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spk03: Good morning. Thank you for attending today's Acreage second quarter 2022 earnings call. My name is Frances and I'll be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Steve Gertz, Chief Financial Officer of Acreage Holdings.
spk08: Good morning, everyone, and welcome to the Acreage Holdings second quarter conference call. Joining me today is Peter Caldini, our chief executive officer. Today's call will be archived on our investor relations website at investors.acreageholdings.com. Before we begin, I would like to remind listeners that today's call contains forward-looking statements subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from those forward-looking statements. Any such information and statements should be taken in conjunction with cautionary statements in our press releases and risk factor discussions in our public filings found on CDAR and EDGAR, as well as our investor website. Any forward-looking statements reflect management's expectations as of today's date, and we assume no obligation to update them other than as may be required by applicable securities law. I will now turn the call over to Peter. Thanks, Steve, and good morning, everyone. As our results continue to demonstrate, Acreage is a transformed company, and I am very encouraged by the strong performance we achieved in the second quarter. Revenue was up 39% year-over-year to $61.4 million, largely due to contributions from our high-quality cultivation and retail assets in Ohio, as well as the official opening of the adult-use market in New Jersey. Revenue was also up 8% quarter-over-quarter, again primarily driven by the opening of the adult-use market in New Jersey. This revenue was somewhat offset by declines within our Oregon operations that were held for sale. However, we are pleased to report that subsequent to the quarter, we officially concluded our operations in Oregon with the sale of our four retail dispensaries in that state. Much like the first quarter this year, revenue for the second quarter of 2022 continued to be impacted by significant pricing pressure across a number of markets, as well as lingering pandemic-related challenges. In addition, Inflation is impacting the discretionary spending of our consumers, which is having a negative impact on our revenue. Yet despite these challenges, we have continued to deliver thanks to the solid platform we built and have continued to strengthen. Looking at the cost side, we continue to remain diligent in the control of our discretionary spending. Unfortunately, inflation on most of our input costs has resulted in both increased cost of goods and administrative expenses. In a period where we're seeing selling price declines and an increase in our cost of operations, maintaining margins and profitability has been challenging. But fortunately, the trajectory we've been on since the implementation of our three key strategic priorities has been positive. with the latest quarter marking our sixth consecutive quarter of positive adjusted EBITDA. Adjusted EBITDA for the second quarter of 2022 was 10.4 million, increasing 28% compared to the second quarter of 2021 and a 20% improvement sequentially from the first quarter of 2022. Q2 was also an exciting quarter for our team as we began to realize the benefits of the significant efforts made over the last year to prepare for adult use sales in New Jersey. This was a monumental moment for us, and I am proud of how we came together to successfully launch when the market opened on April 21st. Revenue in New Jersey was up significantly for the second quarter of 2022, both when compared year over year and quarter over quarter on approximately two months of adult use sales. We are very satisfied with our initial retail sales performance at our two adult use dispensaries in Egg Harbor Township and Williamstown. We look forward to operating a third adult use dispensary in New Jersey the timing of which will be determined once we have resolved municipal zoning concerns. We are not, however, satisfied with our wholesale and cultivation capabilities in the state, and we do not feel it's consistent with the standards we've established at Acres. The expansion of our Egg Harbor cultivation facility was completed quickly to ensure that we were ready for the start of adult use sales. Unfortunately, as a result of the focus on meeting this deadline, we did not optimize our processes and staffing and we were unable to complete some of the capital upgrades necessary for a broader product selection. We are aggressively working on correcting some of these shortcomings now and we believe that with the improved yields and enhanced quality, we will further improve our performance in this growing market and solidify our position as one of the top tier wholesalers and retailers in New Jersey. Our experts in New Jersey have given us valuable insight into how to successfully launch within a new adult use market and are informing our decisions as we continue to make steady progress building out our New York strategy in advance of the pending adult use market. In the second quarter, we completed the first phase of expansion on our cultivation facility in Syracuse, New York. Our expanded cultivation in New York positions us to further support wholesale demand in the existing medical market and prepares us for the impending launch of adult new sales. Additionally, we continue to review our network of retail dispensaries in the state to ensure that we have a solid footprint for the anticipated increase in activity that will come with the introduction of adult use. As an added benefit of the expansion of our New York cultivation facility, after the quarter we were able to launch whole flour that was within the state's strict microbial limit, making acreage one of the only producers in New York with the capability to supply non-remediated whole flour in the market. Increasing pricing pressure in the Connecticut market has negatively impacted our revenue performance. However, we will remain committed to this market and remain excited by its future opportunity. We continue to prepare for adult use and pursue opportunities to further increase our leadership position through vertical integration in that state. Turning to Maine, we announced during the quarter that we had successfully completed the consolidation and adult use conversion of our remaining retail location that had been operating under a managed service agreement. With this initiative complete, we are looking at consolidation and conversion of the cultivation facility, which we expect to be completed in the coming quarters. In Massachusetts, Our retail dispensaries have performed well in a difficult retail environment, but the pricing pressure that exists in this market is intense, which is negatively impacting revenue. In response, we continue to leverage our premium position with Abotnip and Superflux to continue to drive at wholesale and retail levels. In Pennsylvania, our high-quality products and innovation have helped insulate us to some degree against the aggressive pricing pressure in that market. Our products remain very much in demand in this key wholesale market. Next, in Illinois, our year-over-year growth was very strong as we lapped the expansion of our cultivation facility that was completed in the second quarter of 2021. We also saw slight growth both quarter-over-quarter as the wholesale market in the state continues to develop. We believe that the wholesale market will open up even further for us as additional dispensaries come online in the future. And lastly, I am very happy with our sustained leadership position in the state of Ohio, where our operations continue to perform very well. During the first half of the year, we rolled out new, innovative, edible formats and increase the quantity of the products we produce in the state, which has helped grow revenue both year over year and quarter over quarter. Our strategy to accelerate growth in our core markets, drive profitability, and strengthen our balance sheet has served us well, focusing our team on maintaining a disciplined financial approach with a strong operational strength. guiding us through more challenging market conditions. As we move into the second half of the year, we will maintain our focus on delivering and expanding our premium product portfolio to better serve our existing customers and attract new ones. We will also continue to explore potential partnerships where we see strong opportunities. We believe our commitment to innovation and a solid foundation in our core market will be the key drivers for us as we maintain our disciplined strategy to deliver value for our shareholders. Before I turn the call over to Steve for a detailed look at our financials for the second quarter, I want to finish by taking a moment to acknowledge the amazing work our team has done during the first half of the year. Despite the ongoing challenges in the market, we have continued to find opportunities to grow and deliver results. And this is all because of the work of our committed and passionate team members. We went live with adult youth sales in New Jersey, integrated Ohio into our organization, are preparing for upcoming adult use markets in New York and Connecticut, and enhancing our premium wholesale operations in several states across our footprint. I want to thank everyone for the hard work that has gone into these initiatives. This strategy has built us a strong platform for future growth, and we are more excited than ever about the future of ACREs. I will now turn the call over to Steve to discuss the financial results for the quarter in more detail before we open the call to questions. Thank you, Peter. Revenue for the second quarter of 2022 was $61.4 million, a 39% increase compared to the second quarter of 2021. The increase in revenue was largely due to the addition of operations in Ohio, the expansion of our presence in Maine and Illinois, and New Jersey adult-use sales beginning in late April. The year-over-year revenue growth was somewhat offset by declines in select markets due to pricing pressures and by revenue declines within the company's Oregon operations that were held for sale. Additionally, wholesale revenue for the second quarter of 2021 included a large bulk sale that did not recur in the current year. Additionally, total revenue for the second quarter of 2022 improved sequentially by 4.5 million, or 8%, compared to the first quarter of 2022. Excluding the company's Oregon operations, which were not considered core, however, revenue for the three months ended June 30, 2022 increased by 9% on a sequential basis. Retail revenue increased 64% for the quarter compared to the second quarter of 2021 and was driven primarily by the acquisition of Ohio on October 1st, 2021. Excluding the impact of acquisitions and divestitures and the revenue performance of our Oregon operations, which are being held for sale, retail revenue increased by 14%. This organic growth was primarily a result of New Jersey adult use sales beginning in late April and increased marketing initiatives and the introduction of innovative new products across various states. Wholesale revenue declined by 8% versus the comparable period in 2021. As mentioned, included in the wholesale sales for the second quarter of 2021 was a large bulk sale that did not recur in the current year. Excluding this non-recurring transaction and the impact of acquisitions and divestitures, wholesale revenue declined by 3%. Our increased capacity, as well as our maturing operation in Illinois, which resulted in higher yields and better product mixes, were unable to offset wholesale price declines in select markets. Total growth profit for the second quarter of 2022 was $30.6 million, an increase of $6.7 million, or 28%, compared to Q2 2021. Revenue growth drove this increase, and gross margin also continued to benefit from the vertical integration of our operations as a greater portion of the products sold in our retail dispensaries was sourced internally from our own production and processing operations. Gross profit generated from this internally produced product includes both the wholesale and retail margins. Offsetting these benefits were selling price declines due to competition and an increase in our cost of operations due to inflation. Overall, maintaining margins in this environment has been challenging. Gross margin during the quarter was 50%, compared to 54% in the second quarter of 2021 and 52% in the first quarter of 2022. Gross margin was impacted in the second quarter as efficiencies gained from further economies of scale were unable to offset price declines and cost increases due to inflation. Total operating expenses for the quarter were $27.3 million, a decrease of $3.3 million or 11% from the second quarter of 2021, and a sequential decline of $4.9 million or 15% from the first quarter of 2022. Increases in compensation and general administrative expenses were more than offset by reductions in equity-based compensation expense, losses on notes receivable, and depreciation and amortization expenses. Excluding equity-based compensation expenses, losses, write-downs and recoveries, impairments, and depreciation and amortization expenses, all of which are non-cash in nature, total operating expenses for the three months ended June 30 of 2022 increased $4.9 million or 28% compared to the corresponding period of fiscal 2021. Adjusted EBITDA, which excludes impairments, equity-based compensation expense, and unusual items that are not expected to recur in future periods, was $10.4 million for the second quarter of 2022, increasing 28% compared to adjusted EBITDA of $8.1 million in the second quarter of 2021, and a sequential improvement of 20% from adjusted EVA-DA of 8.6 million in the first quarter of 2022. Adjusted EVA-DA from core operations, which excludes markets where the company has entered into definitive agreements to exit and startup ventures, was 10.9 million for the current quarter, indicating that the company's core markets are still being negatively impacted by its non-core operations. Consolidated EBITDA during the quarter was negative 7.1 million compared to a consolidated EBITDA of negative 6.7 million in the previous year's comparable period. Lastly, net loss attributable to acreage for the quarter was 9.9 million compared to a loss of 2.6 million in the second quarter of 2021. The net loss in the second quarter of 2021 included a large gain on the sale of acreage Florida that did not recur in the current period. During the quarter, we completed the sale of our cultivation and processing facility in Medford, Oregon, and closed the dispensary in Powell, Oregon. Total consideration for the sale of the Medford cultivation and processing facility was $2 million, including $750,000 paid to acreage in February 2021, $500,000 due August 1 of 2022, and the remaining balance of $750,000 due May 1, 2023. As mentioned earlier, following the end of the quarter, we completed the sale of the company's four Oregon retail distilleries, branded as Cannabis & Co., which has effectively concluded our operations in Oregon. Closing with our balance sheet, we ended the quarter with $29.3 million in cash and restricted cash on hand, and $3.4 million in short-term investments, which can be readily converted into cash. As of June 30, 2022, $100 million was drawn under the credit facility we entered into in the fourth quarter of 2021, and a further $50 million is available in future periods under a committed accordion option once certain predetermined milestones are achieved. Acreage intends to use the cash on hand and the proceeds of the credit facility to fund expansion initiatives and provide additional working capital. With that, I will now have the operator open the line for questions. Operator, please go ahead.
spk03: Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you'd like to remove your question, press star 2. Again, to ask a question, that is star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from Vivian Azer with Cowan. Please go ahead.
spk09: Hi, good morning. This is actually Victor Ma on for Vivian Azer, and thank you for taking the questions. Good morning. So on your top line, Roughly how much of the 9% sequential growth excluding Oregon was due to adult use sales in New Jersey?
spk08: We don't give actual numbers state by state, but I would say a significant portion of the growth was driven by New Jersey, where we saw very, very strong performance at retail.
spk09: Great. Thank you for the call. And then regarding gross margins, can you talk about the puts and takes behind the 200-bit sequential gross margin contraction and help us dimensionalize your outlook for gross margins in the rest of the year as Connecticut adult use comes online?
spk08: Thanks. Yeah, we've always said we expect a long-term sustainable gross margin rate given the current environment of around 50 basis points, 50%, which is where we're at right now. You know, we had some stronger gross margin in prior quarters, prior years, because we took advantage of inventory that was produced sometime in the past at a lower cost base. We've now run that through. So we're seeing margins in the range that we expect. We are seeing pressure. Obviously, prices are coming down in some markets due to competition, and we're seeing inflation bringing our input costs up. I don't think we're unique there. I think that's what most of the industry is facing. But given the mix that we've got and the efficiencies that we're getting out of our production facilities, we've been able to maintain that margin at 50%.
spk09: Understood.
spk06: Thank you. I'll jump into the queue.
spk03: Thank you for your question. Our next question comes from Aaron Gray with Alliance Global. Please proceed.
spk05: Thank you for the questions. So regarding New York, there have been a number of headlines around the beginning of adult use sales in New York. It's uncertain around the timing how exactly that's going to roll out. So could you just provide some color on how you view the opportunity in the market today and how you're looking to expand the cultivation ahead? And you touched on it a little bit. And then with this uncertainty, how has it led you into this expansion? Thank you.
spk08: Yeah. Yeah, so thank you so much for the question. You know, obviously for us, New York is a critical market and we're very well positioned to take advantage of what we expect to be a very robust economy. use market. In terms of timing, it's a little bit dangerous to make predictions around this, but the way we're currently looking at it, we would anticipate adult use sales in the first half of next year. We are really building up our capabilities in preparation for adult use. We did complete our Syracuse cultivation expansion the first phase of that. So we have the ability to expand up to 235,000 square feet. We actually just did one phase of that. So we want to see how the market evolves. And we're going to continue to build that out. We have the shell in place. So it's going to be a lot easier for us to add additional rooms. And we just want to see how the market develops. But for us, we see an opportunity. We're very well positioned. We're building out our capabilities from a cultivation standpoint. We also have You know, for operating dispensaries, we're looking to optimize that footprint and also potentially take advantage of additional dispensaries when adult use opens up.
spk06: Thank you, Aaron.
spk03: Our next question comes from Glenn Mattson with Leidenberg. Please go ahead.
spk10: Hi, yeah, thanks for taking the question. Sorry, maybe you covered this and I missed it. But just curious, you talked about the cultivation facility in New Jersey, not quite up to the standards you expect, needs capital upgrades, not optimized, that kind of thing. So I'm just curious, how big of an issue are you kind of trying to flag there and how long to get it back to where you think it needs to be? And maybe like what kind of investment is needed as well?
spk08: Yeah, Glenn. So thanks for the question. You know, New Jersey is obviously a critical market for us. And, you know, we had very strong performance in Q2 with the introduction of adult use. And, you know, when we say we're disappointed, we feel that we couldn't fully capitalize on the wholesale opportunity in that market. We're very pleased from a retail standpoint. And a lot of that had to do you know, we don't have the output and the quality that we need to really take advantage of that market. So, you know, we have a number of resources involved in that. I don't think it's significant from a capital standpoint. And anytime you're addressing some of these operational issues, you start seeing improvements in, you know, three to four months. And so, you know, listen, I think New Jersey continues to be an important market for us. We're not exactly where we want to be um you know in that market specifically from a wholesale standpoint and we need to get we need to get the the cultivation where it needs to be um but our performance it's not going to impact from where we are from a revenue standpoint i think it's only going to get better uh okay great that's helpful thanks um and i guess i'll just call it the same store sales growth it's another kind of uptick sequentially um
spk10: You kind of lay out transaction growth, also ramping, offsetting the kind of basket size or whatever. Maybe just a little more detail on some of the dynamics there. Is a lot of that same-store sale growth related to New Jersey? Or is there any of the markets you call out that were particularly strong that drove that? Thanks.
spk08: Yeah, I would say New Jersey, obviously, with the move to recreational use, adult use was very strong for same-store sales growth. We're also seeing some good performance in some of the other key markets. We've got a fantastic operation in Ohio. It continues to grow. We're getting great growth out of those stores. It wouldn't be included in the same-store sales growth because we only acquired those on October 1st. We're seeing good growth in some of our Illinois properties. The retail market there is robust. The wholesale market should pick up in the near term as those additional dispensaries that have been approved start to open. It's not just New Jersey. We've seen some strong sales growth in some of the other markets. As you pointed out, the same-store sales growth is really driven by transaction count and is offsetting an average basket size decline. That's good news. We're bringing in more customers, which will help us over the long term. It's tough on the selling price, though. Prices are coming down. Consumers have less disposable income in their pockets, so they're buying less. So that's hitting basket size, obviously. We're happy to see that we're more than able to offset that with the growths in the customer count.
spk06: Thank you for your question.
spk03: Our next question comes from Yuhan. Kang with Canaccord Genuity. Please go ahead.
spk01: Hi there. Good morning. Thank you for taking my question. I just had a quick question on the cash balance. So I know you guys ended the quarter with about $29.3 million in cash and there's additional $50 million of funding available. So what are the kind of milestones that need to be achieved in order to tap into this $50 million reserve?
spk08: Yeah, we've got a great relationship with our lenders. They've been supportive of us as we go along. We arranged the facility in November, December of last year. And as you can see in our balance sheet, we still have substantial cash balances available to us. The additional $50 million is really there to fund additional capital expenditures. So access to those funds are really a combination of meeting financial covenants on a pro forma basis, as well as showing sufficient fixed assets, real estate assets, and the likes to support that larger debt balance that we would have to carry.
spk01: Okay. If I could just follow up with that with one more question. So I know that there's probably not much that you can say in terms of the regulatory hurdles that you guys are seeing in New Jersey, but do you have any kind of ideas to what the timing would be like for the third store in the state to open up for the adult use market?
spk08: Yeah, Yvonne, good question. Like I said in the prepared statement, very pleased with the retail performance we have in our two existing locations. We see a tremendous opportunity in Atlantic City on the boardwalk. I think it's a great opportunity not only for acreage but also for the city. Um, we've been working very closely, um, with the municipality and, you know, quite frankly, it's, it's been frustrating. Uh, we feel that the goalposts keep on moving. Um, that being said, we're going to continue to have the, uh, the conversations to find a path, but at the same time in parallel, we're aggressively looking at alternative locations, uh, outside of Atlantic city. So I really can't give you a timing right, right now where we are. um but it's certainly a priority for us and you know something that we're working very closely with the city as well as identifying other locations yeah i think i think you know we're committed to opening a third dispensary in southern new jersey as our license allows our preferred spot would be in atlantic city but if we're not able to obtain uh reasonable zoning uh we'll look at other markets
spk06: Thank you.
spk03: Our next question comes from Bill Kirk with MKM Partners. Please go ahead.
spk02: Hey, thank you guys. Could you update us a little bit on the Canopy brand IP that you're using today and maybe the plans for more of it to come? I guess the crux of the question is, is it happening at the pace you originally intended?
spk08: uh and within segments in combustibles or in beverages yeah so uh great question uh first off we we have a very strong relationship with canopy and you know i think that goes beyond just looking at from an ip standpoint in terms of the brands and the products but it's also um capabilities and expertise you know all the way from cultivation uh throughout the the value chain. So we continue to have a lot of dialogue with Canopy, and we do explore different opportunities in different markets where we can fully leverage their brand IP. We also see a significant opportunity to continue to build out our brands in a lot of the markets, so we're always trying to balance that as well. But as we continue to build and stabilize our business, which we've been doing for the last 18 months, I think we're going to continue to identify opportunities to fully exploit that. I think what gets in our way sometimes in terms of fully leveraging Canopy's capabilities, and it's something that we often discuss with the Canopy team quite regularly, is how do we put ourselves in a position where we can fully leverage their capabilities, not just Canopy, but the entire ecosystem, which sometimes is restricted by some of the regulations, TSA, for example, what they can get involved in or not. We continue to work very closely with them, and it just goes beyond just products and brands. It's just the entire business approach, and we're always looking at different ways to further leverage that relationship.
spk02: Thank you. I appreciate it. I'll pass it on.
spk03: Thank you, Bill. Our next question comes from Pablo Zwanek with Cantor Fitzgerald. Please proceed.
spk07: Good morning. Just one question on the comments you made about pricing pressures in Pennsylvania and Massachusetts. Can you just put some context between them? In Massachusetts, I think wholesale is $2,200 per pound. Is Pennsylvania already below that? Which is worse? Just some more color there if you can. Thanks.
spk08: Pablo, from a pricing standpoint, it's also the evolution. It goes across the entire mix and You know, when we're looking at that, I think seeing the same type of pricing evolution in both those states, and it's become very aggressive in Massachusetts as well as Pennsylvania, and you're seeing that across a number of markets, and it's significant. You know, as more supply comes online, you're seeing that, you know, competitive pricing pressure, and, you know, I think it's pretty consistent across both markets what that decrease is.
spk07: Right, but I'm sorry, so in the case of Massachusetts, again, the price, I think it's $2,200 per pound. I mean, would you say Pennsylvania is at that level or even lower?
spk08: You know what, Pablo, I don't have a specific number, but when we're talking about the pricing pressure, we're talking about more the evolution of the price as opposed to the absolute number. Yeah, I think we've also got to recognize we've got different positioning in the markets. In Massachusetts, we're integrated. So we've got cultivation, further processing, producing edibles, and two retail establishments. And in that market, although we're working to become premium, we're not where we need to be yet. Pennsylvania is a very different story. We've only got cultivation. We don't have retail. So we're only capturing a wholesale price and not getting the retail selling price. But we are very premium in that market. So we're able to charge significant premium over mass quantity flour and other products so our pricing in Pennsylvania would be you know would be better than the average in the marketplace by a significant margin because of because of the placement of our products got it and then just going thank you and then going back to New Jersey I understand that you know you know into this shows too much details but I guess two questions one
spk07: the state government said $24 million in sales for the first month of sales, right? Would you say that month two, three, and four were similar, higher, or lower? I mean, we're hearing that there was a pent-up demand in the first month, but then things began to settle down, and actually we haven't crossed 24. And I know I'm asking a question here about the market as a whole. That's one question. And then the second question, at least based on the first month, right, $24 million, 12 stores, that's $2 million per store increase. in sales per month, would you say that acreage was above that or below that? Because some companies are making claims of almost $5 million per month. So that means that some people are way below the average, but just some color there. Thanks. On cadence for the market and then on your store performance, revenue per store compared to the industry average on your estimates. Thanks.
spk08: Yeah, I would say New Jersey came out with a bang. April 21st lineups around the block for all of the retail locations, ours included. And so there was pent-up demand. You had a very, very big opening week. It settled down somewhat after that, but it wasn't significant declines. It's been a steady business. Fortunately or unfortunately, we continue to have long lineups at our retail stores. We're working to address that through more staffing, but that's indicative of robust consumer demand. So I would say it was a great start to the market and the demand continues to build. So New Jersey has been very good in that regard. There is some volatility between the results of each of our stores. We've got two stores open for adult use, and they have different sales performances from each of them based on the market that they're at. I think from what we've seen, given the population base and the densities in the north, the stores in the north are likely doing greater monthly volumes than the stores in the south. And our stores are located in the south, so we're not near that big bulk of the population. Having said that, we're still very happy about the performance of the stores that we've seen so far. I don't want to speak on the individual stores' performance or what an average would be, but it's been good so far. But there's always areas to improve. If we could get more product out of our cultivation facilities and more product forms, I think we'd have some more success at growing sales even further.
spk07: Okay, that's very helpful, Color. And one last one, just if you can expand on Connecticut. I mean, I think other companies have talked about growth in the team sequentially. I think you mentioned a decline. What's going on there for you there?
spk08: Yeah, we were a large player in Connecticut. For medicinal use, we've got three of the highest performing stores. Connecticut's been a tough market for us this year. You know, I think some consumers have chosen to not purchase the medical cards this year in anticipation of adult use happening sometime between now and early next year. And they're making the truck to, you know, other states like Massachusetts to buy their product. There's also been more competition going up in that market, so that's brought prices down. So Connecticut, like I said, was one of our largest performing states. It still is a very large state for us, but our performance would be slightly negative there.
spk07: Got it. Thank you.
spk03: Thank you, Pablo. As a reminder, if you'd like to ask a question, it is star 1. That is star 1 to ask a question. There are no questions waiting at this time, so I'll pass the conference back over to Peter Caldini, Chief Executive Officer, for any further remarks.
spk08: Thank you, Operator, and thanks again for everybody joining the call. We continue to be very pleased with our progress at Acreage, in particular as we continue to follow our three strategic priorities. And we also look forward to updating everyone in future calls as we continue to build out our business and really achieve the potential that we believe is ahead of us and we have the capabilities to reach. So once again, thanks everybody for joining the call and have a good rest of your day.
spk04: That concludes today's conference call. You may now disconnect.
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