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spk06: Ladies and gentlemen, please stand by. Your conference call will begin momentarily. Once again, ladies and gentlemen, please stay on the line. Thank you. THE END Thank you. Thank you. Thank you. Thank you. THE END Welcome to the AIR Wellness Fourth Quarter and Fiscal Year-Ended 2020 Earnings Call. Joining us today are AIR CEO Jonathan Sandelben, the company CFO Brad Asher, and the company CEO Jennifer Drake. The company will discuss forward-looking matters on this call, including targets for revenue and adjusted EBITDA. The forward-looking information is subject to the assumptions and risks as described in the company's management discussion and analysis for the quarter-end year-end of December 31, 2020. As well, we remind you that adjusted EBITDA is a non-IFRS measure, we refer you to the reconciliation to IFRS measures and other disclosures concerning non-IFRS measures contained in AIRS management discussion and analysis for the quarter and year end of December 31st, 2020. I will now turn the call over to AIRS CEO, Jonathan Sandelman.
spk11: Thank you and good morning, everyone. 2020 was a year of transformation for AIR. We are excited to report a strong finish to the year with fourth quarter revenues up 48% year over year, and adjusted EBITDA of over 100%. We continue to maintain margins at the high end of the industry. While we continue to deliver strong operating results throughout the year at our market-leading operations in Massachusetts and Nevada, the air story of 2020 was about building a foundation for a new air wellness, a bigger and better MSO. We spent the end of 2020 aggressively expanding our footprint and investing in our business to be positioned for exceptional growth in 2021. We began 2020 as a two-state MSO, and we begin 2021 as a seven-state top five MSO. We are not done yet. 2020 was also a year of great change for the industry. as new states move forward with adult use programs, and the federal election shifted the tides in Washington. As we enter 2021, we enter with a leading scale, talent, and recently bolstered balance sheet that currently has more than $236 million of cash. In the fourth quarter, we started investing in the additional infrastructure and people, which will prove critical as our new operations in Pennsylvania, Florida, New Jersey, Arizona, and Ohio begin to ramp in 2021. Things are moving quickly. We opened our second air wellness dispensary in Pennsylvania at the end of February. Two more will follow early this summer, and the final two by the end of the year. The first phases at both of our cultivation facilities are on track for harvest this spring. one in April and one in June. We expect Pennsylvania to be a meaningful contributor both to revenue and EBITDA in the back half of 2021. In Florida, we closed on our acquisition of Liberty Health Sciences in just over two months, one of the fastest public-to-public transactions ever, and our team is already fast at work to begin the integrations. We have a strong team in place led by Darren Potter, who joined Liberty in November. We recently hired Mike Medora from Grow Healthy to spearhead the retail expansion from 31 stores to 42 stores or more and drive a more robust delivery business. As I've said many times, we firmly believe that everything we do starts with the plans. And we continue to demonstrate that by investing additional resources in our cultivation facility and team. Many of whom are already at work in Gainesville with Darren to bring the important asset up to the productivity levels we know are achievable. We already have five new outdoor hoop houses planted and are at work replacing greenhouse panels and HVA systems at the indoor facility. You will see the same focus on quality cultivation when we close on Arizona and Ohio later this month and New Jersey this summer. We continue to make progress on our organic growth opportunities as well. We opened our sixth store in Nevada, where we continue to grow and gain share in an economically challenged environment. We look forward to the return of tourism to the state. which is the lifeline for the majority of our local dominant customer base. In Massachusetts, we're moving forward with our plans for our three adult use stores, clearing local zoning boards and getting construction underway. The timing with the CCC is always unpredictable, but we continue to drive the process forward as fast as we can. In the meantime, our medical dispensaries and wholesale businesses remain strong. We have begun construction of a new cultivation facility, which will triple our output, enabling us to grow our wholesale business at the same time supply our adult use stores. While you don't see the impact of these investments in our Q4 revenues, you will see our revenue and EBITDA ramp throughout 2021. Our CEO, Jen Drake, will talk through the specifics of this later. The full impact will be seen in 2022, where we've stated our expectations at least $725 million in revenue and $325 million of EBITDA is achievable based on our current operations, almost six times the $56 million of EBITDA we reported for 2020. Just a few final words before I turn the call over to Brad. I want to welcome the Liberty shareholders to AIR. We appreciate your strong support and faith in us and know that we have a bright future together. Finally, I want to welcome the Liberty employees to the AIR family. At AIR, we believe that each member of our team, now totaling over 1,100, is an essential part of our success. I want to thank you all for your hard work and dedication as we build on our mission to deliver the highest quality cannabis, the best customer experience, and to be a force for good in our communities. This is what our new corporate name, Air Wellness, stands for, enriching the lives of our customers, our teammates, our neighbors, through cannabis-inspired wellness and wonder. I look forward to doing many great things together in the future. With that, I'll pass the call over to our CFO, Brad Asher, to walk you through our financial results.
spk05: Thanks, John. We are excited to report record results across the board for the quarter and year. In 2020, sales increased to $155 million for the year. with the fourth quarter contributing a record 47.8 million of sales. This represents a 47% increase over Q4-19. This increase in sales was driven by consistent operational improvements to the business, with growth across both retail and wholesale business lines. Our adjusted EBITDA increased to 55.7 million for the year, with the fourth quarter contributing a record 19.4 million of EBITDA. This represents a 110% increase over Q4 of 19. The increase in adjusted EBITDA was primarily driven by robust sales across our markets, while maintaining 58% gross margins. This profitability more than offset the ramping of G&A and sales and marketing, which were up 27% on a year-over-year basis, as we invest in talent and infrastructure ahead of the upcoming acquisitions that John mentioned earlier. Moving on to the balance sheet, we continue to have one of the strongest capital positions in the industry. In 2020, we raised $110 million with our debt offering and $48 million from the exercise of warrants, both contributing to our year-end cash position of $127 million. This is compared to just $8.4 million of cash at the end of 2019. And subsequent to year-end, we announced an equity offering in January, which further reinforced the balance sheet with another $118 million USD. In addition to the financing sources of cash, we continue to generate industry-leading free cash flow with over $7 million and $36 million in cash from operations during the quarter and year, respectively. This is a 10x increase from just $3.6 million of operating cash flow in 2019. Our strong cash position is a vote of confidence from the markets, and not only funds our announced acquisition and CapEx plans, but allows us to capitalize on future opportunities in new states and go even deeper in our existing markets. In addition, we are pleased to announce that we are transitioning to U.S. GAAP for 2021, so this is effectively our last quarter reporting on an IFRS basis, and our Q121 financials will be our first presented in U.S. GAAP. This change will position us to be early movers for an uplifting in the U.S. markets upon eligibility, which, needless to say, would dramatically improve our liquidity and lower our cost of capital. As a result of our status as a permanent foreign private issuer, or FPI, we have the advantage of filing under the MJDS, which allows us to make an election for U.S. GAAP reporting. In terms of the U.S. GAAP to IFRS differences you should expect to see going forward, it is important to note these differences are all in line with industry norms and not unique to AIR in any way. Inventory and biological assets are two of the areas that show the greatest differences between IFRS and GAAP in our industry. Under GAAP, we no longer have the biological asset fair value requirement and all fair value is removed from inventory. In addition, the majority of our leases are currently classified as financing leases under IFRS, an expense or depreciation of interest, whereas under GAAP, we expect these leases to be considered operating leases and therefore included in EBITDA as a G&A expense. While this doesn't impact cash flow in any way, it will have an impact on reported EBITDA. We will provide additional details regarding our transition to GAAP. on our Q1 conference call, but we are excited about this accounting change and expect us to simplify our statements by removing many of the fair value adjustments required under IFRS. Lastly, I want to add that we have built our accounting and finance departments to scale by committing to a consistent tech stack and leveraging automation. Thanks to the hard work of our teams, we have seen great results in integrating our acquisitions thus far, and I'm proud to announce that our Florida business is already fully migrated and live in our accounting software today, less than two weeks post-closing. I'll now pass the call over to our COO, Jennifer Drake.
spk07: Thanks, Brad. I spent a lot of time on our last call talking about the importance of the strong business foundation, scalable systems, and operational controls that we've put in place over the past year. As you can see from Brad's comments on the integration of the Florida business into our accounting systems in a bit over a week, This investment is paying off. As we continue to close our acquisitions and launch new operations in Arizona, Ohio, and New Jersey, the strength of these systems and operational controls will allow us to move with ease into these new markets. Letting systems do the heavy lifting where they can and leaving our great people with the bandwidth to do what only people can do, provide the best cannabis experience for our customers and patients. I'll be brief in my operational highlights for the fourth quarter, as I'd like to move quickly to the building blocks for 2021. In Nevada, our revenue growth of 21% year-over-year was driven by exceptional retail growth, and these are strong same-store sales growth rates from an already substantial base. Throughput at these stores is increasing, with total transactions averaging close to 4,700 a day. As John mentioned in his comments, our customers continue to feel the heavy impact of COVID as the locals market to which we cater is heavily reliant on tourism to put money into their pockets. But they know that they can rely on us for great service and great quality at a great price, which has helped us build customer loyalty during this difficult time. We definitely look forward to the return of tourism to the Nevada economy as a tailwind, to even stronger growth in this important market. And lastly, we're thrilled to have opened our sixth store in Nevada earlier this month. The Dispensary Eastern Express is in Clark County, right on the western border of Henderson. It's already beginning to contribute to our Nevada business, and given how close it is to the McLaren Airport, we expect it to benefit nicely as tourism comes back to Las Vegas later this year. In Massachusetts, our wholesale business continues to benefit from an expanded cultivation capacity and strong demand resulting from the new recreational dispensaries that are coming online every month. Wholesale revenue increased over 100% year over year as the number of adult use dispensaries open for business increased to 110, more than doubling where it started 2020. We are selling Sierra products into 78 of those 110 adult use dispensaries. and we continue to see wholesale demand that far outstrips our supply. We also had strong results in our retail business in Massachusetts with revenue at our two medical-only dispensaries up 136% year-over-year. As we look into 2021, I want to touch on the building blocks and cadence of our growth. As John mentioned, we've made many investments in infrastructure and people in the fourth quarter to prepare for the growth we're going to expect in 2021. Starting in Q2, the benefits of these investments will begin to show in our quarterly cadence. In Pennsylvania, our two recently opened dispensaries will increase to six by the end of 2021, with the third and fourth coming this summer. In addition, We have 15,000 square feet of canopy coming online with its first harvest in the second quarter, followed by a further 21,000 square feet in the third quarter. This will help improve retail margins by allowing vertical supply and will also allow us to begin our wholesale business in Pennsylvania, which is a very supply-constrained market. Q2 will also mark the first full quarter of ownership of our Florida operations. Jason Griffith and his operations team are implementing a robust plan for the cultivation remediation and store expansion in Florida. And we'll update you as we reach important milestones in the state. Arizona is on track to close later this month. So we expect to have a full quarter of contribution from our three Arizona dispensaries beginning in Q2. The expanded 80,000 square foot cultivation facility in Arizona is expected to come online in Q4. improving vertical integration and margins, as well as allowing for wholesale. We expect New Jersey to close early in the third quarter. At this point, we don't expect adult use to contribute to 2021 revenue, given the uncertainty regarding the timing and structure of the New Jersey program. But we will have three of the state's 12 open dispensaries, plus we're building over 80,000 square feet of cultivation, so we'll be ready when it happens. Finally, the adult use stores in greater Boston. We continue to do everything in our control to move this process along. But as you all know, it is impossible to predict timing when it comes to the Cannabis Control Commission. We plan to open these stores in 2021. However, we can't predict the exact timing. We will continue to update everyone as milestones occur in the process. And as John mentioned, we have begun development of our newest cultivation facility in Massachusetts, we call it M3, it's a 93,000 square foot facility that will triple our bench space to the 100,000 square foot maximum that's allowed by the state. This will allow us to supply our adult use stores while at the same time maintaining our number one wholesale market position in Massachusetts. These building blocks of 2021 lead us to the full impact of our acquisitions and investments in 2022. By then, We'll see the impact of the new cultivation facilities coming online, improving vertical integration and margins in Arizona, Pennsylvania, and New Jersey, similar to the improvement we realized when we integrated our Nevada operations, where we've grown EBITDA margins from 27 percent to 41 percent since we acquired them in 2019. You will also see improvements in Florida in 2022. where we expect to double the cultivation productivity and retail throughput, similar to our success in Massachusetts, where we've increased cultivation output nearly 200% and more than tripled store productivity since acquiring the business in 2019. Based on this past success at integrating and improving businesses, we're confident in our ability to achieve revenue and EBITDA of at least $725 million and $325 million, respectively, in 2022, as John mentioned. With that, I'll hand it back to John.
spk11: Thanks, Jen. 2020 set the stage for future growth, and now AIR is in the middle of a great transformation. The 2020 elections likely mean positive legislation coming forward that will improve the opportunities for the cannabis industry especially for air. The air transformation is going from two to seven, and there are seven good states with meaningful markets where we expect significant contributions from each of the seven states in 2022. 2022 will be a real story of diversification with strong revenue growth and EBITDA margins. Better than most of the other MSOs that traded twice are multiple. Operator, we will now open it up for questions.
spk06: Ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touchtone telephone. If your question has been answered or you wish to move yourself from the queue, please press the pound key. We also ask that you limit yourself to one question and feel free to get back in the queue for a follow-up. Our first question comes from Matt McGinley with Needhams.
spk13: Thank you. So first, I'd like to say I really appreciate the detail that you provide on the state level results and the capex and the growth of the asset base. The way that you present that information makes it much easier to understand the drivers of the business. Still have a lot of questions, but a lot fewer than I would have had otherwise with the detail you guys give with that. So I appreciate that. My question is on the first question is on the margin rate and EBITDA dollars in the first half. Given you the acquired assets won't be fully operational and integrated, you'll presumably have a drop in margin rate and perhaps even dollars in the first half. And then I assume that would probably look better in the back half, as Jen alluded to. But can you give any detail on what the shape of that year will look like in terms of margin progression? And, you know, I assume the margins will be down in the first quarter, but can you give some color on the magnitude of that compression and what we should expect?
spk07: Thanks, Matt, and thanks for your kind words at the beginning. We really appreciate it. In terms of our – you're absolutely right. 2021 absolutely is a year of transition for us where we expect all of the investments that we've made in the fourth quarter and will make in the first quarter to start to bear fruit, particularly in the second half. So, those investments will increase our SG&A. and we expect our SG&A to go up a couple percentage points, maybe let's call it three, four, five percentage points over the first quarter, and we expect that to then right-size as a percentage of revenue, and I'm speaking as a percentage of revenue. We expect it to right-size back to the high teens by the end of the year.
spk06: Thank you. Our next question comes from John DeCorsi of Viridian.
spk02: Hey guys, congratulations on the continued execution and thanks for taking the call. My primary question was regarding the Massachusetts cultivation expansion. Do you guys have any sense? I know this is kind of a new initiative and Massachusetts is challenging to predict, but do you guys have any sense for timing on that? And additionally, is that included in the kind of the ideal 2022 target of 725 million?
spk07: Thanks, John. Thanks for the question. Yeah, absolutely. So we've been planning M3 for a long time, and we've been in process of construction for a while as well. As John mentioned, it's a 93,000 square foot facility, and we expect it to come online. We expect it to be finished in terms of construction at the end of this year, beginning of next, and to begin contributing to 2022 revenues starting in the second quarter. of next year, potentially late in the second quarter of next year. So, absolutely, it is included in our expectations for our 2022 $725 million.
spk06: Thank you. Our next question comes from Andrew Semple with Echelon Capital.
spk09: Hi. Good morning, everyone, and congrats on the solid results.
spk07: Thank you very much.
spk09: My question here, I just wanted to get your updated thoughts on the potential M&A outlook. We've seen several acquisitions close now, so congrats on that as well, and more expected later this month. Are we reaching the point where you may begin adding new M&A agreements to your pipeline, or do you feel that you've got enough integration on your plate currently?
spk07: Let me see. John, would you like to take that question?
spk11: So, Andrew, the question is, are we going to continue to do further M&A in 21?
spk09: That's correct.
spk11: Yes, you should expect. We didn't put $236 million on our balance sheet not to do further acquisitions. And what we said when we raised the money, we think federal legalization or some form of that is on the horizon. consolidation will accelerate, and MSOs and other companies in our industry will have a choice, right? If consolidation happens, you're either on the eat or be eaten side. And so with this very strong balance sheet and assets that we continue to think are very attractively priced, you could see us continue our M&A strategy.
spk06: Thank you. Our next question comes from Scott Fortune with Roth Capital Partners.
spk03: Good morning. Thanks for taking the questions. I want to focus a little bit on Florida. I know you guys are looking to double the cultivation and the productivity there and triple the store productivity from that standpoint. Can you step us through the cadence? Florida has been a tough market to cultivate down there successfully, but Can you step us through a little color of what changes you're making to that production and the timing of the productivity at the store level as we look at the 2021 into 2022 here?
spk07: Yeah, thanks, Scott. First of all, We are very excited about the opportunity in Florida. We have our integration team down there currently, and they've been down there since the first moment that we closed the acquisition. So we're very excited and hitting the ground running. Our team there, and I mention them because it's really important to understand that we have two Florida experts on our cultivation staff, already and we've had them on the staff for several months now in preparation for this. So two people who have experience turning around Florida cultivation facilities in their most recent resume are already on the ground on the case in Florida today. So I think that's really, really important to understand. In terms of how the timing that we're predicting, look, we expect to be able to put things in place currently. And as you know, it takes a couple months for plants to grow. And so we expect within the three to four month timeframe, we'll start to see the gradual improvement that we expect coming from our cultivation remediation plan. And then we expect that to continue over the course of the second half of 2021 and into 2022. And we do expect that to be able to drive improvement at retail at the same time. Because the big problem for Liberty at retail, and now there are stores, has been that they just have not had the supply to sell through to the customer. And when we give them high quality, ample supply, we think we will be able to provide that excellent customer experience in the Liberty stores that we provide throughout the rest of our business.
spk11: I would say one other point. Liberty in November hired a gentleman named Darren Potter who has been working on the remediation of the cultivation since, again, November. And if you look at the failure in testing that occurred in September, it was roughly 25%. If you look at the most recent test results, it's about 4.5%. So Darren has done a great job already putting the SOPs in place to turn the cultivation around.
spk06: Thank you. Our next question comes from Matt Bottomley with Canaccord.
spk01: Good morning, everyone. Congrats on the quarter. I'm just wondering if I can get your commentary on Arizona and Pennsylvania. So Arizona, obviously not closed, but any sort of takeaways on how that market's been trending the last couple of months with adult use legalization in terms of increased contribution or what, you know, retail stores in the state overall are seeing? And then Pennsylvania, any thoughts on what the, I guess, technical requirements are as it looks like they're continually trying to put a recreational bill through here in the various state legislatures?
spk07: Sure. Let's start with Arizona, which, as you know, we don't own yet, so we have maybe slightly better information than public. But generally speaking, we'll be able to get in there when we close the transaction in the next couple of weeks and have a better sense. But I think we see what you see, which is that the market is picking up. There's incredible demand. The anecdotal evidence is lines around the block. And, you know, particularly in the business that we're acquiring, which had very strong medical dispensaries, above average kind of performance out of the medical dispensaries, performance has continued to be good. And the main thing that's really going to drive performance to the next level is cultivation coming online in the fourth quarter, 80,000 square feet that we're building there. And that's going to really feed the supply into the stores that we have, the three stores that we have, as well as provide a little bit in wholesale. But anecdotal evidence is, you know, very, you know, is a really strong, you know, the public's really strongly receiving that adult use market. On the Pennsylvania side, you know, I think, you know, Our focus in Pennsylvania is really to get our stores open and get our cultivation open. I mean, that is the main thing that we are focused on today. We would love it if that rec bill went through sooner rather than later. We would love that to move through the legislature. That's not in our expectations in the 2021 or 2022 at all. We're just assuming that our Pennsylvania stores are open on the timetable that we've shared with you guys as analysts. and that they get to the state average of about $6 million in annual sales per medical dispensary. If we have upside to that, that would be super exciting.
spk06: Thank you. Our next question comes from Russell Stanley with Beacon Securities.
spk10: Good morning and congrats on the acquisition progress to date and reiterating the targets on near-term closings. Just a question around Massachusetts and the expansion plan there with Milford. 78 stores you're in already. I guess, what kind of penetration rate do you see as achievable, understanding that new stores are being approved along the way? You know, is 100% achievable, or is there a number you can share with us that you'd like to see?
spk07: I mean, listen, I think 75% plus, which is around what we've been averaging, is a great number. We'd love to always improve it, and we'd love to keep it where it is. I think that you've got – our key issue is supply, you know. And as we grow M3, we will have – you know, that issue will become much less of an issue, and we'll be able to expand our – hopefully expand our wholesale customer mix – and there'll be a lot more stores online then as well. It's really important though to understand that part of M3 and part of our rationale for putting M3 up and constructing so quickly is we need to feed our recreational stores in Massachusetts. As you know, Russ, we have an incredible footprint in Massachusetts, one recreational store right next to the Apple store on Boylston Street, Well, these are recreational store locations when they open. One next to the Apple Store on Boylston Street, one right in downtown Somerville and Davis Square, and one on a major commuter route with tons of parking in Watertown. So, we expect our stores to be very, very busy and take up more than our current M1, M2 supply. So we need M3 for our own stores, and also we are the number one wholesaler in the state. So why would we ever want to give that up? We absolutely want to keep that so M3 makes tons of sense.
spk06: Thank you. Our next question comes from Greg Gibos with Northland Securities.
spk14: Hi. Morning, John, Jed and Brad. Thanks for taking the questions, and congrats on the results. I was just wondering if you could discuss the opportunities you're seeing to enter the wholesale markets in some of your newer states, Pennsylvania, Ohio, New Jersey, Arizona, and maybe how those prospects compare to the wholesale markets in Massachusetts and Nevada.
spk07: Sure. Greg, thanks so much for the question. Look, the wholesale markets, particularly on the East Coast, are very, very attractive. They are undersupplied at the moment, We're getting very strong prices for Massachusetts, for Pennsylvania, upwards of $4,000 a pound for flour, which is very, very good. We expect New Jersey to be similarly undersupplied and extremely attractive, which is why we're pressing the gas on construction of the New Jersey cultivation expansion. And as soon as we take over that business, we expect to press the gas even harder. So we think the East Coast markets are extremely attractive from a wholesale standpoint. And we think Arizona should be an attractive market as well, probably more akin to the Nevada market than the East Coast in terms of pricing. But listen, when we look at our Nevada business, we have – a strong wholesale business in Nevada from our excellent cultivation facility. We sell well above the market average, 25 percent above the average price in Nevada because of the quality of our cultivation, but we just don't have enough of it to feed our own stores. and feed the wholesale market. So we do a great job of growing. That's recognized in the selling price, and we would expect to have a similar profile in Arizona as to Nevada. But we're starting there with 80,000 square feet as compared to the 30,000 square feet we have in Nevada today.
spk06: Thank you. Our next question comes from Jason Zandberg with PI Financial.
spk12: Thanks. Just a question on your plan, CapEx, for this year. According to the table that you've laid out in your press release, Massachusetts, you will be deploying the most of that CapEx spend this year, almost double any other state other than, I guess, outside of Pennsylvania. I just wanted to get sort of a high-level thought process in terms of you know, what goes behind that decision to deploy in Massachusetts? Are you, you know, I know that it's, again, you mentioned very clearly it's hard to predict, you know, a lot of the timing in that state. But, you know, by the numbers here, it looks like that is a state that you're quite excited about in, you know, at least in terms of CapEx spend. I just want to get your thoughts in terms of how you allocate those resources over, you know, the many opportunities you have in front of you here.
spk07: Thank you. I really appreciate it. The opportunity in Massachusetts is absolutely exceptional. We were just talking about how great our locations are. We are building those locations now. We are building them out, and that contributes to that capex. The uncertainty comes from whether it's October, November, September, December that you finally get the go-ahead from the CCC because of all of the all of the timing difficulties with that entity. That being said, you've got to build it, and we are building it, and it will come online this year, and they will be exceptional stores. In terms of the cultivation expansion, just talking to Russ at Beacon about that, we need that cultivation expansion to feed our excellent retail locations, and to maintain our wholesale positions. So we are pressing the gas on that as well, because if you think about Massachusetts, right, Massachusetts already is a nearly $1 billion market in terms of annualized revenue, and you only have five adult-use stores open in the greater Boston area. Now, 60% of the population lives in the greater Boston area, so arguably you have not seen what the real demand is from the state of Massachusetts. So the way we look at it, you're going to have material supply constraints for a long period of time in Massachusetts because of the lead time on these facilities and because of the unmet and even undiscovered demand in the greater Boston area. So it makes tons of sense that we are spending most of our CapEx or a good portion of our CapEx there because it's a great opportunity.
spk06: Thank you. Our next question comes from Howard Penny with Hedgeye.
spk04: Thank you so much for the question. Obviously, anything that comes out of Washington, the devil's in the details. But if something does come out on the SAFE Act, do you expect there is a capital markets component to that and that you'll be able to lose your F in your ticker symbol? Thanks.
spk07: We are hopeful. We don't have, listen, we would love for that to be the case. We think that would be a great outcome. It's impossible to predict what comes out of Washington, and what we have done is everything that is required to prepare for that. As Brad mentioned, this is our last IFRS filing. We are now going to be filing in GAAP. We have an S-1 that's effective with the SEC as of last week, I believe, so we have done all of the preparation that's required in order to uplift.
spk06: Thank you. Our next question comes from Eric Dolores with Craig Howland Capital.
spk00: Great. Thanks for taking my question and congrats on the quarter and strong outlook here. So you guys have obviously done a great job increasing productivity, certainly shows in your profitability. How do you guys think about low cost versus high quality production? And as competition increases over the coming years, you know, how should we think about the puts and takes with margins, you know, sort of the cost versus revenue side of the equation, you know, given your 2022 guide, you know, certainly implies some continued impressive margins.
spk07: So thanks for the question. And I think the first thing we want to say is we believe in this industry. Everything starts. with the quality of the plants that we grow. So we are extremely committed to high quality production, high quality cultivation, because we think that's where, you know, one of the key areas where you differentiate yourself. And we do absolutely believe that driving efficiency and driving cultivation efficiency can allow us to be in a real sweet spot, which is, I think, where we are in Nevada, where we are a high-quality, excellent value, excellent product producer, and we are the go-to choice for a huge number of consumers, as you see by the fact that if you look at Nevada over the fourth quarter, I think it's People are understanding that that market had a little bit of a soft Q4, but we were up. We took share in Nevada over the fourth quarter because we offer such great value and great product at the same time to our consumers.
spk06: Ladies and gentlemen, this is all the time we have for Q&A today, and this also does conclude today's presentation. You may now disconnect and have a wonderful day.
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