Ascend Wellness Holdings, Inc.

Good afternoon and thank you for standing by. Welcome to Ascend Wellness Holdings' first quarter 2025 earnings call. The presentation that accompanies this call can be found on the investor relations section of the company's website. Before proceeding, AWH would like to remind you that the following discussion and presentation contains various forward-looking statements or information. These forward-looking statements or information are subject to risks and uncertainties, but may cause actual results to differ from historical or anticipated results. For more information on the risks and uncertainties, please refer to slide two of this presentation, today's earnings release, and AWH's SEC and CEDAR filings, including their most recent reports on Form 10-K. During today's call, the company will be referring to non-GAAP financial measures, such as adjusted EBITDA. Reconciliation to the most direct comparable GAAP measures are in appendix to the presentation and in the company's earnings release. On today's call, I am pleased to introduce the SENS management team, starting with Sam Brill, Director and Chief Executive Officer. Sam will provide an update on the company's key objectives and high-level financial priorities. Also on the call is Frank Pirullo, Co-Finder, Director, and President. Frank will share updates on the company's operational plans and highlights from the quarter. And lastly, Roman Demchenko, Chief Financial Officer, will review financial performance for the quarter. I'd now like to turn the conference over to your speaker today, Sam Broom.

Please go ahead.

Good afternoon, everyone, and thank you for joining our first quarter 2025 earnings call. I'll start off today with a high-level update on the industry, our strategic roadmap, and how we started the year. Looking broadly at the regulated U.S. cannabis industry, despite some challenging regional headwinds, the industry is still growing. Top-line cannabis revenues and the share volume of legal products sold continues to increase, and more states are looking to implement both medical and adult-use cannabis programs. According to FlowHub, sales in the regulated U.S. cannabis market grew over 9% in 2024, surpassing $31 billion, and are on pace to grow another 12% this year. This has been driven by a shift in cannabis customer demand, primarily the younger demographic who are increasingly looking for alternatives to alcohol. daily cannabis users have now surpassed daily alcohol users. In fact, a recent survey showed that nearly half of Gen Z respondents want to reduce or eliminate the consumption of alcohol, and cannabis offers a variety of form factors and dosing options that are very appealing. While the regulatory environment for cannabis remains murky, following several setbacks during the rescheduling process and many failed bills in Congress, The recent commentary from President Trump's DEA nominee, Terry Cole, and feedback from those who have had conversations with the White House leaves us cautiously optimistic that progress can be made under the current administration. We began 2025 with clear priorities, growth through densification in our key markets, margin improvement, and deepening our customer engagement as we continue to evolve our retail and CPG strategies. I'm pleased to share that we're making steady progress and have performed well across all three initiatives, despite near-term headwinds. Furthermore, we've built a market-leading position and an important retail moat within our current programs. As we go deeper in states where we have significant cultivation capabilities, it will allow us to expand our vertical opportunity to improve margins and offset pricing headwinds. We will be increasing our retail footprint by 50% in our core markets over the next 18 months, with half of those new doors to come in 2025. We continue to identify new opportunities to grow our customer base as we fine-tune our newly implemented CPG approach. These efforts include new brand and product launches, entering new segments, refreshed packaging, and popular in-house and third-party brand activations. Our actions taken to improve profitability are resulting in continued momentum from the cost control measures we put in place late last year. We successfully implemented and even exceeded the $30 million in annualized cost savings we identified. While our cost of goods sold initiatives started to triple through in Q1, it was largely offset by continued regional price compression during the quarter. We are actively reviewing our operations to unlock further efficiencies, such as packaging and automation updates for new cost saving optimization opportunities. The broader regional market challenges we discussed on our last call have persisted throughout the first quarter, with price compression continuing to be the biggest headwind for BDSA data. While transaction volumes held steady, lower pricing put pressure on our top line in margins. We expect our ongoing efforts will ultimately help us close the margin gap between us and our peers, but there's still work to do. That said, we're seeing encouraging signals that our margin improvement strategy is taking hold. Overall, Q1 was as expected, with revenue coming in at $128 million, and we maintained an adjusted EBITDA margin of 21.1% despite the market conditions, seasonality, and a heavier wholesale mix. We ended the quarter with cash-in equivalents of $100 million, giving us the financial flexibility to execute on our strategy while maintaining a strong balance sheet. Let's turn to slide five to discuss our retail densification strategy update. Shipping to our expansion efforts, we remain focused on our mid-term goal of growing our footprint by 20 new retail doors with 10 expected to come online by year-end. We are targeting our key states where we already maintain brand leadership and sizable cultivation operation. This ability to expand our retail base and increase our vertical sales is a key focus. Building on the groundwork we laid in Q1, we added three more partner stores in Illinois, with our Markham, North Riverside, and Linwood partner locations now open. We also identified an additional partner store opportunity, which would bring our total in the state to six. In New Jersey, we expect to open our first partner store in Little Falls in the coming months, and we have another three partner locations identified for later this year. We have an active development pipeline across our footprint, keeping us on track to meet our 2025 expansion targets. This also includes three sites in Ohio and one in Pennsylvania. These dispensaries continue our strategy of securing prime high-traffic retail locations and will enable us to capture further vertical sales while building our brand footprint in these high-value states. As I previously shared, refocusing on the customer is now a top priority across the organizations. To support this shift, we started making meaningful changes to our retail experience and are refreshing our brands to help drive top line growth. Let's turn to slide six where I'll discuss our latest steps during Q1 in detail. Our refresh customer strategy is beginning to gain traction, and we're starting to see transaction growth at stores where key initiatives such as e-commerce have launched. Early results from the e-commerce pilot program show a 6.9% increase in e-commerce order volume, a 7.7% rise in revenue per user, and a 50% drop in order abandonment compared to pre-launch metrics. While pricing pressure has offset some of these gains, we believe the opportunity is there as we expand these efforts. In Ohio, our adult use ramp-up continues to be very strong in contrast to what we've seen in other markets. Our Ohio stores have performed ahead of our original expectations, and we are excited about the future potential this market offers. On the brand side, Q1 saw some exciting developments, with several of our already leading brands moving up in the state rankings, further positioning us as an emerging CPG leader in key markets. During the quarter, we became the number two leading brand house across Illinois, New Jersey, and Massachusetts combined. Three competitive key states where we maintain significant operational capacity. The recent Illinois launch of our infused brand, High Wired, has received a very strong early response. Since launching in late April, it has become the best-selling infused flower brand and the fourth best-selling brand across all flower sales in our Illinois stores. In addition, Effin continues to perform well and is now ranked as the number one sleep skew in both Illinois and New Jersey. We have plans to expand the Effin line with new targeted effects set to launch in the coming months. Our customer-first mindset is not a slogan. It's our edge, and the results are beginning to show. According to recent BDSA data, while the specific markets that we operate in contracted in Q1 with a 3.4% decline, we held our ground and grew our market share by 4% compared to Q4 2024. Finally, we continue to actively utilize our share buyback program to take advantage of what we view as a significant disconnect between our underlying business value and our public share price. During Q1, we repurchased approximately 790,000 shares, with an additional 781,000 repurchased after quarter end, for a total of approximately 1.57 million shares repurchased as of the end of April. We still have about 75% of the authorized amount remaining under the current program, and we will continue to assess the highest return available on our capital as the year progresses. In Q4, we identified and began implementing key initiatives across the business, with further progress made throughout Q1. With Q2 expected to remain steady, the second half of the year should mark a ramp-up phase as those initiatives begin to scale. While we're keeping our close eye on ongoing price compression, we're equally focused on executing strategic initiatives that strengthen our position. Our priorities remain clear. delivering for our customers through innovation, evolving our CPG and e-commerce strategies, and enhancing product quality and the customer experience across the board. We've been confident in our strategy and committed to our densification and optimization priorities. We are executing with discipline, and we are staying focused on delivering long-term shareholder value. Before turning the call over, I'd like to sincerely thank our AWH team for their fantastic work helping to overcome challenges while successfully implementing our initiatives. There's a lot more work to do, and I'm confident that we have the right talent to execute. With that, I'll hand it over to Frank.

Thank you, Sam. Good afternoon, everyone. I am pleased to be here today to share an update on Ascent's operational performance, the actions we've taken, and changes we've implemented across our organization to strengthen our business. During the quarter, we saw competition expand across our markets. with all regions seeing new retail participants, which has resulted in some expected top-line revenue pressure, specifically in our core regions. As Sam mentioned, according to recent BDSA data, the overall market softened in Q1 2025 with a 3.4% decline. Ascend grew our market share by 4% compared to Q4 2024. Q1 versus Q4 is always a difficult comparison due to the fewer selling days and the impact of post-holiday seasonality on consumer spending. While this presents challenges, it has reinforced our belief that our strong retail locations, market-leading brands, and wholesale capabilities will continue to drive success as markets mature. We continue to emphasize, plan, and execute our initiatives, driving operational excellence and focusing on the customer. These items are the cornerstones of our strategy as we work to exceed customer expectations. We're committed to sustainable long-term growth by providing high-quality products and a standout retail experience for consumers. At Ascend, the customer is at the heart of every action we take. To further navigate market conditions, we continue to be hyper-focused on actively managing the business to meet our goals. Let's first look at how we are putting the customer first in the retail business. Let's move on to slide nine. The focus for the team in Q1 was implementing processes and technology to improve revenue, margin, and the customer experience. Online or in our stores, we have tried to curate the right menus and experience to engage customers. We recently completed market by market assortment guides to ensure we utilize market data and key performance indicators to provide the selection needed to attract and retain customers. The work creates a repeatable process to help drive a more curated experience for the customers with measurable results that help drive the continued improvement in each market. Curating our menus for our customers and driving better purchasing for our stores will positively affect the customer experience, revenue, and margin. These virtual planograms are dynamic, iterative, and based on data about our customers and how they shop. Recently, we also completed the implementation of new pricing and promotion strategies and processes to ensure AWH branded products are always the best value and stand out on our menus to drive AWH product penetration. This process is data driven down to the micro market to help ensure we are always selling market-leading products at market-leading prices. We also have better visibility into how our promotional activity will affect margins for better planning. Discount dollars and promotions need to be planned to maximize margin and help drive customer behavior. These new tools and processes help drive transactions in our stores, help customers build better baskets, and keep them coming back to Ascend. To help drive repeat visits, we are also pleased to announce we will be launching a new loyalty program later this month. Developed over the past few months, the Ascend loyalty program will be more than a discount program. To build upon our industry-leading customer experience, we will ensure our loyalty program treats our best customers to VIP-level service and great discounts, as well as products and promotions you will only find at Ascend stores. The program will be a tiered program to build community around Ascend's market-leading products and customer experience. This loyalty reboot will be furthered by our e-commerce initiative mentioned last quarter as we implement a single unifying tool to have better insights, data, and tools to service our customer. Our new e-commerce platform is showing early signs of success. As Sam mentioned, the pilot demonstrated an increased revenue per customer, increased order size, and significant decrease in order abandonment. This new customized platform was built with a strong focus on enhancing the customer experience, basket building, retention, and strategically positioning products to better meet consumer needs. Our optimized interactive kiosks have also contributed to a better in-store experience. The pilot has shown e-commerce and kiosk average order values continue to outpace walk-in orders. We added two additional kiosks at our pilot store, resulting in a shifting of orders from walk-in to kiosk. These actions will further improve efficiencies and revenue at our stores. This next-generation AI and machine learning customized e-commerce platform was thoughtfully designed to enhance the customer experience, improve retention, and optimize product positioning. We're pleased to see solid early results from the pilot launch. We expect the transition to be completed over the summer for all retail locations. Looking at our retail densification strategy, in the quarter, we added two retail stores, one partner location, and celebrated the successful reopening of our Detroit and Michigan store. We continue to focus on expediting our retail footprint expansion across our core markets to improve our scale and fight external market pressures. We are pleased to have supported the opening of two partner stores since the close of Q1 and are on track to open one additional partner store in New Jersey in Q2. New store openings should be more heavily weighted towards the second half of the year to meet our goal of 10 new store openings in 2025. Let's now move to slide 10 to discuss our operations in wholesale business. Continuous improvement across our operations sites is key to driving margin expansion to keep pace with price compression and market headwinds. Our operations team have made significant progress to support the commercial strategy to fill more of our shelves and customers' baskets with our brands, new product lines, and drive the efficiency with automation and increase yield quality and yields. The operations team increased production of higher margin SKUs from in-house brands to increase shelf presence and help lower COGS across all sites in Q1. Achieving greater scale and increased production of high-value products is our number one priority to support our margin expansion goals and overall business efficiency at our operations sites. The operational success helped fuel market share growth in key regions with the expansion of our brand house across all three key wholesale markets. These initiatives help propel AWH Brands to the number two position in sales and units across Illinois, Massachusetts, and New Jersey combined. We are especially proud that across these same combined markets, the Ozone brand ranks number one in sales and units. As mentioned, what's driving this growth is the continued enhancements of our brand portfolio. highlighted by the launch of 100 new products across our top four markets during Q1. These launches have contributed $6.8 million in retail revenue, reinforcing the strength of our innovation pipeline and our ability to meet evolving consumer demand. We rolled out new vape products with the launch of our Ozone Pixie disposable pens in three additional markets, along with new Ozone vape cartridge flavors and extended Simply Herb flavor lineup in four markets. Our Ozone Pixie Vapes have been a particular highlight in Q1, driving Ozone disposable vape sales up 103% compared with Q4 2024. As Sam mentioned earlier, we were excited to launch HiWired in the quarter, our bold new line of infused flower and pre-rolls crafted specifically for seasoned cannabis consumers. With a proprietary blend of quality flour and potent top-tier concentrates, this launch not only meets the rising demand for infused products, but also positions us at the forefront of one of the industry's fastest-growing categories. Now available in Illinois and more markets on the way, iWired is all about delivering consistent, elevated experience to our most discerning customers. Looking ahead to the second quarter, we have 156 new SKU launches in flight. This includes the second phase of effect-based brand Effin, with over five new flavors and unique minor cannabinoid combinations. We were able to launch new pre-roll multipacks across multiple brands. Finally, we were also able to launch our ozone edibles in Pennsylvania this quarter, providing further verticality in in-house brands to our patients at our retail stores in Pennsylvania. We've made significant strides in enhancing our production capabilities through automation initiatives and targeted investment in our operations facilities across the network. I am pleased with the progress of the automation pilot at our Athol, Massachusetts facility. We have successfully concluded the pilot aimed at testing the automation of flower pack, vape filling, and continued pre-roll automation, including our new infused lines. These new lines are driving increased production and the reduction of labor hours. Due to this measurable success, we have made the decision to implement these lines across the network. These new machines and practices will be operational throughout the rest of the network by year-end. New pre-roll automation has already been launched in five of our six vertical sites, improving volume, sufficiency, and consistency across the board. We are measuring the labor savings, and they are tracking in line with the expected savings, including our savings initiatives discussed previously. In addition to these operational upgrades, we continue to make targeted investments aimed at increasing yields and quality across the network. Our cultivation team is supporting the business to ensure we have the highest quality flour to hit our goals. The cultivation team also launched 20 new flavorful high THC strains across key markets, with a strong focus on consumer-driven cultivars and genetics to meet the evolving preferences. For the remainder of 2025, our focus will remain on reinforcing a customer-first mentality, which will continue to be the cornerstone of our leading retail and wholesale strategies in Q2 and beyond. We are committed to driving growth through deeper customer engagement, innovative product offerings, and operational improvements. By staying attuned to customer needs and preferences, will ensure that our initiatives align with market demands and pressures, positioning us for sustained success throughout the year. I will now turn it over to Roman, our Chief Financial Officer, to discuss our financial performance in the quarter.

Thank you, Frank, and good afternoon, everyone.

For the first quarter of 2025, we generated $120 million in revenue and $27 million in adjusted EBITDA. Compared to last quarter, our net revenue was down 8 million, or 5.9%. 4.4% of this decrease was due to retail sales, and the remaining 1.5% was due to wholesale. Sequential decline was largely driven by softness in tickets and price compression, partially offset by an increase in units sold per transaction across our core markets. We believe that the post-highway slowdown in seasonality had a meaningful impact on transaction volume, especially in the first two months of the year as consumers recovered from holiday spending. Adjusted EBITDA also declined by 3.2 million or 10.7% sequentially, of which 4.8 million was due to a decrease in adjusted gross profit and partially offset by 1.6 million improvement in SG&A. The decrease in adjusted gross profit was driven by price compression noted earlier, as well as the relative sales mix, With retail sales, we're presenting a smaller percentage of the overall revenue compared to last quarter. Despite the 5.9% loss in net revenue, adjusted EBITDA margin only decreased by 1.1%. This is largely due to the cost savings initiatives the company has been executing since the end of last year, which have provided us with a healthy foundation to navigate the short-term weakness in top line while we execute on our growth strategies and use their openings going forward. The year-over-year sales and gross profit trends are consistent with sequential drivers noted earlier, partially offset by new start opening in 2024, as well as the transition to adult-use sales in Ohio. Compared to the first quarter of last year, net revenue is down 10%, while adjusted gross profit and adjusted EBITDA are also down by 16.4% and 16.8%, respectively. Adjusted EBITDA margin decreased by 1.3%, which is largely due to a decrease in net revenue, offset by improvements in SG&A. Let's now move on to the next slide to discuss cash and the balance sheet. We finished the quarter with $100 million of cash, which is a net increase of $11.8 million from your end. This increase was driven by $6 million generated from operating cash flows, as well as the $13.7 million of net inflows from financing activities, offset by $7.8 million of investing outflows. Total operating cash flows include the first biannual interest payment made under the new indenture of $16 million, as well as the $1.4 million of interest related to the remainder of the 2021 term loan facility. Financing inflows of $13.7 million includes $14.3 million in net proceeds from new debt issuance, offset by $0.3 million in share repurchase, and $0.3 million in finance lease payments. Total investing activity includes 6.4 million of CapEx, of which 1.7 million was related to new store openings. We also had approximately 1.5 million of M&A-related payments made during the quarter. Excluding the CapEx related to new store openings, free cash flows for the quarter totaled 1.3 million. Looking at the rest of 2025, we still expect to spend approximately 30 to 35 million in total CapEx, roughly half of which would be related to new store openings. Overall, we believe this quarter reflects continued progress under the new leadership team. Last quarter, we identified key areas for improvement and laid out a clear strategic roadmap. Throughout Q1 and Q2, our focus has been on putting a strategy into action to better position the business for long-term growth. While we continue to face headwinds in some of our core markets, we believe the second half of 25 will begin to show the benefits of the initiatives we've put in motion and we look forward to updating you on our progress in the quarters ahead. On behalf of the management team, I would now like to thank each of our team members for their dedication and efforts in getting us to this stage, as well as investors and partners for their continued support.

I will now turn it over to the operator for questions. Ladies and gentlemen, we will now begin the question and answer session.

Should you have a question, please press tar followed by the number one on your touchtone phone. you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please make sure you lift your handset before pressing any keys. We will be taking one question and one follow-up per animist. Your first question comes from the line of Frederica Gomez from ATB Capital Market. Please ask your question.

Hi. Thank you. Good evening. My first question is on your sales per store. It's a metric that has been declining for quite a while, and I think we see that across the industry as well. I'm just curious, how do you view the metric evolving, considering all the retail initiatives that you have in place, as well as your retail expansion plans for this year?

Thank you. Thanks, Rodrigo. So our average revenue per store, I believe we still rank number one in the industry on a per store metric. And I think that's a reflection of the retail moat that we've built over the course of the company's history. And it continues to be a main focus when we look at the densification strategy, focusing on key locations that are on main and main, heavily trafficked, part of the consumer's everyday life, whether they're going to work, coming home, shopping, just making it very convenient for them to find our locations and get in and out quickly with the least amount of friction. So that's a key focus to that identification strategy. And we still remain confident that our target of 10 new locations by the end of the year will be achieved. As we mentioned, we have three more that we've already added. They're open. And the New Jersey store is going to open in the coming months, so hopefully four very shortly. And we should be able to hit the other six in the second half of the year. Did that cover what you were asking?

Yes, thanks for that. I guess the second question would be on wholesale. You mentioned that you increased market share by 4% sequentially, which I think is pretty strong growth. Do you think that that sort of sequential performance is sustainable on the back of your wholesale initiatives? And I guess from a capacity standpoint, would you require any significant capex anytime soon to expand capacity as you continue to increase wholesale? Thanks.

Sure. Look, I think on the wholesale side, Part of it was just a function of, I think we mentioned this in the last quarter, that there was some channel stuffing at the end of the quarter. We didn't participate in that, and I think that that just put us on firmer ground when it came to the wholesale business. But in terms of operating capacity, I would say that with the measures that we've taken, there's probably significant, I wouldn't say maybe significant, it's too strong of a word, but we have additional capacity that we can certainly crank up within each one of our facilities without significant additional capex that's not in the budget.

That's perfect. Thanks for that. Your next question is from the line of Andrew Semple from Ventum Financial.

Please ask your question.

Good evening. Thanks for taking my question, and congrats on the Q1 results here. First of all, I just want to ask on the cost reductions that were realized in Q1. Have we seen the full benefits of cost reductions within the first quarter? Or will subsequent quarters show more of an impact and more of a benefit still to come?

Yeah, so we've fully implemented the 30 million. We've actually exceeded the 30 million in annualized cost savings. And we did see on the COG side is what's kind of had that lag. So we still don't have the full You know, savings in the COGS. Yeah, I mean, we did see additional savings in COGS. Unfortunately, it was offset by the pricing pressures that we saw. But we should see more improvement on the COGS side as we ramp up, or rather as we cycle out of older inventory and into newer inventory. And we should see additional benefit as we implement the automation initiatives that we talked about. The automation packaging should help drive costs down. And again, it's always a forward cycle. So you're not going to – it usually takes three to – four months before it comes through so that that's the lab so we're really if you think about in q1 we're selling products that we were making uh at the beginning of poly q4 um and then we're going to see that additional improvement in the same um in the same cycle got it okay that's helpful and i guess that tightens my second question here and just on the

the growth margins, the quarter, and how you're feeling about that level versus the remainder of the year. I think, you know, broadly out there, it's expected that pricing pressures persist. Do you think that you've got enough room on the ongoing reduction of costs in your production costs, but as well as, you know, opening new stores and getting more vertical? Do you think you have enough room to potentially drive margins higher for the balance of the year? Or how do you see gross margins chasing out?

Yeah, I think it's a good thing that we took the actions that we did. Because if we didn't and we couldn't bring down COGS, it would have been a lot tougher quarter. So I think that that's already showing, just being able to stay consistent. But clearly there's a cost curve. It's like a Moore's law of cannabis where pricing continues to come down and we need to stay in front of that curve. So every single one of the actions that we're taking is in an effort to stay in front of that curve. And we're very focused on that and it's one of the top priorities. I think as the densification strategy takes hold, and we add more scores in the second half, there's an opportunity to improve margin just because the mix will be better and we'll get more vertical margins out of that mix. But we need to see how pricing pressures continue to persist the rest of the year.

Great. I appreciate you taking my questions. I'll get back into you. Thank you.

Ladies and gentlemen, as a reminder, if you would like to ask a question, please press tar followed by the number one on your touch telephone. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. Your next question is from the line of Neil Gilmer from Haywood Securities. Please go ahead.

Yeah, thanks. Good afternoon. I wanted to see what you're sort of seeing with the consumer sentiment. We all know season Q1 is seasonally a weak one, but then as we move into the spring here, I think it's fair to say that volumes typically pick up. I'm wondering whether, you know, all the tariff headlines and everything, you know, what you've seen as far as some of the trends as you have you moved into the second quarter here. And I don't know whether you want to use 420. I know it's only one day, but whether, you know, use that as a litmus to how things were versus last year.

Yeah, I think the consumer sentiment is pretty positive towards cannabis. I mean, we're seeing increased usage across the board and it's not like we're selling like, I know the revenue trajectory is where it is, but if you look at the actual just sheer volume of units sold and brands sold, it continues to ramp at a rapid pace. So consumer adoption is certainly there as people convert from other forms of consumption to cannabis. Specifically, it looks like alcohol is losing the majority of the customers, especially in the young demographics. So I think that the sentiments there, just for us as an industry, especially in some of the markets where you have oversupply, it's putting that price pressure on. So for the consumer, it's great. They're getting more product for less dollars. So it's a great value proposition. But for us, obviously, it's tough because we need to stay in front of that cost curve and defend profits.

Yeah, fair enough. Okay, thanks. Second question, you highlighted the shares that you've repurchased since you got approval of the plan in late December. What's your thought on the capital allocation strategy besides your capex of 30 to 35? You've got more room on the NCIB. What's your view on debt retirement or anything like that? Just curious on the philosophy that you're taking there.

We're always looking to be good allocators of shareholder capital. And we measure each of those buckets in a very, you know, I think, sober way. As we look at opportunities on the M&A side, it's hard to ignore what's out there. There's a lot of, I don't want to call them distressed assets, but operators that don't necessarily have scale that in our, you know, part of our network would greatly benefit from the scale that we have. And, you know, prices just have come down over time and they're very compelling, you know, and so we need to balance that with the fact that our stock price, you know, trade, we have a market cap that's lower than our cash position. And obviously, you know, as we generate free cash flow, you know, you want to also take down debt. So as a board and as a management team, we're always trying to you know, fill the right buckets. But right now, I would say that that pipeline is extremely compelling. And, you know, we definitely see opportunity there.

Great. Thanks for the question. Thank you. There are no further questions at this time.

Thank you very much for joining today's conference call. This concludes today's meeting. You may now disconnect.

Thanks, everybody.