Trulieve Cannabis Corp

Good morning, everyone, and welcome to the True Leave Cannabis Corporation Fourth Quarter and Full Year 2024 Financial Results Conference Call. My name is Andrea, and I will be your conference operator for today. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Christine Hersey, Vice President of Investor Relations for True Leave. You may begin.

Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Wes Getman, Chief Financial Officer, will deliver prepared remarks on the financial performance and outlook for Trulieve. Following the prepared remarks, we will open the call to questions. This morning, we reported fourth quarter and full year 2024 results. A copy of our earnings press release and PowerPoint presentation may be found on the investor relations section of our website www.trueleave.com. An archived version of today's conference call will be available on our website later today. As a reminder, statements made during this call that are not historical fact constitute forward-looking statements, and these statements are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from our historical results or from our forecasts. including the risks and uncertainties described in the company's filings with the Securities and Exchange Commission, including Item 1A risk factors of the company's most recent annual report on Form 10-K, as well as our periodic quarterly filings. Although the company may voluntarily do so from time to time, it undertakes no commitment to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During the call, management will also discuss certain financial measures that are not calculated in accordance with the United States generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for TRULY's financial results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is available in our earnings press release that is an exhibit to our current report on Form 8K that we furnished to the SEC today and can be found in the investor relations section of our website. Lastly, at times during our prepared remarks or responses to your questions, we may offer metrics to provide greater insight into the dynamics of our business or our financial results. Please be advised that we may or may not continue to provide these additional details

in the future i'll now turn the call over to our ceo kim rivers thank you christine and good morning everyone and thank you for joining us today we are excited to report impressive quarterly and annual results our relentless focus on serving customers while driving continuous continued improvement led to outstanding performance during the fourth quarter and throughout 2024. the team came together to generate additional torque from our core business and deliver industry-leading margins and record cash flow. I want to congratulate everyone for successfully driving continuous improvement in the business fundamentals during an election year, featuring the adult youth ballot initiative in Florida. From our vantage point, while Amendment 3 fell short of the 60% required for passage, there are many positive takeaways from the adult youth effort. First, we are highly encouraged by the fact that almost 6 million Floridians, or approximately 56% of voters, supported adult youth. The foundational work that was done to raise awareness and educate voters about the many benefits of adult use legalization sets the stage for eventual adoption through legislation or another ballot initiative. Keep in mind that several other states, including Arizona, Nevada, Ohio, and even the Florida Medical Amendment, required two ballot initiatives for successful passage. We believe the support of the majority of Floridians, including President Trump, sends a very strong signal that voters are ready for common sense cannabis reform. Before moving into our financial results, I'd like to take a moment to congratulate Jason Purnell on his new role as president of Trulieve. As one of Trulieve's co-founders, Jason has been instrumental in the growth and success of this organization over the past decade. Most recently, Jason has played an integral part in the outstanding performance achieved in Florida. I look forward to working with Jason and the entire team in the year ahead. Turning now to our results. Full year revenue grew 5% compared to last year. with increased sales in both retail and wholesale. Fourth quarter revenue increased 5% versus last year and 6% sequentially, aided by strong traffic and record units sold. Gross margin improved to 62%, driven by lower production costs and our disciplined approach to promotional activity. Adjusted EBITDA increased by $15 million to $111 million, or 37% margin. contributing to record full-year adjusted EBITDA of $420 million, up $98 million, or 30%, from 2023. Higher revenue and gross margin paired with expense control in our core business contributed to increased profitability. Full-year operating cash flow of $271 million exceeded our target of $250 million. We exited the year with $300 million in cash and investments. Trulieve continues to separate from the pack, effectively leveraging scale to yield stellar financial results. In addition to exceeding our financial targets, we made substantive progress on the strategic initiatives that we laid out at the start of the year. Following a strong finish to 2023, we set goals to further improve the customer experience, expand retail and wholesale channels, and increase distribution of branded products while continuing investments to support these initiatives. Since inception, Trulieve has grown the company guided by a customer-first philosophy. Our unwavering commitment to providing exceptional customer experiences dictates our approach. In 2024, we did several things to enhance the customer journey. We aligned incentives for store managers with positive customer experiences, rolled out a new website platform enabling smoother customer interactions, and we launched a revamped loyalty program. First, we adopted a thoughtfully designed bonus program company-wide to appropriately incentivize our store general managers. By rewarding specific outcomes for metrics including net promoter score, overall satisfaction, and wait times, compensation is appropriately aligned with our team's ability to deliver positive customer experiences. Throughout 2024, we realized the benefits of the new program, evidenced by incremental improvements in the customer experience and customer retention. Progress continued during the fourth quarter with higher NPS and steady or improved overall satisfaction across all markets. To further illustrate the strength of our retail team, wait times during the busy holiday season were six minutes on average, demonstrating our ability to maintain elevated customer service levels during peak traffic times. Second, we rolled out a new website built upon more advanced technology, which we call Web 2.0. This new web architecture provides greater functionality for users, including real-time updates to products, pricing, and promos, and product availability at nearby stores. The upgraded website supports higher traffic and enhanced data capabilities, enabling seamless interactions today while preparing us for future growth. Third, we launched a refreshed loyalty program featuring a simplified reward structure, tiering designed to reward repeat purchases, and portability across markets. The program grew to over 550,000 rewards members this month, up from 450,000 last October. Loyalty members typically shop more frequently, spending 2.3 times more per month than non-loyalty members during the fourth quarter. Our comprehensive approach to elevating the customer journey contributed to higher retention. Customer retention improved in the fourth quarter, with 68% of customers company-wide and 76% in medical-only markets returning to stores. As we prepare for future growth, we remain committed to investing in infrastructure, technology platforms, and talent to support our strategic initiatives. These foundational investments and upgrades to our customer service, website, and loyalty program strengthen our competitive position today and ensure readiness for long-term success in this rapidly evolving industry. Expansion and optimization of our distribution platform to reach customers is an important component of our long-term strategy. During 2024, we grew our retail network, adding 33 new stores and exiting the year with 225 locations. As part of ongoing efforts to optimize our retail footprint, We relocated one store in Pennsylvania, rebranded 16 stores in Arizona and Ohio, and refreshed or remodeled 29 stores in Florida. We review the productivity of our retail locations on an ongoing basis to identify opportunities for expansion and areas for improvement. In 2025, we plan to open 10 new retail locations, relocate up to three stores, and refresh or remodel up to 45 dispensaries. Year-to-date, we have added five dispensaries in Arizona, Florida, and Ohio and closed one location in Florida. Fourth quarter retail revenue increased 6% sequentially and 4% year-over-year. With traffic up 4% from the third quarter and 13% versus last year, robust holiday performance with record units sold during Green Wednesday and 12 Days of Cannabis highlights strong demand for our products. Leveraging the strength of our brands, we grew wholesale revenue by 26% in 2024. Expanded relationships with key partners drove higher revenue, with sales in Maryland and Pennsylvania contributing meaningfully to growth. This year, we plan to increase wholesale distribution of branded products. Our commitment to selling high-quality branded products through our branded retail locations is a core part of our strategy. In the fourth quarter, we sold over 12.5 million branded product units, up 12% compared to last year and 10% versus the third quarter. Two of our most popular brands, Modern Flower and Roll1, continue to resonate with customers. Both are among our top-selling brands across our markets, demonstrating the clear value proposition of approachable and consistent cannabis products. We recently launched Modern Flower and Roll1 in Ohio. Availability of trusted, high-quality brands serves to reinforce customer loyalty and build long-term brand equity. With over 4 million square feet of capacity, our team has successfully leveraged scale and production to drive down costs by over 20% compared to 2023. Higher yields and potency combined with process improvements and efficiencies across our platform all contributed to lower production expense. Throughout 2024, we added new equipment and upgrades in most of our markets. leading to higher product quality and expanded production capabilities. Lower cultivation costs in cornerstone markets contributed to improved growth margins in the fourth quarter. This year, we will continue to identify opportunities for greater efficiencies and cost reduction throughout the value chain. Turning now to a new growth initiative for Trulieve. Yesterday, we launched a pilot program for a new premium THC beverage called Onward. Farm bill compliant Onward beverages powered by Trulieve are expertly crafted using premium ingredients to ensure consistency of effects and predictable experiences. With products doses at 3 milligrams, 5 milligrams, and 10 milligrams, Onward drinks offer something for everyone, from the curious beginner to seasoned consumers. As a market leader in cannabis, Trulieve brings significant expertise to product development and brand marketing. We are excited to introduce this innovative beverage line for those seeking a new form of refreshment. Onward Beverages comes in a variety of delicious flavors, including 3-milligram Italian Spritz and Peach Bellini, 5-milligram Blueberry Mojito and Sea Salt Margarita, and 10-milligram Passion Fruit Martini. These cocktail alternatives are available online at drinkonward.com for shipment to 36 states. In the coming weeks, we will be piloting the brand in select total wine locations in Florida. Check the website for locations and availability near you. Next month, OnRule will be featured in select Total Wine stores with in-store sampling events to support the brand pilot. We are excited about this new category and look forward to announcing additional distribution partners. In summary, the core business remains strong, delivering outstanding financial results while enabling continued investments in strategic initiatives. The team is laser-focused on strong execution to best position Truly for long-term growth. With that, I'd like to turn the call over to our CFO, Wes Gettman. Please go ahead.