Ascend Wellness Holdings, Inc.

For standing by, welcome to AWH's fourth quarter and full year 2022 earnings call. I'd like to hand over the conference to your first speaker today, Rebecca Kaur, Head of Investor Relations. Please go ahead.

Good evening, and welcome to AWH's earnings call for the fourth quarter and full year 2022. The presentation that accompanies this call can be found on our website, www.awholdings.com slash investors. Before we proceed, I would like to remind you that there are several risk factors and other cautionary statements contained in our SEC and CDAR filings, including our annual report on Form 10-K for the year ending December 31, 2022, which we plan to file in the coming days. We will not review those risk factors and other cautionary statements on this call. However, we encourage you to read them carefully. Various remarks on this call concerning expectations, predictions, plans, and prospects constitute forward-looking statements or information. These forward-looking statements or information are subject to risks and uncertainties that may cause actual results to differ from historical or anticipated results. Any forward-looking statements or information reflect management's current view only. We undertake no obligation to revise or update such statements or make additional forward-looking statements in the future, except as required by applicable laws. References may be made during this call to future-oriented financial information and financial outlooks, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as forward-looking statements or information. While we believe that such estimates have been prepared on a reasonable basis, reflecting best estimates and judgments, the actual financial results of the company may vary from the amounts discussed herein. During today's call, we will be referring to non-GAAP measures, such as adjusted growth profit, adjusted growth profit margin, adjusted EBITDA, and adjusted EBITDA margin, as defined and reconciled in our earnings materials in the appendix of the presentation. These non-GAAP measures, as defined by AWH, may not be comparable to measures with similar titles used by other companies. Certain information that may be mentioned during this call, including industry information and estimates, is obtained from third-party resources. including public sources, and there can be no assurance as to the accuracy or completeness of such information. Although believed to be reliable, management has not independently verified the data from third-party sources. On today's call, we have Abner Curran, Executive Chairman, Frank Garullo, President and Interim Co-CEO, and Daniel Neville, Chief Financial Officer and Interim Co-CEO. With that, I'll turn the call over to Abner, starting on slide four.

Thanks, Rebecca. Good evening, everyone, and thank you for joining our fourth quarter and full year 2022 earnings fall. 2022 was a challenging year in the cannabis space. The legal cannabis market topped $25 billion and is expected to grow at a 15% compounded growth rate through 2025. Furthermore, nearly 70% of American voters support federal legalization. But while the economy faced rising interest rates and inflationary pressure, Many cannabis markets face an oversupply of products, resulting in significant pricing headwinds compared to previous peaks. Massachusetts wholesale spot prices decreased by 56% year over year. Meanwhile, the average retail item in the United States was down 13% year over year. These adverse conditions, combined with the letdown of expectations from safe banking not passing, has deterred investment in the cannabis sector. That said, this is a growth CPG business in a market with the potential for $100 billion in sales as consumers and states convert from the illicit to the legal. These businesses have significant first mover advantage, and the industry has the potential to become one of the most important adult use goods of our lifetime. 2022 was the first full year as a publicly traded company, and we continued the growth trajectory we established in prior years. We continue to successfully navigate this difficult industry, and our numbers speak to the unwavering dedication and tenacity of our team. We started later in the game compared to several of the U.S. multi-state operators, but we have leapfrogged the competition. We now rank sixth in overall adjusted EBITDA for U.S. operators, and in 22, we began to stand out from the pack. We grew EBITDA faster than any of our peers year over year, earned the highest average revenue per dispensary solidified our position as a top brand and had among the most stable wholesale performance of the entire MSO landscape, despite a challenging environment. We are continuing to grow and move closer to positive cash from operations when many competitors are retrenching. We've achieved record revenue of approximately $406 million for the full year, representing 22% year-over-year revenue growth. Our adjusted EBITDA increased by 17% to $93 million, representing a 23% margin. Most importantly, we are near generating positive cash flow from operations for the full year of 23. These are tremendous financial milestones, and I'm extremely proud of the team for delivering in a top environment. Despite some of the aforementioned headwinds, we are still able to make significant progress during the year. We had access to capital through the debt markets, which allowed us to fund our growth and maintain liquidity. These funds enabled us to execute our growth strategy. In 22, where we expanded our geographical footprint and cultivation capabilities, and they will continue to support our 2023 initiatives. We maintain a strong balance sheet with no near-term maturities and ended the year with $74 million of cash on the balance sheet. We continue to believe in the tremendous value that comes from achieving scale in existing markets. Furthering this will require continued discipline and opportunistic M&A. While other companies are shying away, we think building scale is even more important than ever. In New Jersey, we were able to become a top operator in the state right from the outset of adult use. We grew our cultivation from nothing to 42,000 feet and opened one of the most successful stores in the state, Rochelle Park. This illustrates our execution of our playbook to enter late stage medical markets before adult use, and we were able to generate similar success to our initial victories in Illinois in 2020. This type of medical to adult use conversion gets us excited about future opportunities in our existing medical states, such as Ohio, Pennsylvania, and Maryland, where we have a pending transaction. Ascend is well positioned for the future, with a considerable amount of our portfolio that we expect to benefit from near to midterm adult use flips. As we continue to try to increase penetration in our core markets, we are looking at a variety of partnerships and distribution agreements to maximize wholesale and retail market share as new stores come online. These opportunities, combined with discipline and M&A, will drive our growth throughout the year. In 2023, we will shift from a period of hyper-growth to focus on self-financing and being free cash flow generous. Given the realities of the market today, all of our attention is focused on raising the bar for capital allocation and gap backs, improving our rates of conversion from EBITDA to cash from operations, and achieving positive cash from operations. In light of this, we are changing our targets to 15% revenue in EBITDA growth for the full year and are expecting to generate positive cash flow from operations for the year 2023. This will be a major milestone for the company to achieve within five years since our founding in 2018. In 2023, we plan to fill our open CEO position. We continue to work with the search firm Russell Reynolds to find the CEO with experienced scaling organizations. It is time for the industry to move from founder-led organizations to professional operational management teams. We continue to review candidates and hope to have an update for you again during the next call. Meanwhile, we've been in good hands and are happy with the co-CEO roles that Frank and Dan have been filling. Their work has been critical to getting these assets open and will be critical to getting the company to cash flow positive this year. In addition to development of the CEO search, we are making progress, garnering support for challenging the legality of the Controlled Substance Act through the federal court system. We at Ascend believe the use of the CSA as applied to the state legal business is unconstitutional. Many industries, most notably online gambling, have achieved legality and access to capital markets and exchanges through challenging the constitutionality of certain federal legislation. We think it is quite possible that cannabis follows in their footsteps. In fact, Justice Clarence Thomas had made comments supporting this viewpoint. He explicitly called the federal government's current approach to cannabis legalization as half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana, where the contradictory and unstable state of affairs strains basic fits principles of federalism and conceals traps for the unwary ascend is working with a number of industry participants to advance legalization from a federal perspective we expect to have more more to announce in the coming months and we'll update you throughout the year on progress we will not sit idle on the sidelines of this critical issue that could meaningfully lower the cost of capital and eliminate 280 taxation for the cannabis business with that i'll turn it over to frank to review operational highlights from the quarter and then to Dan to discuss the quarterly financial results.