Goodness Growth Hldgs Inc

Good day, everyone, and welcome to the Goodness Growth Holdings Third Quarter 2023 Results Call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply place star 1 on your telephone keypad. If you would like to withdraw your question, it is star 1 again. I would now like to turn the conference over to Sam Gibbons, Investor Relations. Please go ahead.

Thank you, Lisa, and thanks to everyone for joining us. With me on today's call are our interim CEO and CFO, Josh Rosen, 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 today'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 securities 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 today's earnings release. Now I'll hand the call over to Josh.

All right. Thanks, Sam. And thanks, everyone, for joining us this afternoon. I'll begin today with some business highlights from the third quarter and the progress we're making against our cream and fire strategy. And then Amber will run through some updates in our core markets and key performance indicators before we open up the call for any questions. As a reminder, our strategy name of Cream and Fire refers to the famous phrase, cash rules everything around me, as well as our focus on producing fire cannabis products that delight our customers. Please turn to slide three of today's presentation, which is available in the quarterly results and events and presentation sections of our investor relations website. As we've discussed previously, 2023 is an important year of transformation for the company, and our third quarter results represent meaningful progress and are a solid indication that our decentralized reorganization initiatives are working. Total revenue, excluding discontinued operations, increased 44% year over year and 28.2% sequentially. Performance was driven by the combined benefits of our recent operational improvements initiatives and the launch of adult use sales in Maryland on July 1st. I want to take a moment to talk about how I think about evaluating performance and supporting operations when markets are first activating, like what we've witnessed in Maryland in the third quarter. In what's still a relatively immature industry, it's hard to evaluate performance with precision. Our focus is initially on how we're doing compared to the industry trends. Then, secondarily, with a constant eye on how we're positioned for long-term success as markets inevitably get more competitive. Although early numbers can be noisy on the initial metric of how we're doing compared to the industry, we appear to have captured incremental market share when adult use was activated, which can be seen in comparing our relative growth, both sequentially and year-over-year, with the state's published numbers. I'm pleased to see this initial performance. As for how we are positioned for long-term success, that requires being honest about your strengths and weaknesses and understanding the dynamics of inevitable pricing and supply chain normalization, something that's different in every market but often rhymes. When pricing is elevated with limited supply, there are surplus profits being captured, and it's our job to win now and in the future as things get more competitive. It's probable that margin profiles will come down and the better operators that don't overextend will hold serve much better in these environments. It's the job of our local team and our version of the COO, our wheat hustle office, to make sure we're a long-term winner. Not many folks talk about surplus profits in this industry, and I'd like to see that change. As Amber will detail momentarily, we are continuing to see improvements in our key performance indicators resulting from our recent operational improvement and cost control initiatives, as well as our partnership with Grown Rogue that has continued to drive strong improvement in harvest yields despite a challenging summer climate in our Minnesota greenhouses. While we still have much hard work in front of us over the course of the next several quarters, we've been very pleased with the performance of our team in adapting to our new decentralized operating structure. As we've discussed consistently for the past few conference calls, growing into a better credit by improving our ability to generate cash flow has been the most fundamental focus of our operating strategy this year. So we're very pleased to be able to demonstrate clear improvements in these areas. One of the most important milestones for us in achieving the success, however, relates to our ongoing efforts to simplify our business with strategic asset divestitures. And we discussed last quarter the divestiture of our former New Mexico operations and also disclosed that we have an LOI in place to divest our New York assets and operations. While the New York divestiture process has taken a bit longer than we anticipated, we're optimistic we'll have definitive documents before the end of this year, at which point we could begin the license transfer application process. We can't say much else on this for now, but this would be a key event for us on our path toward improving our cash flow generation. And we look forward to sharing additional details regarding our future profitability expectations once this process is complete. Please turn to slide four, where we've provided a refresh of the highlights we discussed last quarter regarding the progress of our cream and fire operating strategy. Last quarter, we discussed how the qualitative components of the strategy outlined on the left side of the slide were beginning to gain traction. But this quarter, we provided some additional specificity with a couple of quarterly key financial metrics dating back to the third quarter of last year. Meaningful progress is evident in both the trajectory of our SG&A as a percentage of sales and EBITDA performance. We've also included comparisons on these metrics for both the year-to-date periods from this year and 2022. We're pleased to showcase the improving trend in these metrics, and we're optimistic about our ability to sustain leaner costs. Although it's not a metric that is conducive for industrial communications, internally, we have the team looking at incremental margins as an important tool for decision-making. We've been very transparent that securing a strong independent future for the company depends upon our ability to grow into a stronger credit and produce meaningful cash flow. Our results today demonstrate that we've simplified our business and improved the efficiency of our operations to support longer-term profit growth. But we're still maneuvering through some exceptionally challenging circumstances that were created by Verano's wrongful termination of our arrangement agreement in October of last year. This includes having little choice but to divest New York. As a reminder, earlier this year, we gained additional financial flexibility to execute our plan for the year by amending our credit facility and closing out a convertible loan, which provides us with incremental monthly support while we remain in ongoing litigation with Verano. And as we've discussed previously, we have the potential to extend the maturity date on our credit facility into 2026 with the satisfaction of performance-related milestones. We've characterized in the past that these aren't easy milestones for us, but that we view them as achievable. We believe that the inflection to producing more meaningful operating income in the third quarter, despite a meaningful drag from New York operations, has increased the likelihood we attain these milestones, and at a minimum, put us into a much better credit profile. That concludes my prepared remarks, and I'll now hand the call over to Amber Schimpa for some additional business updates and review of our third quarter key performance indicators.