GRAMF - Earnings call transcript Q3 2021

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Operator

Good afternoon, everyone. Welcome to The Parent Company Third Quarter 2021 Conference Call for the three months period ending September 30, 2021. Listeners are reminded that certain matters discussed in today’s conference call or answers that may be given to questions asked could constitute forward-looking statements that are subject to the risks and uncertainties relating to The Parent Company’s future, financial or business performance. Any such forward-looking information is based on certain assumptions, and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information, including the risk factors details in The Parent Company’s continuous disclosure filings that can be accessed via U.S. Security and Exchange Commission website at www.sec.gov or SEDAR at www.sedar.com.

and this call only the and estimates, expectations, in date of plans, provided as projections, this management of is opinions information call date. as speaks the beliefs, of Forward-looking today’s of assumptions based on assurance place There not will provide you reliance on forward-looking forward-looking to can that information accurate be be and no undue should information. update information. The Parent of whether new as information, Company undertakes such no a forward-looking obligation to result

certain meaning may addition, financial during do of course references measures be other adjusted measures, not non-GAAP In and presented to to this call, including companies. similar may also not references there comparable have under the EBITDA, therefore, to by be which any GAAP, standard

of adjusted to directly information Please to Analysis GAAP including most about refer and EBITDA measure. forward-looking SEC comparable and Discussion more XX-Q Parent available on non-GAAP Form both on reports reconciliation website Company financial Management quarterly The and the For a information measures, including SEDAR.

to this I remind Now everyone XXXX. being like call recorded Monday, XX, that would November today, is

would introduce The sir. Mr. of Chief Officer go Executive Please Company. Parent to I like Troy Datcher, Now ahead,

Troy Datcher

lies With Thank Chief that across today, all that driving O’Malley; And in the couple afternoon, you, thank is call. and and for I us met of that doubt, in members you Operating end our and strategy also learning by Without the the today with I’m with me, and Batesole; today’s I’m for I’ve whirlwind have everyone, during it’s my joining of got on our the encouraged Q&A of a call. joining many our of significant since organization. results I’m for speaking Mike Steve potential later the a business. Financial company Head Allan, by September. weeks session -- of call ahead. Dennis over to the first first and Officer, about you the Chief good talent at joined excited the the time, team me been early Officer, today functions our Corporate Development quarterly for pleased be

call, Briefly the $XX.X During were the our as results. cannabis sequential million. our against market share into focus strategic results looking financial challenges, cannabis a revenue. wholesale recent priorities, our well came the at review brief In has developments pricing QX entire sales impacted decline the XXXX quarter, of for today’s as quarter, topline net I’ll in industry in resulting success our which California

growth focus key areas that our expanding and While sequentially we our is XX.X% that pleased cannot can the business the value. we QX direct-to-consumer of year-over-year. California business up will is of drive side our And control I’m one our X.X% long-term external grew in conditions, pricing report direct-to-consumer of presence Significantly to strategies.

our expansion doing are of customers. this for We pickup options the as footprint, retail storefront well delivery as through and

together goals our are, three to consumers to of have is products, approach, to meeting pronged easy the Calma, months. four in existing announced retail two recently acquisition and our dispensaries, we objective. On of how One we that where ensure shop Jaydens presence just with is with this quadrupled that high access had Journey they which prefer ensure and retail California front, new they quality customers our footprint our

both million has licensed the adult for an storefront new which delivery. and people Our Angeles area, is is of commerce in and store Metro XX.X population Los approximately

previously Caliva latest delivery served our Modesto DELI in opened our back our via approximately and where is location August, last Journey This consumers reach million Jayden’s into While DELI location by Hanford Hanford. an service. in In adults. is increases X.XX expansion we further we

well shopping as such the option area or customers consultations also lines carry new of as by DELI Caliva, will third-party offering have popular this With products, Caliva in provide locations and company expanded many in-house as expert now brands. in-store by in product delivery. DELI in Our location, they to pickup with Monogram this addition customers and addition

We Diego products area, next approximately a enhancing for adults. be under an few serves customer with this San service, menu. the we area express addition further months of Metro an launched delivery hub the delivery million X.X Greater in which predetermined new also from will delivery The delivery in our in hour our providing select

our in customers us puts direct-to-consumer operations. close reach forecasted achieve products stores the our to in further of the objective to that engaging the the hub we well we operator a of the to October engaged experiences X.X with in largest continue in the XX% million Northern Metro high the Santa in All This accessing retail consisting Sacramento for six which of executed we our depots, State this XX at a Coastal Barbara, to six recent of will our have coverage acquire forefront over holder agreements and ensure in-state largest lastly, our locations retail California. cannabis addition August, hub entire delivery. had Luis in products construction for and one a Diego, depots This suite of operating Vallejo, quality Company, in of service with Upon delivering we us hub definitive state. licensed delivery Barbara and we The previous adult superior California of five in with and adults expand announced and license our QX. customer be as located and and to to XX% dispensaries And operations retail area retail announced of dispensary end West San by market, California, premier two acquired San retail retail the and will the license when approximately ahead Santa positions delivery mission six In Sacramento. Angeles, the cover are consumer will developments population, the offer ensure Coastal Obispo. transaction these Stockton with on delivery Los of currently Holding Pasadena, that

have and California our maintained evaluate in one add operations. the strongest of to balances and to opportunities both to we’ll scale the expand continue industry We to depth

have strict criteria and an acquisitions to to align the to an a to priorities, we’re Program. in focus to equitable more legislation accretive with an on business. to being doing our and in invest believe it a provide for duty industry that transactions that cannabis historical our market. significantly on Equity to is is Ventures opportunity Our potential cannabis I’d We the strategic that disenfranchised opportunity diverse take is and continue is important our is that economically most believe those disadvantaged aid to also and while for cannabis also Social by myth. update we industry a like initiative been ensure these organizations I work this The

first Our led the official And grand Los expensive & scheduled women week. to and wide Josephine Billie’s by Angeles forward Josephine entrepreneurs is joining look a of product which opening in Billie’s, owned market. its favorites black & of for products women November business portfolio. opened retail first color, team carries a ago later weeks at range investment from our this with XXth. I along location its the two and just

Equity Peakz through intuitive both grasp second Peakz on with and sale been performing eliminate name this cultivators a Social for our select from cannabis their look with for caliva.com consultation We culture, our strength and retail has locations. together through made and themselves in-store available options, the with and of with to investment, at Our future well premium has to respected our opportunities indoor growth. for and well Peakz we’ll working shopping genetics and investment online Advisory continue product Company current forward partners program evaluate Committee.

Before him John Biggs, his Biggs, line, I’d one so service. I I hand call to the moment take thank a John Figueiredo over to our of sorry, like colleagues, Figueiredo. brief for

As a team, wishes of in for position from John the remain today’s transition, success stepped behalf has wholesale bulk wish you’re best to but and new entire will pursuits. a John we we earnings announced future with and John year Sisu, us division. the of President down oversaw on smooth where his until facilitate much as release,

we solid early point, I’d and strongly this combined several with the long-term speaking financial look quarter. our to for our execute again to I you at as and deliverables one our completed over expansion Mike, have discuss California, to a it on of as emerge recent since to positioned leaders for to balance strong important built over continue growth. foundation turn the the progress We with sheet forward like And in coming has highlights XXXX efforts the quarters. us Mike? will who for months

Mike Batesole

and Troy, good everyone. Thanks, afternoon,

I’ll in All report the over reminder, results in MD&A U.S. on contained a found financial and XX-Q. As be our today are can figures going in dollars. our quarterly statements Form be

were our standards. XXXX financial QX GAAP, are Now with in in prepared registered, with IFRS accordance previously, were that our statements U.S. whereas accordance we U.S. statements prepared financial

be Commission compared QX the on Our QX XX.X% and Security million, net XXXX, XXXX QX decline U.S. GAAP statements can found of website. a revenue Exchange totaled $XX.X to million. representing sales $XX.X approximately QX financial

bulk quarter. largely during drop decrease the bulk mentioned, was and the driven sequential a on pricing Troy by wholesale As in our oil

or profit. QX forma XXXX. total net as of QX With $X.X gross over million QX expansion Our sales, net $X.X and $XX.X shifts of operations, of sales expect margin our $XX.X sales, gross sales QX year-over-year. pro to QX million to categories. profit product total of lower in million margin sales profit compared we XXXX XX.X% continued further direct-to-consumer Despite revenue our On our gross business sequentially to XX% towards direct-to-consumer million over or gross higher XX% XX% direct-to-consumer grew increased improvements in see X.X% increased of basis, or total net XXXX a XXXX time,

general million QX million expenses, QX expenses million of $X.X $XX.X $X.X operating and and QX cash lease compensation stock-based sales by in benefits and $X included non-cash included XXXX salaries expenses, and benefits, XXXX XXXX expenses and over operating $X.X XXXX. were and million amortization $X.X and in million which in $X.X of marketing cash -- QX $X.X million. expenses Excluding impairment, million, of depreciation million sales administrative, improved expenses in our

loss primarily million was that the adjusted XXXX EBITA occur activities QX operations to the company’s core during that a M&A business, Our attributable was including ongoing $XX.X the quarter. of

the asset our company was softening In September impairment cannabis XX, addition, goodwill Based the impairment of ended appropriate. and $XXX XXXX months XXXX, three test on included non-cash intangible market that the determined during million. QX of results California a

As and additional charge the company on recorded the non-cash This activities environment. and and due lower flows The forecasts cash flower the during not expected is amount available whether issues and occur, under part the occur prices the on or the operations. for in unique a will contingent quarterly and the the our of been adjustment company’s not XX-Q will position signing while will shareholder future which is heading oil will of the and that future cash the on XXXX by as of price thresholds continues current certain are the the of focus quarter the consideration entire September Coastal company’s as onerous cannabis Factors review tax guarantee statement as does consideration. remains in legalization XX, realized consider no highlight the that period This during potential a please California to consideration create charges Transactions, XXXX, affect optimistic impacted company regulatory changes company’s our is gain third long-term and company’s long-term $XXX.X disclosure are Risk the last flow like ended There Calma impairment stock when, operations contingent the in Form in issuable, such September to has XXXX, The on nine months cannabis significantly further SEDAR. that of website reflect impairment the paid which assessment, the faced for would reaches Qualifying I $XXX cash to or consideration future the SEC’s estimates if million transactions. company to to an that value company strategy. the million, reflected is not quarter. and to related that market impairment Furthermore, XX,

XXXX on I’d Form like previously to Securities effective as the with XX Before pursuant This and over common Exchange Commission the Security step the stock is NASDAQ of regulatory important Stock company’s advancement. market warrants or potentially the the I reiterate to States became hand statement York upon and an recently New to the permitted advance Act filed registration into Exchange amended. shares Exchange line, our United list the being

over like I’d to Now, line on the activities during to our Dennis discuss to turn the operational progress quarter.

Dennis O’Malley

and good Mike, everyone. Thanks, afternoon,

year-over-year. As increases our Troy revenue and Mike mentioned, showed quarter-over-quarter direct-to-consumer and

grown also revenue expanded. and our direct-to-consumer portfolio goods our packaged In to addition consumer growth, has

You will With delivery see and website retail channel. locations, revenue our and higher depots, mobile first-party eight a brands, through margin focus XX in mix to app six confident a first-party, quarter, our with direct-to-consumer processed feel Beginning quarter-over-quarter migrating over XXX,XXX the in served strategy. XX% during growth we we increase increase and XX% direct-to-consumer transactions, this a our key business, over quarter-over-quarter. XX,XXX customers, products

app customers currently mobile shopping app X continues new shopping to Our strong on than have a rate when website. mobile higher our times and our show results conversion on

now an increase XX% Loyalty Our a XX,XXX compared have XX% customers. has members, loyalty channel to non-loyalty program higher quarter-over-quarter. in members AOV

top We see several Cruisers. and light of QX, brand BDSA, Uncle the SKUs gelato SKU new and with in also the the five our strain the including in line Cruisers in offerings portfolio. for vape the continues very Fun Fun strong line X all eight, to Monogram for ranking two. launched number Uncle gram line to and according continue within the live to had momentum product in XX state product number We ranking the September, product first line resin grow

As September a in perspective over California. BDSA month SKUs vape tracked sold of in X,XXX the

flower the which strain, strain best Headset week XXth. recently OG in was to by for side fifth November as in the we selling California the see preceding On our Alien strength continue ranked

relieved, categories, rested their In in consumption we offering. Well offers well to and enhanced lines consumers our to In as needs. that well have we product and balanced, well. addition product wellness tinctures products by brand new products of and to pick expanding cater allowing the best a flower and launched This Caliva, non-inhalable traditional line lotions three August well vape,

management. oil As we’ve DELI its we relaxation, been builds October XX Dimes designed DELI products consumers are spectrum line include in our choosing our This often the product consumers progress is channel since top In consistently data, seen products mind. Nichols pain line of on in reasons which May direct-to-consumer in XXX% launched line, full XXXX. those gummy with quality for the selling brand line, that this cannabis and sleep of has a milligram gummy in launch

service present we As I’d to California we’re growth been providing retail in products. categories of you our in months ubiquitous us fun new opportunities direct-to-consumer and the session. our look to offering of great I’d the believe experience vision strong Q&A our forward as branded to excited to we over for execute on our has to consumers significant will sheet, building fastest and these access October, We customers. the delivery and and great commence Operator the category and and XXXX value the and of to product one turn offerings now to our products, balance exciting Operator? growing like gummy line updating sharing With footprint, growing progress solid the our ahead.

Operator

Thank our Craig-Hallum you, Lauriers from sir, take you all. and from Instructions] We Eric Des thank [Operator Capital. will first questions

Your go line is open. Please ahead.

Eric Des Lauriers

the of revenue within you between revenue what through those? and of just and for out kind break delivery, Thanks walk you my the margins gross I us -- seeing retail wondering if guys of question. are kind was could Thanks. taking each DTC

Dennis O’Malley

time, This At Dennis. the Eric. not online Yeah, breakout and of out have consisting I asking is DTC pickup question. of delivery. we the really you and appreciate revenue retail broken within this online,

you’ll furthermore, channel, the overall channel. And and also to, gross retail, again, this I that DTC pickup into revenue extension to transition to the So into revenue at products margin delivery, continue first-party but I includes out back of go DTC margins, a our higher channel the of note, that we mix revenue a those and of in and time. revenue wholesale breakout just of think at broke I’d see terms think,

those for initiatives both but growth two are us, from key as really expansion also both in drivers margins growth, So well. revenue different

Eric Des Lauriers

And separating can help to gross those and where you quarters? expecting of help can DTC physical profile the without us coming and revenues understand online, in get understand -- maybe the margin maybe us you’re them

Dennis O’Malley

different Uncle within you key DELI of a we’ve we there’s are that some products the look at two think, both Certainly, highest see had. within I those and there’s margins. at. products Fun Cruisers the our things first-party some gross products, for products of that instance, of One of Dimes, Well, is, number look initiatives when margin to

So indoor making With inhalable said, also on not our are to we’ll improvements facility that products. specifically. that continue products continued focus we’re within scalable cultivation

So over greenhouse time, we compression though, we’ve in seen flower have more price flower and seen specifically, indoor outdoor hold constant. pricing

products within focus margins as improving flower So on see I a over well. indoor think gross you’ll time, our

Eric Des Lauriers

that indoor you what that are could you and the or able is is that growing you us source maybe are flower your prepared is And indoor for that that those the of comments to is on flower Thanks. mix, -- guys based each? capacity remind guys in remarks,

Dennis O’Malley

Yeah.

-- terms within on cultivation we’re focusing things, in source on have facility. provide out leave the Sour the of some so But that two indoor on indoor Mike our that. of profile we the And flowers capabilities, to gross broken Jose perspective certainly our also flower indoor and terms we haven’t flower I’d two, a to well. then margin just in Canopy as under San of

Mike Batesole

Sure. Thanks, Dennis.

provide we as Eric, yields we or that got about that capital think square with know for I -- that towards the allow a would, that DTC expansion. magnitude we’re expenditures $X working be obviously, about of not in guidance to we of that to and a specifically will at company. increase really point joined CEO that the accelerate mag us in we He’s So, us grow so, have your going million XX,XXX margin looking question, margins. strategy or we’re answering then this that increase of now not getting and new and would especially future feet significantly to chosen we the we’ve time, dramatically that direct but the a area to business move Canopy are out that the the to at understanding our can and indoor, in, coming develop

that position at I more details. point, to think granular so And much in better we’ll get into a be deeper,

Troy Datcher

Troy. Eric, -- have is This Yeah. we

terms cover for yield, to our upside most that We high improve of have incredible portfolio. the opportunity in have quality our to with of products demand we

and to beyond as on we We other partners are distribution vetting build just our ecosystem. lean our expand

products as lean that go-to-produce there’ll from be marketplace. in the to partners, come and as of in-house will of combination quality the a grow all we’ll our on people in-house offerings high our So in respect heavily though -- well our

has to, was for us to is if alluded structure making looking team so the a the improve it As where in-house, more obviously, end. that investments advantageous we’re gone that’s margin at and to yield

Eric Des Lauriers

stores? for have Okay. here, And of now owned some income us they’re the through and remind M&A as just a into expect from fully seeing different you flow service you one guys where what those me could remind can you there, master DTC XXXX, statement, footprints? increased are then just footprint? that with you comment know DTC agreement And then Coastal, we just us pipeline kind how are again, we from the last Thanks. I with of look what from how sort

Troy Datcher

Okay. the aware, through cannabis we delivery or delivery it whether is that reach Coastal an Eric. kick That’s I the now one of Why visit transaction the home can financial What’s handle important of to well service. Mike dispensaries piece will the and objective you can you through aspect. California exciting are our our that’s that closing for marketplace about XX% they to don’t I XX footprint direct-to-consumer, of as the

the end it that to coverage XX% have by of publicly at we stated year. We calendar the be want

of ahead there. pace we’re So

end XX% team make objective the get we identifying to to to order X The Tier determined great or to out investment XX% XXXX. and a coverage as that need coverage of the X of has calendar is done Tier in what locales an we’ve objective the by Our by to year. get around job end that of

making objectives there. one obviously location investments in currently We area. this have infrastructure The that’s is comes very it to of strict The them. when

place things to like invest growth. in over less and we execute a against more can we So And objective. have to that those a we’ve that property infrastructure, playbook identified in take than

track, that, we right track objective. XXXX to stated ahead on actually on So so now, of against track like but deliver that

Mike Batesole

making set for for we’re roll businesses. going because for basically And will -- owned these how by running financials, Thanks. up, regulatory decisions so, the if therefore, Thanks, we up the it XXX% they them, us Yeah. up, waiting roll as own that’s when we’re MSAs Troy. just effectively, approval licenses, that and be just they’re and the it are to

Troy Datcher

point, objective last the is do our one and that to expansion, against us right if to we balance find of is additional allows execute And sheet that, still strategic Eric, strong opportunity so.

execute get and the to well we So against the financial positioned plan. support

Eric Des Lauriers

Thanks.

Operator

from will to next our question from move We Bobby Canaccord. Burleson

ahead. line Your go is Please open.

Bobby Burleson

Hi. Yeah. Good afternoon.

what seen the QX looking far? dynamic just so So pricing first and bulk have in we’ve guys probably my at just California, beyond wholesale question is you for as pricing curious general moved

Dennis O’Malley

Yeah. the I appreciate question. This Dennis. is

So the we in previously, outdoor, see the bulk I foreseeable today, -- wholesale noted oil, a that focusing business what softness are as the big the wholesale on think why we DTC indoor really focusing really at some for bulk least potential really on can’t market. flower future oil flower and we’ve as part, and for still greenhouse within be what of that the pricing and forecast, that on we flower we we wholesale of while that’s flower and pretty or bulk And both decrease think well. and I will think, as see I specifically seen cultivation

that’s from So the in shift why terms strategic that goes business, business for us. really priority have the it our bulk a to wholesale show of into DTC we

Bobby Burleson

curious am guys Great. you What Okay. that operating to then, measures in of kind improvement had cash there. of that? are taking And some terms from? there where came you expenses, I the temper

Mike Batesole

to sales marketing -- quarter-over-quarter pay actually were improvements severance that. last a that out had expenses for quarter of a our Most and on and Yeah. we large that had around a we severance

to million was dollar a paid out accrued severance was out couple anyway the or large paid the those be what So primarily that change was there’s and… were --

Bobby Burleson

Okay.

Mike Batesole

in … some the improvements market.

Bobby Burleson

up me have a it transactions than last the just one the outlook, year. curious what have slowly million, M&A then more you like And what you and of kind some is, expected play Okay. of for M&A like market the I this bit coming ability would some $XXX acceleration or of that see, seems kind little to against the on going guys transactions impediments right I how is forward? are am happening you’re now, state announce here dynamic

Steve Allan

is Yeah, Bobby. This Steve.

continue due We to diligence.

was Troy criteria set perspective covering as perspective. questions, what product around think the around that’s of perspective on on last the direct-to-consumer raw I factor we form fits very materials have high or an extremely the whether us, specifically a and in for

pipeline that So robust. is

call to our continue through way We it.

continues that be for softening are to But the market, California evaluate. We selective. providing there us which opportunities will to it more be within obviously or to is continue weakening seeing

our goal month executing Our X quarter, that against it’s we’re transactions of number to not is to get sure make or done strategy. really in a a

and we we that’s go be got something California. well always we’ll also good As along accretive as XXXX. price, shareholders mindset continue to something held, selectively as to everything and operationalize at We’ll for other potentially markets here, into we we’ve be do it’s within looking long-term a that can that our

Bobby Burleson

distribution or distribution? as focused at of on Make as you -- approach you retail looking well where sense, kind barbell are more production, there still are focus you’re

Steve Allan

Yeah.

That’s base there’s solve be. focus where also, microcosm it’s really help can number a a the need market, continue and that we on and rather one will our is profitable has of channels direct-to-consumer. most Our for California It than the to been need. consumer it

given what’s two dispensaries that what change know over they’re that Colorado. basis is delivery As really for that’s into by the of in we platform towards both the you time, to and and the that across Florida, the have capita California are believe par on going focus. assets core we’ve focus you about really will that but XXXX a Obviously, see put know, together XXth XXXX. the solve we’re presence loyalty consumer we it’ll primary remainder app be always per that the a drive help on over been consumer and roll of supported and in years, coming round the and what really And have really state of that’s broad as the a with years looking lot a of our out online to we the digital we three able

Bobby Burleson

Thanks. Great. Okay.

Operator

would to for turn I Mr. like this the remarks. back to additional conference any Datcher closing or At time,

Troy Datcher

you importantly, joining the Well, covered on thank with very to today. quarter, team over I thank like chartering bright for and today’s that I’d of for closing work the future the the us hard last the a call. want for to management the I in acquisitions call

Year. Looking forward to to for for New in to as ours you break Thanks forward we a your and your families the safe well and Thanksgiving look talking time.

Operator

concludes for This you. Thank today’s call. Thank you your participation.

You may now disconnect.

Gold Flora (GRAM) 16 Nov 212021 Q3 Earnings call transcript