Tilray Brands, Inc.

Q2 2022 Earnings Conference Call


spk_0: for standing by our conference will begin shortly once again thank you for standing by our conference will begin shortly
spk_1: eat
spk_2: good morning everyone thank you for joining us to discuss two merging financial results for the two thousand and twenty two fiscal second quarter and november thirtieth two thousand twenty one twenty me until they call our own simon chairman and chief executive officer cromer turn to financial officer were mcneil
spk_3: doesn't have to re canada
spk_4: denise her
spk_2: chief strategy officer and heard of international and burn rada chief corporate affairs officer oh might to replace on mute to prevent any background noise after the speakers remarks they'll be a question and answer session for analysts and investment firm conducted via audio and participating retail shop shareholders conducted through the say technology platform question submission and uploading through the say technologies platform has already been conducted concluded and the company will read aloud and answered the top questions missouri you may now begin the conference
spk_5: thank you and good morning by now everyone should have access to the earnings release which is available amen investors section of calories website at hooray dot com and have been filed with the fcc and feet are on today's call we will be referring to various non gaap financial measures which can provide useful information for investors however the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with gap today the earnings press release contains a reconciliation at each non gaap financial measures to the most comparable measure prepared in accordance with gap also please note that we will be making new mirth forward looking statements be statements are based on our current expectations and believe and involved known and unknown risks and uncertainties which may prove to be incorrect actual results could differ materially from those described in be forward looking statements the text in our earnings press release issued today include many of the risks and uncertainties associated with such forward looking statements and now i'd like to turn the call over to tell raised chairman and ceo or when simon
spk_6: thank you bear and at a lower be one we thank you for joining us for a this morning and as the operator just noted or what to recognize the new additions to call today including blair mcneil president over canadian business speak on the evolution of or tbd business and the canadian market and to the his father checked president of our international business and chief strategy officer who spiegel or global operations and it's stress at the heel of international growth and legalization across europe for all of the reasons we will discuss this morning we're excited to be in they'll do a new pair neighbor a company kill rate brand eat or new day reflects or evolution from a canadian lp to a global consumer package good company and branded powerhouse with a markedly the portfolio of cannabis and like sell cpg brands that are in power in the world wide community to lived their very best life through the completion of our business combination last year we position to re as a disruptive cannabis industry leader with a portfolio highly sought after brands that bring people together in a memorable and positive way contribute significant operation scale benefit from abroad global distribution footprint and last but not least that are flourishing from hands on c b g expertise and operational excellence across the board the economic engine driving shareholder value is or model that seeks to generate current cash flow positive even dog while adding the infrastructure production facilities and distribution networks to capitalize on long term growth opportunities that come with increasing the acceptance of medical and recreational use of cannabis globally an ongoing cannabis legalization this is the heart of till raise value proposition edit unique among our peers said most importantly this model constitute the road map to four billion dollars in revenue by the end of fiscal twenty twenty four as a result to they underscore we're making tangible and notable progress towards executed against his opportunity despite challenging conditions in certain key markets and geography despite the tv we challenge a backdrop driven by colds and other competitive considerations we deliver growth in the second quarter compared to year ago we also deeply gratified with second quarter results included in our eleventh consecutive quarter of a positive adjusted ebitda a strong affirmation of our ability to achieve top line growth and a pair it with smart discipline operations academic while there are multiple factors that contribute to this relatively strong outcome not as more notable than the grit hard work and resilience of till raise global team they are performed admirably under some trying conditions and i'm immensely proud of their ability to execute second we have been proficient and flexible in terms of simplify in our supply chain particularly in light of today's head was facing our businesses this combined with our production and cultivation efficiencies we have gained through the integration have allowed us to partially offset the negative impacts of colbert and current cost pressures impacting every segment of the global economy importantly we believe there are temporary headwinds which when they a bait and conditions normalize put us in even stronger position for growth as we capitalize on our leading brands are distribution network are proven execution skills and are strong financial profile and scale in canada europe us and the opportunities around the rest of the world with that i will down through the call over the blair mcbeal for discussions on our canadian business blair
spk_7: thank you are one and i'm very pleased to be they're speaking with all of you today and providing an update on or comedian business i'm excited to have joined the chill regime from bacardi where i successfully ran their canadian business for the last five years i see tremendous growth for jewelry and the canadian market bringing new consumers into the market and taking consumers away from the illicit market at the highest level that market remains defined by over saturation of license for losers and retail stores leading to unsustainable price compression and lack of profitability i want to be clear we do not believe this is a sustainable and barb that strong will survive though we view this as a temporary pinpoint and an opportunity mainly we're being more aggressive do when share capitalizing on or iconic and leading brands are innovation pipeline industry leading cultivation capabilities boots on the ground provided to us to our expanded distribution partnership with great north distributors and the strength of our balance sheet importantly even in the intensive price competitive market we have maintained our number one leading marketshare position in canada and leading position the cross our portfolio brands with top ranking is across adult use product categories that just concentrate edible flower oil free world topical the and beverages based on recent high fire data in canada for the month of september to november fill in the second full quarter for completion of the business combination our retail market share the to twelve point eight percent from sixteen percent in the sequential period because of the heightened price deflation as i alluded to our pricing strategy is to defend share to attack we will not severely compromised margin and to protect our gross margin you're implementing several initiatives to ensure we have the white popped in back to can be profitably can be clear out canadian marketshare strategy is to execute relentlessly and with the position across two main thing that compliment and reinforce each other first the to teach equates reductions will drive near and long can go in our path is going categories they simply was and position after strong upside when the market consolidate further second we are ramping up initiatives to educate and bring a new consumers too many different from including are doing retail and but tires and delivering a more aggressive marketing strategy and product innovation pipeline through business intelligence and insights on the medical from the are also rolling out new job a medical website and patient platform that gives patient access to all for medical breath and enhances their experience this includes killed a medical a free a medical vocal cause medical anything else in short we have the scale and resources in canada to allow it to double down on brand and strategically when with that are now turned the ball over to the and a spell check the me
spk_8: thank you blair and thank you all for joining us today internationally our presence continues to grow we now offer branded medical cannabis in twenty countries around the world reflecting the trust that governments health care professionals and patients place and us everyday importantly over the past five years while everyone else has focused on other markets we were focused on europe we strategically invested acquired and built a strong infrastructure team and business across the u which had twice the population of the u s and twenty times the size of canada just within the last couple of months policy discussions on the legalization of cannabis for adult use has intensified throughout europe with germany in portugal being the most prominent candidate the dominoes are beginning of fall and till ray is uniquely an optimal a position when they do our to say that the art cultivation facilities in portugal in germany provide eg m t certified pharmaceutical grade medical cannabis and we have sales and distribution arrangements to supply cannabinoid based medicine two major pharmaceutical distribution channels this includes among others are wholly owned subsidiary cc farmer in germany which has preferred acts as to approximate thirteen thousand pharmacies and grow pharma in the uk notably till raise the only company currently supplying the german government with medical cannabis cultivated in country and we are the market leader across germany and medical cannabis extracts and right flower combined which helps to ensure that patient needs in germany i bet with products of the highest quality and safety while to see same time ensuring consistent supply and reducing dependence on importation in germany or revenue relate medical cannabis extract products grew sixteen percent versus last quarter and we now have a market share of sixty four percent in the extract market our revenue related to drive flowerpots grew ten percent versus last quarter and we now have a market share of approximately sixteen percent in the dried flower market as of november tilbury is now the market leader in germany with an overall market share of approximately twenty percent how strong reputation and product quality and safety and science based cannabis research also put us in an excellent position to capture the enormous opportunity for both medical and adult use legalization in the you and that time may be near on the horizon because germany's incoming government coalition has reached an agreement to legalize i don't use cannabis nationwide within the framework of of a regulated market in terms of population germany would then become the largest country in the world to permit the sale of adult use cannabis on a federal basis and when that milestone does occur we believe we have a head start on the competition based on our eg m t certified cultivation facility currently operating in normandy to germany which has additional capacity to immediately support the recreational market and we have a track record backed by science technology and quality control standards to offer high quality adult use cannabis him and products on a consistent basis that we are confident would be well received in the market we are all philly market leader with in other countries in europe where we have achieved the following in portugal we are the only approved medical cannabis products in the market with archie eighteen dried flower which is distributed to our distribution partners to medical stakeholders throughout out portugal in luxembourg we were selected by the luxembourg ministry of health as exclusive supplier for the country medical cannabis program for dried flowers oils in switzerland we distribute or cannabinoid based medical extract products to swiss patients to our local partner in france we were selected as one of four suppliers in a two year pilot experiment to supply approximately three thousand patients with medical cannabis this experiment was to inform a regulatory framework for medical cannabis going forward and we expect the french medical market to be in the order by order of magnitude of joy germany in italy we are one of five distributors license to import medical cannabis into the italian medical market in the uk in the quarter we completed our first shipment a broad range bride flower products with high medium and balance potency into the uk market in addition we are one of only three suppliers within the irish market who's cannabinoid beef medical products are eligible for reimbursement as we look ahead with respect to legalization more plea we expect all of europe to legalize medical use cannabis with the next twelve to twenty four months and certain countries legalizing adult use thereafter right now there are compelling finds that portugal on israel are also gearing up for adult use market outside of the you are businesses in australia and new zealand or performing very well with tilbury branded extract and flowers leading the market to give some highlights hillary was the first company to have both purified cbd and balanced is the extracts registered in new zealand by meeting their high quality standards this took effect october first and the rollout of our projects going very well patients now have accessibility to all for jewelry products offered in the market and we are well positioned to drive ongoing both in australia the reputation and trust in our brains continues to grow to give an example through a contract with the department of health victoria ninety children are now participating in a government funded seizure program using our products which will continue until the end of twenty twenty four consistent with this growing trust our browns more national pharmacies and australia have requested to a product by name driving a twenty nine percent increase in revenue quarter over quarter in fact or performance would have been stronger had our sales team not been prevented by corbett lockdowns from promoting our products face to face turning to the rest of the world we see additional up which with in argentina where we benefit from are distributor really should with a bp in brazil and even china and india so in short our international up to their tremendous and i look forward to keeping you updated on our progress on now turn the call over there irwin one for discussion of our us operations before call closes the prepared portion of our remarks with a detailed financial overview or when
spk_6: thank you to of somewhere and you ever want to start whether cpg businesses sweetwater brewing manitoba how was that are new edition breckenridge the story which together generate a personal hundred and fifty million an annualised revenue and profit go a bit dull and have exciting potential for be to grow to offer some insight utilizing our current footprint in the us today were able to invest in the strong brands meaningfully expand their presence and let richard distribution systems to thoroughly in the cbd beverages cbd personal cares and related a jason sees the free option of play is that these attributes will later be translated into thc businesses in addition to our beverage out the whole businesses upon federal legalization in the us much like a madman investment will continue to explore thc options in the us market once additional clarity is available sweetwater is known for it's for twenty beers among others but since or acquisition of the bill as a year ago we've expanded the product line to collude spirits ready to drink vodka soda is it a kid in collaboration with our canadian cannabis brand rip as well as hard to use of my money's a new craft beers and cooling a new imperial i p a and a b c like you're in collaboration with our award winning canadian craft cannabis brand broncos it is our intention to make us beer consumers more aware of our canadian cannabis brands prior to federal legalization because we have data that shows that beer drinking consumers are often cannabis users to every bit more opportunities with sweetwater down the road such as developing cbd products or infuse a non alcoholic spirits with thc in addition to the new sweetwater tap room located in denver international airport and please visit it on your trips we also recently acquired a second sweetwater brewery and tap room in fort collins colorado both which is able sweetwater to pursue their expansion to the rest of the us and in the western states just a few weeks ago we now see acquisition of breckenridge distillery widely known for it's award winning bourbon whiskey collection and innovative crafts spirits portfolio including bourbon whiskey gin and vodka breckenridge is an exceptional the brand that as kurt distribution across fifty states working with it's founder brian old and his team all a bomb who were made a place we plan to bring our cpg brand building expertise to be aaron make targets investments in marketing brand awareness and increase distribution even now breckenridge will benefit from synergies on the distribution side when paired with sweetwater we are confident that these steps will drive growth both now and in the future i should note that both sweetwater breckenridge distilleries our business said art cash flow positive he but to a positive result creative and can be leveraged for cannabis when federally permissible sweet waters distribution currently reaches over forty seven thousand on and off premise points of sale and we're continued to build the business right before year end sweetwater now the acquisition of alpine beer and green pledged iconic west coast craft beer brands to be brewed in our new fort collins the silly for west coast distribution all which compliments sweet waters existing product offerings and give us a strong foothold in california and the west part of the united states the largest state economy the us and the largest legal cannabis market in the world i spent my career building cpg branch with teams that i work with today and i we brought this expertise to tell right with it ability to a dental five and significantly expand leading cpg lifestyle brands that resident a powerfully with consumers even without legalization we can therefore grow these brands while believed all the sets and pieces for the immensely positive impact that legalization will bring one day with this in mind i'm excited about the very fast growth of the spirits category in the us and works for an additional opportunities to build our beverage alcohol business through more categories and of course brands the cpg deals and turns ensure access the even more potential a deal for out and agree that a bit off for us thirty now that manitoba harvests we have stabilized the business that's assuming ownership by rebuilding it's core have food portfolio in the latest twelve weeks or us consumption and measure channels is up to percent on manitoba harvest a significant turnaround from the double digits decline the brand was experience at the time are bit of our business combination we tend to accelerate the business suit twenty twenty two as we're introducing a great deal of product innovation down label us to capitalize on consumers interest in hemp products aligned with plant based more carbs or keto diet as a certified be court manitoba harvest is committed to educating consumers are both the nutritional benefits and the sustainability of have as we grow consumer trial and awareness of him foods additionally we are leveraging are greedy division to collaborate with cpg partners who are incorporating hemp seed him protein and hemp oil into their brands are till re wellness business is also the multiple cbd beverage products for lodge and twenty twenty two we'll take full advantage of a beverage manufacturing capabilities to deliver these innovative products to market manitoba harvests products are currently available in seventy thousand stores in the us as with sweetwater there is room to run beyond that as we grow each of these brands we will be able to use these distribution systems to parlay the cbd beverages personal care products and related adjacent sees these made a later be translated into thc based products upon federal legalization in both cases we do not need to expand significant capital build production facilities or distribution networks they already exist and can be leverage we're setting the standard manitoba harvest has the opportunity become a multiple hundred million dollar company this is a clear a fraction of the fact that even now before federal legalization we're building out our us infrastructure through cannabis a jc products putting the pieces a place to drive revenue growth today and to allow us to hit the ground wanting once legalization occurs and these assets it
spk_9: be more fully leveraged
spk_6: that being said we've your ability to go on day one as important in that process which is why we invested a convertible notes of men we have multiple ben at the options regarding med meant more broadly we continue to build our strategic position through multiple turner this so they can we fully benefit from legalization when the time cause oops of course we could take additional options on multiple amazon now but this approach only provides options since we could not recognize revenue or even dog from the underlying businesses and are dependent upon regulation to realize the full benefits of these options moving on i will touch on our progress in delivering the eighty million and cost synergies we've identified as part of the till ray a free a business combination in short we are ahead of our original pace have you reach seventy million dollars on a run rate basis to date with actual cash savings close to thirty six million curl speak it more detail on our progress against the synergy goals in a minute in conclusion to sum up before i turned the call over to curl to raise business model which is based on current value we are generated from our business in canada international a new as plus the upside that comes with legalization is the backbone of our strategic plan and we remain on track despite headwinds our strategy or team are in place and executing and we're leading and differentiating or market position and we're looking at all ongoing opportunities to drive synergies reduce production costs and a strong pipeline of transaction and growth opportunities worldwide at the same time we are cognizant of the near term challenges facing our business and the current pressure on or shares and that of our industry and the global economy in general omnicom is likely to exasperate these challenges while unfortunate neither to tear us from exits during on our mission to further build our position in the global cannabis industry in fact they enable us to make investments and adjustments now that will pay even bigger dividends when the market and the global economy normalizes
spk_10: we have the brands we as a team we have a plan in place all to drive consumer demand and we will reward our shareholders and allow us to win and with that carl thou discuss our financials in greater detail half thank you very much now discuss or relative strength during you to the synergies we are successfully building into our business model as well as our cash and liquidity position at the highest level the quarter was unquestionably impacted by a variety of factors including as blair mentioned marketplace saturation in canada and the impact of covert on or operations importantly we are confident that the medium to long term implications of the challenges play to our favor particularly in terms of her ability to implement strategies that will ensure we win market share we are therefore more confident than ever concerning are organizational objective to emerge from the short term market challenges stronger more diversified and more profitable to or execution of our key competitive differentiator as with prior corners i want to remind everyone that as a result of the arrangement between a free until ray or results in the prior fiscal quarter are based on a free as financial statements but have since been adjusted to follow us gap and are presented in us dollars additionally recall that in july twenty twenty we published in appendix to our investor deck located on our website that contains and unaudited analyst primer which break down a free of us gap financial statements for fiscal twenty twenty and twenty twenty one by quarter please also note that road are call today we will reference both our financial results in accordance with gap as well as are non gaap adjusted financial results our earnings press release contains a reconciliation of are reported financial results under gap to the nine gap financial measures identified during our remarks starting with the top line despite a challenging environment or que to net revenue grew twenty percent compared to queue to last year although the comparison itself is not apples to apples because the year ago quarter does not include any contributions from legacy del ray we'd seemed are eleventh straight quarter of positive adjusted ebitda particular really in a market where revenue was a challenge speaks volumes to are relentless focus on operational and cost efficiencies or overall planning capabilities and the success in integration and executing on the synergies we identified in the tory a free accommodation over the past year we have continually challenge market expectations on profitability and delivered superior results each time from a medical standpoint there were similar downward pressure caused by calvin from patients unable or unwilling to see a doctor as well as increased competition from adult rack and related price compression
spk_11: ultimately we believe that consumer demand for higher quality brands will rise once the pandemic wayne's and bartenders are able to more positively influence purchasing decisions and then we will be best position to capitalize on that opportunity to the similar to how consumers behave with regards to other products such
spk_10: as alcohol turn into our beverage business sweetwater on premise demand remains impacted by call it off from his channels look to be stronger in the future with our new innovation pipeline and increase distribution points new leadership product innovation and operating improvements have stabilized manitoba harvest with it's revenue contribution relatively flat from the sequential quarter and margins basically unchanged after managing to the changes associated with moving from branded product at a big box retailer to a white label product we are pleased with his revenue contribution in queue to finally while cc farmer experience a decline in net revenue a major part of the decline with tied to the strengthening of the us dollar and the inherent weakness mean of the euro versus the prior year period more specifically if the euro us dollar exchange rate had been the same in the current quarter it was a year ago cc farmer would have reported an additional five point three million dollars of revenue before return to profitability it is important to note we performed a detailed review of our inventory is part of the quarter as part of our review we identified as adjustment of eight million dollars in the value we originally i'm scribe the inventory and six million dollars in the value we originally described the prepaid and other current assets as part of our rivers purchase of terrain during the current quarter and prior to having finalize the purchase price accounting for the transaction we reduce the inventory and prepaid and other current assets on the transaction the by fourteen million dollars and correspondingly adjusted deferred taxes and goodwill these adjustments did not flow through the income safe at the same time and is part of the inventory review we identified inventory were acquired in the transaction cruz cost to the price compression in the market with now higher than are expected selling price for the inventory accordingly recorded in inventory impairment of twelve million dollars in the quarter with the vast majority of the right down reflecting the higher price inherited him and tory from the transaction in a challenging revenue environment operating excellent can play an outsized role and that's certainly true was returned to bottom line performance despite the headwinds we've all discuss here today our team worked hard to optimize performance and as a result we increase net income by almost ninety six million dollars to six million dollars from the prior quarter as well as improved are adjusted gross margin to twenty nine percent from twenty seven percent in the quarter on a year over year basis further we reported are eleventh consecutive quarter of positivity chastity be done which increased the thirteen point eight million dollars from ten point one million dollars a year ago importantly we are confident or profitability will increase as more of our operating synergies become embedded within the platform particularly by converting a legacy theory brands to or three as cause structure on a pro forma basis for example if a free of cost structure and been deprived applied to the legacy tory brands in canada during que to we believe that are adjusted gross profit would have been three point eight million dollars higher recall that a free as been a low cost producer with strong cultivation processing and manufacturing facilities and we are now polling additional costs out of that structure to gain further efficiencies will improving product potency and quality the meat market demand adjusted free cash flow improved the negative sixteen million dollars from negative fifty three million dollars last quarter as we said last quarter we believe that our first few quarters as a combined entity with likely see daggett of cash flows however as we achieved are synergies would be working towards sustaining free cash flow generation which we believe will generate sustainable shareholder value turning out of the business integration we're making meaningful progress optimizing operations and as we focus on edge reaching at least eighty million of synergies within the first eighteen months posts transaction to date synergies achieved averaged seventy million dollars on a run rate basis and thirty six million dollars of actual cash savings further we're pleased to announce that we now anticipate reaching our eighty million dollars energy target within a little over twelve months of causing the transaction or by our current year end on may thirty first additionally we are pleased to announce that we anticipate generate an additional twenty million dollars and synergies from the transaction that will be achieved during our fiscal twenty twenty three year knowledge discuss que to in greater detail within cannabis our medical business grew primarily due to contributions from legacy tell right and innovative new products including the june launch of our book of our new brand symbols which addresses and met medical needs and provides patients with more choices in managing their health conditions with medical products still we experienced the lower number of existing patient renewals and lower numbers of new patients and both independent and clinic patients because they were unable or unwilling to see a doctor or it out use business on that basis declined year over year despite contributions from the business combination because of the move the price based brands more competition and more aggressive price discounting during cold it and while we took the proactive measures to adjust our pricing and rationalize some scuse during you do is discussed earlier or can have is gross margin fell as a result of the price protection provided to our customers as part of our pricing adjustments as a result of our pricing changes we anticipate a minor fall in our have is gross margins going forward but we believe we were main industry leading or adult use business experience the revenue decline the strong performer and the quarter was our international cannabis business or room where we reported a two hundred and twenty seven percent increase in revenues from the prior year net cannabis revenue rose seven percent to fifty eight point seven million for the quarter that distribution revenue fell seven percent to sixty eight point nine million for the quarter net revenue that sweetwater were thirteen point seven million dollars slightly down from the prior quarter net revenues from or wellness business manitoba harvest were thirteen point eight million which was relatively flat sequentially and for which there is no comparable to the previous year we viewed as business is largely stabilized at this point under the leadership of jared simon all of this led to net revenue increasing twenty percent to one hundred and fifty five point two million and queue to over the prior year period with the increase primarily driven by the contributions from legacy terry for which there was no comparable in the prior year and sweetwater for which the comparable was only five days in the same period adjusted cannabis gross profit remain flat at twenty five point five million in you to or adjusted can cannabis it's gross margin remain strong but fell to forty three percent from forty six percent for blacks in part are pro active and the decisive of steps to adjust our cost structure and reduce production costs to the integration process leading to some temporary inefficiencies during the transitional phase but ultimately that hard work now will yield greater efficiency is going forward distribution gross profit decrease to seven point six million in two to to while distribution gross margin declined to eleven present as a result of the impacts of covered on cc farmers sales mix beverage alcohol gross profit was seven point eight million and que to and there is no meaningful comparable in the prior year as the acquisition was completed last november beverage alcohol gross margin with fifty seven percent which was on par with the sequential quarter despite the drop in revenue buffalo the sixty percent we achieved in the prior year well miss gross profit was three point eight million and gross margin was twenty eight percent which was in line with our expectations and for which there were no comparable last year in aggregate adjusted gross margin increase likely to twenty nine percent compared to the prior year well adjusted gross profit rose twenty seven percent to forty four point eight million as we continue to achieve our energy plan over the coming quarters and as or non distribution revenues increased their share of our total revenues we expect to see continued improvement in this matter
spk_12: for the quarter we reported net income of approximately six million dollars compared to and that lot of eighty nine million dollars in queue to last year
spk_10: turn into cash flow and liquidity adjusted free cash flow with negative sixteen million dollars drink you to and reflected seventy million dollars of net cash used for operations seven million dollars in investment in capital an intangible assets offset by eight point one million of cash expanded related to our acquisitions again as i said earlier we view achieving free cash flow on a consistent basis as a priority for this business while we certainly fell short and queue to the negative negative adjusted free cash flow with within expectations given the integration of the tory assets and represent a substantial improvement of over thirty seven million dollars from the prior quarter we also still maintain a strong cash position of three hundred and thirty two million dollars as of november thirtieth to both support our existing working capital requirements and our business plan as we look forward and get beyond the near term challenges due to colvin and armor on variant with a good reason for optimism first their own likely be a right sizing of the canadian market that canada lee will be accelerated as the dramatic impact of on the contrary and impacts consumer behavior across the board
spk_12: further continued pricing levels below cost levels for the vast majority of our competitors are not sustainable
spk_10: do the benefit of time we believe those pressures will be removed
spk_7: second the movement towards legalization is continuing with the anticipated legalization of recreational cannabis in germany we believe other you countries will follow suit
spk_10: moreover we are continuing to that invest in our us assets including sweetwater and men until the harvest which are already cash flow and either da positive or new the creative and will be leveraged for cannabis along with other recent acquisitions such as breckenridge alpine beer and green flash brewing that will be accreted to our portfolio
spk_13: across all markets in geography is we are expanding our energies and resources on executing on our highest return priorities
spk_10: actual eyes in our business integration to better manage costs and capturing and delivering value for our shareholders this concludes are prepared remarks thank you for your interest until right
spk_14: well now begin the question segment of our call starting with questions from are covering analysts which will be followed by a few questions from our retail shareholders from the say platform
spk_15: operator what's the first question
spk_16: thank you
spk_2: if you'd like to ask a question is pissed off one phone keypad affirmation to indicate your line is in the question you may for start to see to remove your question
spk_17: advertisement using speaker equipment and maybe necessary to pick up your handset before passing the sacking
spk_18: in the interest of time we as you keep one question and one follow
spk_19: i first question comes to mind as
spk_17: tv hi good morning and happy new year
spk_20: happy new year events
spk_21: so you guys have been active
spk_6: lemonade stand point an alcoholic beverage market makes good sense as he likes you can lead at interesting that the long term leverage belletti as a does our fault that you know
spk_22: yes i'm it is a bit of a different network so i'd be curious to see hear your thoughts on any had synergy opportunities easy see classes at that time
spk_6: the middle and i i
spk_7: okay thanks
spk_6: a vivian we have a little talking about long time that africa i was allowed to talk over a fire alarm a different are organic anyway i'm just arms in regards to that listen i think what we saw with sweet while growing number one should have very very quickly yeah we rolled out our with plan we rolled out art and wrong are broken house friend and you know i think averages is a me your major part of the whole have to hide of the ship the second thing is is here i think one day when you know this can't happen that the opportunity replace alcohol with thc ah i'm an and i said this before
spk_23: the brands that are out there today whether sweetwater it's breckenridge or brands that consumers you know and we will have the opportunity you know to get into the market with thc products at it all i come back and i look at the whole bourbon category is such a fast growing category
spk_24: and one day to be able to my when a bourbon let's infuse with thc under the breckenridge name which we would have had alcohol business we'd have a thc business
spk_2: the third part is listen if you come back today the look to build brands out there and you saw we change the name the me the tell rebrand company on and you look at valuations multiples on the spirit industry is similar to the campus industry in many ways and there's many crossovers your arse
spk_25: study shows that consumers who consume alcohol or also cannabis users so lot of synergies and listen autumn a partner in canada southern blazers in regards to our distribution piece that the business bomb that the opportunity here the us i see a tremendous amount of synergies and these deal
spk_7: a our freedom and there's good growth in these industries for us and one of the big things you know be the in the he can do is wait for the us to legalize and i think what the important thing is is asked the and in adjacent see categories they got growth i got a creation and that give us opportunities in the march
spk_26: replace
spk_6: i just i think they're much q or next question comes in line and and your car was cheaper hey thanks good morning i just want to step back and the through the canadian don't use as i think first off the pressure on your market share our actually coast integration of fill rate the diagnosis is the option of fight the fighting and now that you put the prices that misapplied do you think you'll be able to grow revenue at a level to where your actual
spk_7: canadian papa building will grow physics thanks morning and to resign gonna started and then i'm gonna turn it over to blair mcneil who is in newly appointed president canada but yeah i think it i come back for second is is here number one the canadian market is continuously going into its challenges there's more stories i've been up there is more lps out there are also there's pricey and i come back and i look at here we have twelve brands were gone to screw rationalization we're going to brad is a
spk_27: and and also have you come back to the liquor control board they're also going to skew and brand rationalization and i think what's important is what till ray has we're going to have brands we're gonna have innovation we're going to have products that consumers want because we're gonna build our brands and that's why we change the name to the till rape
spk_6: brand company the other thing is and i think what's important is our products are grown in our leamington facility or broken cause consolidate that's gonna be consistent with quality gonna be consistent with regulatory and gonna be able to deliver potency so with that yeah we'd have lost some share in the marketplace
spk_7: some of it was self inflicted on ourselves by the easiest thing is just go drop price and great share but we're here to build something for a long term blair you want to add something to that yeah well thanks er when on i would say first on the diagnosis side it's very clear the inventory levels add a lot about these are unsustainable and he'll to get rid of those inventoried they're doing two things one as they are compressing prices and if you look in the last year we'd come down and price one
spk_6: point seven percent while the market of come down twenty two point six percent the we have definitely protect our margins on the way down and i think as a as an l p we have more room than a lot of our competitors to to be able to take some smart pricing so that number one i'd say the other form of this new of that oversupply of inventory is new brands hundred and fifty seven new brands one launched in the last year so the market is getting very diluted and we're going to ramp up our innovation and a big way to fight that so we will take some strategic price or will also do it with that industry leading innovation portfolio behind our big brands which are we just talked about and i think the most important thing at and final
spk_28: party your question is can we do a profitably and yes we think we can we have big scale we have some caused opportunities that we we live through the synergies but we have further cost
spk_15: that we can take out of the desert to make sure we can do this and go got smartphones it's going to be a little bit of a bumpy ride over the next couple of quarters but certainly were in a i would save the best position to be able to whether it thanks and andor
spk_29: the big thing of better i think the baby is listen you're one of the things we're dealing with is a world followed colbert your were also dealing you know with supply chain issues and products and stuff like that at the end as we brought these two companies together and took out you know seventy billion dollars a cost and look at it more opportunities i think that's what the important part here is and there's a big opportunity in the can either yeah and market right right now the fifty percent of the market going through the old the legal market where there's additional illicit market you heard pearl talk about the opportunity for us in the medical market so know the industry three years old and canada
spk_6: i think there's lots of opportunities and yes there could be additional ebony opportunities for us in the canadian market thanks though i thought thinking or next question comes mine a problem with cantor fitzgerald question good morning thank you get we can i ask about the jb when bush just if you some bag you and about it through in asia that you be if i take whatever what it a twist on it does that give you more flexibility in pursuing partners should be added cpg companies are there was no in an issue and if i may add one for deniers and and say what of that goal of the news i was very helpful so big jump sequentially about forty percent that when she got in exports is that it normalize runway that we should think about for linux you go to see because you more or there with ya the is thank you
spk_5: thank you pablo the morning and happy new year i think wasn't on the opportunity would they be i think very early on even before the you know the transaction close we're discussions with a b i and it made sense to terminate this deal on it was not a great deal for tell ray number one dog number
spk_30: to a degree market a be i just did not want to do thc products and number three it was a major money losing
spk_6: the relationship there and with that with our own infrastructure and our own distributor base with distributors and a beer business as knowing that business on and would no growth but big losses it just made sense and it was mutually for both of us to terminate we still have a relationship put them in regards to a cold pack relationship and do in the cbd product for them but that's ultimately it was not any type of play hostile issue which is made sense economically it made sense for us and it made sense for them and listen it can create there's a lot of other beverage companies out there we have a lot of other relationships and the beer distribution business and one of the big things we acquired was a facility and were the ones that have the facility in regards to produce a manufactured drink today whether it's cbd or thc so that's the whole thing with a b i and be a part of our synergies came from closing down this yeah joint venture the nice if i think girl when high papa nice to hear from you i'm just in terms of your question in terms of been rate for europe so we are looking at a thirty seven percent runway for the rest of the year now just just as a node does i sort of caution in our numbers are often times shipments into other countries and
spk_31: as you know it's regulatory framework sometimes tests the timing of that doesn't always work out the way we want to with import and export permit but there were there was a shipment into luxembourg with our first shipment into the uk on and so am just but cautioning just said with a thirty point seven percent there could be some some changes in out years quarters
spk_15: and i think bubble the thing is is this year we're excited about european market you know today and i and i said at how do we get two billion dollars in europe it's got to depend upon legalization you know is in certain countries but you've heard germany talk about it and we're working with the german government right
spk_32: right now in ways that this is going to happen it's probably gonna get announced soon will probably take maybe twelve eighteen months before it can happen
spk_6: and you'll see potentially portugal then you know other countries go ahead because of attacks you even see our home talk about it in france it regards the his election in may that is something that you will have on his election platform up and with our facility in portugal with our facility in germany and with rcc farmer were well pursuit shit for that marketplace and as did he said i mean right now there's twenty plus countries in europe today that do sell medical their medical cannabis and we look to and so sales
spk_7: great thank you thank you or next question comes to line every push print was oppenheimer pleased with your question good morning thanks for to get cautious also happy new year arms i guess i just wanted to touch on the colbert backdrop tropicana if you guys can to help us understand what you're seeing right now in in canada and then as we look at the business in the current quarter would you expect the canvas part of it to take a step back versus what you to student you too
spk_6: so the of canada and until rio in a lot of the different provinces are shut down
spk_7: blair i'll let you go ahead and take that since you're in trouble right now and up you're the one dealing with the office close the restaurants close but
spk_33: cannabis stores are still open which is the good news your the have to show your back seat hard before you can enter that's the same with the control boards the other good knows if people are staying home so hopefully they're consuming more alcohol and so be more cannabis blur
spk_6: yeah thank you are one arm yeah in terms of the covert affects i think you over the last year almost two years we've seen that similar issues so he have the ability to get capacity limits and store which you know making sure our distribution team can get out there and talked about tenders and be in store so that is a little slower than what we'd like arms some of the supply chain things that are when mentioned earlier similar and so but we are seeing on their the opportunity for consumption we are seeing an increase of on that side so i'd say the coveted nothing and it's unexpected to what we've seen so far in response to your question about two three numbers we are forecasting an increase in or two three business so we death molly think that are pipeline of innovation some the strategic pricing most we've made our will result in increased revenue or vs keep to about figure
spk_2: great thank you
spk_7: and and your post i think the big thing is a serial you know covert have some to that's been around for two years and the in a good the bad news is still around for two years a good news for getting used to dealing with that and had a deal with it and it know with that we have made tremendous amount and improvements to our business keeping our employees safe keeping our offices open
spk_6: you know doing things online and making sure we sell into the bartenders and that's what our partnership with southern glazer that has the boots on the street to get into the stores and mean i'll mark martha to these bartenders the other thing is working with the liquor control board to make sure we have inventories in regards to be unable to shift to them and hill in the last quarter of because a labour not have labour be lost multiple sales are pre rolls on you know some the control board took down their inventories because concerns of covert that's already gone to number so there's lots of things that happen and there's lots of things that reflected our numbers because of poor with but the thing as blair said we're in a good place and having blair on board today who came through the you know the spirits industry would you know five years with the party knowing how to work with the control board knowing how to work with you know and alcohol product and t today it's totally responsible for the piano of canada and runs all sales marketing operations in canada so it it's great that someone a blair's caliber running canada for us today thank you thank you are next question comes from the line of john's emperor in out with see i b c please proceed with your question take the morning and or it look at the out he just that just one question what are your thoughts on cannabis emanate need mention that thirty percent domestic share in the past it does look like that or require acquisition so what are some attractive characteristic of a target that you might look for in canada and and what did you learn from either the jewelry a free a merger or deal outside the candidate space in forming your future emanate lamp
spk_7: you know it's like every every one of them or something different than there is a lot and i've always had this the my prior days and pain every deal have i done i learned something different for from and death what what we've done differently i think the big thing which again
spk_15: we learned from tell read ah a a free to come together do we need to brands to can't support all twelve brands and one of the things and as you look at some of our revenue were down because we have twelve brains out there that been able to support while bridge the second is bringing the cultures together and bringing the people together not something
spk_34: why blair's here today is really to you know bring the cultures together and bring the businesses together is how we what brands are we going to spend on on the innovation part of the business arm and then it's we closed to facilities in a skill and and an eyeball because of costs out knows the saudis to produce and that's sort as blair talked about before you know is us be in that low cost producer and that us be in the quality producer another big thing is how do you bring more more consumers over from the illicit market you gotta offer innovation got offered new products he got off a potent
spk_35: he out there so there's a lot will learn in regards to future acquisitions i'm i come back and say there's some great lps in canada that would add additional uniqueness this and brands that would add you know additional
spk_6: capacity and bring him into our our are free it till rate facility and there has to be consolidation there's close to seven hundred plus you know lps in canada today you're you're you're seeing in regards to just about carry a gun from six hundred to twelve hundred stores or the cowboys a in happen in that marketplace so ah yes we're lucky that acquisitions in canada as you can see today listen to you like the top four five companies know can we all lose share but is it profitable share a sustainable share and ultimately what happens to it you just can't look at a quarter to quarter that are states pressure to collect thank you very much thank you thinking or next question comes to mind as far as jane with barclays question high five unwanted pets allowed for taking my question is just on the comment that have been made a the canadian market that next quarters of a new will be more than the squad or then clearly most producers are losing money right now and that is overcapacity so what is your best estimate wind industry does is it later this year to trade you for what is it more of a twenty twenty three phenomena when he actually see and have done in the industry and the few good think or talk about what could be a potential margins at that time at him that would help us really understand ah opportunity i think number one we're not ready to get the keynote guidance here but i think the thing is is is here
spk_7: what a blair is that all a blur speak for himself were all at carl what's important is you know is we brought these two businesses together you know in may june of last year job and taking the cost set of these businesses and you know setting the floor for the brand's the products water ski rationalization and you know i i hear from people you down quarter over quarter while they're seasonality there's holidays are there certain your stores that were close during covert there's a lot of factors
spk_6: out there but i come back and say this year the canadian market as a nine billion dollar market today at retail and that's only for fifty percent yet that's only for fifty percent of the a market the other market is the illicit market there's ultimately sales and there's consumers to bring over from that are in regards to bringing new users into the marketplace i think that's gonna continue breed more and more users into the marketplace the other and i've talked about it before his the category in regard to the medical cannabis industry which shot is tremendous in own size an opportunity for us on you saw or margins improved somewhat in the over it and a quarter but i think the big thing blair mention this is here why the industry was down in price twenty two percent were only down at one point seven percent and yes we lost two or three sure points but i think as we build out the poor brands with intel rate as we build
spk_36: out the innovation with intel rate we build out the potency with it till read and we have that boots on the street which we had to get in there to educate the bartenders which are key
spk_37: ultimately and i think it's a it's also important is that have that consistent low pass producer out there come and other facilities blair you want to add anything
spk_4: nowhere when up you went exactly where i was gonna go which is there's so much runway on the illicit market were still only at fifty percent of that so certainly we see the opportunity for growth in the next two quarters
spk_38: notwithstanding some the issues there but you know we're we're building up capacity on three walls were building up capacity on flower were building elder innovation pipeline over the next a twelve to twenty four months to have more robust launches into the marketplace so there's a lot of runway for growth and canada and as we said in her statement i think the bottom line is we see some of it's compression a short term how short term we don't know but you know as or when mentioned there are a lot of lp were either buying products or party which makes their margin compression much much worse than ours
spk_39: and there's a lot about peace were burning through cash trying to compete right now and some of that consolidation will either muntari and we see the opportunity to you know optimize revenue from that point forward the timing isn't exactly clear about you think it's it's not gonna be a lot left
spk_6: i grab you might see margins ya go down but because of price compression and we out there you are drop in some price whether it's vapours or some other thing but on the other side where we have the opportunity and he heard me say today we are increasing our cost savings and the car offset were taking out of the combination of till ray you know in a free us you're are going to a hundred million dollars and that's ultimately how we're going to support that and you know that's what's important is here we can afford to be able to go there and do it and we're not gonna do and recklessly by no means at the same time you know the products are going to be grown in our facilities which are going to bring your overall cost down on you know as we bring in the in a skill in and we bring in the deny more production into our facilities and limited but thanks a lot thank you or next question comes to mind attorney general theme of capital markets
spk_40: question
spk_41: hi good morning hours or so quick question on the us strategy so owing to talk quite a bit about the citizens beverages personal care related adjacency that then can be translated to thc upon federal the alive and shit but i'm curious on this aspect which is that what we see right now in the us of that market
spk_42: is that like canada flour and tribals really gone so i was wondering if you could talk about how you intend to build that aspect of your us strategy because my senses that i got mad men it's primary a retailer not as much a flower producer thank you so it is the u s
spk_43: tammy you know we're seeing the out demand out there for other products and is learn products whether it's and drapes whether it's and edibles whether it's in you know moisturizers whether it's it's it's been a tight a personal care products but in a with that we have formed a wellness
spk_6: bob run by and jared and his team that is doing a ruddy manitoba harvest today so with that you're gonna see us coming i would cbd deterring soon you're gonna see us coming out with you know others cbd products you're also going to see as focusing on hemp and taking a big position in the whole hemp mark and you know what are the standards they are i think we've done a great job in regards to improving and out as the him quality in the taste of hemp what we've done with sweetwater if taken the risk brand and the broken coast plan and coming out with the with seltzer products and coming out with ip a in that market to introduce our brand names so you know the the us market is the focus is to grow brands are both and spirits beer and cbd and wellness arm until legalization does happen here at least that gives as good a jason see products and as i was telling some of the other day you know in regards to you know regulatory ultimately regulatory will change a regulations will change in the us and i think at that time will have a good size business said we will be able to participate in the thc market whether it will be flower weller the will be pre roles and with that having you know the knowledge in the business that we have in a canadian market bob will be able to translate a lot of that expertise into the us market thank you thank you things are not present i'm angry with alliance
spk_42: global partners
spk_44: question
spk_45: i could warn you pay for the question of such one for some medical harvests so you have some stabilization are they had seen parts of the murder of want to touch more on the market side soaked him in mid high twenties past three quarters now i'm below the forty percent levels you know we had seen in the past so or not you could provide
spk_46: some color in terms of your gross margin profile whether not wish expected to see now in this range our with more the shift to the brain and white label that white label versus branded prior if you see some margin opportunity there thank you fair in the morning
spk_47: the a good question and i'm really excited about manitoba harvests and i know your quarter over quarter was down a bit but if you look at manitoba harvest the brand itself it was flat quarter over quarter and this is a brand that you know until require that think they have lots lots of play
spk_46: as for a not sure it got the plans and attention the other three years you know everybody thought him have happened what we do with this bob the team that is working on this you know worked with me and he has introduced numerous new products i've seen the new product plan i seen what they're doing in regards to disturb you should have also i've seen what they've done in regards to the of taking costs said of this business we did have a lot of private label business that was not profitable and we have now discontinue that are given it up you know and some of that was cosco business that was manitoba hard miss where they have converted to their kirkland brand
spk_30: and taught me back and sort of say did you did the manitoba harvest read you know ultimately sell better so number one is i come back and say we're going to focus on the manitoba harvest spread we're gonna come out there and legitimize hemp who's in regards to the quality of the product the taste of the price know some of the products just did not taste buds we pull them off the marketplace in regards to the benefit of hand and educating consumers why hampers good why it's good and ill in in regards to smoothies why it's good in the over why it's it's a keto diet food and i think there's a big opportunity to really grow this business two hundred million dollar business or do add on acquisitions we have not in the spec businessweek planned and for the snack business with plan to you know to enter other product lines and ingredients in his business of ultimately will the margins grow yeah because we're going to take said at the facilities that are going to be much more efficient and a lot of products that were cold pack and third parties were in a move back into our facilities you know today manitoba harvest a soul in over seventy thousand stores so the out looking to expand that and the key thing is there's a team and place haven't done that before on the stack product on other grocery products and know how to do that i great things to our advantage of you
spk_6: thank you thinking or less question comes as doug rbc capital markets please proceed
spk_48: yeah the morning and this questions for the nice i just wanted to review what specifically the the german timeline
spk_2: it would look like in terms of receiving
spk_49: approval
spk_32: on a broader basis what the wrists might be and then
spk_50: maybe you could just talk to us a little bit but your for so in germany and had you bailed supply that
spk_6: if we did see the approval on taught eighteen months normally the their backs
spk_10: yep i think sad and for the question so in terms of the legalization hi mine am as you know that the coalition on had already talked about the approval of medical advice i don't use cannabis into the german marketplace and are working on a framework a lego toy framework in what a to as
spk_51: featured on that a minute or darwin mentioned and we are an offering up our support and help to the extent unnecessary to help frame and of and provide some information in order to
spk_50: in allow for the development of that same mark rather quickly and we believe it'll be a twelve to twenty four months framework for the basically the adoption of new regulations as well as the execution implementation of those are regulations on so in essence and because of the is the fact that a wholesale markets to be developed it has
spk_10: to go through our various government channels and then it has to be ultimately approved and rolled out to we believe that that timeline is probably around twelve the twenty four months or fall on the execution implementation and commercialization of adult use cannabis us about the germany facility and on and so we believe that this uniquely to additions us and provides us with great an advantage in the german market one i think that a german government has talked about is trying to eliminate the overall requirement that they have to rely on as you don't basically cannabis as imported into germany arm and as we
spk_7: all know that there's not enough cannabis is actually being produced in germany to actually support that however we are the only facility today that is supplying the german government with medical cannabis there is room for expansion within this facility on and we believe that we can very quickly on expand and also
spk_6: provides a the adult use markets we believe it's a great advantage for ourselves and it just add onto that you know we're really excited about europe and i wouldn't wanna be starting from scratch and europe today and i think that's the big thing we've made the financial commitments we dealt with the financial burns we've we've dealt with you know been limited to medical cannabis and i think it's important to date of where we are and what ultimately that could be worth one day with the german mark alone and again you know it gonna legalize and like other be done is a two to three billion dollar more get within itself yet you know canada is thirty three million people germany's eighty million and there's so much and that's what's by the canadian market is so important for us number one will both adult use and medical is legal but there's so much perfection that we have learned from the canadian market
spk_52: and knowledge that we're taking to europe today and at the same time we will take that to the us once the legalization happens here
spk_7: a keyboard
spk_10: think you are next question comes to mind as gordon johnson
spk_50: gl day research please precipitous
spk_6: hey guys stay for taken my question on just just a quick question of when i look at yourself on a like for like basis is it or is it fair to say if i look at the sells for tear away after your combined and the fiscal second quarter they were down thirteen point nine percent year over year to sales quarter over quarter on a combined were down i'm not your job after out so none are year over year so in one of the presentations you guys gate gate program or results for africa fill rate cells in the fiscal second quarter of last year and a number was around one hundred eighty million so using that number in the cells reporter today have one fifty five or a year over year basis looking at you know pro forma numbers on apples to apples basis is correct but cells actually fell thirty point nine percent year over year to the of gordon our if you go to the the analysts primer which is i think the documentary referring to your the and you look at the pro forma number on up on a pure dollars for dollars basis you're you're correct but i think he also have to go back and look at what was in those numbers for legacy right
spk_53: the in the prior year and so in the prior year they had their one big shipment for the entire year that was ah that was
spk_2: to the ah to the it is real and the international market a free i had a it's one big shipment in the year in that in that period and you also had had die until re working towards it's it's it's achievement of iba deposit of by the end of of that that calendar year and so there's a few things that are and
spk_5: there that are that you know that driver that and that number up that may not be comparable in future pure and i think or the other thing is to look at you know in this quarter you know close to seven million dollars of inventories were were taken out of oh see and as we've gone through skew rationalization and of we got to prod
spk_54: when they should i got your your numbers quarter over quarter view of year as a combined is absolutely correct but there's been a factors that added to that also you heard her talk about currency
spk_6: you know in regards to this quarter five million dollars and thirty retail ah so you know absolutely right but there is other conditions as we look at you know for over four hundred year year when companies come together it it's also the that life i'm sorry guys you're not not only i'm really helpful on you know that that was really helpful i appreciate out a little confused last quarter is well because it was a similar dynamic where'd he might for like numbers were flat but the number at the top of the press release was much higher so so separately aren't it's encouraging that you guys are entering your geography on do more get sick cetera can you tell us what you expect to be your biggest opportunity ah over the next three to six months from a geography geography perspective and dom you know it seems like there's some opportunities clearly in the u s t give us your outlook on of six you'd be together he said it's the can you give us your outlook on or national league as a x for the questions guys in a good luck so number one here i come back and you know with blair in charge in canada today and he's got a real good strategic plan you heard him come back and say about growth you know in the third quarter and all the things that we've been working on so i feel good about the opportunities in the canadian market have you heard with denise laid out regards to your and with that it's not gonna happen in the next three to six months but that the others gonna be plans in place in regards to us really grown in you know the european markets is twenty markets today that has you know cannabis you know a medical in europe the big thing for us in the us right now is i come back and i say this here is growing manitoba harvest it's you know breckenridge has tremendous tremendous growth opportunities ya it's and fifty states majority the products a sold in colorado but we look to rule that out
spk_5: we looked roll breckenridge it's in cans are expanding you know sweetwater into additional states going into the west coast with the fort collins is silly withered your green flash or alpine products so there's lots of opportunities for us both of us canada and europe
spk_6: bob gordon and the the last but not least there's additional costs to come out of this business i think that's what's important for us and the next two quarters that were free cash flow positive here and we really manage those costs arm and that we are able to get share back from a profit google standpoint just not good share back for the sake of share back a good guys and that concludes our questions via the telephone announce ten fly back to missouri thank you operator and now will turn to questions from say technology platform from a retail shareholders grip our first question is regarding the stock price what are you doing to increase the share price and to perhaps reassure stockholders so great questions and listen it's something that i get asked all the time and my first and foremost as our focus remains on executed hundred global growth strategy and i hope we discussed a lot of that with you today what will not be distracted by short term market volatility will not go there and do short term o preceded strategies we will defend competition absolutely but we're here to build a strong consumer packaged goods company that's why we choose to leave to tell ray brands yeah cannabis is still a nascent industry and shareholder values or foremost priority when i went back to our shareholders and looked for additional shares i said we would not go there and you see shares for deluded deals and so far we have not and that is a big part of our plants i think what's in poor and to is our focus is executed in driving top and bottom line performance but profitable once and delivery sustainable value just like gordon ask me the question before his it's it's very easy to gloat there and do private label business is very easy to keep sales in place that are not profitable for toppling grow op but that's not something we're going to do as we bring these two companies together how do we build a base for the future growth and listen there's lots that changes out there he oh yes i've come out and said four billion dollars is contingent upon legalization in the us it's continues upon legalization you know in europe i'm i've come out and said you know i'd like to get to a billion dollars in canada there's lots or would the chop to get there and i think you know a year from today they'll be lots of changes in the marketplace this is a three year old industry and if you look at most companies today and most categories there a lot older than three years so we're out there redefining the category and trying to get it right do we get everything right no do we make mistakes along the way yes but we realize it and try to correct it thank you and the second and last question is what are the plans to enter the us market and twenty twenty two and hottest performance luck or bounds of twenty twenty two
spk_2: so you know the plan to enter the us market as i've been clear about it is here when our breckenridge brand or sweetwater brand now or green flash or alpine or manitoba harvest we really have you know as food stable of consumer products will look at other acquisition

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