Medmen Entprs B Sub Vtg

Good day and thank you for standing by. Welcome to the MedMen fourth quarter fiscal 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Mr. Rhys Fulgham, Chief Financial Officer. Please go ahead.

Thank you. Good afternoon and welcome everyone. Today, I am joined by our CEO, Tom Lynch, and COO, Tim Bossidy. On today's call, management will provide prepared remarks, and then we will open the call to your questions. Earlier today, we issued a press release announcing fourth quarter and full year fiscal 2021 results for the period ending June 26, 2021. The press release, along with our financial statements and MD&A, are available on the company's website and filed on both EDGAR and SEDAR. Before we begin, I'd like to remind you that the comments on today's call will include looking statements, which by their nature involve estimates, projections, goals, forecasts, and assumptions, and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements relate to, among other things, the business and operations of MedMed, our plans for new stores, our financial, operational, and strategic expectations, and our expectations as to future sources of funding. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. Additional information about the material factors and assumptions forming the basis of the forward-looking statements and risk factors are provided in the press release and in the company's reports filed with the United States Securities and Exchange Commission and Canadian securities regulators. During today's conference call, MedMen will refer to certain non-GAAP measures that do not have any standardized meaning prescribed by GAAP, such as EBITDA, Retail Adjusted EBITDA, and Corporate SG&A, which are defined in the earnings press release we issued earlier today. Reconciliations to GAAP measures are contained in the press release. Please note, all financial information is provided in U.S. dollars unless otherwise indicated. Now, with that, I'd like to turn the call over to Tom.

Thank you, everyone, for joining us this afternoon. We will provide another update on the company's turnaround progress, including execution on our transition to growth and plans to drive future growth. the recently announced transactions with Soraya and Tilray, as well as our financial performance for the fourth quarter in the fiscal year 2021. The past quarter was a pivotal one for MedMen. When we joined MedMen 18 months ago, we set out to stabilize this company and return it back to a growth trajectory that aligns the power of the brand, which we believe is the leading retail cannabis brand in North America. We've done that. We've drastically improved our expense structure, generated momentum in quarterly sales, and have now posted positive retail-adjusted EBITDA for four consecutive quarters. Looking ahead, we plan to accelerate our growth and push towards company-wide profitability in the coming quarters as we leverage our national brand recognition to drive new store growth in Florida, California, Massachusetts, Arizona, and Let's now review highlights from the fourth quarter and fiscal 2021 results. Revenue trends during the fourth quarter continued to show sequential growth coming in at $42 million for quarterly revenue at Bed-Bed. This increased 18.5% sequentially from the third quarter's $35.4 million. It was up 55.4% year over year. The sales increase was driven by frequency of transactions and greater traffic and was broad-based, with all states other than Illinois posting positive sequential sales growth. While our full-year fiscal 21 performance showed a slight revenue decline to $145.1 million versus $155.3 million from the prior year, COVID had a profound impact on our results, particularly during the first half of the fiscal year. And we have ended the year in a much better place as pandemic restrictions moderated during the last two quarters. Profitability metrics reflect a dramatic turnaround for the company. The fiscal year retail adjusted EBITDA increasing to 28.1 million from 5.9 million a year ago. Company-wide EBITDA for fiscal 21 improved by 25.7 million year over year. This is especially exciting in context of where we started. We think taking a moment to reflect on this adds significant credibility to us saying, first, we needed to focus on a turnaround and profitability reset, and now we can turn to growth, and we have the platform to do it. In Q2 2020, the last reported quarter before we started, total, inclusive of New York, adjusted EBITDA was approximately negative $34 million. This quarter, there was also a one-time inventory adjustment ad back of approximately $11 million in operations. Without that one-time ad back, quarterly adjusted EBITDA would have been approximately a $45 million loss off a revenue base of $48 million. The annualized difference between that and this quarter's total adjusted EBITDA is over $140 million. Let me repeat that. annualized adjusted EBITDA of over 140 million. We think that context is incredibly important because it scales how much work needed to be done and where all management focus needed to be. At the same time, we were over levered and undercapitalized and needed to work to transform the balance sheet. Also, we're in a pandemic with severely restricted capacity in California and Nevada. And at one point, a number of our stores had to close completely due to looting and damage. This operational progress has allowed us to attract strong partners to reshape our balance sheet. The amendment and extension of our debt, along with the $100 million equity investment, gives us the flexibility and firepower to match our revenue trajectory to our operational expertise and renowned brand. With the transfer of a large portion of our notes by Gotham to Tilray and the agreement to amend and extend our convertible notes, We have refocused covenants, which were previously an administrative burden and cost driver, to reflect the fact Bedman is a high-potential and high-growth company. We have also extended the debt maturity by seven years and eliminated cash-paid debt service, allowing us to prioritize new market opportunities and existing operations over near-term balance sheet management. The $100 million equity investment led by Soraya Private Equity will allow BedBed to expand its operations in key markets, including California, Florida, Arizona, Illinois, and Massachusetts, and identify and accelerate further growth opportunities across the United States. We have significant opportunities for growth in all of our key markets, and this fresh capital allows us to capitalize on these opportunities and execute on our growth plans. The two transactions together have also allowed us to remove the going concern risk language for our most recently reported financial filings. We continued to see progress on profitability during the quarter, in addition to the full year, as we posted our fourth consecutive quarter of positive cash flow after tax across our retail footprint. We measured this by retail adjusted EBITDA, which was $8.9 million during the fourth quarter, up 8.6% from the third quarter, and compared to negative $200,000 in the comparable period last year. This represents an annualized improvement of $37 million. On the expense side, corporate SG&A grew about half the rate of sales growth, increasing 9.7% sequentially to $12.1 million. As a reminder, at its peak, the company's corporate SG&A was approximately $160 million annually. Importantly, corporate SG&A was not up because we felt we had to scale headcount for additional growth, but was predominantly due to a one-time bonus reversal benefit of $1.2 million we took in Q3. We're excited about our forthcoming growth prospects. With 14 new store openings planned in key markets, In addition to our recently opened Orlando store, our current plans include two new stores in California over the next six months, nine new stores in Florida over the next six to nine months, two openings in Massachusetts, and one in Illinois. As revenue from these new stores come online, we expect continued progress on profitability metrics. We appreciate the patience and support from our stakeholders as we executed the key elements of our turnaround plan. We believe this patience has paid off as we have taken a significant step forward with the recent Tilray and Soraya transactions. We could not be more excited to execute on our growth plan and deliver the revenue and profitability numbers we believe this brand is capable of generating. With that, I'll hand it over to Tim Bossidy for operational highlights.

Thanks, Tom, and thanks, everyone, for joining us today. As I have the last few quarters, I will walk through our state-by-state plans and progress, as well as what we have set in motion to drive future growth. Like Tom, I'm more excited than ever about the future of MedMen. At the state level, sales increases were broad-based in Q4. California revenue for the fourth quarter was up about 24% versus third quarter. Nevada revenue was up about 44%. Arizona up about 17%. Florida up about 11%. and New York, while in discontinued ops, was up about 12% quarter over quarter. Illinois did calm down slightly, which we will touch on in more detail. I'd also like to note that this quarter brought in our most successful day and week in the history of MedMen during the 420 holiday. That fiscal week, we achieved over $4 million in revenue and generated over $800,000 in revenue on 420 itself. What is exciting to us about this landmark is that it shows proof we now have scalable pieces of infrastructure in place as we continue to refine our model certainly there are a number of opportunities to improve and future proof our platform but during the turnaround and restructuring process while we cut we did not cut to the bone and we are ready to continue to scale upwards now as we look ahead we have the footprint the balance sheet momentum in stores and as i mentioned before 20 a scalable infrastructure for growth at retail We're also starting to gain significant momentum in our cultivation and manufacturing facilities. At our Arizona facility, Mesa, revenue nearly doubled year over year, increasing 98%. We also saw strong trends at our Florida facility, Eustis, with revenue increasing over 200% year over year and 37% sequentially. Both Mesa and Eustis also generated positive EBITDA for the quarter, adjusted for inventory write-downs primarily associated with how we cost. Those adjustments essentially just mean we posted sequential improvement in operating efficiencies. But the highlight here is that at these facilities, we generated positive EBITDA for the quarter. We continue to make strides in both yields and potency. and we have now identified potential expansion opportunities at Mesa in addition to the previously discussed expansion at Eustis we continue to pursue. Going a little more granular state by state, in California, fourth quarter revenue grew 24.4% sequentially to $25.2 million. California accounted for 55% of the company's retail EBITDA in the quarter and increased sequentially as well, driven by higher top-line volume. Key drivers in California during the quarter included, first, a focus on traffic driving initiatives as COVID restrictions began to lift. Specifically, we increased email sends by 33%, and we also saw a 25% increase in engagement rate as we pushed our CRM strategy. As part of this process, we began segmenting content to customers based on their past purchasing habits and testing responses to these contents. Quarter over quarter, we also saw loyalty revenue increase 18%, and have since ramped up our loyalty initiatives, including a hand-carry card, and are seeing very promising results from this pilot. We also increased our out-of-home advertising, locking in billboards in highly strategic places, including on Lincoln Boulevard, adjacent to our store in Venice, and on the well-traveled 2nd Street in Long Beach. With our at-home advertising, we've also revised the creative, we're much better encapsulating a fun and engaging feel. We also continued success with our private label, seeing MedMen Red jumped another 30% to about $1.3 million in revenue in the quarter, where it continues to lead at entry-level price points in a number of categories. Looking ahead in California, we plan to open two stores in San Francisco over the next several quarters. We are working closely with the city to open our Union Street location in the next two months, and our southern street location by early calendar 22. in our existing footprint we plan to build off of our existing private label success and leverage our connections and insights in the industry to launch a higher-end private label offering this fall as well as continue to improve on and expand med men red we will also continue to improve and test our pricing strategy where we think we have substantial ring to improvement And finally, delivery. We're investing to build out our team and are testing a fee-driven, on-demand offering to build on our scheduled delivery. In Nevada, same-store sales grew 44.1% sequentially to $4.7 million. Nevada accounted for 14.5% of the company's retail adjusted EBITDA in the quarter, an increase meaningfully on a sequential basis. Key drivers in Nevada during the quarter included, first, a focus on driving traffic back into our stores through additional marketing initiatives in line with tourism increasing. We strategically deployed taxi toppers, digital billboards on the strip, Lyft and Uber driver incentives to bring customers into our doors. Overall, we are pleased with this performance and are currently looking to add more digital billboard replacements. We are launching car wraps in the next several weeks and increasing the total topper counts. We've also begun to develop strategic partnerships such as the popular First Fridays events in downtown Las Vegas. Further, we increased email communications by 36% in the quarter and actually got leverage off of that increased communication and saw a 43% increase in engagement in Nevada. Loyalty revenue also increased 33% as we implemented more local resident specials. Going forward in Nevada, We also plan to launch a higher-end private label offering, similar to what we were doing in California this fall, as well as continue to improve upon and expand Redmond Red. The success of Redmond Red and the tight flower market in Nevada led us to some inventory supply issues in the quarter, which we have addressed. And on the go forward, we think we'll be better fortified against missed revenue opportunities here. We're also testing pricing, particularly in the fire category, where MedMen Red will be a valuable tool. Competitive analysis shows how aggressive the discounts are around this particular category in Vegas, and we're working to optimize our pricing strategy. We also plan to relaunch delivery in Nevada in November, going live with our Paradise location. Finally, we're also looking and working to create a consumption lounge in our Paradise location. which, while we're in early days, we think will be a phenomenal grand showcase for us. In Arizona, we are thrilled to resume our investment in this market and are equally thrilled with the results we've seen since the market turned adult-ease. We grew sales by 17% to $2.5 million during the quarter, and Arizona accounted for 7.6% of the company's retail adjusted EBITDA. The key drivers in Arizona during the quarter included a focus on driving traffic to retail after the spring's transition to adult use. We strategically deployed platinum placements on Leafly and WeMaps, increased our email communications by 80%, drove an over 50% less engagement. As mentioned, we also drove strong year-over-year comps in our cultivation and manufacturing facility and achieved positive EBITDA there. There is significant room for growth in that operation, given not only our grow, but our exclusive manufacturing agreement with Kiva. Looking ahead in Arizona, we plan to look opportunistically on ways to expand our cultivation and manufacturing, expand our private label, including a pre-roll offering we believe will be distinct in the market at both retail and wholesale, continue to upgrade our cultivation capability, which will drive some of this private-level offering. And to that note, we are seeing already with some of our pilots increased yields and COAs with total cannabinoids in the 30% range. as well as finally continue to build our new rep customer loyalty through marketing programs that drive return visits to our store and through the strength of our private label program. In Illinois, we did see a modest decline in same-store sales of 5.8% to 4.4 million. The state accounted for 12.5% of the company's retail adjusted EBITDA in the quarter. We attribute the sales decline to a bit of a dip in quality from one of our key suppliers, as well as a sub-optimal pricing strategy, given increased market competition. We are working to drive enhanced new and repeat business through loyalty punch cards, in-store events, and elevating our product offering, as well as revamping our pricing and assortment strategy. We note we did lay the groundwork for future comps, subject to the adjustments we need to make, by seeing our email communications increase by about 35%, and our engagement rates increased in lockstep with that at about 35%. In future quarters in Illinois, we plan to open our new location in Morton Grove, and while there have been frustrating development delays, we think that this is a special location, and we are expecting a strong opening in spring 22. We also plan to increase third-party marketing within state guidelines to help improve customer acquisition. and we are working on a permanent loyalty program and a better systems integration to increase customer retention as we currently have an interim program in place and a bit of a systems isolation issue in Illinois. Bringing this all together into the broader MedMed platform we think is going to be a really nice driver for us. In New York, same-store sales increased 12.2% to $4.5 million. The state accounted for 6.2% of the company's retail adjusted EBITDA in the quarter and increased sequentially. While in discontinued ops, we did want to note progress here. It is helpful to show that we're continuing to grow this business. And while we've still worked towards regulatory approval in New York with the assigned investment, we are not letting up on continuing the pursuit, including implementation of the wholesale offering subject to regulatory approval. In math, we continue to drive towards our new store openings, where we are increasingly confident we will be a differentiated retailer based on assortment and customer service. We're working with the state to get our family location open as quickly as possible. Construction is done and inspections are ongoing. And right now we hope for a November opening subject to state approval. Although MAS advertising guidelines are highly restricted for cannabis, we are excited to have locked down a couple of prime billboard placements in the area, which we'll be announcing our coming soon messaging in the upcoming months. We've also already secured desirable placements with Leasley and LeadMaps in advance of the grand opening of our family location. On delivery, we have identified a vendor for a potential partnership in MAS, and we are evaluating timing and compliance requirements. We have also identified several potential partners to launch MedMen Red in Massachusetts once our retail operations are underway. And we still aim to open our Newton location in spring 22, subject to city and state approvals. In Florida, revenue increased 10.9% sequentially to $3.9 million. Florida accounted for 4.2% of the company's retail adjusted EBITDA on the quarter, a sequential decline due primarily to higher operating expenses as a percentage of revenue with the ramp-up of our new Miami Beach store. We also saw improved operating efficiencies at our cultivation and manufacturing, as noted, showing positive EBITDA at the facility level based on internal accounting. This is a first in MedMent history and is a huge credit to the team there and a marker of how much progress we've made. Key drivers of results in Florida include better product, Potency increased and flower quality increased, driving more sales, even though our SKU count remains low. We also increased email comms by over 80% and improved engagement by over 50%. Oil key revenue increased as well. For future quarters, we plan to expand our assortment by about 70 SKUs by the end of the year, which is almost double where we are now, and expand at least another 50 or so SKUs early next year. We also need to experiment pricing strategies to better compete with our promotionally driven peers. We think we can do this while maintaining strong margins, but we absolutely need to be more competitive from a price standpoint, and then we need to educate our patients around how competitive we are, both from a product quality standpoint, and in fact might be differentiated from a product quality standpoint, while providing tremendous amount of value. We need to refresh our genetics program. This is underway. alongside the expansion of our cultivation facility. We plan to open additional nine stores through the end of this year into early and mid-22 on the back of our cultivation expansion. We're also excited to be launching delivery into the Florida market by the end of October, starting in Orlando, St. Pete, Miami, and Coral Shores. An important point I want to leave everyone with is that there is an enormous amount of operating leverage in our business, given the high fixed costs we inherited. As we execute on the growth plan and the phenomenal MedMen footprint, we will quickly drive our story towards the one of profitability. With that, I hand it to Reese. Thank you, Tim. First, let me note that we are considered a U.S. domestic issuer under the rules of the SEC. And as such, our financial statements were prepared in accordance with U.S. GAAP. Also, consistent with prior orders, All the figures on today's call are in U.S. dollars. In addition, I'll refer to certain gap measures we believe to be relevant economic indicators. You can find further information on these financial measures in our press release. Overall, we continue to make solid progress quarter over quarter by most financial and operational metrics. First, let me address our company-wide retail results, which includes the New York operations, which are currently classified as discontinued operations, and Arizona operations, which were previously classified as discontinued operations, but are now included in our GAAP operating results as continuing operations. Companywide transactions were up 20% for the fourth quarter, driven mainly by broad growth across all states, except for Illinois, which was slightly lower than the prior quarter. Companywide retail revenue for the fiscal fourth quarter was $45.2 million, up 19.4% from $37.8 million in the prior quarter. For the full year, company-wide retail revenue with $154.3 million, down 5.6% from $163.5 million in the prior year. California and Nevada continue the meaningful progress recovering from the COVID-19 impact on business and occupancy restrictions. California retail sales increased by 24.4% quarter over quarter, and Nevada improved by 44.1%. Company-wide retail gross margin for the fourth quarter was $24.4 million, or 54% of revenue, an increase of $3.7 million, or 17.8% from the prior quarter. Company-wide retail operating expenses for the quarter totaled $14.1 million or 31.1% of revenue compared to the prior quarter operating expenses of $11.5 million or 30.4% of revenue. Third quarter expenses included a one-time bonus reversal benefit of $1.2 million. Full-year company-wide retail gross margin was $84.4 million, or 54.7% of revenue, up from $81.1 million in the prior year. Full-year company-wide retail operating totaled $51.6 million, or 33.4% of revenue, a decrease of $24 million from the prior year. company-wide retail adjusted EBITDA for the quarter was $10.3 million, or 22.9% of revenue, which is $1.1 million, or 11.9% higher than the prior quarter, and $10.9 million higher than the prior year's negative adjusted EBITDA of $590,000. For the full year, company-wide retail adjusted EBITDA was $32.8 million or 21.3% of revenue compared to last year's $5.5 million. Retail adjusted EBITDA, including distribution expenses for the fourth quarter, was $9.6 million or 21.2% of revenue which is $1.1 million or 12.3% higher than the quarter. Full-year retail adjusted EBITDA, including distribution expenses, was $29.2 million or 18.9% of revenue. As Tom mentioned earlier, this was our fourth quarter in a row of positive cash flow after tax across our retail footprint. Now let's take a deeper look at our continuing operations as reported in our earnings release today. On a high level basis, the presentation of our fourth fiscal quarter and full year fiscal 2021 financial results differ from the prior quarter as we have reclassified Arizona as continuing operations from discontinued operations, And we have classified the New York operations as discontinued operations from continuing operations. Revenue from continuing operations for the fourth quarter sold $42 million, up $6.5 million, or 18.5% sequentially. Full-year revenue from continuing operations totaled $145.1 million compared to $155.3 million in the prior year. The decrease year-over-year was primarily due to the impact of COVID-related restrictions in California and Nevada. Continuing operations gross margin for the fourth quarter totaled $19.7 million or 46.9% of revenue, which is a $5.4 million increase from the prior quarter. Continuing operations gross margin for the fiscal year totaled $67.3 million, an $11.9 million increase from the prior year. We expect overall continuing operations growth margin to improve going forward as we deepen our partnerships in cultivation at DHS and Mustang, where we still carry significant fixed costs. Fourth quarter continuing operations selling general and administrative expenses totaled $33.5 million, which is $3.7 million or 12.4% higher than the preceding quarter and $5.3 million or 13.7% lower than the prior year. For the full year, continuing operations, selling, general, and administrative expenses declined $77.7 million, or 38.2%, to $125.7 million, down from $203.4 million in the prior year. Corporate SG&A for the fourth quarter was $12.1 million, which was $2.9 million or 19.1% lower than the prior year and $1.1 million or 9.7% higher than the prior quarter. Primary reason for the sequential increase is an accounting adjustment recorded in Q3 reversing a bonus accrual expense of $1.2 million. Corporate SG&A was $42.6 million, which was $42 million, or 52% lower than the prior year. For the fiscal year, net loss from continuing operations totaled $145.4 million, which improved from $456.6 million in the prior year. Included in the 2020 loss from continuing operations was an asset impairment charge of $246.7 million. For the full year, net loss attributable to shareholders of MedMen Enterprises improved to a loss of $124.1 million from a $247.2 million loss in the prior year. For the fiscal year, weighted average shares outstanding was $530,980,011, driving a per share loss from continuing operations of $0.22, an improvement from the prior year's net per share loss of $0.66. Turning to our balance sheet, As of June 26, 2021, the company had total assets of $472.5 million, including cash and cash equivalents of $11.9 million. Medmin was able to raise net cash from investing and financing activities in fiscal 2021, totaling approximately $62 million. As previously announced and subsequent to year-end, the transformative note amendment and pipe transactions solidified several integral turnaround components, including, one, restructuring $219 million of convertible secure debt to extend the maturity until 2028, eliminating cash debt service requirements and modifying certain restrictive covenants to provide flexibility to the company, And two, a new equity investment of $100 million to fund the growth plan required to achieve profitability objectives. Further, on August 17th, 2021, we announced that Tilray acquired a majority of the outstanding senior secured convertible notes from Gotham Green Partners and other funds. Under the terms of the transaction, Tilray and other strategic investors acquired an aggregate principal amount of approximately $165.8 million of the notes and warrants in connection with the convertible note facility, representing 75% of the outstanding notes and 65% of the outstanding warrants under the GGP facility. Prior to the sale of the notes, the company amended and restated the ggp facility to extend the maturity date to august 17 2028 eliminate any cash interest obligations and instead provide for payment in kind interest and eliminate certain restrictive covenants in addition to restructuring the senior secured convertible notes we also announced on august 17 the successful closing of a 100 million dollar pipe with a group of investors led by Sarooya Private Equity. This investment resolves the critical turnaround requirement of stabilized liquidity, which, in conjunction with the restructuring of the senior secured convertible notes, properly positions the company from growth to profitability. I also think it's important to recognize that another significant positive outcome of the transactions in conjunction with management's turnaround financial forecast was the removal of the going concern disclosure in the annual financial audit opinion letter which further evidences MedMen's improved financial condition. I would like to provide an update on our cap table as well given the existence of redeemable securities at our subsidiaries. As of September 15, We had approximately 1,193,505,976 subordinate voting shares and an additional 91,247,378 redeemable shares, which are redeemable for subordinate voting shares on a one-to-one basis. Overall, I'm very encouraged by the improved operating results, stabilized liquidity, and importantly, the progress made to position the company for scalable growth. MedMen management and operations team continue to be focused on executing our aggressive cultivation capacity expansion and store opening schedule, thereby unlocking value from all leased but unopened portfolio properties, which is truly exciting. This will not occur overnight. and executing the transformation of infrastructure, operations, and retail offering to best in class is not without challenges. However, I'm confident the assembled MedMen team is up to the task. Accordingly, I expect continued methodical progress to profitability through expansion of our footprint in Florida, Tucson, Arizona, Illinois and California, continued daily rationalization and reduction of expenses as a percent of revenue, continued prudent stewardship of our financial personnel resources, optimization of our cultivation and production capacity, and continued improvement of our retail product offering while sustaining our world-class customer experience. In conclusion, I would like to express my sincere appreciation to the various stakeholders for their continued support. I also want to recognize and appreciate the outstanding effort put forth by the MedMen team members on a day-in and day-out basis to continuously improve operations, provide an unsurpassed customer experience, and successfully execute our growth strategy. I remain very excited to be involved in this immature and developing cannabis market, and I believe that MedMen is uniquely positioned to thrive as the market matures and cannabis use is normalized. We will now open up the call to your questions. Operator?

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Again, to ask a question, please press star 1 on your telephone. Please stand by while we compile the Q&A roster. And your first question comes from the line of Matt Bottomley of Canaccord Genety.

MATT BOTTOMLEY, Good afternoon, everyone. Thank you. Good afternoon, everyone. Congrats on the quarter and the previous Hillary announcement. Just wanted to get your, you know, any additional thoughts on your primary market of California here and if the growth that you saw and how the growth that you saw in the quarter sequentially relates to what the state did overall and if there was anything specific to the traffic patterns at the MedMen stores that might not translate to the sort of average store profile in the state. And then if you could also comment on any risk that you see, if any, on the California market looking to consolidate some of its regulations and how that might impact the Los Angeles market specifically.

Yeah, Matt. This is Tom. Thanks for the question. You know, California performed particularly well this quarter. It has a lot to do, frankly, with, as we've talked about before, we've talked about a go-to-market strategy, right, where we've been and become much more embedded in which the communities that we're fortunate enough to have dispensaries. So we're not just simply a tourist-driven go-to-market strategy as this company originally was. We certainly have great, broad, diverse offering that caters to all types of folks. But I would point towards... MEDMEN REGAINING FRANKLY MORE THAN ITS SHARE AND GROWING ITS MARKET SHARE AS A RESULT OF THE QUALITY OF OUR ASSORTMENT THE DEPTH OF THE ASSORTMENT AND THEN JUST FRANKLY THE RETAIL EXPERIENCE WHEN YOU TALK ABOUT THIS TURNAROUND WE TALK ABOUT FIRST THE BOXES WHEN WE GOT HERE WE HAD negative 8 percent, 6 to 8 percent EBITDA contribution for stores. We're now north of 20 across the portfolio. And so, we had to prove that organically we're able to grow, because if we can't fix our own stores, then what is the point of talking about expansion? And we continue to prove that quarter over quarter. So, very pleased with California. Very, very honestly bullish on the market. It's been challenged, obviously, but we're very bullish on what's taken place there. Tim or Reece, anything you'd like to add?

I would just know quick. I think when you look at the other adult use states in the country, California still looks a little bit underpenetrated or potentially significantly underpenetrated when it comes to legal cannabis sales per potential consumer. And so I think with that, we'll definitely continue to work hand-in-hand with the state, be ahead of all of our peers from a compliance standpoint. But I think there's a lot of room to grow here. And so given the conservatism in the state around COVID restrictions, I think that was part of the question. We'll always keep watching that. But for now, it looks like the market's continuing to open up, and we think there's a lot of room to run here. Thanks, Matt.

Again, to ask a question, you will need to press star 1 on your telephone keypad. There are no further questions at this time, and this concludes today's conference call. Thank you for participating. You may now disconnect.