The Cannabist Co Hldg

Good day and welcome to the Cannabis Company's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this call is being recorded. I would like to turn the call over to Asia Gilbert, Director of Investor Relations. You may begin.

Thank you, Operator. Good morning, and thank you for joining the Cannabis Company's fourth quarter and full year 2023 earnings conference call. With me today is Chief Executive Officer David Hart, President Jesse Shannon, Chief Financial Officer Derek Watson, and Senior Vice President of Capital Markets and Investor Relations Leanne Evans. Earlier this morning, we issued a press release reporting our fourth quarter and full year 2023 results. A copy of this release is available on the investor section of our corporate website, where you will also be able to access a replay of this call for up to 30 days. Certain remarks we make today regarding future expectations, plans, and prospects for the company constitute forward-looking statements within the meeting of applicable Canadian and U.S. securities laws. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors which we disclose in more detail in the risk factor section of our annual Form 10-K for the year ended December 31st, 2023, which will be filed with applicable regulatory authorities. Any forward looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update any such forward looking statements in the future, we specifically disclaim any obligation to do so except as otherwise required by applicable law. Also, please note that on today's call, we will refer to certain non-GAAP financial measures such as EBITDA and adjusted EBITDA. These measures do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. The cannabis company considers certain non-GAAP measures to be meaningful indicators of the performance of its business in addition to, but not as a substitute for, our GAAP results. A reconciliation of such non-GAAP financial measures to their nearest comparable GAAP measure is included in our press release issued earlier today. With that, I will turn the call over to David Hart to get us started. David?

Thank you, Asia. Good morning, everyone, and thank you for joining us today. We're pleased to discuss the results for Q4 and the full year 2023, and more importantly, share how our team is driving this business forward in 2024 and beyond. I'm excited to be here at the helm as CEO, joined by a dedicated management team who's passionate about representing our outstanding employees across our 15 US markets. We remain confident in the value of our strategic position and our focus on sweating our assets to deliver for our customers, partners, and shareholders alike. You may recall that in Q3 of last year, once we were free to operate as a standalone company following an arduous 16-month process, we undertook a number of initiatives to best position the company going forward. During 2023, we announced and continued to implement our balance sheet improvement plan, which has already resulted in a decrease in interest expense, reduced leverage, and positioned us to satisfy upcoming maturities, including $13 million remaining in May 2024. As part of that effort, We took steps to increase inventory monetization, reduce working capital needs, and drive cash flow. This work continued in the fourth quarter as we monetized certain excess inventory, which had a temporary impact on margins, but contributed to a healthier cash position at year end. We completed the fourth phase of a previously announced corporate restructuring program, contributing to annual life savings of over $38 million. We began to optimize our stellar portfolio of assets with a focus on those markets that will drive growth and profitability going forward. To date, we've exited markets such as Missouri and Utah, and we look to lean in where we believe we can drive the most value. We launched our dedicated wholesale effort to capitalize on our national footprint and cultivation potential, which Jesse will discuss in more detail. We rebranded the company from Columbia Care to The Cannabis Company, and we leverage our expansive retail presence, rolling out purpose-driven new products and brands across our shelves as we prepare for additional markets to transition to adult use, such as Ohio, Delaware, and Pennsylvania. We are committed to continuously improving our operations, implementing changes in our systems to increase efficiencies wherever possible, and building a winning culture to exit 2024 in a much better position to succeed as a team. We're being thoughtful about our footprint, and where we can best capitalize on the tremendous opportunity before us as we see more of our markets transition to adult use. One of the first and most important steps to success has been to ensure that we have the right people and the right jobs with the right tools. This is something that Jesse and I are highly focused on as we understand the importance of winning at the hyper-local level. To that end, Jesse and I have been meeting with local executives across the company to root out inefficiencies, hear from the front lines on how to improve our processes, and empower them for success. You will hear more about these initiatives in the coming quarters and should see the evidence of positive changes in each of our facilities. Next, as we look to maximize our existing cultivation and manufacturing footprint, we've reworked our organizational structure and go-to-market strategy for wholesale. Wholesale has been underrepresented as a portion of total revenue for the company, at 12% of total revenue in 2023, and we are looking to change that. Over time, we have invested significant CapEx dollars in creating an enviable portfolio of assets throughout our markets. We are built for adult use and ready for those transitions with little to no additional CapEx required as those markets flip. However, at present, many of our largest facilities are underutilized, creating a significant drag on our gross margin, which we've discussed in prior quarters. To address that, you should expect to see us strategically ramping up wholesale across the portfolio and continuing to engage in key partnerships that will complement our own in-house brands to complete our product mix in retail and strengthen our wholesale product offering. You've seen a number of partnership announcements from us to date, and there are more to come. While 2023 was the year of transition for the cannabis company, we produced consistent top-line revenue of $511 million with an improvement in adjusted EBITDA over 2022. This year, 2024, is not about chasing top-line growth. We are focused on margin improvement, cash flow generation, and long-term sustainability. Our primary goals for 2024 are to materially improve our financial profile and company culture so that we can capitalize on the massive opportunities ahead for the cannabis industry. we're still in early innings and we will be positioned for long-term success. To reiterate, the first step is to have the right team in place. That task is completed and I could not be happier than to be working with the team that we have. The energy, commitment, and frankly, pure grit in our organization is absolutely inspiring. We have great leaders and great people on the front lines driving continuous improvement. As we move forward, we're focused on four key initiatives. Number one, Enhancing the customer journey for existing medical and adult use customers today, as well as for the new customers of tomorrow as cannabis transitions to adult use in more of our markets. Number two, capturing supply chain inefficiencies and sweating the retail, cultivation, and manufacturing assets that we already have invested in. We will leverage the underutilized capacity through wholesale growth and selected partnerships with winning brands. And number three, capitalizing on the next chapter of cannabis evolution as adult use adoption leads to increasing TAM and the creation of new market segments. And number four, continuing to improve our capital structure to ensure our ability to grow responsibly over time. The successful execution of this strategy will result in leaner operations, improved inventory management, and enhanced cash flow, ultimately driving sustainable profitability and shareholder value. Before I turn the call over to Jesse, let me just recap where the cannabis company is going. We're exceptionally well-positioned in markets that are poised to transition to adult use with states like Ohio, Delaware, and Pennsylvania all on the cusp. We've made the necessary investments in cultivation, manufacturing, and retail, and the opportunity remains to sweat those assets to drive returns with very little additional tap-backs required. We have incremental opportunities and additional product brands to complement our assortments, and turning our wholesale business into a value creation machine and empowering our team members on the front line to focus on providing the best customer service and experience possible. Broadly, we are reevaluating every aspect of our business. If something isn't working, we will address the issue head on. With that, I'll now turn the call over to Jesse to give you more color in some of the play-by-play. Jesse?