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spk06: Ladies and gentlemen, thank you for standing by and welcome to the Goodness Growth Holdings fourth quarter and full year 2022 results call. I would now like to turn the call over to Sam Gibbons, investor relations. Please go ahead.
spk02: Thank you, Mandeep, and thanks to everyone for joining us. With me on today's call are our interim chief executive officer, Josh Rosen, our chief financial officer, John Heller, and our president, Amber Shimpa. Today's conference call is being webcast live from the investor relations section of our website. Dial-in and webcast details for the call have also been provided in Friday's earnings release, which is also available on our website. Before we get started, we'd like to remind everyone that today's conference call may contain forward-looking statements within the meaning of U.S. and Canadian security laws. These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described in such forward-looking statements. For more information on forward-looking statements, please refer to cautionary note regarding forward-looking statements in Friday's earnings release. Now I'll hand the call over to Josh.
spk08: All right. Thanks, Sam. And thanks, everyone, for joining us this morning.
spk05: I want to take a moment to thank the Goodness Growth team, because I've been drinking from a fire hose since stepping into the day-to-day role late last year. And the team has been nothing but supportive, hardworking, and open to my perspective and leadership from the start. And it has required some patience on their part, as I'm not bashful about asking dumb questions and taking things to first principles. I'll begin today with some brief updates on the progress we've made as an organization over the past few months. Then Amber will run through some state-level updates before we pass the call to John for a quick review of the financials and balance sheet. We're going to do our best to focus this call on the most relevant details. And I'd note that our 10-K, where there are other financial statements and the MD&A, is available for a more thorough review. So I've asked John to keep to important context as opposed to repeating within our press release and filings when he reviews our financials. Please turn to slide three of today's presentation, which is available in the quarterly results and events and presentation section of our investor relations website, as Sam just suggested. Since Verano wrongfully terminated our arrangement agreement to be acquired in October last year, our team has been adapting to the new reality of remaining an independent operator for the foreseeable future. As was previously communicated, the board and our leadership team reopened the review of strategic alternatives immediately. It goes without saying that we found ourselves in what's a much different industry and capital markets environment than was present in late 2021. Let's be candid. One year ago, we did not expect to be here today. We expected to be part of a much larger, better capitalized operator. Leaving our litigation aside, we needed to make a choice about the direction of our company. And with the altered landscape, we concluded that regardless of whether a value-enhancing strategic alternative materializes, we needed to later focus on being a strong, independent operator. We believe that we have an attractive standalone platform for growth and the foundation to be successful on our own, and we are relentlessly focused on our standalone success.
spk08: In my new role as interim CEO, I have a mandate from our board to augment our operational capabilities and to manage our balance sheet to support our long-term success.
spk05: Over the last few months, we have restructured the organization to improve operating performance by enabling our various state markets to act more independently. The decentralized approach to the leadership of our various state markets is designed to improve the speed and quality of decision-making on the ground at our facilities, which should help us drive stronger operating and financial performance in the future. And we haven't done this in a vacuum. We've also augmented the local teams with some resources from my network that are battle-tested and competitive and transitioning markets. Having seen Amber's people-first, common sense approach to leadership and key decisions as a member of the board, I was excited to partner with her to help drive change. We recently promoted her to the role of president and also the CEO of Vireo Health of Minnesota, our most significant state operation. Amber will speak more about her approach to management and operations in more detail momentarily. Dr. Kyle Kingsley remains a key thought partner to me and vital to our success and is now in the role of executive chairman of our board of directors. In particular, Kyle remains heavily involved in matters related to product safety, effectiveness, and access as it relates to both our operations, as well as how it intersects with policy and emerging regulations. I wouldn't have stepped into this role without the full support of Kyle. In addition to our focus on optimizing operations and preparing for the launch of adult use sales in several of our markets, I've been working with John Heller and his team to drive several important initiatives to improve the strength of our balance sheet and cash flow. Please turn to slide four. where we've summarized key components of our organizational priorities for the year ahead. 2023 is a transformational year for the company. And internally, we've been referring to it as the year of cream and fire. Our priorities boil down to, first, making decisions that drive cash flow generation and profit growth. For those unfamiliar with the CREAM acronym, cash rules everything around me. It's the guiding ethos for how we spend and make money. And then second, growing and selling fire cannabis products, because we firmly believe that we need to have passions with the quality and value that we're providing customers in order to drive longer term. And this needs to be core to our operations team. Maybe it's a bit corny, but Amber and I are focused on keeping our core messaging simple to support better performance. Over the past few months, we've made considerable progress with our decentralized structure to improve our decision-making and manufacturing operations at the state level. As I noted, we streamlined our operating teams, and brought in some additional external resources that are helping us position our product and brand portfolio for adult use markets. The expected outcome of these efforts are both improved profitability as well as better working capital efficiency moving forward. From a balance sheet perspective, we were pleased to announce on Friday that we've amended our credit facility with our senior secured lender, which was the first step to gain the flexibility we need to execute the cream and fire initiative this year. We're also in advanced discussions to secure an incremental $10 million in capital through the issuance of convertible notes, which is the second step. John will have more details on our balance sheet, but this was the single most important item to address when I started in my role. Although the current capital markets environment is treacherous and expensive for incremental needs, Chicago Atlantic has been highly collaborative in their approach with us compared to other lenders in the space, many of whom which I have firsthand experience. We'll continue to manage the balance sheet with our capital partners to support our transformation into a stronger operator and credit partner. We've implemented strong cost controls in the current environment, and we're prudently deploying capital expenditures against high-returning projects. In all candor at this point, these small investments have been no-brainers thus far. I'd like to say that our current situation requires us to play defense first, but I'm optimistic that as we gain momentum, we can selectively begin to be more offense-oriented. As part of being defense-oriented, we remain open to divestitures of non-core assets, which Kyle discussed on last quarter's results conference call. I often view the large I often view the emerging industry like a portfolio manager in terms of each individual state market representing its own set of risks and opportunities, translating to a current and anticipated future value. So we're also open to divestment and strategic partnership on our core assets. And as is no surprise to anyone that knows us in our current situation, we are aggressively pursuing litigation against Verano and taking significant damages to the court system in British Columbia for wrongfully terminating our arrangement agreement last fall. On a personal level, as I stepped into this role, It's worth noting that although litigation comes with timing and magnitude uncertainty, I view the Verona litigation as a key asset of our company. Please turn to slide five, where we've provided a summary of our asset portfolio, which remains very well positioned for growth with pending regulatory catalysts in several of our markets. The launch of adult use sales in Maryland anticipated this summer should be a strong growth driver for us in 2023. And while the exact timing of our participation in New York's adult use market remains uncertain, we're hopeful that we'll be able to start selling into New York's adult use market through the wholesale channel later this year. There is currently an adult use bill working through the state legislature in Minnesota, and we believe it's likely that some form of adult use legislation is likely to pass before the current legislative session ends in May. These collectively are meaningful catalysts for our business, and we anticipate they could pave the way for accelerated improvement in our ability to generate substantial cash flow. In New Mexico, We have shifted our focus away from opening additional dispensaries as the state has rapidly become saturated with adult food stores. We're no longer considering New Mexico a core market and have much higher priorities for our limited growth capital. We are now focused on cash flow generation. On slide six, we've provided a deeper look into several key performance indicators that a recently formed Weed Hustle Office believes are critical to the success of our cream and fire initiatives. Our new Weed Hustle Office is supporting our new approach to the decentralized state markets. which is comprised of our state leaders as well as some third-party partners to collectively satisfy the responsibilities of a chief operating officer. Amber will speak more to our lead hustle office. The KPIs shown on this page represent a few of the most relevant metrics for our business, and we believe they can help us and you measure our progress as we move forward. Our industry tends to only highlight big-ticket summary numbers and oftentimes glosses over poor performance in some places. We intend to provide an extra level of transparency and disclosure about our business with these metrics, and we plan to be honest when performance doesn't meet expectations and explain what we plan to do about it. And we plan to continue to share the state-level detail as we have, as can be found in our press release in 10-K. Looking at these metrics, we are first and foremost focused on improving our production quantity and quality of flour within each of our markets. Total harvest Pounds in biomass produced is certainly a focal point, but the more important metric for our teams today is our percentage of biomass produced, which meets our internal standards of optimal flower quality, size, and appearance to be considered a flower. Our current numbers aren't acceptable, which I believe also demonstrates a great opportunity for improvement as we move through 2023 and beyond. From a heritage standpoint, it's worth noting that two of our core markets didn't include the sale of flower in their initial regulations. that being Minnesota and New York. So the legacy infrastructure wasn't optimized for flower production. I also want to highlight same-store sales as an important indicator. While these are often a function of regulatory and competitive shifts in the early years of our emerging markets, we believe, like with other retail businesses, this metric is an appropriate indicator of business health and momentum. We may choose to share this on a market basis in the future. Lastly, we've identified inventory terms as an improvement area for our teams. as improving this component of our working capital performance will help us improve our cash flow performance in the future. Outside of a rare market transition plan, such as Maryland coming this year, I push the concept that holding and building inventory is toxic to cash flow. I'd now like to pass the call over to Amber for more discussion on our core market results and the progress in the cream and fire strategy, and then some additional core market updates.
spk01: Thanks Josh, and thanks everyone for joining the call this morning. I'll start by providing some more transparency into our new way of operating, and then spend a few minutes on important updates in our core market. Change management is hard to do and to get right, but from the outset of Arano's wrongful termination of our transaction, we've aimed to prioritize compassion for our people as we've managed through this challenging transition. Josh's synergistic leadership style and fresh approach to how we operate have really energized our team. and his encyclopedic knowledge of the cannabis space has been very impactful, to say the least. We've been supported by key teammates throughout this transition who have answered the call and are leading with action. These teammates make up the WHO, or our Weed Hustle Office, and we're already seeing early indications that our decentralized approach to operations is leading to greater success. Josh and I have been particularly impressed with how Patrick Peters, our Executive Vice President and State Lead for both New York and Maryland, and Brendan Sweeney, our vice president of operations, have both nationally risen within our teams as clear leaders of people and process. These two know our business and the business of cannabis so well and have been eager to wear a few more hats as we move quickly off of our operational pivot and execute on our year of cream and fire. Moving on to some market specifics on slide eight, Our home market of Minnesota remains our most important market and it continues to grow following the commencement of flower and edible sales in 2022. As Josh mentioned, there is an adult use bill working its way through the state legislature and proactive conversations regarding this legislation are ongoing. In New York, retail sales have been negatively impacted by a proliferating illicit market and the overall uncertainty about when more stores will be open but wholesale volumes have increased substantially to other existing registered operators. We are balancing our need to control cash burn in New York with the need to prepare for adult use implementation. Make no mistake, this has been a challenging state market environment for us. We are getting closer to the completion of our 170,000 square foot indoor cultivation facility in Johnstown, which we expect to be ready for occupancy late this summer. We believe it will represent one of only a few large capacity indoor cultivation facilities in the state. This new building is predominantly composed of cultivation space, as well as a new home for a cloning and vegging space, drying, trimming, and flower packaging operations. We believe that efficiently produced, high-quality indoor flower can be the primary source of competitive advantage for us in New York, and we're putting less energy into manufactured goods expecting the market to have ample biomass and oil-derived products relatively quickly. The exact timing of our participation in the adult use market remains uncertain, but we are hopeful that we'll be able to begin selling products into the wholesale channel later this year once our new facility is operational. In Maryland, our second dispensary in Baltimore drove increased retail sales performance in 2022. However, we are not satisfied with our cultivation performance due to environmental and infrastructure challenges, and that is a prime focus for our cream and fire initiatives this year, as we expect Maryland's adult use market to launch sometime in the second half of this year. As Josh mentioned earlier, we are now considering New Mexico a non-core market, as we have pivoted to focusing on cash flow generation rather than growth. Adult use sales started in New Mexico in April 2022 and brought significant revenue growth, But ultimately, our operations there are minimally profitable and not generating meaningful cash. On slide nine, we've highlighted a few upcoming programs in Minnesota, which reflect the hard work and dedication of our team's commitment to being a strong community partner and advocate for cannabis reform in Minnesota. We're very proud of our Minnesota roots and our status as a Minnesota founded and run company in the U.S. cannabis industry. And we are laser focused on life and longevity in our home market. I've been spending time with key stakeholders in the state this legislative session, sharing lessons learned from other markets that have transitioned to adult use, and advocating for a fair, equitable, and practical licensing and regulatory framework to set the state up for a successful adult use program implementation. Our support of social equity applicants includes sponsoring folks through our Cannabis Business Accelerator, like a recent applicant who works in a Minnesota startup and wants to explore licensure via social equity license in the state. Our 1937 impact fund also supports key equity-focused groups like our April beneficiary, The Great Rise, which is advocating for justice-impaired Minnesotans to participate in this expanding market. We also continue to invest time and resources into our various expungement clinic programs, which we host across various operating markets. Our next clinic is slated to take place in Moorhead, Minnesota in late spring. Our community and equity programming initiatives are led by our DEI Council and its early leader, Dr. Paloma Layfeld. This work is so important to us and is foundational to who we are and how we support the communities in which we operate. Please turn to slide 10 for some more additional discussion of how we are operating today as we work to execute against our cream and fire strategy. We've hit on some of these aspects already this morning. but I want to provide some additional clarity around the progress we're making. At the time Verano wrongfully terminated our arrangement agreement in October, our teams were mostly focused on preparing for the pending integration with Verano, and we actually paused several projects and initiatives in order to provide Verano with maximum flexibility with the management of our assets upon the expected change of control. The result of the wrongful termination of the transaction was months of critical time lost. amidst a very challenging environment for the cannabis industry, as well as the broader capital markets. Our team had to react very quickly to these changing circumstances, and we believe we've done so effectively, and expect to begin seeing benefits of our recent initiatives to improve our operating performance during the second half of this year, once severance expenses related to workforce reductions lapse. We had to make some difficult decisions to streamline our operating team, But we believe we now have the right people in the right places in our decentralized approach to the management of our state markets has empowered our on the ground leaders to act quickly with support from the multidisciplinary experts in our weed hustle office. We're already seeing early indications of improving performance with anecdotal evidence across our markets during the first quarter of this year. Our fire focus on driving stronger quality products helped Patrick Patrick Peters' team set a new record for sales of our High Color Edibles brand in Maryland in the month of March. These same products are also being sold in our Minnesota market under the Vireo brand name and have been contributing to some of the sales growth performance in Minnesota. We're also continuing to reach new highs in retail sales performance on a monthly basis in Minnesota. And finally, recent efforts of our rehustle assets have been making to improve our inventory management have begun translating to increase sales velocity in Maryland. Inventory turns are one of the KPIs we'll be tracking most closely over the next few quarters, so we're pleased to see early indications that our efforts to better align inventory to demand are working. As Josh mentioned earlier in his discussion of KPIs, we are operating with a much stronger sense of urgency and have a keen focus on measuring our progress transparently, both internally to support our decision-making and externally with the investment community and our other partners invested in our success. I'll now hand the call over to John for a more detailed review of the financials.
spk04: Thank you, Amber, and thanks to everyone for joining us this morning. I'll provide a high-level summary of key financial metrics from the fourth quarter and then review our balance sheet and liquidity position in more detail. Please turn to slide 11. Our fourth quarter results reflected revenue growth in each of our core markets, sorry, in each of our markets, as well as continued improvements in margin performance, which was amplified by the negative performance drag we experienced last year in our former Arizona cultivation facility. Total gap revenue of 19 million in the fourth quarter increased approximately 39.4% compared to the fourth quarter of last year. If you exclude last year's contributions from our former operations in Arizona, total revenue grew approximately 55.8% year over year. Gross margin performance improved significantly year over year from 15.8% of sales in the fourth quarter of last year to 44.7% of sales. As mentioned previously, gross margin benefited from our recent wind down of operations in Arizona, as well as from increased retail sales in Minnesota and Maryland. SG&A expenses as a percent of sales also improved year-over-year in the fourth quarter, declining to 38.9% of sales from 67.2% of sales. This number remains too high, and between revenue growth and cost containment, we expect to bring this down meaningfully in 2023 and again in 2024. Finally, we've provided a look at EBITDA and adjusted EBITDA performance on this slide for consistency with prior disclosures. but we do not intend to provide a breakout of adjusted EBITDA performance moving forward. In future quarters, we intend to focus our disclosures around the key performance indicators, which Josh and Amber discussed earlier today. Please turn to slide 12 for a review of our balance sheet and liquidity position. We ended the year with total current assets of $46.7 million, including cash on hand of $15.1 million. Total current liabilities at the end of the fourth quarter were $29.7 million, and we had $46.2 million in long-term debt outstanding. As we disclosed in a separate news release on Friday afternoon, we have amended our Green Ivy credit facility, which extended the maturity on our credit facility loans to April 30, 2024, and removed the previously required amortization schedule. We also have the opportunity to hit some performance-based milestones that would extend the maturity to January of 2026. We believe we are on a path to becoming a better credit partner through the initiatives we've taken to improve our operating and financial performance this year. Please turn to slide 13, where we've provided a summary of debt outstanding as of March 31, 2023, reflective of the amended credit facility terms we announced on Friday. We have a total of $60.4 million in debt outstanding related to our Green Ivy credit facility. $4.3 million of this balance is related to our acquisition of our dispensary in Baltimore and has a different maturity date of November 19, 2024. Our other debt primarily relates to former M&A activity with maturity dates at the end of this year. As previously mentioned, we have the potential to extend the maturity date on our green IV credit facility even further to January 31, 2026 by meeting some performance-related milestones. Although the milestones are not easy performance hurdles given our history, we believe they are attainable should the operational and profitability improvements we're implementing prove to be successful. And assuming we continue to have reasonably conducive state regulatory environments. The milestones themselves are based on fixed charge ratios, so they are effectively tied to our ability to generate profits and cash flow, consistent with being a better credit. As we disclosed on Friday afternoon, we're also in advanced discussions with a separate affiliate of Chicago Atlantic on the finalization of a $10 million convertible loan facility, which we expect to start funding during the second quarter of this year. This facility is expected to have a monthly draw scheduled that will provide us additional support as we execute our cream and fire strategy for this year. We plan to provide more clarity around the details of this facility later this month with disclosure and a news release once the transaction closes. On slide 14, we provided a summary of share capitalization as of Friday at market close, inclusive of shares issued to our lenders related to the credit facility amendment and extension fee we announced Friday afternoon. Following the issuance of subordinate voting shares to our lender in connection with the amendment to our credit facility and the conversion of super voting shares to subordinate voting shares, which we announced on Friday afternoon, The company will have 128,126,330 equity shares issued in outstanding on an as-converted basis, 178,921,494 shares outstanding on an as-converted fully diluted basis, and 131,348,007 shares outstanding on a treasury method basis. I'll now hand the call back to Josh for some additional closing comments.
spk08: Thank you, John.
spk05: With that, if there are any questions, we'd be happy to take them at this juncture, or I can hit some concluding remarks.
spk06: The floor is now open for your questions. To ask a question this time, please press star 1 on your telephone keypad. If at any point you'd like to withdraw from the queue, please press star 1 again. We'll now take a moment to render our roster. We do have a question from the line of Eric DeLaurier from Craig Hallam Capital Group. Please proceed.
spk03: Eric DeLaurier Great. Thank you for taking my questions, and I appreciate all the increased transparency and all of my congrats to Amber on her promotion as well. First question from me, just on the topic of Minnesota adult use, you know, that the regulations there seem to be in flux a bit. I'm just wondering sort of what your expectations are at this moment for the opportunity for the existing medical players to be able to compete in the adult use market and just, you know, overall how the Minnesota team is kind of preparing for that potential transition. Just some additional color there would be great. Thanks.
spk05: Yeah, certainly, Eric. And I'll hand it over to Amber for some specifics in terms of the actual blocking and tackling on the ground color, but the core of the message is we're really optimistic about our ability to participate. There's been a lot of work on the initial draft, but as we've seen time and time again, particularly with the legislative processes, It's difficult to be precise with exactly what is the final product at the end of the day, but as noted, we've got a lot of optimism, and there is, from our vantage point, a lot of what I'd call early prep work, not late prep work because implementation tends to take quite a bit of time when it comes to this, so we should have time to adapt to said rules as opposed to trying to preplan too aggressively. Amber, if you could offer a little bit more color on the day-to-day on the ground in Minnesota, that would be fantastic.
spk01: Absolutely. Thank you, and good to hear from you, Eric. In Minnesota here, you know, this is – it's not new to our team. We've been at this now for about eight years, operating the state of Minnesota, and the team is really excited about what's to come in the expanding Minnesota market. And so, you know, we have – some minor facility improvements that are underway to focus on producing quality fire flower. And our team stands ready to support. Josh and I and Kyle are supported by an incredible Minnesota-based team, and they're ready to go. So looking forward to what comes out of this legislative session. We've really been spending some time, like I mentioned earlier, with key stakeholders in the state, sharing our learning. And just encouraging folks to lean into some of the experience that we've seen what's worked and what hasn't.
spk03: All right, I appreciate that color and then on the overall effort to increase the quality of a flower again, really appreciate the transparency you guys are providing here. Could you just help me understand maybe where some of the key focus is in terms of states? I mean, assuming that. you know, these core markets, Maryland, Minnesota, New York are obviously the focus here. But I don't know if you're able to sort of rank those or just, you know, if you're thinking about those differently at all in terms of, you know, what needs to be done or, you know, sort of what the priority is. And then just overall, could you just help us understand what you see from an improvement standpoint from, you know, like a significant CapEx perspective versus just you know, kind of getting better at the blocking and tackling, so to speak, just kind of help us understand a bit more of the color that sort of goes behind what you see needs to happen to sort of increase that quality or that percentage of a flower.
spk08: Thank you. Yes, certainly. I mean, let me attack this in parts.
spk05: First is the cultural side of this. So part of the push around this FHIR principle is really understanding what quality flour looks like, what it is, and having a passion for producing it and having a greater understanding through our people of what that is. And what I would say is coming in and working with some folks going back quite some time on this topic, the opportunity set to improve flour quality, even within, let's call it mature markets, really exists from beginning to end. It's problem identification in early-stage cultivation, mid-stage cultivation. It's how you handle the product post-harvest. It's from beginning to end, and it's not just SOPs. It really does come back to the cultural side from my vantage point in terms of really seeing what works well. And so having that as a backdrop, what I would say is there are things to do kind of regardless of facility infrastructure that can improve. certain infrastructure is going to be more constraining than others relative to what that portion can go to, how much quality, et cetera, what the yields might be. There are infrastructure constraints that come into play, and that's where the CapEx question becomes more relevant. And so if we just do a quick little rundown of the states that we operate in on the core side, if you look at it from a pure opportunity standpoint for us, there are two things that jump out meaningfully. One is the state of Minnesota. and our position in the state of Minnesota and our ability to be a long-term winner in the state and provide great value and access to customers in the state of Minnesota. And so getting this right over the intermediate longer term in Minnesota is vital. Near-term, the sell-through of higher quality flour is pretty immediate for us. The cash flow cycle that would happen just from making those improvements through the same infrastructure is really quick and efficient and so near term the low-hanging fruit is just modestly picking that number higher longer term it's how you win producing producing quality and value so that's kind of the Minnesota is where we see the most intermediate longer term value and we'll continue to have to focus around that New York as Amber identified we see a great opportunity for indoor flower producers without that regulatory structure works. And so we are fairly far along in completing the large, what we refer to as the Bluebird facility in Johnstown. It is a large indoor cultivation. The rest of our infrastructure on the cultivation side is greenhouse. And so in New York, we are hitting that market as we move forward with indoor product. And we've got the infrastructure fully mapped there. Obviously, it's a fairly large capex project to begin with, but not incremental, not meaningful incremental capex for us at this juncture. Maryland is the one where we've got, you know, both some low-hanging fruit as well as, you know, adult use catalysts coming, what we think, very quickly here this summer. And it's also the place that we're probably the most constrained from infrastructure standpoint. The greenhouse and environmental controls in Maryland leave a little bit to be desired relative to producing quality A flower, and we're working through that. But what's nice is, similar to what I described in Minnesota, what we produce, we move really efficiently, and there's low-hanging fruit to be had with some pretty modest CapEx improvements. So when I mentioned no-brainer investment decisions, we're talking sub-six-figure type investment decisions.
spk08: We're not talking about large CapEx decisions. Covered a lot of ground. I'm not sure I hit 100% of what you asked, it had some context and nuance to it, but the core.
spk03: Yeah, that was exactly what I was looking for. That was very helpful. Thank you. And then this last question from me here, John, I think you did touch on it, but I was just looking potentially for some more color on some of those performance-based milestones that could help extend your loan maturities to 2026. I think You may have mentioned some fixed charge ratios and then just overall focus on cash flow. So just seeing if I heard that right and then if there's any additional color that you have to offer on those milestones. Thanks.
spk00: Yeah, sure.
spk05: Before John, can I jump in quick, John? Yeah, please go ahead. I wanted to know one thing from the conversation because a lot of these things all tie together. I mean, cash flow performance comes from operating performance. And one of the things that was really key in our conversations with Chicago Atlantic when it came to extending was needing to improve our performance. And so the way we've discussed these things internally is I would qualify the extension milestones as attainable, but they're not no-brainers. We have to perform as we should. And so that's the context that I'll give is if we execute like we think we should, uh you know we we can attain those and and as john mentioned on the the the prepared remarks uh you know the fixed charge ratio oriented uh but john feel free to jump in with more specifics yeah eric um later this year will will be um you know there'll be a fixed charge coverage covenant in place in the new in the amended credit facility and then starting um in
spk04: the first quarter of next year, 2024, we'll have the optional extension of the facility if we can slightly outperform the base covenant of the fixed charge coverage. So that'll ratchet up from a quarter to a half a turn of fixed charge throughout 2024 into 2025. It's pretty simple.
spk08: That's how that will work. All right. Thank you very much. Appreciate you taking my questions.
spk06: The floor is now open for your questions. To ask a question at this time, please press star 1 on your telephone keypad.
spk07: I would now like to turn the call over to Josh
spk06: Rosen for closing remarks.
spk05: All right. Well, thank you for participating in today's call. I'd like to conclude by noting that I'm really excited about the opportunities in front of us. We have an enviable geographic footprint, and I can feel the initial momentum of our cream and fire initiatives. We're going to continue to focus on executing what's within our control amidst the current landscape. The core of our business isn't all that complicated. We grow, manufacture, and sell cannabis. It's simply highly nuanced because of the patchwork regulatory environment and various levels of state-level competition. What we clearly control is being focused on getting better at the basics to delight our customers. And with that, I will hand it back over to the operator.
spk06: Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation. You may now disconnect.
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