Ascend Wellness Holdings, Inc.

and thank you for standing by. Welcome to Ascend Wellness Holdings Q2026 earnings call. Before proceeding, the company 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 that may cause actual results to differ from historical or anticipated results. For more information on the risks and uncertainties, These refer to today's earnings release and ASIM's FEC and CEDAR filings, including their most recent report on Form 10-K and quarterly report on Form 10-Q. During today's call, the company will be referring to NANGA financial measures, such as adjusted EBITDA. The conclusions to the most directly comparable TAP measures are in the appendix to the presentation and in the company's earnings release. I am pleased to introduce the Accent Management team joining us on today's call. We will begin with Sam Brill, Chief Acceptive Officer and Director, who will provide an overview of the key operational developments over the second quarter of 2026. After that, Romana Nemchenko, Chief Financial Officer, will review the company's financial results for the quarter. With that, I'd like to turn the call over to our first speaker, Sam Brill. Sam, please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining today's call. On our last call, we said we believed we had reached an important inflection point. This quarter's performance confirms it. Our growth strategy continues to demonstrate broader system-wide results. We're consistently adding retail doors, selling more of our brands through them, and seeing strong financial performance as a result. This model provides compounding benefits to our core business, a very attractive return on invested capital, and we have ample runway to continue executing this playbook. Before I get into the details, I want to provide an update on where things stand on federal reform and its impact on the capital market level for assent. The DEA's administrative hearing process on voter rescheduling concluded on July 15th. The matter is now in briefing. We don't have a firm timeline for a final ruling, but moving through the hearing and into briefing is itself progress, and we remain optimistic given the strong rescheduling support demonstrated by the testimony from expert DEA witnesses during the hearing. Under the exercised pathway created alongside the Schedule III reclassification order, we filed applications with the DEA to register a certain state-level license Medical Cannabis Operations, which requires a DEA response within six months. This is a concrete near-term step that lays the groundwork for broader normalization across the industry. On the hemp side, federal action to close the unregulated, intoxicating hemp loophole is scheduled to take effect before the end of the year, barring any last-minute changes. When it goes into effect, we expect it to be a tailwind for licensed regulator operators like Ascend as demand shifts from the unregulated channels into legal markets. We are already seeing some evidence of this in markets where states took action. On the capital markets front, we filed a definitive proxy putting a reverse stock split of our Class A common stock to a shareholder vote. The special meeting is scheduled for August 28th. The split is required to meet the minimum required share price for an uplisting to a major U.S. exchange. If you are a shareholder of record, we encourage you to vote your shares ahead of the meeting. Every vote matters, and instructions are included in the proxy materials. We are not alone in taking this step. Other MSOs have completed similar reverse splits in pursuit of the same objective. We understand from major exchanges that upon broader rescheduling, Thank you for joining us today. We applaud Trulieve for becoming the first U.S. cannabis company to uplift onto a major exchange. It's a clear sign that the ground is shifting for cannabis operators generally, not just for us. With that, let's turn to the quarter. Q2 2026 net revenue was $126.1 million, up 7.9% sequentially. That's meaningfully ahead of the 2% to 3% sequential growth we discussed last quarter. This is despite continued pricing pressure and competitive intensity in a handful of markets, partially offset by outperformance in Ohio. Adjusted EBITDA was $29.1 million, with a margin of 23.1% up $2.8 million, or 10.6% from Q1. As I noted at the top of the call, our growth strategy is centered in high ROI retail expansion and, in turn, the growth This verticality was the common thread across everything we did this quarter. This isn't a wholesale story or a retail story in isolation. It's both moving together. Retail grew to 73.5% of total net revenue this quarter, up from 71.1% in Q1, continuing our shift towards higher margin, vertically integrated sales. Our average ticket also held up better than the broader market in four of seven states this quarter, outpacing each state's own BDSA pricing trend on a sequential basis. That tells us something important. Pricing power right now is relative, not absolute. And by that measure, we're doing better than the markets we operate in, even in states where our own ticket size came down. New doors continue to open across our footprint this quarter. and they're already contributing to incremental volume. All the transactions grew 6.7% sequentially with expansion across most of our markets. The breath here matters. This isn't one hot market carrying the number. It's most of the footprint moving in the same direction at the same time while the broader cannabis market continues to compress. Our new product pipeline is accelerating too. New launches have gone from 95% to 106% to 133% to 199% over the last four quarters, a 49.6% sequential increase, our fastest innovation cadence yet. And we're taking share. Per BESA, our share across our seven-state footprint grew nearly 5% sequentially, even as the overall market contracted. In Illinois, Massachusetts, and New Jersey combined, our share held steady. Put together, new stores, faster innovation, and share gains in a shrinking market are really the same story told three different ways. We are taking business from competitors at a moment when the overall pie is contracting. We remain focused on our 2026 priorities, driving retail densification, deepening our customer-first retail model, and advancing our CPG strategy. Our Q2 results showed execution across all three pillars. When I took over as CEO in late August of 2024, our retail footprint started 39 stores, including partner owned and operated locations. Twelve months ago, we had 44 locations. Despite closing an unprofitable Michigan store earlier this year, we ended Q2 at 55 stores. Today, we stand at 56 stores, including partner-owned and operated locations, an increase of about 45% in just under two years. Every retail door has widened our consumer reach, reinforced our brand and market share positioning, and provided additional operating leverage through increased vertical sales. We continue to open stores in New Jersey, We have more planned in the back half of the year. East Coasting opened in Eatontown on 4-20, and we added another partner store in Matawan earlier this month. We have an additional three partner store opportunities remaining in our New Jersey pipeline, which would put us at nine locations by the end of the year. Our partner store in Malton was approved by the CRC after the close of Q2. Importantly, our scale production capacity within New Jersey will be able to support vertical sales at all planned dispensaries. Massachusetts also gave us more room to grow this quarter. In April, the state legislature raised the cap on retail licenses and operator can own from three to six. This provides real runway in a market where we have scale production with plenty of capacity to support additional dispensaries. We continue to look for ways to grow within the state's regulatory framework. Our Massachusetts retail presence today consists of three Ascend dispensaries and five partner owned and operated dispensaries that Ascend supports. Ohio remains one of our strongest performing retail markets, and we continue to look for ways to grow within the state's regulatory framework. To that end, we developed an approved strategic relationship with an Ohio operator that is in the process of acquiring several dispensary licenses pending regulatory approval. Following the close of that transaction, our Ohio retail presence will consist of both Ascend-owned and operated dispensaries and dispensaries that Ascend supports under this strategic relationship. We expect to meet or exceed our 60-store target by year-end. We are engaged in dozens of M&A conversations and see ample opportunity to expand our retail footprint beyond that target. Our customer first strategy is compounding. We increased our traffic by nearly 20% sequentially in Q2. Of those new customers, 31% converted into our loyalty program. Active monthly loyalty shoppers rose 4% sequentially. Net sales to loyalty and Eric Sickett held essentially flat despite ongoing market pricing pressure. On the technology side, pay-by-bank or Ascend Pay adoption reached 11.1% of transactions in Q2, up from 9.7% in Q1, a 14.8% sequential increase. We rolled out an upgraded self-service kiosk experience, giving customers direct access to their loyalty balance, and we're rolling out contactless tap-to-pay across our stores. Both are aimed at a faster, more seamless checkout, which drives experience and retention. We also ran 498 in-store marketing activations for our brands across our retail footprint this quarter. plus another 447 third-party activations across our core markets, continuing to build direct engagement with our customers at the point of sale. Sustained investment in our operations and processes has meaningfully improved product quality across our portfolio over the last 12 to 18 months. That's driving the premiumization of our branded portfolio with a focus on improving revenue per grant. We have never been more confident in our flour, which remains a key focus in our broader CPG strategy. Our flagship Ozone brand held the number three overall brand house ranking across our seven markets by dollar share through Q2, and we were number one in units, so there's still room to improve. According to BDSA, Ascend maintained its position as the number two brand house by both sales and units across our core markets of Illinois, New Jersey, and Massachusetts combined. We continue to expand the ozone offering with the launch of liquid diamond disposable vape, full-spectrum gummies, and macroglass gummies across multiple flavors. Furthermore, the elevation of our flower never stops. We are launching a line of select strains feeding into our new ozone signature lineup in our primary markets in Q3. The best demonstration of our saving quality is our limited edition Ultra Premium King of Queen Cola, which sells out to Legends and Platinum members before they get a chance to hit our regular menus. The herb held steady at number four across our seven markets combined, with Massachusetts alone rising to number three. Baked Flavor Expansion was the Q2 focus where we added more than 20 flavors across markets, meaningfully diversifying the portfolio. High Wired continued its strain-specific expansion across infused flour, infused shake, and pre-rolls. The brand gained 3.2% share in our core markets. As a reminder, High Wired has been in the market for a little more than a year. We view this strong brand performance as a solid indicator of our ability to successfully launch best-in-class products and brands even in the most competitive markets and product categories. Honor Roll continued to climb the pre-roll rankings sharply this quarter, moving off a low base in both New Jersey and Massachusetts as the brand gained real traction with customers thanks to our 100% high-quality flower inputs. We'll continue expanding this portfolio with new form factors in the coming months, including a grass-tipped 1.2-gram, 10-pack, and 2-pack offerings, along with upgraded premium packaging. F&F Edibles also moved up the rankings across participating markets this quarter, and we continue to expand the ingestible portfolio with live resin and RSO SKUs, custom molded gummies, and fast-acting formulation improvements. To close, I'm proud of how this business is coming together. Operating leverage, meaningful regulatory tailwinds, disciplined execution of our CPG strategy, and continued retail densification are all reinforcing one another. None of this happens without the team behind it, and we continue to see SM becoming a place people want to build their careers. We believe this is the kind of momentum that builds, and we're looking forward to carrying it through the back half of the year. With that, I'll turn it over to Roman to walk through our second quarter financial results.

Thank you, Sam, and good afternoon, everyone. For the second quarter of 2026, the company generated $126.1 million of net revenue, which is an increase of $9.2 million, or 7.9% quarter-over-quarter. Retail sales were $92.7 million, up by $9.6 million, or 11.5% sequentially. Although new stores drove most of the increase, our staying store portfolio also had a strong quarter. Despite the continued pricing pressures from the market, we've regained the transaction volume loss from Q1 seasonality slump and finished the quarter at higher transaction run rates than we started the year with. The data is encouraging, and we believe this trend can be attributed to our customer-centric approach to the business over the last two years. Wholesale revenue was $33.4 million, down 400,000 or roughly 1% sequentially. The decline was driven primarily by volume pricing in New Jersey for the entire quarter despite a strong finish in June. Illinois Wholesale also missed a few days of deliveries as a result of the union strike that began at the end of the quarter. Both biomass sales in Michigan offset some of these declines but have much lower margins as we finish clearing the remaining biomass. We would like to note that our Lansing, Michigan site remains closed for repairs, and the strike in Illinois is now over with the business back and operating at full capacity. Adjusted gross profit was $58.3 million, which is an increase of $4.4 million, or 8%, while adjusted gross profit margin remained relatively flat at 46.2%. Adjusted EBITDA was $29.1 million, up $2.8 million, or 10.5% from Q1. This is consistent with growth in sales and adjusted gross profit. Adjusted EBITDA margin also increased slightly from 22.5% in Q1 to 23.1% this quarter. Turning to our balance sheet. We finished the quarter with $67 million of cash, up $6.1 million from Q1. The net change from the prior quarter reflects $22.5 million of net cash inflows from operations, 13.1 million used in investing and 3.3 million used in financing activities. Cash flow from operations reflects operating income of the business without the biennial interest payments which are made during the first and third quarters of the calendar year. Maintaining lean working capital, continuous cost management, and driving more sales through the retail channel were the largest contributors to the cash flow this quarter. Investing outflows of $13.1 million includes $5.8 million of total CapEx and approximately $7.3 million of M&A-related payments. Total CapEx includes $2.8 million related to new store build-outs with the remaining $3 million used for projects across recuperation and manufacturing facilities. Financing outflows of $3.3 million mostly reflects a $2.9 million payment for revenue share arrangements related to our Pennsylvania acquisition in 2022. CapEx for the full year is still expected to be about $20 million. With $11 million already deployed this year, most of the remaining CapEx will be invested on new store openings as well as maintenance CapEx for our cultivation and manufacturing facilities. Additional capital would also be available for talking acquisitions to continue driving our densification strategies. Looking ahead to next quarter, we're expecting a 2-4% top-line growth driven by the ramp-up of new store openings and our M&A pipeline. This will be partially offset by the wholesale sales impact of the union strike in Illinois during the entire month of July. Despite the union strike, the sequential increase in retail sales should still yield an adjusted EBITDA margin similar to Q2. The growth in retail sales will be a meaningful source of EBITDA and Cash Will Grow for the second half of the year and into 2027. Overall, we're encouraged by the financial results and opportunities our densification strategy has brought this quarter as well as what we're seeing ahead and would like to thank the entire SIN team for their continued hard work and dedication towards executing on this strategy. We're truly grateful for their efforts and recognize that our progress is driven by their commitment to executing our vision. We also appreciate everyone who joined today's call and look forward to our next update. With that, I will turn the call over to the operator for questions.