Goodness Growth Hldgs Inc

Thank you for standing by and welcome to the Goodness Growth Holdings first quarter 2024 results call. 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 press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Sam Gibbons, Investor Relations. Please go ahead.

Thanks, Rochelle, and thanks, everyone, for joining us. With me on today's call are our CEO and interim 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, Dan. And thanks, everyone, for joining us this afternoon. Before we get into the prepared remarks, I thought I'd add a quick commentary on the prospects of rescheduling. I won't say much, as it's a well-covered topic. We believe it's difficult to handicap how long the process might take, but agree with others that it's a very high likelihood that we get rescheduled soon, although our version of soon wouldn't be surprised to see it stretch into 2025. I've learned that I'm not particularly skilled at handicapping these things overall. It's worth the reminder that this news is a meaningful step in the right direction, and despite timing uncertainty, this was the natural next step. In other words, while the timing is uncertain, I don't think this could have been better news at this juncture. I'll begin today's prepared remarks on slide three of today's presentation, which should be available in the quarterly results and events and presentation section of our Investor Relations website. Let's start with the elephant in the room. We're getting our news release last week about our application filing for summary determination in our litigation against Verano. and the magnitude of the damages that the expert calculated in supplement to our legal filing. I told the team to expect that outsiders would start by thinking the magnitude of damages is inconsistent with the circumstances, but that I'm a big believer that the math is the math. I'd remind folks that our arrangement agreement was structured as an all-stop transaction for over $400 million, and one could fairly assume that Toronto was expecting a compelling return when they entered the transaction. The stock prices themselves and our market capitalization are actually irrelevant to the analysis. It's a damaged analysis to our company, not directly to our shareholders. As is often the case in these circumstances, I believe discounted cash flows become the most robust choice for such value determinations. As I believe was well laid out in our filing, we believe Verano was calculated with their decision to wrongfully terminate our agreement and by claiming our breach. By claiming our breach, they avoided entering any substantive settlement conversations. I believe they did this knowing we had become acutely financially vulnerable through the summer of 2022, with obvious debt maturities on the horizon not unlike today. I'm a bit surprised they didn't re-approach us when we were most vulnerable, but I think that perhaps speaks of their lack of familiarity with just how liable companies are when they dodge definitive merger documents, or potentially it relates to how comfortable they are that time is on their side. Throwing a bowl of spaghetti excuses against the wall, claiming that we breached, would be somewhat laughable if it didn't have such harsh consequences for the stakeholders and goodness growth. And now, I believe we're on a solid, independent path. It's not an easy path, but we can see this case through, and I have a lot of comfort with facts. I recently agreed to commit to dropping Enum for my CEO title because I'm excited about our team and our path, and I'd like to see this through. And that could include meeting a full trial. I hope it doesn't. I think that would be a shame for both parties. But there's no love lost for what Verama did to us, and I'm now much more confident that we are positioned to benefit significantly from this litigation. I believe they took a calculated risk, and it's our job to protect ourselves from ultimately what I believe was predatory behavior, whether intentional or not. While living with our compromised balance sheet, we've seen our peers invest significantly to prepare for the adult use activations in Minnesota and New York. Okay. One last note on the litigation. We're taking our scrappy operator approach to this litigation, just like we do our operations. Our leadership team, in particular me, Kyle Kingsley, and our outside counsel, Nicole Stanton, our outside general counsel, Nicole Stanton, are actively stewarding this process and making sure we utilize our resources wisely. We believe this situation warrants the prudent use of our capital and human resources, just like when we analyze our capital and bandwidth allocations more broadly. All right, having addressed that subject, let's move on to our first quarter and recent business highlights on slide four. Our first quarter results reflect the continuation of the trends we observed during the fourth quarter, with continued improvements in operating and financial performance driven by the commencement of adult use sales in Maryland, as well as strong execution of operational improvements under our cream and fire strategy. As a reminder, the strategy name refers to the famous phrase, cash rules everything around you. and our focus on producing fire cannabis products that delight our customers with quality and value. Last year, we embraced a scrappy operator mentality under this strategy, and we made swift moves to decentralize and infuse our organization with mature market talent with our primary goal of improving our operations and quality of products. Since then, we've developed much stronger capabilities to move inventory more quickly and convert product into cash flow, which is particularly exciting as we await the launch of adult use sales in Minnesota in early 2025. I'm also excited because we still have a lot of room for improvement. Total revenue, excluding discontinued operations and New York, increased 45% year-over-year to $21.1 million, and we remain pleased with the recent consistency of our margin performance as both gross profit margin and operating margins improved as compared to the first quarter of last year. We're continuing to add mature market talent across our operating footprint in Maryland and Minnesota, and we were proud to highlight several of these recent key personnel hires in last week's Clean and Fire News press release. As Amber will discuss momentarily, we're very excited about the launch of adult use sales in Minnesota next year. In this past 420 holiday, we were pleased to launch two new brands of beverage products in Minnesota. Given Minnesota's unique regulatory framework for hemp-derived THC products, we view our beverages launch as a very low-risk, capital-light opportunity to send some of our adult use-leaning brands into market before the launch of adult use sales. We also see opportunities for these plans to expand into additional geographic markets in the future. As we discussed last quarter, we are working toward definitive documentation and regulatory approval in our pending transactions to divest our New York assets and operations to ACE Venture Enterprises. Given some preliminary regulatory diligence, we believe New York's strong desire to have a minority-led RO can support an efficient timeline, and we are optimistic that this transaction will close before June 30th. While we were disappointed that Toronto's wrongful termination of our merger forced us into divesting our native business, we've entered into a collaboration agreement with ACE for management and compliance in return for a 15% profit share in New York moving forward. Finally, as we disclosed in last week's Cream and Fire news release update, we received a temporary extension of the maturity date on our credit facility loan until June 14th of this year. And we expect to reach an agreement with our senior secured lender to secure a longer term extension here in the second quarter. Please turn to slide five of today's presentation, where we've summarized our strategic objectives for 2024. These objectives mostly reflect continued execution of the key tenets we outlined of our cream and fire strategy last year. But our focus in 2024 is as much about preparing for 2025 as it is on continued improvement supporting our current operations. Fortunately, these goals largely support one another. That concludes my prepared remarks, and I'll now pass the call over to Amber for some additional highlights from the quarter and a review of our key performance indicators.