Trulieve Cannabis Corp

Thank you. Good morning, and thank you for joining us. During today's call, Kim Rivers, Chief Executive Officer, and Jan Ries, 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 third 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.truelieve.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 An archived version of today's conference call will be available on our website later today.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 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 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. Good morning, everyone, and thank you for joining us today. First, I'd like to extend a warm welcome to Jan Rees, our new Chief Financial Officer. Jan brings a wealth of leadership experience and has already made impactful contributions since joining the team. We're thrilled to have him on board. Turning to the third quarter, we are pleased to report results that highlight the continued strength of our core business. Despite seasonal pressure in the quarter, the team delivered robust margins and strong cash generation while also expanding our customer base. As we prepare for the busy holiday season, we remain encouraged by the momentum behind meaningful cannabis reform. Trulute continues to lead the industry forward, pushing for impactful change while reducing the stigma surrounding cannabis. Moving to our results. Third quarter revenue of $288 million was in line with guidance and typical seasonal trends. Industry-leading growth margin at 59% reflects pricing compression partly offset by operational efficiencies. Adjusted SG&A expense declined by $9 million compared to last year, demonstrating the team's commitment to reducing expenses in our core business. Adjusted EBITDA of $103 million improved by 7% versus last year to 36% margin, underscoring tight expense control. Operating cash flow of $77 million contributed to cash of $458 million at quarter end. Yesterday, we announced the planned redemption in December of our notes due in October 2026. Depending on terms, we may issue new notes for up to $150 million. During the third quarter, retail traffic and units sold increased by 6% and 7% year over year, highlighting strong demand for cannabis. Consumers continue to lean in towards value and mid-tier products, reflective of general economic conditions. Wholesale revenue grew 16% compared to last year, highlighting continued execution. Outperformance in wholesale was driven by strength in Maryland, Ohio, and Pennsylvania. We are expanding our wholesale business, as conditions permit, with careful monitoring of the credit quality of customers and industry developments. In our core markets, October traffic has improved compared to September, in line with historical seasonal patterns. We are continuing to monitor consumer behavior closely for any changes in preferences and spending. As we approach year-end, our team remains focused on four key areas, reform, customers, distribution, and branded products. I'd like to start by discussing federal and state cannabis reform, given the importance for our industry. We remain optimistic that the Trump administration will address cannabis reform by rescheduling marijuana to Schedule 3. This important milestone would acknowledge the medical value of cannabis and open the door for additional research. Millions of Americans rely on medical cannabis for relief, a fact that contradicts the current Schedule 1 classification. Rescheduling would not legalize cannabis, but it would remove the punitive tax burden on state legal operators, enabling greater conversion from the illicit market. We believe rescheduling represents the first major domino in federal reform. Additional steps are needed to address challenges with banking and the growing divide between federal and state laws. Safer banking enjoys widespread bipartisan support as elected officials from both parties recognize the need to remove excess cash from dispensaries to ensure safety for workers and discourage criminal activities such as money laundering. In our home state of Florida, Trulieve continues to support the Smart and Safe Florida campaign for adult use legalization. The 2026 ballot language includes revisions to address concerns raised during the 2024 campaign, which narrowly missed the 60% threshold required for passage. The new ballot language prohibits products and packaging that could be attractive to children, prohibits smoking in public, directs issuance of new non-vertical licenses, and expressly clears the way for the state legislative body to allow homegrown marijuana. Signature gathering efforts are ongoing, and the campaign expects to reach the required number of validated signatures prior to the February 1st deadline. As of November 1st, more than 1.1 million raw signatures have been submitted, with over 675,000 signatures validated. We expect Florida Supreme Court review of the ballot language and summary will be concluded as required by April 1st of next year. To date, Trulieve has been the primary financial contributor to this effort, leading the charge for change in Florida. While we firmly believe in the potential for Florida to serve as a model for successful state cannabis programs, we are preserving optionality and deciding whether to contribute meaningful financing to the 2026 campaign. Trulieve's ongoing support of the campaign will be determined based upon data and the political landscape heading into the 2026 election. In Pennsylvania, we remain optimistic that a compromise can eventually be reached to enact adult use legalization. We believe state legislators recognize the potential for adult use to satisfy constituent demand for cannabis while generating revenue for the state. Several bills have been filed this year, and many constructive sessions and hearings have been conducted. If adult use is launched in Pennsylvania, it truly was well-positioned given our established retail footprint, strong brands in retail and wholesale, and scaled production capabilities. With adult use programs already launched in five of six neighboring states, we expect Pennsylvania will enact adult use in the near term. In addition to reform efforts, we are driving operational improvements in three key areas, customers, distribution, and branded products. Since inception, Trulia has grown with customers at the forefront of everything we do. By providing a normalized retail environment alongside superior service, we strive to deliver exceptional customer experiences throughout the customer journey. Personalized customer messaging and engagement continues to evolve as we add new capabilities to our customer data platform and analytical tools. During the third quarter, we implemented new product recommendation schemas, including prompts for suggestions and repurchases. Similarly, we added enhanced customer segmentation features to allow predictive modeling for shopping patterns, frequency, and anticipated order dates. These tools allow identification of customers and personalized timing of recommendations to drive re-engagement. Our generous rewards program continues to grow, reaching 820,000 members at the end of September. We continue to see greater retention and monthly spend among members who spend on average 2.5 times more than non-members. Rewards members completed 77% of third quarter transactions. We recently introduced new monthly rewards statements that highlight key milestones achieved to enhance program engagement and visibility. Building upon the success of our rewards program, today we launched a new mobile app available for download in the Apple App Store. The Trulieve mobile app is uniquely designed to deliver a best-in-class experience that centralizes shopping, deals, gamification, and rewards. The app gives customers an effortless and engaging way to browse and reserve products, Push notifications to learn about special promotions or when orders are ready for pickup provides a more seamless experience compared to email and text messaging. We are excited to bring these new features to our Apple customers in Florida, and we look forward to launching the app in additional markets and on Android devices in 2026. Personalized messaging, loyalty rewards, and seamless digital experiences all contribute to customer retention. Third quarter retention improved by 1% sequentially to 58% company-wide with 76% retention in medical-only markets. While customer retention metrics are strong, we're amplifying the Trulieve brand through local engagement to attract new customers. Across our market, we are recalibrating community events to focus on four key areas, helping patients, serving veterans, assisting seniors, and promoting restorative justice. Through community activities, partnerships, and charitable work, we are directly addressing the needs of these stakeholder groups. In October, we raised awareness and funding to fight breast cancer through register roundups, specialty products, and charitable walks. This month, we are supporting veteran organizations to serve those who have sacrificed so much for our country. This weekend, Trulieve is sponsoring a weekend retreat for Operation Resilience, led by the Independence Fund, which is an event designed to help veterans who are at high risk for suicide. We are proud to give back to these worthy causes and partner with groups that support our mission to expand access to cannabis. Alongside engagement efforts, we are investing in retail and wholesale distribution to reach new customers and drive sustainable growth. We met our 2025 retail target by opening 10 new stores in Arizona, Florida, and Ohio, expanding our network to 232 stores. In September, we relocated one Arizona store from Scottsdale to Bisbee, broadening our reach by entering an underserved area. We are on track to refresh or remodel up to 45 stores this year. In wholesale, Maryland and Pennsylvania continue to outperform. In Ohio, our production partner continues to ramp sales of branded products, including Modern Flower and Roll One. With over 4 million square feet of production capacity, our scaled platform provides a meaningful competitive advantage, including strong growth margins and the flexibility to adapt to evolving market conditions. Our production team continues to identify operational efficiencies, driving costs lower while delivering great products. Consistent product quality differentiates our brand in an increasingly competitive landscape. During the third quarter, we sold over 12.5 million branded product units. In-house brands Modern Flower and Roll One continue to resonate with customers, representing almost half of the branded products sold. In Florida, we recently launched a new Roll One clutch all-in-one vape. This new compact disposable vape cart sold out in less than two weeks. We plan to launch additional modern flour and roll one SKUs, including new all-in-one bakes in several markets. Turning now to the beverage category. Last February, we launched a new line of Farm Bill compliant THC and CBD cocktail alternative beverages called Onward. Throughout the year, we have added new flavors and expanded distribution. In July, we added a line extension of CBD and THC energy drinks called Upward. In September, we launched new 10 milligram flavors for Onward and Upward. Onward Berry Smash, Cosmopolitan, Lemon Drop Martini, and Paloma, and Upward Half and Half Iced Tea and Lemonade flavors are performing well, enjoying positive customer feedback. These Farm Bill compliant THC beverages provide an opportunity to reach new customers with approachable products in familiar outlets. Onward and Upward beverages are available online and in more than 440 stores, including ABC Fine Wine and Spirits and Total Wine in Florida, and specialty grocers and convenience stores in Florida and Illinois. We recently launched distribution through Anheuser-Busch in Florida and Romano Beverages in Illinois, and we're actively working to expand distribution with new and existing partners. Visit drinkonward.com to find a retail location near you or order online. Overall, We are making real progress across our focus areas, reform, customers, distribution, and branded products. With continued momentum and significant flexibility in our core business, we are set to expand our leadership position while pushing for cannabis reform. With that, I'd like to turn the call over to our CFO, Jan Rees. Please go ahead.

Good morning, and thank you, Kim. I'm thrilled to join Trulieve, and I'm focused on driving profitable growth at a leading company and industry pioneer. Third quarter revenue was $288 million, up 1% year-over-year, driven by new store openings, adult use in Ohio, and wholesale growth, partially offset by pricing compression and world pressure. Gross profit was $170 million, or 59% margin. Margin performance driven by increased pricing compression, loyalty point reduction, and product mix, partially offset by lower production costs. We continue to expect quarterly fluctuation based on product mix, market mix, inventory sales through promotional activity and idle capacity costs. SG&A expenses were $99 million, or 34% of revenue, a significant improvement driven by reduced operating expenses and lower campaign support. Adjusted SG&A declined to 30% of revenue, 34% last year, due to ongoing operational efficiencies. Net loss in Q3 was $27 million, or $0.14 per share, versus $0.33 last year. Excluding non-recurring items, net loss per share would have been $0.07. Adjusted EBITDA was $103 million, up 7% year-over-year, or 36% margin, reflecting expense leverage in our core business. Turning now to our tech strategies. As a reminder, we have filed amended returns starting 2019 and continue through today, challenging the applicability of 280E to our business. To date, we have received refunds totaling over $114 million. While we are confident in our position and strategy, final resolution may take years. We continue to accrue an uncertain tax position while realizing lower tax payments. Important to note, rescheduling to Schedule 3 would have removed Q3 and year-to-date results would show positive net income under those conditions. Moving now to the balance sheet and cash flow. We ended Q3 with $458 million in cash and $478 million in debt. Cash flow from operations totaled $77 million with capital expenditure of $12 million and free cash flow of $64 million. Turning now to our outlook, we expect low single-digit sequential revenue growth in Q4. We expect full-year gross margin will be comparable to 2024. We anticipate at least 250 million in cash from operations for the full year. CapEx of 45 million, up to prior target of 40 million, reflects investments to relocate stores and minor cultivation upgrades in Ohio and Pennsylvania. We remain focused on finishing the year strong, delivering results aligned to our strategic priorities. With that, I will turn the call back over to Kim.