Vext Science Inc

Thank you for standing by. This is the conference operator. Welcome to the VEX Science second quarter 2025 financial results conference call. As a reminder, all participants are in a listen-only mode and the conference call is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. I would now like to turn the conference over to Priyam Chakraborty. Please go ahead.

Thanks, Operator. Good morning, everyone, and thank you for joining us today. VEX second quarter 2025 financial results were released earlier this morning. The press release, financial statements, and MD&A are available on CEDAW Plus as well as on the VEX website at vexscience.gov. We would like to remind listeners that portions of today's discussion include forward-looking statements and that forward-looking statements are included in today's filing. Letting be no assurance that these forward-looking statements will prove to be accurate or that management's expectations or estimates of future development, circumstances, or results contained therein will materialize. Risks and uncertainties that could affect future development, circumstances, or results are detailed in the MDMAs. and VEX, other public filings that are made available on CEDAR Plus. And we encourage listeners to read those risk factors in conjunction with today's call. As a result of these risks and uncertainties, the developments, circumstances, or results predicted in forward-looking statements may differ materially from actual developments, circumstances, or results. This call also includes non-IFRS financial information, and such non-IFRS financial measures are subject to the disclosure and reconciliation included in our press release disseminated earlier today, as well as the MD&A. Forward-looking statements made during this conference call are made as of the date of this call. BEX disclaims any intention or obligation to update or revise such information, except as required by applicable law. VEX financial statements are presented in U.S. dollars, and the results discussed during this call are in U.S. dollars. I will now pass the call over to Eric Offenberger, Chief Executive Officer of VEX.

Thanks, Priyam. Good morning, everybody, and thank you for joining our second quarter 2025 Financial Results Conference call. I am joined today by Trevor Smith, VEX CFO. The second quarter of 2025 marked a record period for VEX. Our results reflect disciplined execution, efficient capital allocation, and our proven ability to translate revenue growth into industry-leading margins and free cash flow. Revenue grew 59% year-over-year. Adjusted EBITDA increased by $3 million to $4.1 million as we leveraged our Ohio operations and we've generated a 31% cash flow margin. placing us among the top performers in our industry. These results reflect the momentum we are building in our core markets. In Ohio, we are leaning into the opportunity created by the launch of adult use sales while continuing to strengthen our vertical footprint. In Arizona, despite multi-year declines in statewide sales, we are preserving margins through tight cost control, disciplined inventory management, and yield improvements at our Eloy cultivation facility that already exceed industry average. Let's start with Ohio. Ohio continues to stand out as a growth engine for VEX. Our consolidated retail sales in the state grew 86% sequentially during the second quarter, driven by the addition of Athens and Jeffersonville dispensaries, which we began consolidating this quarter. We further expanded our footprint with the June opening of the Portsmouth store, whose transfer paperwork has already been submitted to the state of Ohio. And we secured a provisional license for our sixth location in Fairfield, expected to open in Q4. The addition of drive-thrus to select dispensaries has been a clear success, contributing to increasing customer traffic and reinforcing the strength of our retail-centered approach. Our capital-wide build-out model enables us to bring locations online quickly, generate cash flow rapidly, and deliver strong returns on invested capital, a clear competitive advantage as we scale. The goal for Senior Ohio is beyond just adding retail doors. It's about building a high-performance retail platform supported by in-house cultivation and manufacturing. We've increased plant counts and yields to meet our own retail demand, and we're actively evaluating additional cultivation capacity to support continued growth as a... ...in 2025, according to QRAs. and we believe VEX is strategically positioned to capture that growth. With average annual sales per dispensary in Ohio climbing from 5.2 million in the fall of 2024 to 5.8 million in July of 2025, we have a strong tailwind in this market. Net third-party wholesale sales in Ohio declined sequentially in Q2, primarily due to the Big Perm acquisition, and the associated wholesale volume is now being captured as retail sales. As our Ohio retail footprint expands, we expect wholesale sales to continue to decline as a percentage of revenue, consistent with our retail first strategy. This positions retail as the dominant revenue driver in Ohio, similar to our model in Arizona, where approximately 90% of revenue is generated through our own stores. Turning to Arizona. The market continues to contract with Q2 2025 marking the steepest year-over-year decline since adult use sales began. Statewide retail sales were down 13.7% year-over-year, while our Arizona resale sales decreased by only 0.3% over the same period. On a sequential basis, VEX Q2 sales declined 3.6% compared to Q1 versus a 6.2% decline at the state level. This relative outperformance reflects our disciplined operating model and focus on retail execution, even as the broader market remains under pressure. In this environment, our focus on selling our own products through our retail shelf, tight operational control, disciplined inventory management, and above industry average yields at our EOA cultivation facility enable us to maintain profitability despite multiple year revenue declines across the market. While near-term conditions remain challenging, we expect the market to stabilize as excess cultivation capacity eventually comes offline, creating opportunities for well-capitalized and disciplined operators like BEX. Although we see long-term value in expanding our retail footprint in the state of Arizona, current pricing expectations remain misaligned with market realities. We will continue to evaluate opportunities and ask when conditions are accreted. Taken together, these results demonstrate that our strategy works in very different market conditions. Ohio is delivering rapid high-margin growth, and Arizona is proving that we can run profitably in a mature competitive market. That combination, supported by our capital-like growth model and strict cost discipline, has enabled us to deliver industry-leading EBITDA and cash flow margins, even relative to much larger peers. For the balance of 2025, our focus remains on execution. In Ohio, we are building on a record first half by expanding toward the state license cap, driving retail growth, and capturing the pull-off side of the adult use market. In Arizona, we are proving that disciplined operations, strong yield performance, and tight cost control can sustain performance even in a contracting market. With the heavy lifting on acquisitions and retail build-out largely behind us, we are well positioned to convert more of our top-line growth into free cash flow while strengthening our balance sheet. In an industry where performance is the true differentiator, we believe VEC's operational discipline and capital light model will continue to set us apart and create long-term value for shareholders. With that, over to Trevor for a quick review of the financials. Trevor?