Jushi Hldgs Inc Cl B

Good afternoon. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to Ducey Holdings, Inc.' 's third quarter 2025 earnings conference call. Today's call is being recorded. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. I will now turn the call over to Trent Wolovec, Co-Chief Strategy Director. Thank you. Please go ahead.

Good afternoon, and thank you for joining us today on Jushi's third quarter 2025 earnings conference call. My name is Trent Wolovec, and I am the Co-Chief Strategy Director at Jushi Holdings, Inc. With me on today's call are Jim Cassioppo, our Chairman and Chief Executive Officer, John Baric, our president, chief revenue officer, and corporate secretary, and Michelle Mosher, our chief financial officer. This call is also being broadcasted live over the internet and can be accessed from the investor relations section of the company's website at ir.jushico.com. In addition to the company's GAAP results, Management will also provide supplementary results on a non-GAAP basis. Please refer to the press release issued today for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the investor relations section of the company's website at ir.jujico.com. Additionally, we would like to remind you that during this conference call, we will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, and future performance and business. Although Jushi believes our current estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. We caution you that actual results may differ materially from any future performance suggested in the company's forward-looking statements. The risk factors that may affect actual results are detailed in Jushi's 10-K and other periodic filings and registration statements. These documents may be accessed via EDGAR and SEDAR, as well as the investor relations section of our website. These forward-looking statements speak only as of the date of this call and should not be relied upon as predictions of future events. Jushi expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Jim.

Thank you, Trent, and thank you, everyone, for joining our call. Today, I will provide a high-level overview of our financial performance during the third quarter of 2025, followed by a discussion of our recent operational achievements and key developments. I will then turn the call over to Michelle to review our financial results in further detail before opening the question and answer period. We continue to build positive momentum in the third quarter, delivering revenue of $65.7 million. This represents a steady sequential increase of $.6 million and a robust year-over-year growth of $4.1 million. I would note the third quarter has consistently been our seasonally slowest of the year. Retail revenue was slightly lower on a sequential basis by $0.7 million, but delivered a meaningful year-over-year increase of $3.3 million. The year-over-year growth was primarily driven by strong performance in Ohio and Virginia. In Ohio, we benefited from higher unit sales due to the addition of five new stores, while Virginia delivered strong same-store sales growth across our six-store network. Although price compression remained a challenge across markets, Ohio's performance stood out, continuing to deliver despite this ongoing pressure. Wholesale revenue grew by $1.3 million sequentially, with all markets contributing to quarter-over-quarter improvement. On a year-over-year basis, wholesale revenue increased by $.7 million, with Virginia as the one exception. where partners prioritize vertical sell-through, resulting in a softer annual comparison. Our third quarter sales performance reflects ongoing strength across both our retail and wholesale channels, fueled primarily by operational enhancements at our grower processor facilities. These continued improvements have elevated both product quality and availability, enabling us to better serve demand across our network while achieving improved margins. Gross profit for the third quarter was $30.7 million, representing 46.7% of revenue. This marks a notable improvement from $28.9 million, or 44.5% of revenue, in the second quarter of 2025, and $28 million, or 45.4%, in the third quarter of 2024. The 220 basis point sequential increase in gross profit margin, along with 125 basis point expansion year over year, highlights the continued positive impact of our operational enhancements on overall profitability. Net loss was $23.7 million compared to $12.3 million last quarter and $16 million in the prior year. Adjusted EBITDA was $12.8 million compared to $13.7 million in Q2 of 2025 and $10.3 million in Q3 of 2024. Cash flows provided by operations were $6.1 million in Q3 of 2025 compared to $1.9 million of cash used in Q2 of 2025 and $2.4 million of cash provided in Q3 of 2024. The improvements in operational efficiency and product quality across our facilities are now translating directly into stronger financial results contributing to increased sales and enhanced margins. This progress stems from advancements in genetics, facility upgrades, and approved operating procedures due to a material upgrade to our management team through promotions and new hires over the fourth quarter of 2024 and throughout 2025. Across our growth processor network, I'd like to highlight two key achievements. First, our yield has climbed to an impressive 84 grams per square foot across the GP portfolio, making a 13% increase year over year. Second, our potency levels have averaged 27% THCA, which is 10.5% above our 2025 target, and an improvement over 2024. This combination allows us to better meet patient and consumer preferences, driving growth in both retail and wholesale sales. As mentioned, we saw strong momentum with a 23.2% increase in quarter-over-quarter and an 11.9% rise year-over-year in our wholesale channel sales. While wholesale sales have been down for some time due to lack of availability of products, Our increased production capacity now enables us to satisfy increased internal demand across our retail network while continuing to support wholesale partners. Ohio continues to impress with a 2.4 times increase in canopy year over year, alongside continuous improvements in yield and potency. Our yield in Ohio is now around 92 grams per square foot, with potency averaging 29% THCA. The improvements in our quality are resonating in the Ohio market as we expand to 160 active wholesale doors in the third quarter, which is an 11% sequential increase. The successful improvement of both yield and potency as we expanded our canopy reinforces our confidence in our ability to replicate these results as we continue to scale, and particularly as we move forward with planned canopy expansions in Pennsylvania and Virginia. I'm also pleased to report that we have successfully navigated and addressed the operational challenges in Massachusetts and Pennsylvania. Our Pennsylvania GP is performing as good as any of our facilities in the portfolio. It is our largest facility with the ability to produce products in every category except for a few small ones like soda-type beverages, press pills, and creams. Moving on to our ongoing projects, we continue to deploy high return capital into our grower processor facilities, especially in Pennsylvania and Virginia. These high ROI projects are a vital part of our long-term strategy and enable us to strengthen our supply chain for both medical and adult use in these markets. In Virginia, we continue to expand capacity to meet rising demand in the medical market. We expect to bring our seventh cultivation room online at the Manassas grower processor in the first quarter of 2026. After that, we have the ability to add on one additional cultivation room within the existing footprint. In parallel to support adult use sales, we have begun design work on a new warehouse on our vacant land at the rear of our current facility that we will eventually connect. We are hoping to be in a position to begin construction of an adjoining building a couple of months after adult use is approved, depending upon the speed of regulatory approvals. In addition, there's more vacant land to allow for additional warehouse expansion projects if market conditions warrant such an investment. In Pennsylvania, we will shortly finish phase one of our two-phase expansion plan to increase flower capacity and required support areas like increased dry room capacity. This phase includes reengineering an outdated cultivation space into three smaller single-stack cultivation rooms capable of producing to our much improved standards. Phases two and three have been combined into a single phase as we currently have more than adequate capacity for the medical market. The new phase two is in the architectural stage. Phase two will substantially increase our capacity for adult use. This expansion is a reengineering of underutilized space in the current warehouse, which allows for a quick turnaround and lower capital investment to meet adult use needs. These two expansions are expected to increase our total canopy by approximately 35% once all phases are completed. As in Virginia, our grower processor facility sits on plenty of land, which will allow us to address additional market opportunities if growth and profitability are robust.