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spk_0: good evening ladies and gentlemen and welcome to today's planet thirteen fourth quarter twenty twenty two conference at was all participants had been placed on a list and only mode and we will open the floor for your questions or comments after the presentation it's not my pleasure to turn the floor over to your host mark to nurse my head of investor relations mark the floors yours
spk_1: thank you good afternoon everyone thinks you're doing today petr j holdings fourth quarter of fiscal year twenty twenty financial felt were released today the press release the come his quarterly report tanguay it really a dna if i little famous are available on the i think his website a guaranteed are at all on our was a pathogen holy fuck up before about call the nesbitt we like to remind the said that portions of today's discussion good for look a that they can be no assurances that such information will pay to be accurate in a measured expectations are estimate the future developments started status or results will materialize as a result of the wrecked and underneath the result events predicted pretty need for the could save it may differ materially from actual results or them wish factors that could affect results or get on the companies or without it there may available available the united securities and exchange commission and al qaeda incredulous history both a month in conjunction with it it for before the continue to top it all made it to the data default that they can defend any intention or obligation to update or by such information except as required by applicable law and does not seem any liability for this call you relate to and call it mentioned here it initially afraid to about gap and non gaap financial measures for information regarding are non gaap financial matters reconciliation for the most directly comparable gap measures feature for to today's pressure which puts on our website five thirteen specialty much everyday us always had a result disgusting this color and your thighs unless otherwise indicated on a call today we have layers of a coach or make out here our girls that culture make i feel that logan fi fo on our part to call a little a shopper coach erik go see a play they can all it
spk_2: ah gonna apparent everyone and now thank you for participating in our fourth quarter you for your call i'll be discussing our performance in nevada and california dennis will discuss our financial performance and bob provide an update on our growth initiatives and plan for a twenty twenty three later on the cop twenty twenty two with the challenger near cross economy consumer debt with dual pressures of high inflation rising interest rates the took money out of their pockets resume ampac of their son on the other kind of us companies that have already part it as well as many companies that are focus on consumer discretionary spending turning to the impact on our individual states in nevada the trans we've all seen and we've seen all year of start to stabilize what pricing compression slowing and about a state while say sales relatively flat from que three the queue for we've also seen some of the more marginal his pants for a start got a business and que por reducing their risk for future competition and pricing pressure were optimistic that this is up to say is a sustaining change in the traveling trend lines gives me despite all of into competition over the last couple of quarters we've been able to maintain our share of about a sales for a point five percent for the quarter and nine percent for the four year a line or in line with our long term goals or between eight and ten percent we expected to continue to have some fluctuations quarter to quarter from kyoto two and que three be traditionally stronger due to higher and higher tourist traffic but fully intend to continue to set is benchmark on a retail operations and the state and cure for in about it we generated forty million dollars on a superstar two million dollars from curbside and delivery two million dollars for medicine two million dollars from other about a wholesale from hosts on about wholesale another our total of about a revenue was twenty billion dollars compared to twenty point five and que three for the for a year we generated eighty point six million from the a retail companies to our our a compared to one hundred and seven point five million and twenty twenty one this decreased was caused by the material weaken the of the consumer
spk_3: some and over twenty percent decline
spk_2: i an equivalent per hour graham cannabis prices as well as reduction in the number california tourists in las vegas on the whole cell types of advantage of the new doors opening the state over the course of the year and are incredible a product portfolio portfolio to grow wholesale by twenty six percent year over year the strength of continues with december and january be in or to highest months ever and pray we are performing very well on a per day basis i call i'll call off specifically the increase sales of our medicine flower brand which has seen strong growth see a completion of our cultivation expansion in september of twenty twenty two during the fourth quarter and twenty twenty two we continue to enhance our properly or and brings top canvas brands and products to the consumers her beat up bbs say we grew madison to the to the a number two flower brandon que por ah to the number five can be brand greenland shock to the number one chocolate brand and trendy to the a number three concentrate and number for bait brand in the state this is an impressive performance or a house or browser testimony that to our cultivation production and sales staff looking ahead in about nevada were optimistic that the trend we saw the fourth quarter with the normalization on pricing is a sign of the bottom of the market and are so far through que one twenty twenty three that appears to be the case for pricey miss mistake stabilizing the obvious caviar is that is ah that is that what happens with a wider macro environment we've seen pressure and consumer wallets resolving consumers trading down to lower cost options or a shopping and involved we see more disgust if inflation interfaith in the economy continue to take money out of consumer caucus it could lead to for the sales pressure turning california and queue for we generate a poor point nine million dollars of revenue which is a slight reduction as result of a typical seasonality what a massive increase of eighty eight percent over the same period and twenty twenty one mainly driven by the expense of wholesale in california former acquisition next greenway
spk_3: the same can be seen a looking at the for year to twenty twenty one regenerate eighteen point one million compared to five billion dollars and twenty twenty one
spk_2: looking forward to california our operation gets injured do to mature and game oh man i'm wary are also contain him to expand distribution distribution door wholesale portfolio we obviously don't expect to replicate access we've had in nevada and become a top five selling a product and every calyx category in california where we're confident and i've seen our products a good velocity i and are welcome addition to a third party shelves what that i'll pass and a dentist and discuss our financials
spk_4: thank you learn our the for i just like to remind everyone that all numbers on to the u us dollars a month stint as is ugly other one in key for we generate twenty four point eight million in revenue compared to twenty five point six million and cute three events and three percent decline cool recorded as though discussed with significant decline and pricing started the bottom and cute for while unit sales volume of has trended above that of teaching niggling the company a offset some of the into place in pressure when operating costs we have explains during the quarter and during the year ended december thirty first went on to keep or has historically been are slow as quarter and the shift in the placing of i am a joined a quarter was a welcome was welcomed looking at twenty twenty three weeks tagged revenue revenue to be relatively flat for the first half of the year with growth towards the back end of the year driven by new acid coming online and continued growth from our wholesale operations in both nevada and california do for twenty twenty two gross margin increase to clinch lead to point three percent from forty one point two percent in two three twenty twenty to increase was driven by games in efficiency and yield that are cultivation facilities along with an increase in the shelf space and sell to rate of our house brands and our own dispensary over the course of twenty twenty three weeks back continued incremental improvement a gross profit especially in california having said that neonics that gross profit to ignore the fifty percent again because of the deluded impact on the margins from our growing wholesale operations both california about gross margins our retail operations continue be continue to be in the high fifty percent range in las vegas in a local percent lanes in california you continue to target a long term two percent or higher gross margin for all of our retail operations and we expect games from vertical integration to offset some of the pricing pressures of to reach a level sales and marketing expense for the quarter was one million up from nine hundred thirty thousand and two tree and down substantially from the one point eight million and keep war torn twenty one for the full year three point five million compared to six million and twenty twenty one we continue to focus our marketing activities on areas that are direct sales driver such as events and activities and celebrity appearances where we can read really readily measure the incremental snails generated in return on investment from this targeted spending the company spent twelve point five million a dna expenses in the quarter down significantly from the fifty point seven billion in queue for twenty one across your organization we're doing a good job and crowd control your costs and improving our efficiency for the full year dna was forty nine point three million compared to fifty nine point nine million and twenty two anyone the improvement in sales and marketing and je ne are clear signs of our focus on cause control just vote it continues to be a priority for us and twenty twenty three becoming a leaner more efficient company that can propel future growth and most importantly generate sustainable cash flow despite the on on fate unfair but we consider a chair to a new tax treatment during the quarter we also took a thirty two point seven million dollar impairment charge related to our cultivation assets in california as we've seen across the industry the change evaluations and a decrease in also pricing in the california market lead us to a revaluation of the assets one hour and several of our competitors balance each week and it's impairment charge this impairment charge reduces the carrying value of the goodwill on or balance you to nero but does not impact or cash
spk_5: former business fundamentals
spk_4: and twenty twenty three regenerate three point eight million a positive operating cash flow while remaining turn on our tax on our taxes table balance we've done it's well supported the builder to florida in illinois which are both still pre revenue it's a testament to our individual state level profitability in nevada on and wouldn't towards that in california as we interesting scale of operations and generate more revenue weeks back to improve operating leverage in casual as of december thirty first twenty twenty two the company had a cast out of fifty two million and no debt and twenty two twenty two we spent approximately four point and fourteen point one million a cat that's between or nevada cultivation facility expansion which was completed during two for and the build out of our floored operations as we've discussed a party has looked to had to twenty three or to build scale an increase profitability of a casual we are focused on the continued though that of our of florida as well it's focusing on our illinois dispensary and looking for other profitable standalone opportunity that will increase by to skill we will be opportunistic in managing the catholics of climbers with these initiatives and continue to seek alternatives that reduce contacts in order to conserve or casters transposition we will lead having a strong casual mission generate cash positive cash flow and didn't get free give us flexibility to whether the current storm the other cannabis operators did not add that's luxury doing and without will turn it over to bomb
spk_6: i thank you dennis and good afternoon everyone throughout twenty twenty two we up stepdad scaled and the business gone from essentially a single state operator to vertically integrated multistate operator
spk_7: when a lot of growth ahead
spk_8: looking our days group project projects
spk_6: in illinois for instance were making significant progress in february this year we purchased a dispensary location and started renovation we also purchased the remaining fifty one percent ownership and february making the illinois deathmatch three now one hundred percent all my planet thirteen we are very excited about the prospects for this dispensary it's location and waukegan and a prominent shopping center and aside a large casino project will ensure built think customer for traffic
spk_7: a store similar to our neighborhood style stores with a smaller footprint and lower operating expense
spk_6: yet still offering the unique customer experience a planet thirteen is known for we are targeting and hoping for later this year we've also been get discussions with many different producers in the state to ensure we get competitive pricing and diverse him a toy selection don't any a any issues in that regard that would not being vertically integrated and with so many i'm as was and est state there's a lot of competition and we believe we can ensure a steady supply and attractive prices turning to nevada where provisionally approve or consumption lounge on december fifth we are working closely with regulators to craft our plan and are exploring all options including working with partners to lower the cap bags and operating costs involved with the lounge this is a new and exciting frontier for the cannabis industry and alongside our various stakeholders we are working to figure out the best path board that exceeds everyone's expectations and delivers the highest return on investment for planet thirteen
spk_7: in florida we purchased are cultivation campus in july we've been building out he focused hyper efficient cultivation facility aimed at growing i quality flower that has cost competitive concur with doling out the facility we've been explain opportunity to take on lisa from other companies as a way to speed our time the market increase our long term supply that both fades another manufactured products
spk_6: we signed leases or for dispensary so far all of them a good locations with easy access the parking and very reasonable least great we expect all of a dispensary to as strong for law economics once they are up and running and very low fixed cars back all six of our initial dismount three to be ready when our cultivation of online and were able to fully stocked chef let's look back at twenty twenty twenty twenty two for just a moment and i'll address or three goals are we said at the beginning of the year and where we ended up our first dog of course was to maintain eight twelve percent on of at a retail sales and continue to grovel sell share in the state walk securing on a creative endeavors fight revenue opportunities looking at the years a whole we have maintained and nine percent share the nevada retail market and are wholesale revenue as continue to expand and twenty five percent for the four year we completed our bell cultivation expansion has indicated previously and have made progress on several opportunities to increase utilization of the superstore include getting a consumption alone approved and opened and other third party shop and shop concepts unfortunately we've seen an industrywide slow down on sale else and reduction average unit price which is limited the revenue in nevada but under the circumstances olanoff arm well throughout twenty twenty two are optimistic that this pricing pressure has stabilized and that we can grow revenue in nevada and twenty twenty three and continue to mean that eight twelve percent margin i'm statewide from or to the
spk_9: spencer's
spk_7: with respect to the second goal
spk_6: set for ourselves we were looking to improve profitability to increase sales and operating leverage are spencer in california increase heard a plane aggression and enter into profit a wholesale operations throughout twenty twenty two we saw progress on all fronts we successfully hundred and the california posts l operations in general generate three point one nine and queue for long
spk_10: or revenue on a retail side and california increased nine point eight million and twenty twenty two compared to five million and twenty twenty one would believe we can continue to grow those numbers and twenty twenty three over the course of the year with also drove march and expansion in california through better utilization rate that are also facility increase vertical integration at the o c store and more efficient staffing
spk_6: our third target to start started here was at making progress operations employee to drive growth and open our doors in florida and twenty twenty three on this front progress has been slower than we would have like with attempted
spk_7: to speed up the path to mark and a cough efficient way including taking over least cultivation facilities while building our premium focus cultivation operation we can continue with our plan to build out a cultivation to sell it i'll be competitive long term from an efficiency and a perspective but have had some of our
spk_8: these opportunity to fall through and last minute
spk_6: overall despite the difficulties facing the cannabis industry trap united states the then effective an art and our goal to meet the object that we said we have generated meaningful expansion sales on our own brands and have made progress towards expansion plan thirteen and both
spk_11: illinois
spk_6: may twenty three import here in the development of planet thirteen take a major step towards me a scaled the state operator revenue generated generating retail and four states and a former to population and three of those states we're also seeing more and more optimized to tad assets to the portfolio from practically nothing and that are said synergistic with our from
spk_0: as we look at twenty twenty three the pros claire
spk_7: surf capital prove profitability and a crease scale and operate strength to ensure that planet thirteen as one of the companies and makes it through the challenging period
spk_6: leave the outside benefits available and long term for the cannabis industries best companies
spk_10: and with that i'd like to thank everybody for protests in it
spk_6: this penny today know that the operator now on the line for questions thank you
spk_0: like you at this time we will be conducting a question and answer session if you like to ask a question please press star one on your telephone keypad a confirmation told to kick your line is in the question que you may press start to she would like to remove your question from the queue for participants using speaker equipment it may be necessary to pick up your headset before press the sarkies one moment please when we poll for questions and the first question is coming from bobby rosen from can occurred please proceed
spk_12: they thanks for take my question
spk_13: so i guess asus for
spk_14: either bob earlier both
spk_13: he looks like some others tourists data your so far this year has gotten better over last year
spk_15: with the stuff i've seen and there's off also talk about the a younger demographic and more international stuff like that is that something that you're seeing at the superstore how does that can't play into position the oh fisa be the tourist component your demand
spk_16: yeah i body or bob
spk_6: yeah lot more really excited i you know we're saying traffic up tax were saying convention up tags on you know that all positive news and the type of unanswered are committing a really exciting with a full compliment tom help arm of our facility for instance we've got this weekend you know the sweet sixteen and the final eight college basketball a term and here in town we've got one of the largest concerts of the year here ah italy didn't sound of friday night an email to the balance to the air and i we that have one coming in which we think is gonna be huge draw later in the year and you know what things such as the superbowl coming in on and festival season is just starting you know dd see any other own large outdoor events like life is beautiful so we see a really strong summer and an hour we're excited he on the of thing that's you know a bit concerning of courses dress all his words economy go you know from a macro perspective were you know as you know as we see the fed just raised interest rates again yesterday in all this all has an impact on the customer in our wallets and now they're million pay so we're going to watch that closely and then has done a settlement continued operated official it was as we can but from a traffic standpoint we're we're very encouraged with thank god vegas on as on the upswing there
spk_17: great that sounds like some other
spk_5: yes operators are struggling in the the state and just wondering how you plan on capitalizing on that you're clearly you can pick up some share or there more aggressive things can do
spk_15: in terms of acquisitions or what were your thoughts on he other substances that that since the way
spk_6: sure yeah but we're continuing to watch that data learning i failed inquiries and multiple inquiries every week with a lot of stores are struggling ah we think that's gonna create some opportunities for sharing the nurture near term com again it's it's just a function of those operators coming to the realization where the market really stands
spk_18: some yeah
spk_19: we stay in touch with them and off
spk_2: and on we're optimistic will pick up some solid assets here as a result chavez i've that this larry lab that to the other big benefit to us i'm a emperor are pick up the assets says the or the getting rid of some of the competition and that will pick up the a customers that are left be divided between the ones that survive this her a downturn of dispensary laziness or
spk_20: surely a huge
spk_12: oh great thanks bob sykes larry
spk_21: they'll jump back into the que
spk_22: version about a good targeted
spk_0: canopy have a question or comment please press star one the next question is coming from the cooper with beacon securities please proceed
spk_23: megan of new guys sturm start them and the balance sheet to some clear and fifty three million i was them as as of december thirty first direct know what is the wedding it what a the capital budget moon just remind me amnesty yeah to trade in february together a minority into the illinois
spk_8: and then what what is the catholics expected remaining in florida in illinois
spk_24: form a okay i'm looking get really i can't go for former pro born agains member
spk_4: to fifty people can fifty three nine on the balance sheet know the look at the that's going to the year and we spent two point one two by two million purchasing the land were so the watching them sensory we will likely stand and other two and a half million on the bilbo that dispensers will be with a five by dollars a day and i will do so he's back on that he had some that cash back so i look at that is a temporary out and then we we had to pay frank eight hundred sixty six thousand in cash
spk_5: cash to buy out ticket to understand and that license and he didn't own
spk_4: the lab they are gives us a summary of of where we are in i'm from illinois germs that ago out there are the gloves of college three three to five million that me they stand other superstore on danny to go hallway and and dad does he agree shell for another nice opportunity at that stage and then also as bob mention the of working with regulators on the lounge and the we don't we don't tend to spend very much on and on the lounge in more into that as you some they're getting station and and locomotion an alien yeah the bigger ones florida of managing glass of whom the topic spot there obviously we have for least locations that we haven't started going lease rates on on them yet yeah they kick him some point and twenty three and as bob mentioned we're we're looking at opportunities to get into that market
spk_5: faster than than what we would otherwise be able to do we don't vote on our own but it will be a scale debate where you can manage that that cash out to fill in i would i would target you know more than five million in which been employed at least in the near term
spk_24: and illinois expected to come on revenue produced in in luxury that it's a second half obviously been a closeted you for him and florida neatly into the bay revenue from there and as your
spk_4: the i did what i mean york you're correct on on illinois of concerts concerts and a teacher didn't you know in the queue for depending on where where little bit whole schedule gems work construction budget timeline florida it's really going to depend on the up to these we're currently working on as they come to fruition it could be sooner and if they don't learn it will be likely looking on the dock any of year and it and twenty twenty four
spk_23: and read the a noise given a delegation next the cathedral i'm a scorpio it is tremendous
spk_25: ah norms
spk_4: and of built on girl george square footage journalism
spk_8: yeah we did total building that a thousand square feet to two levels are first for dispensary tell gross footprint about four thousand feet
spk_24: so what what he into the bait this is like ten million dollar opportunity i think an early
spk_4: i will help so you and you utterly to alone will will budgeting and that in that both are getting a job with a great location given it's next to a casino and and score high high traffic down from wisconsin in the illinois i'm sure to that a bunch of drop on them he totally visiting other dispensers into the
spk_26: while the casino traffic so
spk_5: if if the cat is generally know that facility i'd be surprised
spk_2: well as larry and a guy get the depends that oh yeah i'll i'll say as to to compare it to something the largest step and largest grossing dispensary imitative illinois is ten miles farther south from his grandson border and ten miles farther west of the freeway were on their pre away a cross from a super walmart next to the casino ah next to that dow i'm amusement park area about jeff fifteen minutes away so when i would anticipate more indeed the twenties not the tens four revenue
spk_4: the episodes i could live we can't determine whether we don't have a skaggs as exactly learn i can we get it and i get and my last one just told me we get infected by these question on about bottom and i'm a dispatcher that left to now and about it
spk_24: barring area in you can be you implied that if you may be shut down
spk_6: well yeah yeah let's say that lemmy qualify well as cetera that they haven't shut down there are some that are there are on life support a number of them the problem is doug the cc be keeps granting and so without a number of dispensary the continue to prop up but they've got no market share and like i said they're they're rob
spk_27: on there
spk_7: or livelihood or does their length of operation is very very short optically the standalone smith
spk_8: integrated operator
spk_6: you're basically on fumes right now
spk_4: i don't so i gets a two pronged think so if the were had them opportunities would you prefer them to be illustrated would you go outside to reno or summer literary the state what what are you look at what a what a guide looking at me
spk_24: third don't like i know some of the publicly traded weekend was here in canada now trade point to time sales public a month
spk_6: yeah yeah i'm well lucky for as far as is our location goes i mean there are a couple areas here in clark county that would continue to be attractive for us ah i'm you know northern nevada saturated but a couple stores up there that that that i think have some potential obviously i have the population base up there the you have here in southern nevada and you don't have anything close to the tours drop sell out
spk_28: like i said it it's
spk_6: there are some opportunities up there and will end and if they make sense for us and we get them at the right price will probably jump on but there there will be no shortage of opportunities here
spk_29: as we gonna sign at all
spk_23: if i can imagine you guys designated gonna leave liability him in you get so relaxing inventories america
spk_30: yeah of course
spk_31: it looked at it from me guys picture was like that photography and
spk_0: we have reached the end of the question answer session this concludes today's conference and you may disconnect your lines at this time thank you for your participation
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