Good day and welcome to the Greensum Industries first quarter 2025 earnings call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the start key followed by zero. On today's call, management will provide prepared remarks and then we will open the call up to your questions. To ask a question, analysts may press star then one on your touchtone telephone. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your questions, please press star and 2. Please note this event is being recorded. I would now like to turn the conference over to Shea Kaplow, Director of Communications for GreenThumb. Please go ahead.

Thank you, Betsy. Good afternoon and welcome to GreenThumb's first quarter 2025 earnings call. I'm here today with Founder and CEO Ben Koebler, President Anthony Georgiades, and Chief Financial Officer Matt Faulkner. Today's discussions and responses to questions may include forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from those statements. These risks and uncertainties are detailed in the earnings press release issued today, along with the reports filed with the United States Securities and Exchange Commission and Canadian Securities Regulators, including our most recent annual report filed on Form 10-K. This report, along with today's earnings release, can be found under the Investors section of our website. GreenThumb assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Throughout the discussion, Green Thumb will refer to non-GAAP financial measures, including EBITDA and adjusted EBITDA. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and SEC and CDAR Plus filings.

Please note that all financial information is provided in U.S. dollars unless otherwise indicated thanks everyone and now here's ben thank you shay good afternoon everyone and thank you for joining our first quarter 2025 conference call while we only talked a short while ago on our fourth quarter conference call it certainly feels like a lot has changed the macro uncertainty created by the tariffs has ripple effects in many places and there's an elevated sense of angst for businesses and consumers. In addition, we have the early clues where the current federal government is leading on traditional cannabis reform. Despite the tariff fears, demand for THC remains at an all-time high, while pricing pressure persists in many markets. As we have discussed before, when pricing is down 20%, our team must deliver 25% more units to break even. You can't escape that map, so I want to give a major shout-out to our team who managed to beat last year's strong first-quarter revenue, even in this environment. First-quarter 2025 revenue came in at $280 million, about $4 million greater than the comparable period last year. Adjusted EBITDA was $85 million, or 31% of revenue, and our first-quarter cash flow from operations was $74 million. dollars. As we've said repeatedly, we built our business to succeed regardless of federal change, and from what I can see, that change is not on the agenda for the Trump administration. The DEA has historically not been friendly to cannabis, and the nominee to head up the agency, Terry Cole, was pretty cagey about rescheduling at his recent congressional hearing. Of course, there is always a chance for change, and this administration probably increases the odds of a left field event but we certainly can't bet on that but we can bet on our balance sheet so i believe we will continue to succeed even with an apparent deck of cards stacked against us and when the cards are stacked against you you can either resign to death or choose a different path an alternative reality which includes success we've chosen the latter and therefore we are continuing to evolve as we change our game. We are forging new paths that can realize the value we have created while staying true to our mission. A strong balance sheet that we believe will support our long-term plan over the next four years and beyond. What keeps us focused is how we can optimize the long-term opportunity related to consumers. For example, alcohol is long buying for space in consumers' wallets, but the tide of Americans' preferences is clearly turning. Hangovers might be temporary, but alcohol's lingering impact on health is not. And consumers are taking note. Alcohol consumption is declining, especially among younger adult consumers. And this gives us a long runway for future engagement as THC drinks gain momentum. The THC beverage category is in its early stages of mainstream popularity. And we are bullish on its opportunity as a legal product and are encouraged by both the data on the ground. Our job right now is to continue connecting our top-rated brands like Rhythm, Incredibles, Bebo, and Dogwalkers to satisfying and exciting customer experiences. For example, a few weeks ago, we kicked off our Rhythm Budball Summer Series in New York City for the first time. Budball celebrates the hard work and contributions while showcasing the Rhythm lifestyle. We are looking forward to sharing that connection between cannabis and music to more Americans across the country as our brands continue to pop up at mainstream music and lifestyle events this summer and beyond. Bud Ball Philly is next week featuring musical guest Philadelphia's own The Roots. Hope to see many of you at that event. Our team has worked long and hard to construct a foundational distinction for Green Thumb. That includes, we have an incredible portfolio of highly regarded products and brands, and the innovative drive that attracts great and like-minded partners. We have a relentless team who shows up every day with a genuine commitment and love of the plant. We have a set of very productive assets and a strong position in states where the launch of adult use sales is coming soon, like Minnesota, Virginia, and Pennsylvania. young. Our ability to generate cash and maintain a strong balance sheet gives us the financial flexibility to build on our track record of high conviction capital allocation. And finally, we have a seasoned and visionary group of leaders who look to the horizon and a team that is dedicated to both our success and our mission. Every day is day one when you play to win, and you win by keeping your head down and executing every day.

With that, I'll turn the call over to Anthony Anthony thanks Ben well you just heard the headline numbers after record-setting 2024 our team rolled right into the new year without missing much of a beat generating 280 million in revenue and 85 million in EBITDA in the first quarter that's a strong start and reflects our team's hard work and execution mindset let's take a moment to walk through some of the key developments of the quarter and what we expected the year unfolds First, expansion. In the first quarter, we invested $30 million in CapEx, opening new stores in Florida and Nevada, and continuing to invest into our wholesale footprint in New Jersey and Connecticut. Over the course of 2025, we expect to open, relocate, or remodel between 10 to 12 stores. We're also making selective investments in our CPG infrastructure, structure, all with an eye toward improving capacity and efficiency. All in, we expect capital spending for the year to approximate $80 million, about flat with last year. Second, product innovation. Our brand innovation teams are doing a nice job staying ahead of the consumer. We've been scaling our Rhythm Remix pre-rolls, which launched in Illinois last year, and we're excited about the rollout of our Rhythm Liquid Diamond vape line. We've also refreshed our good green brand with a new look to better meet the needs of value-conscious consumers. Innovation is a moving target, and our team recognizes its power given the velocity of the industry and consumer trends. Third, CPG market share. Resale competition continues to heat up, with more stores opening in many of our markets. Our strategic response has been to build a strong, resilient CPG business. in key markets like illinois new jersey pennsylvania and maryland our branded products continue to climb the rankings led by the strength led by the strength of rhythm premium flower brand loyalty isn't something you can manufacture overnight it comes from consistency quality and trust and we're working hard to earn and re-earn that trust every day fourth adult use opportunities given the somewhat limited near-term growth prospects across our market base the company remains focused on its adult use opportunities in minnesota pennsylvania and virginia minnesota is expected to launch adult use sales later this year and we plan to be ready we're also investing time and effort in pennsylvania and virginia advocating for responsible adult use legislation we've learned over the years that patience and persistence are helpful traits in the political game fifth tariffs at the moment there's no clear picture on what tariffs might mean for our business we'll know more as policy takes shape but in the meantime our procurement supply chain teams are doing what they can to insulate our operations and minimize the financial impact and last our outlook for 2025. as we look ahead our expectations on regulatory reform remain grounded in reality we said before that we don't expect sweeping federal reform anytime soon and nothing we've seen recently has changed that view we all listen to the same DEA hearing you did and we remain confused by the industry's false sense of optimism at the same time we're continuing to see pricing pressure in several of our markets supply demand imbalances new competition unregulated products being sold as hemp and the consumer who's watching their wallet are all contributing factors we have tools to manage this operational efficiency brand strength and scale among them we also recognize these tools have limits despite these concerns and overall industry malaise we remain confident in the following one our team results don't happen by accident we built a culture that rewards merit challenges assumptions and puts in the work that's not always glamorous but it's what moves the needle over the long term two our balance sheet throughout our journey many questioned our conservative financial approach you're not moving fast enough with the line we often heard in the early days but To agree in thumb, we understand the power of compounding hard work, thoughtful strategy, and disciplined financial management. Our collective decisions along the way, and the compounded impact of those decisions, have provided the company with the financial flexibility to spend in the markets and categories where the greatest opportunity exists today. We cannot understate the importance this optionality provides to our shareholders. And third, consumer trends. It's hard to ignore the big picture. Alcohol use is declining. The demand for THC is rising. we've long believed the demand for cannabis products would accelerate and we're now seeing real evidence of that shift with new product formats like thc beverages gaining traction especially in traditionally conservative regions we're increasingly bullish on long-term category growth the tidal wave of demand that ben has been talking about since the day i met him is big and getting bigger by the day in terms of final thoughts despite the noise the noise the competition, the regulatory policy hurdles, and many others, we're well-positioned. We've got an incredibly talented team, a consumer who loves our products, and a growing market in the largest economy in the world. We love the setup and are humbled to have positioned ourselves to be in the center of it all. With that, I'll turn the call over to Matt.

Thanks, Anthony, and hello, everyone. In the first quarter, we delivered $280 million in revenue, a 1% increase compared to increased consumer packaged goods sales. Overall, retail revenue declined 3% versus the first quarter of 2024 due to significant pricing. The second quarter of 2025, common goal of least 12 months decreased 5%. Consumer packaged goods net revenue for the first quarter increased 14%, driven by continued growth in New York and the addition of adult-use sales in Ohio. Looking forward, we expect second quarter sequential revenue to be flat due to the pricing of 51% of revenue, down from 145,053. percent the decrease in gross profit was primarily driven by selling general administrative compared to 74 million the increase in total depreciation amortization one-time transaction cost approximated 69 million the increase year over year is mainly attributed to the 11 incremental the company generated net income at 8 million or 4 cents per diluted share down from net income with 31 million worth the fair value adjustment adjusted compensation 85 million down pricing challenges We will now begin the question and answer session.

To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. we ask that you limit yourself to one question at this time we will pause momentarily to assemble our roster the first question today comes from aaron gray with alliance global partners please go ahead hi good evening and thank you very much for the question here so we're just like to take a high level one in terms of you know capital allocation and how you're thinking about shareholder returns you have a you know healthy balance sheet on pace for another year a strong

cash flow generation. So just given the current stock price, you know, how best to think about capital allocation and shareholder returns. You know, you utilize the buyback, but curious, you know, if the depressed stock price offers more opportunity to get more aggressive there, or if you're seeing some other opportunities via M&A or otherwise. Thank you very much.

Yeah. Hey, Aaron, it's Ben. I'll take that. I would say we're trying to be opportunistic in terms of the stock buyback. I think the capital allocation sort of matrix is looking like, you know, OpEx and can we fund the business? Do we have enough money to cover the debt? That was the year ago plan. Can we cover the CapEx and what's needed to invest in the business to grow? We're out there looking at M&A. And keep in mind, we made a pretty strategic investment in the fourth quarter last year and then funded that. And so we're out there looking. I think in the buyback, you know, it's sometimes a little bit tricky to look at. You've got to be a little careful in terms of the size. And so, you know, with our limits in terms of data liquidity and things like that trying to see the bigger picture and take a little bit more of a longer turn meaning even if we buy up to the max in the open market there could be a chance bigger blocks show up and there's larger blocks of stock out there that could come available for sale that we would be very interested in buying as a strategic asset for the business in the best interest of shareholders so you know it could be an opportunity to collect 75 cents when playing in one way only gets us you know a nickel or a dime but we certainly have a balance sheet we're very comfortable with it. We're looking at it and we're answering the phone a lot. I would say, you know, the M&A discussion has evolved. Interested in what we're listening to what's out there and we're watching what's happening. The capital markets are pretty bleak and we know our cash is a unique asset and that should help all of us, including.

Okay, great. Thanks for calling there, Ben. I'll jump back in the queue.

The next question comes from Matt Bottomley with Canaccord Genuity. Please go ahead.

Yeah, thanks very much. Good evening, everyone. And Ben, maybe i'll just uh piggyback off of what you just sort of mentioned in in your last uh couple sentences give any more color on whether you know the mix is more geographic innovative pipeline versus you know cpg um what types of things are out there i think that there's like obviously a pretty big advantage here given your balance sheet that if there was something worthwhile doing that you guys are probably best situated to to take advantage of that uh while everyone else is you know, I think, you know, stuck with refis and some of the other things that are plaguing the sector right now. So I think, at least from the investors I talked to, a little more granularity on maybe the classifications of what M&A looks good to you would be helpful.

Sure. It's a good question. And to give much detail, I would say, you know, we're sticking in the U.S. The phone rings a lot. We're not looking international, but we're interested. We're getting smarter on it, but that are the place for us. There's not a fancy amount of math going on. In states we're in, we can get better meaning we can increase our margin we can get better but pricing is coming down way down you mentioned things like the refi risk we see material issues out there for players in the industry we've been seeing it for a long time it continues to actualize and you know we've written down numbers and people were raising eyebrows on it now the numbers are coming in and so we'll see it's nothing transformational there's not some big company we're eyeing for there's some of that and then there's also deals that are like forward-looking where we think the industry is headed uh that we can play around in answering the phone and any of the people you were

talking to that are in dire straits on the call if they think something makes sense for us okay thanks man thank you matt the next question comes from frederico gomez with atv capital markets please go ahead hi good evening uh thanks for taking my question um just a question on the same-store sales decline of about five percent this quarter. I think that's a bit of an acceleration from what we've seen over the past few quarters. So curious if there's any specific state that may be driving that acceleration or is it more broad-based and if there's anything here you can do to reverse that trend and initiatives that you may have in place specific to retail that you think you can implement or or maybe there isn't much to do and it's just about waiting for these markets to normalize.

Yeah, so, Rico, Anthony here, I'll take that. Good question. You know, look, it's a combination of really two things. Number one, you know, greater competition at retail. You know, as stores open up, obviously that's less of the pie, the pie just gets sliced into more pieces. You know, the other component is that, you know, and Matt mentioned it in his prepared remarks, it's just the price eruption, right? So as we've seen pricing come down, what we've seen transactions and unit volumes go up um total net revenue has come under pressure so you know holistically um those are those are two of the primary drivers and we just zoom out and look at it you know if we wanted to get more granular in terms of the markets where we're really seeing it you know illinois and new jersey are two that kind of stand out in terms of where we've seen a lot of new competition as well as some relatively you know sizable price movement the last you know six to nine months thank you very much this concludes our question and answer session i would like to turn the conference back over to ben for any closing remarks

well thanks everybody for joining i think it's certainly a sign of the times on this call and the participation we're here we're working we'll talk the conference is now concluded Thank you for attending today's presentation.

You may now disconnect.