The Cannabist Co Hldg

Good day and thank you for standing by. Welcome to the Cannabis Company Q4 and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. would now like to turn the conference over to your speaker today, Leanne Evans. Please go ahead, ma'am.

Good morning, and thank you for joining the Cannabis Company's fourth quarter and full year 2024 earnings conference call. With me today are Chief Executive Officer David Hart, President Jesse Shannon, and Chief Financial Officer Derek Watson. Earlier this morning, we issued a press release reporting our fourth quarter and full year 2024 results. A copy of this release is available on the Investors 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 meaning 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 Factors section of our annual Form 10-K, The year ended December 31, 2024. 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, Leigh, and thank you to everyone who has joined us on the call today. A year ago, when Jesse and I were appointed as the new leadership of the company, we set about to build a better business to affect change in the organization and improve our financial stability by achieving a more sustainable economic model. As we looked ahead to what will be required, we committed that the company would look materially different by the end of 2024. While we are not yet finished with the turnaround, we are a very different company today. Throughout 2024, We made structural changes to the business and put into place a number of key initiatives to optimize our retail and cultivation assets, including monetizing assets that were not efficient in our portfolio, rooting out supply chain inefficiencies, capitalizing on adult use adoption in markets like Ohio, and continuing to improve our capital structure to advance our ability to grow responsibly over time. We made significant changes in our operating footprint. We divested assets in Utah, Florida, Eastern Virginia, and Arizona. We closed underperforming locations in Colorado, Washington, D.C., and Boston, Massachusetts, and we restructured our New York operations. In November, we announced the closing of the sale of 14 retail locations and two cultivation facilities in Florida, which were loss-making for our portfolio. We are still in the process of closing the transactions for one additional facility and the remaining license in Florida. Upon close of those transactions in Florida and finalization of the exit of Washington, D.C., we will be operational in 12 markets. We had 59 active retail locations at year-end compared to 73 active retail locations at the end of the third quarter and 86 at the end of 2023. On the operational side, we restructured our wholesale business and engaged in a number of brand partnerships with third-party products. We adopted new internal processes, changed reporting lines, and attacked supply chain inefficiencies. With asset divestitures and several rounds of corporate restructuring, we were also able to substantially reduce corporate overhead. During 2024, we reduced overall headcount by more than 20%, resulting in approximately $23 million in annualized savings. As a result of these efforts, adjusted EBITDA on an apples-to-apples basis for the 12 remaining markets was essentially flat year-over-year, despite the challenging pricing environment. At this time, we are currently at the midpoint of our eight-quarter restructuring plan. We are pleased to report that as of the end of February, we are seeing positive developments Key accomplishments include the reorganization of operational leadership and associated KPIs, the implementation of improved purchasing and pricing standard operating procedures, and the ongoing rationalization of the product portfolio with a 50% to 60% reduction in product categories and SKUs. On to the balance sheet. Recognizing the need for a comprehensive approach to balance sheet management in the current market environment, on February 27th, we announced an agreement to extend the maturities of our senior secured debt until December 2028, with options to extend through 2029. With 70% support from our node orders, we are confident that this process will be completed, and we are anticipating it closing in the first half of this year. This transaction provides one way for us to focus on the optimization of our business as we complete the vestiges, continue to cut costs, and improve the operational and financial profile of the company. While a number of these initiatives took longer to complete than initially expected, we made excellent progress over the course of 2024 and we are carrying momentum into 2025. Our operational focus in 2025 is simplification across all areas of the business. This encompasses geographic footprint, corporate structure, and go-to-market strategy. In February of this year, we closed three underperforming locations in Colorado, bringing us to 56 active dispensaries to date. These initiatives are expected to deliver improved gross margins and cash flow throughout 2025. Liquidity management remains of paramount importance and is a central focus for 2025. In addition to the previously announced cost reduction efforts throughout 2024, we're implementing another cost reduction that will deliver over $5 million in annualized cost savings. This represents over 10% of our fourth quarter corporate expense run rate. Additional cost reductions are planned throughout 2025 as we complete all pending divestitures. We anticipate a shift in focus from simplification to operational optimization leading into 2026. We continue to operate in a challenging environment with uncertainty of timing of rescheduling, ongoing pricing pressures in key markets, and challenged liquidity across the sector. However, the cannabis industry, fueled by patients and customers, continues to demonstrate growth. Industry sales were up 9% year over year, and we continue to see states transition to adult use while others adopt or enhance medical programs. Despite the uncertainty at the federal level, this industry is here to stay. As equity valuations have come under pressure, it is incumbent on us to focus on where we can be most impactful, to optimize our portfolio, product assortments and processes, and to streamline our go-to-market strategies. Our mandate in 2025 is to continue to simplify our business, maintain liquidity, improve margins, and drive cash flow generation, putting us in a position to succeed in 2026 and beyond. With that, let me turn the call over to Jesse to discuss our operational results and initiatives in more detail. Jesse?