Fluent Corp

Good afternoon ladies and gentlemen. Welcome to Fluent's fourth quarter and full year 2024 conference call. Joining us today is the company's CEO Robert Beasley and the company's CFO Patricia Fonseca. At this time, all participants are in a listen-only mode. After the company's prepared remarks, the management team will conduct a question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. As a reminder, this conference call is being recorded and will be available for replay in the Investors section of the company's website at .getfluent.com. Please note that certain subjects discussed on this call, including answers the company may provide to questions, may include content that is forward-looking in nature and therefore subject to risks and uncertainties and other factors which could cause actual future results or performance to differ materially from any implied expectations. For additional details on these risks, please consult the cautionary statement regarding forward-looking information contained in the company's financial results, press release, MDNA and annual information form, which are available on CDAR. The company does not undertake to update or revise any forward-looking statements except to the extent required by applicable securities laws in Canada. In addition, during this call, the company will refer to supplemental non-IFRS accounting measures, including adjusted EBITDA, which do not have any standardized meaning prescribed by IFRS. As a final reminder on today's call, unless otherwise indicated, all dollar amounts are expressed in US dollars. I would now like to turn the conference over to Mr. Robert Beasley, company's CEO. Sir, please go ahead.

Thank you and good afternoon, everyone. 2024 was a transformative year for Fluent. We closed the year with a record-breaking annual revenue of $103.6 million, which is a .4% increase over 2023, demonstrating yet again our continued focus on sustainable, positive growth. One of our biggest milestones was the successful acquisition of RIV capital, giving us a solid operational footprint in New York, including retail, wholesale and cultivation assets. This move marked a pivotal expansion in our multi-state presence. We also strengthened our financial position with a non-dilutive debt refinancing under favorable terms and closed the year with over $40 million in cash and cash equivalents, again positioning us for future growth and expansion. We expanded our brand portfolio. In New York, we launched Moods with a tremendous success and NAC, two brands which are now gaining traction early on with the consumers. In Florida, we introduced HigherKind, our first ever concentrates line. Looking ahead, we're excited about our early results in our cultivation facility in Chestertown, New York. The latest harvests have delivered exceptional yield and high THC levels, which is a strong testament to our integrated operations and skilled teams. While the broader industry dynamics, including the delay of Amendment 3 in Florida, created challenges like market oversupply and increased competition,

Fluent

remains resilient and strong. Our plans were never reliant on the passage of Amendment 3, and our existing medical footprint and market expertise continue to give us a strong edge as the market stabilizes. We continue to operationally expand. We now have 42 locations open across Florida, New York, Pennsylvania, and Texas and expect to open three more stores in Florida by the year end. We're building a wholesale program in New York under the name Entourage and hope to take advantage of the increasing retail presence in that state. Construction is progressing and near completion in our Tampa-based cultivation facility, ROSA, with the first target date being Q3 of 2025. The year 2025 for Fluent will witness two new facilities coming online, both designed and specifically designated for high-quality flower output in both Florida and New York. With this stronger foundation, expanded footprint, and new brands resonating in the market, Fluent is poised for continued success in 2025 and beyond. I'll now hand it over to Patricia to walk through the financial highlights.

Patricia? Thank you, Robert, and good afternoon, everyone. Please note that all figures are in US dollars and all various commentary is on an -over-year basis, unless otherwise indicated. In the fourth quarter of 2024, revenue was $24.9 million compared to $25.5 million in Q4 2023. The decrease is primarily related to the price pressures attributed to an increase in inventory in the Florida market. Florida revenue was $20.3 million compared to $21.6 million in 2023. Adjusted gross profit for the quarter was $10 million or .1% of revenue compared to $12.6 million or .4% of revenue in 2023. The decrease in gross margin was primarily related to the impact of prices in the Florida market that I just mentioned. Adjusted EBITDAF for the quarter was $3 million compared to $6.9 million, with the decrease again driven by the decline in Florida. Cash flow using operations for the three-month ending December 31, 2024 was $14.7 million compared to a cash flow provided by operations of $1.4 million in the prior year. Despite a challenging fourth quarter, as Robert mentioned, we are proud to report another year of revenue growth at a record-breaking $103.6 million in revenues. For the full year, that increase corresponds to .4% compared to the $97.3 million in 2023. The increase was primarily driven by the two new dispensaries opening in Florida in the first quarter. Adjusted gross profit for the full year was $50.3 million or .6% of revenue compared to $49.5 million or .9% of revenue in 2023. Adjusted EBITDAF for 2024 was $25 million compared to $27.2 million, with the decrease again driven by the slowdown in the Florida market in Q4. On December 31, 2024, the company had approximately $40.1 million of cash and cash equivalents and $82.4 million of total debt outstanding, with approximately $630 million shares outstanding. This concludes our financial highlights. Operator, we will now open for the call for Q&A.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. We will pause for a moment as the callers join the queue. Our first question comes from Brian Manning from New Normal Investments. Please go ahead.

Hi, thank you for taking my question. With just doing back of the envelope, at a modest valuation of one-times revenue, it would seem that the share price should be approaching $0.20 a share. Given where it's at now, have you considered a share buyback program from your available cash flow?

Thank you for the question. We have actually considered share buybacks at the board level several times. As you point out, this is the first time that the cash is available to actually accomplish it. I think that it is on the table, if you would, with the board as a possible option. The frustrating thing is, as you pointed out, our market cap and share value has never been a fair approximation of a multiple or even our asset value. That's either just the way it is in cannabis or the way it's been for this company. We're hoping there's one day when there's a recognition of our true value. To answer your question very quickly, it's being considered, I cannot tell you that it's reached the level of serious consideration, but it certainly has been on the table for some time as one of the many considerations as to how to impact the share value for the benefit of the shareholders. Okay, thank you.

Thank you. Once again, if you have a question, please press star, then 1. This concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.