Trulieve Cannabis Corp

Good morning, everyone, and welcome to the True Leave Cannabis Corporation First Quarter 2025 Financial Results Conference Call. My name is Debbie, and I will be your conference operator today. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Christine Hershey, 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, Tim Rivers, Chief Executive Officer, and Ryan Bluss, Interim 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 first quarter 2025 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 An archived version of today's conference call will be available on our website later today.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 facts 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 from our historical results or from our forecast, 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 four 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 another strong quarter and fantastic start to the year. Best-in-class growth margin and strong operating cash flow during a seasonally slower quarter clearly demonstrate our commitment to operational excellence. First quarter revenue of 298 million increased slightly compared to an atypically strong first quarter last year. Growth margin improved to 62% versus 58% last year, driven by lower production costs and disciplined promotional activity. Adjusted EBITDA of 109 million, or 37% margin, improved by 1% compared to last year. Operating cash flow of 51 million contributed to cash of approximately $330 million at quarter end. First quarter results show strong demand for cannabis products. Retail traffic and units sold both increased 7% year over year, while pricing compression and loyalty point redemptions pressured retail revenue to decline slightly by 1%. Momentum in our wholesale business continued in the first quarter with revenue up 25% versus last year. Demand for truly branded products and expanded relationships with key wholesale partners in Maryland and Pennsylvania contributed to higher wholesale revenue. Since the start of the year, we have observed modest shifts in consumer behavior towards value-oriented products. As in prior cycles, we are actively refining our product offerings, pricing, and promotional activity to meet customers where they are. By leaning into competitive advantages, including deep connectivity to our customer base and the ability to quickly modify production mix and utilization, we are further solidifying our position as an industry leader. This year, we are building upon the strengths of our business with an emphasis of four key areas, customers, distribution, branded products, and reform to drive regulatory change. First and foremost, everything at Trulieve begins and ends with the customer in mind. Our store teams take great pride in serving our customers with care, knowledge, and convenience. A key component of our customer-centric approach is our ability to provide store managers and associates with training, support, and real-time feedback to drive overall customer satisfaction and outstanding experiences. During the first quarter, Net Promoter Score increased by 4 points compared to last year, and every market scored within our target range. Kudos to the entire retail team for driving such a notable improvement. As part of our strategy to attract and retain loyal customers, last year, Truly rolled out a refreshed rewards program company-wide, featuring portable, stackable, and redeemable points, all designed to reward repeat purchases and foster customer retention. At quarter end, the loyalty program reached over 625,000 members, growing by almost 20% in the first quarter. Consistent with last quarter, on average, loyalty program members spent 2.3 times more per month than non-loyalty members. Our data shows that consistently delivering elevated experiences, high-quality branded products, and generous loyalty rewards to customers reinforces retention. First quarter customer retention remains strong at 66% company-wide and 75% in medical-only markets. Turning now to our second focus area, distribution. Expanding our retail and wholesale distribution channels allows us to reach more customers while providing greater access to legal cannabis products. We are working to attract new customers in retail with new, relocated, and refreshed stores while accelerating wholesale distribution of branded products, particularly in Maryland and Pennsylvania. This year, we plan to open 10 new retail locations, relocate up to three stores, and refresh or remodel up to 45 dispensaries. During the first quarter, we opened 60 dispensaries in Arizona, Florida, and Ohio. We relocated one Pennsylvania dispensary, refreshed nine locations, and closed two Florida locations. Today, we operate 229 dispensaries in eight states. The power of our retail platform was on full display during the 4-20 holiday season. Compared to last year, units sold increased by 20% and traffic increased by 9%. Customers took advantage of 420 deals stocking up during sales while celebrating the holiday. Our retail team expertly managed the spike in customer traffic equipped with training, technology, and support. On average, customer wait times were less than four minutes, demonstrating our ability to provide superior service levels at higher volumes. The size and sophistication of our combined retail production and data platforms lend Trulieve a meaningful competitive edge in several ways, especially in dynamic macroeconomic environments. First, as a leading cannabis retailer in the U.S., Trulieve has unparalleled access to customers. Second, multiyear investments in data analytics enable early identification of changing customer behavior. Third, modular production capacity allows quick pivots in utilization and product mix in response to market conditions. In combination, these capabilities afford Trulieve the flexibility to identify and respond to evolving customer preferences, further reinforcing customer satisfaction and retention. Knowing what our customers want dictates efforts in our third focus area, branded products. Consistent availability of approachable, high-quality products is essential to long-term success. With over 4 million square feet of capacity, our production team continues to deliver outstanding results. Yields and potencies remain strong overall in the first quarter, contributing to gross margins while supporting the value proposition of branded products. Trulieve's brand portfolio includes meticulously crafted internal brands augmented by popular third-party brands. In the first quarter, Trulieve sold over 12 million branded products through our branded retail network, up 7% versus last year. Trulieve brands Modern Flower and Roll1 continue to gain momentum, representing over 40% of our branded products sold. The expanded reach of these accessible brands demonstrates true resonance with customers across the country. Our edibles brand, Sweet Talk, continues to gain traction in Arizona, Florida, and Maryland. We plan to launch additional products under the Sweet Talk brand in existing markets this year. Turning now to a new branded product category for Trulieve, THC beverages. In February, we launched Onward, a line of Farmville-compliant beverages. Premium Onward beverages powered by Trulieve are available in select locations in ABC Fine Wine and Spirits, Shores Liquors, and Total Wine in Florida, and online at drinkonward.com. Through a combination of in-store sampling events and training sessions, we are raising awareness and understanding of the THC beverage category and the Onward brand. Next month, we plan to launch an exciting new energy drink called Upward. Upward leverages our proprietary CBD and THC emulsion blend to provide an enjoyable, focused occasion like no other. Combining CBD and THC with natural caffeine creates an elevated feeling that is simultaneously calming and energizing. The upside is for consumers seeking clarity and focus without the jitters or crash associated with traditional caffeine-based energy drinks. Upward will be available in four flavors, five milligram lemonade, peach nectarine, and strawberry tea. and 10 milligram pink lemonade. Broad distribution of high quality branded products is essential to building lasting brand equity supported by an army of loyal customers. We look forward to expanding branded product offerings and distribution through new and established channels. Finally, our fourth key area is reform. Trulies continues to lead from the front, tirelessly pushing for a common sense approach that acknowledges the value of cannabis and reflects popular opinion. This year, we are investing to support meaningful advancement, including rescheduling, state banking, and state 2.0 at the federal level and adult use in Florida and Pennsylvania. Our action includes individual efforts by Trulieve and a leadership role in the U.S. Cannabis Roundtable. For decades, federal costification of cannabis as a Schedule I drug has blocked medical research, prevented full development of the regulated industry, and limited access to natural relief provided by the plant. Rescheduling to Schedule 3 would acknowledge the medicinal value of cannabis and enable cannabis research, representing a meaningful step towards greater reform. At the same time, rescheduling would remove the 280E tax burden, allowing state-licensed operators to pay normalized tax rates, bringing up capital to invest in the regulated industry. Safe banking would allow financial institutions to provide ordinary banking services to cannabis companies and employees, reducing reliance on cash and improving safety for dispensary workers. Safe banking enjoys strong bipartisan support as it would accelerate economic growth and the development of a more robust legal industry. Since 2019, safe banking legislation passed in the House seven times and moved out of the Senate Banking Committee. We are optimistic that safe banking legislation will be revisited this year. Last month, bipartisan legislators introduced a new bill called the States 2.0 Act. If passed, this bill would allow each state to determine its own approach to regulating cannabis. Stage 2.0 removes cannabis from the Controlled Substances Act, allows oversight by the TTB and the FDA, and removes the 280E tax burden for compliant operators. In our home state of Florida, last November, voters fell just shy of the 60% threshold required for passage. However, approximately 6 million Floridians voted in favor of personal adult use. In December, the Smart and Safe Florida Campaign filed revised ballot language for personal adult use legislation. incorporating learnings from the 2024 campaign. The campaign is currently working on signature gathering required for inclusion in the November 2026 election cycle. To date, the campaign has collected over 700,000 signatures, which once validated, is sufficient to trigger review by the Florida Supreme Court. With 23 million residents and 143 million tourist visits per year, Florida has the potential to be the best legal cannabis market. In Pennsylvania, support for adult use legalization continues to build momentum as most neighboring states have launched adult use programs. Earlier this week, adult use legislation was filed in the House of Representatives, kicking off the first step towards reaching a bipartisan agreement. Trulia has been working to educate legislators and key stakeholders about the benefits of cannabis and legalization for adults. We remain optimistic that adult use legalization can happen in the near term. With increasing acceptance of cannabis, Trulieve will continue to push for meaningful cannabis reform and expanded access for patients and adults. In summary, we're advancing our leading edge in four areas this year, customers, distribution, branded products, and reform. By leaning into our intrinsic strengths, Trulieve continues to separate from the pack, propelled by a differentiated strategy and meaningful competitive advantages. With that, I'd like to turn the call over to our interim CFO, Ryan Blust. Please go ahead.