recessionary cash prepare that for foremost. will prioritizing a potential and flow recessionary measures Given business environment, believe

delay time, hold strategically provide sheet In believe this return addition, At prefer do we on on we to returns, long-term that with flexibility. cash we not the immediate-term growth we provide will CapEx opportunity. short-term to projects decided balance as investment balance to

historically, as react towards accordingly and, We will markets. adult-use progression to picks we've continue in up monitor as certain done

the ROI we adult-use clearer for We reignite these once also become programs have time, the and states projects develop. to appropriate at see potential the optionality certain

included prior assets, Goodness with CapEx our and than previously spend that Given of in acquisition, termination CapEx amounts associated Minnesota light we Growth's disclosed. much lighter New York of range our a expect

are now XXXX. quarter in We in $XX the and fourth million $XX to targeting $XX million million

balanced the have We for to strategic projects, in of our announced the manner. refinancing currently cash increasing we through save provides month, last facility of flexible certain can cost utilizing our believe that earmarked ways we to and optionality decrease This more less $XXX can credit approach will cash we our capital. through prepayment money, CapEx credit reserves, said, with of we a along take October terms a With cash continue flow and XXXX. million us with of such as that facility new our which business

we facility, to up is the a low-cost prepayment we million. delever $XXX us to million of have the believe fee of allowing Specifically, prepay option at what to $X

our to in to medium we blended approximately cost capital of Additionally, the leverage unencumbered XX.X% of real term. expect continue with goal bringing the to our estate, down

extended prioritizing the interests. rising believe interest this terms our with a an able best example pleased environment, very investors' are secure rate of were in We is and we to

adaptogens. six five new Illinois, R&D BITS, ramp efforts, soon core we varieties that Earlier Massachusetts, segments. line, Maryland, find line brand of THC; as In product this our opportunities, Nevada, we by the of consumer looking launch to also followed markets, cannabinoids; up initial be milligrams Florida. unique terms we X Jersey, announced ahead, combines New and this and of functional of launch a ways edibles future high-function including and Arizona target low-dose to spans growth complementary of platform to our month, Ohio, flavor The continue

our In partnership Ric and of such into growth part opportunities, brand addition as recent plan our to Drip partnerships Cannabis our with in licensing Tyson launch exciting strategic and expanding Flair portfolio categories, new X.X. includes

We competitive Illinois, adult-use the the legacy will scaled of adult-use just in five key we sales have last Jersey, also Nevada future to voted launch next in positioned Verano, where look which future successfully as a state in In Connecticut, tenet done six representing we and XXXX and and positions. whose as and a well Maryland, maintains in strategy. Florida, million for of and to as have Americans Verano opportunity New growth legalization Maryland, residents Ohio. Pennsylvania, adult use ourselves XX tremendous markets, months, legalize week potential our forward advance operations

look at adult-use We our program excited to four to welcome and to are launch with another collaboratively smooth and are go working steps next state locations. customers ensure dispensary ready regulators on forward and Maryland to successful

continue we when to the expand evaluate to front, is will M&A if opportunities strategically footprint and the time On appropriate. our

industry, especially smaller operators challenging the in some Given trends the headwinds of macro the are facing. many

We eye evaluate towards opportunities critical with continue accretive to growth. a

Before Brett, it turning in on to the see over to touch DC. momentum I building we want

leadership by President momentum for industry. recent encouraged and and federal states, charges. banking as cannabis Senate We of in we a from the of the the see been two cannabis anticipate to the short far The same in market that growing understand marginalized. review is of part are of the tomorrow that positive will Biden to don't scheduling Missouri, but cannabis We announcement as signals that adult-use today. utilize order, we President's welcome cannabis pardon recent industry possession having be new what in scheduling the land decision is Maryland elections, recent an prior session. the too cannabis normalization From directives pass the long won't voted it minimum has US reform We of two

any on we themselves that best explore that to so continue opportunities avenue to have conversations the will on positioned capitalize are legislative front. present We and every

forward In will to new that shape with continue to addition, Meredith. partnerships help we push the certain

not as never our bullish We federal changes That at more upon can dependent execute we movement. as are irrespective level. confident of movement level, said, does the and potential ever has being that have and federal in never the been of success we

we to code. consideration, after it tax this Jersey over to positive New Brett for also so provide a more would but passed I the are I'll far, bill still at the head cat detail, encouraged assembly action. companies that tenant next will the And some to cannabis from the state by extend closing This discuss level, IAE now the Finally, which turn in recently comments. financials

Brett Summerer

of financial highlights to Today, XXXX, structurally. quarter third cover first, but review some I George. I'll we've of from made want Thanks, progress the briefly the

renewed resources. We headcount relationship pleased with the to with and recruit We're continue gone. accounting, our finance internal for transition to happy I'm the as very roles well how operational and has additional finance add teams, internal accounting and very and specific our as audit, technical controls, smoothly with including auditor,

the to financials. Moving on

Third remaining wholesaling. quarter by retail to the or was quarter and for of offsetting other XX% eliminations, revenue as we the of softness Jersey, business. excluding basis, the XX% derived an the an inventory XX% about On build was the second up benefit $XXX increase by improvement sequentially, business, from driven to Gross compared efficient in On in to revenue support the quarter sales. QX, Jersey profit in primarily more million retail of higher The side of mix of this an million, adjusted production basis, up third XX%, of gross was is wholesale a New QX was primarily quarter's X% seasonally versus revenue. from New intersegment XXXX driven due XXXX growth $XXX X% markets. above XX% slightly the

We ramps quarter-over-quarter quarter, adjusted headwind, the down in sales an On this which Verano XX% for pricing X% pressures which improvement Florida, to in industry fourth Though expect or revenue. impact nearly were basis, reverse this by alignment the as at was an Arkansas, $XX mostly back and sell-through of increase our X%, Michigan. was a of of were increased in by excluding to reflects structure the some our QX. SG&A million expectations. seasonality XX%, we stores, cost product to offset expenses an quarter this of

loss or the third in for manage economic revenue. quarter. improvement of the Given line second revenue, will million $XX EBITDA, current $X adjusted revenue, net had $XX of versus the of of for our we an quarter We the a XX% uncertainty and or continue surrounding the our XX% with environment, costs million of to quarter; million,

Cash with and to in cash Turning the million and cash sheet equivalents. the operations for retail million quarter flow first $XX projects. in first respectively. nine and $XX the months flows, was balance nine spend from and cash ended $XX the million we third even was $XXX $XX between quarter million Spend months. CapEx for was split for quarter quarter the the an and nearly wholesale million and

million smaller expect as some scale fourth we forward, we approximately the wrap CapEx for in quarter Going $XX projects. up spend

with spend XXXX. million legislative but will We and $XX we economic $XX spend between for strive now to in CapEx match both for and anticipate developments, million

million Regarding third we quarter. payments within made $XX payable, taxes the of

our low-cost unchanged capital. Our tax strategy tax of income a remains whereas leverage we payable source as

to Lastly, million $XX over paid Consideration as our QX. million Acquisition has was decreased in $XX Payable out

make estimated Despite closed fourth We the being have cash payments of for $XX the to environment, in in XXXX. remains strong. a economic million quarter, demand cannabis out balance slowing with consumer

feel And strong will so well and the can Looking up. mindset, results to our positioned future sustainable and hand we deliver I’ll the ahead. we wrap ahead, year agile for to maintain now, continue to it in George back very

George Archos

Thanks, Brett.

that We today growth, than pressures, continue. in of fourth been and to While us, set growth recent ahead we anticipate brand our quarter the we operationally, of ahead third into also costs lingering Despite quarter. expect amount Savvy ever for before. revenue Similarly, events Florida. fourth down versus a new the in position seeing some the impacts increased in pricing primarily still of quarter markets, from the the and we challenges, we’re strongest expectations the are flat is movements appropriate rollout trends market as we margins decline accelerated driven in the recent to we the economic by have of the of see tremendous want to

key for In addition, we are markets. adult-use poised

on We into teams Lawrence to who which game extremely something Hirsh, and US As the our emphasize, want audit now as our governance finance board up possible, I entry strengthened brings committee, of capital we beef the ourselves a position with focused and recently and and accounting tenured an background. remain for addition chairs would our corporate for us. changing to continue Brett, potential mentioned, we when be markets

backdrop forward the optimistic line very developments. that, further With please operator, are we open legislative Lastly, the and current about up for questions. to look

Operator

Our Partners. Aaron from with first Instructions] Gray [Operator Global question Alliance comes

Aaron Gray

the here, I the you thank Hi. Good questions and and there. see margin improvement morning for

of looks because So first volume some question weekly of have to that but just twice I some looking the Florida. openings store to at about as many store share see the there guys is close openings have despite data, been you the on there, all I flat curious had, looks which the be competitor. next

market. market. dynamics just I know competitive Any terms the color particular So in outside dynamics it hurricane, pricing of can promotional additional of you given the that, the provide remains of strategy? a the particularly on your of

pricing with the flat are still Thank openings? with comfortable So you. despite roughly strategy you share store

George Archos

Thanks That's been little and with additional Normally, we going question. the I the Aaron. a flatness the year. with the the on, new but we why And hurricane pricing bit intact. bit seen But price That around anticipate is current we little that growth we've this a there remains They're changing something we've become has competitive, been that morning, for pressure price is of through to to structure something points not trying Florida continue more about. do. mean, still popular. Good been what's the quarter. economy we're brands just yeah, we've our given on a to time the of expect soft. little track introducing current We're talking consumer that new with new very a need to brands.

in Florida and well excited the out. Savvy rolls in what very and in that's the anticipate So has all it. same we're launches it markets, these about as we we're focused done on, different

Aaron Gray

given CapEx plan, lower great. in much environment. it of color. certainly for very you that Thank then sense makes your the terms Okay, And

color and you those earmark whether no that to for looking such that states CapEx terms CapEx, spoke provide for markets were include maybe Just or New as goodness, with any York for can of central that? excluding you or Thank that states, would you. plans in not in you of have that does terms less one additional is

George Archos

including Yeah, those, right.

happening used bit So what's we a little sooner come anticipated than Pennsylvania, about to currently.

Florida, We we future footage but same build thing. paused second So some of there. construction square paused there. the rollout additional facility, up we

schedule. obviously on longer our New Minnesota both York and CapEx no

So the it thing a in on with our optionality moving gives which us good forward, is a given going what's today. cash economy little

Aaron Gray

jump great. Thanks Okay, much. queue. the back I’ll very in

George Archos

Aaron. Thanks

Operator

from comes question Our next Needham. with McGinley Matt

Matt McGinley

you. Thank

to program, your be wholesale trends So the be being business around quarter, down at overall New flat will ratably assume pressure that and supply on mentioned able that do wholesale should into the overall fourth the would have to grow Jersey you sufficient in or that of we wholesale down both those of rate segments you retail.

George Archos

Good morning, Matt.

we wholesale. We stores have Jersey, more open. do see supply additional for to need New do

think capacity. oversupply factors increasing we again facility, I to But have sales. see We'll new the these be additional opening. We do stores determining want our going didn't the wholesale to tiers third the market. we have just that's start when to

So we plan that recently. for

additional supply online. coming So we have

very their wholesale And additional there online. the stores to we in in so demand. But that new new first. open excited position everyone additional that a suppliers good of stores state. come verticals, the are And we're So to that is remains for seen, that the be open timing

the the new So near-term happens we'll see source. what with in

Matt McGinley

When quarter, very from about can is the you same Got the in going had over third or in pressure to you're your be gross core base that you despite that at pressure talking side had, to you that margin it. you dollar the in appear come that margin quarter, the the quarter. G&A end margin year? the of store the in on strong to And the control G&A quarter, level mentioned the fourth largely of the the core growth pace in see fourth expect sustain G&A, what you

George Archos

continue On more the us SG&A there. side you're going to efficient to see become

let So little that that. sustain should Brett but further pretty a remain I'll flat, on answer

Brett Summerer

Yeah.

taken. percentage sustain see a the probably that actually in is we going of we've to the stay the just consistent QX, as actions ability realization I full think SG&A even to potentially improve quarter our of

demand we associated gross side, will won't that of our the margin matched be the what we simply, some QX, you had in in going deterioration efficiency we the to see because the as to with seasonality anticipated have level same On industry. is in there our QX put

Matt McGinley

you. Thank Okay.

Operator

from comes question Russell with next Our Securities Limited. Stanley Beacon

Russell Stanley

Florida, market. that and you my for is adult Good mentioned thanks use a Maybe morning, taking question. potential first on

Just views initiative latest going Safe the be on supporting interest wondering, are what and where in your might Smart that your forward?

George Archos

believe it we option XXXX it's Good initiative. make viable morning, Russ. Florida a pretty to as AU, valid a

that and this multiple game We industry. excited changer So, it. a be it along. future, Florida companies business obviously, how we're for see of And major about view the what see comes We'll as for in the a could driver entire happens. we'll

Russell Stanley

stores what wholesale major but of Maybe now what licenses many the improved thinking those on stores online I wondering about respect have any from coming how with might Obviously, it. new you Got for boost, has to a timing, Illinois, perspective, XXXX? wondering might know XXX a from idea issued? but be around level visibility it's visibility always you guessing, your if

George Archos

far last for stores it made shipments capacity And black recently they're as anticipate in additional customers And is us, store few access, week, approved stores We and the adding wholesale access Illinois, against in does It's that Now, market, lower a competing provides major in exciting XXXX two of slowly additional and how come this over on others, to great the for for open think stores, next is those additional those Illinois us. which need quarters. week. and for out a I positive we we're I'm the we we put additional right? many and of end, hearing, there. couple would what based Verano. I opening the for XXXX, a-third maybe As

quarters. the wholesale over So, expected the next on things we front there few

Russell Stanley

color. Thanks the back queue. for great. in I'll That's get

George Archos

Thanks, Russ.

Operator

from with Canaccord question next comes Our Genuity. Matt Bottomley

Matt Bottomley

for the the margin for everyone. quarter. Thanks on morning, healthy Good and profile questions congrats very a

to wondering utilization. with own in already, your bit impacts but could a break pressures very versus little facility profile, healthy, of to around your discussed margins, that your more but if so On of in you came the I'm you just the it seems the again, than level might peers. the respect else pricing a more be terms it I little Anything macro move down bit driving margin bounds know profile

in of So understanding versus these what sort elements some like control of the what's just trying changes/ macro to Verano's get an causing of

George Archos

Good just morning, Matt. I'll here there around. a a us pass little in minute Brett of off – for to bit is bouncing

remember, few You had acquisitions year. last have to quite a we

we mostly and integrate macro while So pressures multiple as markets. offset seeing for streamline those facilities, same the – we're are on being we time, do what's the We on side, changes, by positive, going pricing make in the at right?

in becoming are absolutely more in operational we I'll clarify. what's we've perspective, with the can position, are and do ever much so been let from on you although, an efficient, going only the best in economy. there's But So, we further Brett

Brett Summerer

Yeah. Sure.

some you go a So sell-through. ride primarily But it, pressure about our as to in we that a handful with states, through is did – of of have if your and was it offset largely this. does bit point, right, rollercoaster pricing think we it a

provided kind we've just operational pricing our you what kind the of deterioration manage margins. a lift and if the from look our So wash. there. then pricing help in And That's our margins, sell-through, us internally efficiency of kind at done offset to our of

So, that you're color gives looking for. the hopefully, you

Matt Bottomley

Yes. more just me. Got it. And then, one for

profile. flow Just overall the cash on

maybe for had whether number that what on nine remind year. will actual expected, million a the pointing you you about how finish be months. the an it's like is to looks cash us, or Can just analogous will might for quarter previous taxes -- just end $XX kind it So of

profile of some of of get payments. in, inclusive tax the to flow of different full cash where trying the timings idea come Just year an will

Brett Summerer

and continue on in time, are we want quarter, to do to and is. to Again, our depending on payments we Yes. the timing, make on investment choices what manage where highest as that we cash the return the choices what at tax our make flows

outstanding. on to XX changed, average hasn't strategy the XX months So

quarter, within opportunities depending on However, the accelerate push what our might move we are. and the

payments. today exactly quarter's So what going tax terms it's cash you to and here hard me in for do sit to we're of this tell

Matt Bottomley

Okay. Thanks, guys. Appreciate all the help.

Operator

next Capital with question ROTH Partners. Scott comes Fortune from Our

Scott Fortune

Thanks for morning. here. Good the questions

Just, some your what of respect in meaningfully you to options up from you provide little of on the in brands to kind level? your can pricing more pressure That do own have your are states? a seeing We from of states what side you a seeing there's been wholesale verticality kind any And And know business? stabilization are the states, be you there, to color sell standpoint? would here states your footprint, then, stores more room great. move different those of, in but in

George Archos

Yes. Good morning, Scott.

wholesale, depends pricing stabilization the on market. the On

soon. they Arizona, We a are that same seeing did in some the here, significantly prices here PA bit; in stabilizing. with Hopefully, starting it where stabilize happens to start little pretty Nevada. will see, pretty order short

think that's in you're not to as construction going factor much other population the side seeing a here play the thing I is, anymore.

to I So most the couple were of close come projects to CapEx become of a of happening that think last over years, fruition. lot the they when them

should stabilize help a markets. don't see which supply, think going lot these of So to additional I we're

verticality, we as do additional far As movement. have

online cannabis additional and some that have We came in in Nevada Arizona.

integration able be will online. to do increase Massachusetts our we that integration capped, the vertical unfortunately. to were expect there vertical increase some will Pennsylvania, But we -- well. help. we there. So as wholesale also Illinois from side came

pretty For part, it. is Florida vertical. the much obviously XXX% that's most

we see upside markets of couple in others. a some in and So

have we'll wholesale opportunities. think I additional So some

Scott Fortune

Florida, kind that kind far then production current little mentioned states store what the you you Can Appreciate in as a far support you real side, amount can provide retail the your some in production. stores there? of as of Got CapEx And more quick, potential And Florida? as color. new then it. the as additions, color is with the on

George Archos

pretty our We're comfortable footprint. total with

year the be in handle more have capacity cultivation stores stores. mid-XX, do the able to XX XX, end that. do -- the to We probably will above We XX to probably about

it a we'll couple economy. pretty markets, couple and we what's markets, at much stores Pennsylvania, and markets in Other in open based next other So in moving a fit, we're additional stores, up key on stores how continue that's of of the see And to we're pretty comfortable position, going We're now. more. year. looking opportunities three and in see open some as we'll additional out play over the we'll a for with on those

Scott Fortune

Thanks. queue. the I'll jump back in

George Archos

you. Thank

Operator

comes next with Kenric Tyghe from Our question ATB.

Kenric Tyghe

morning. quarter? the have insight you specifically any around environment Could George, pressures Thank dive of provide into great? And some perhaps be respect you on exit a XXXX promotional you're may extent macro good the Thanks. concerns and with of markets maintained will to that as comments you discipline or sort any seeing. specific on your discipline And just the saw we worsening you more would XXXX? to that can into being you

George Archos

morning, Good Kenric. Hi.

promotional actually to the over promotional but it's activity, next the into days. going going pretty holidays, activity we're a bit XX I'm sure better, been So see significant

actually I able how things of to So to the the pricing. reserves, having be Savvyinvestments of you and see type But time, almost in we'll a We'll like. mean, couple all aggressive participate some we'll see retailers different unique the propulsion of this positive. do all able it ourselves. gets. activity. for first we'll be actually different tiers it's though, what see of that looks Traditionally, time year,

So we're the and actually excited like?. that to what year how out see ends looks

Kenric Tyghe

and getting buckets for down a much in was tease you to sort better, just versus Appreciate your on XXXX. in goodness related just correctly? then sure on wanted reset? the us And that, out step Thank make quickly the Can CapEx reset Just the cadence of core operations? help the the sequencing you. George. that of, we're cadence the guide How

George Archos

got how in roughly aggressive Minnesota. on was XX%, would Goodness depending XX% we rest it And all Verano-based. have of to the been

of anticipated. expansion to based So organic what's to are in just couple a we our pretty in going Florida, on stores. other not stores quickly continue wholesale as footprint in cultivation as see some We're down scaled expand, Pennsylvania, now. want had with Florida own the we our comfortable to And growth is markets on retail going front. We

were. aggressively throughout we add on continue to the see not we'll as as fit, So we strategically but as state

that tiers in. the all value position organically. announced grow we're Again, continue and company the So of about the we more we feel very becoming comfortable to efficient, with getting

Kenric Tyghe

Thanks George. That's quarter. correct, congrats much and the on so

George Archos

Thanks, Kenric.

Operator

comes Echelon Capital with Semple question next Our Markets. from Andrew

Andrew Semple

Thanks congrats for question my and morning. QX the results. Good on taking

guys that want active you side that we your how feel comfortable Just sales in given see how wholesale Connecticut new to to market, be do couple feeling attention in Seattle are the on be able the the about that [ph] capacity and might turn months you state? to beginning here, in you'd of next

George Archos

some one largest wholesalers additional in Good do. morning, supply. brought state. the We the Andrew. of in We We're currently

be additional will opening also some and retail structures. services JV We

we're perspective, growth pretty From anticipating growth Connecticut. see the in good retail wholesale happen in and So near-term. we'll should a pretty timing

growth So we're build locations. and It's CT. these continue there, CTPHARMA as tight anticipate probably good we to wholesale we market. about in we excited But mostly it a very pretty that well out be will And traditionally, store new find and has growth market. done

Andrew Semple

to Glad hear that. Great.

in that a kind higher that retail QX sales the in in down you provided see help bit are Can understand you attributable us comments the the flat ask anticipating you we outlook to quarter-over-quarter on down given fourth that outlook QX? sales seasonally point of be be this to states quarter. speak flat Could or might of typically to Second, that little might And that you more for I quarter. maybe which to that better? soft just wholesale want growth

George Archos

coming in we mean Traditionally normally additional the of in that that you on from see. hurricane We're comment softness I people haven't that going and what's Florida, move there state. before. seeing the Yes. see majority uptick not just We're back Florida. the QX, over we seeing seen that is strength to

we'll numbers. being see and you So markets, it how all Other just out. flat or see state numbers, X% the plays or They're cautious, X%. we're relatively down

So on And our efficiency we're focusing and doing. other again, very the what we're operations out. plays cautious our being with again, and

Andrew Semple

Thank Understood. back you I’ll That's get the helpful. very in much. queue.

George Archos

Thank you.

Operator

And from with Hanus Spencer Research. our final comes Wolfe question

Spencer Hanus

Great. Thank the for question. you

is we'll million year think that start that you pricing do see discipline your CapEx target out $XX to lead when CapEx, $XX close million to trends increased better in how to pullback there? industry's And CapEx maintenance needs? to for then, the With next

George Archos

pretty this point. Brett in number, got number dialed that. Maintenance He's Spencer. can on at morning, that Good answer

I plays question? out I'm -- see first lost part that. how So the of we'll sorry, what was that the

Spencer Hanus

pricing the you In terms discipline that do to stabilization XXXX see that when Is you increased XXXX event? do plays capital that a like, think in market? dynamics? of the a think How event? led we'll Is pricing the into

George Archos

it's we cultivation see something currently. the CapEx the Yes, being mean talked spent about earlier. don't I you

within the play lot So demand markets, the medical based also will So on to see what see out. usually a a as it you in you X.X it depend on so from transition But increase takes that and individual right? huge of be happens to will economy. or years

Brett Summerer

Yes.

about On year. answer the CapEx, first a question, maintenance -- to the it's $XX the million just

Spencer Hanus

it. Got

So that's helpful.

Brett Summerer

So we prices our increases hopefully, could well. as as we see demand as we goods, get and increase – see basket

Spencer Hanus

demand terms taper off. That adult remarks launch prepared do in that New Curious new Yes. to to you're what then mentioned of And relative pump population. so you start the makes under-stored just sense. wears I as drive in you think that the to there Jersey, category, seeing can the guys state more the in still the in given there, is and we're interest use

George Archos

many biggest of And be a much additional we small to driver aren't stores. stores. states, so throughout going do with there for only the amount is especially that opened can us. The There's

the access, in you see as So and sales. have stores you more additional an see increase you'll

Spencer Hanus

enough. Fair Thank you. Okay.

George Archos

Spencer. you, Thank you. Thank

Operator

the over call further George no back speaker, turn I time. Archos. questions this There at are to

George Archos

see happy Again, a everyone. everyone. and holidays, wonderful the day. We'll quarter, Have thank you in you, next

Verano (VRNOF) 14 Nov 222022 Q3 Earnings call transcript