Good day, and welcome to Green Thumb Industries' second quarter 2025 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. On today's call, management will provide prepared remarks, and then we will open up the call for your questions. To ask a question, analysts may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. And to withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Shea Kaplis, Director of Communications for Green Thumb. Please go ahead.

Thank you, Debbie. Good afternoon and welcome to Green Thumb's Second Quarter 2025 Earnings Call. I'm here today with Founder and CEO Ben Kobler, President Anthony Georgiatis, 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 these 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 10K. 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 Thumbs 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, Shea. Good afternoon, everyone, and thank you for joining our second quarter 2025 conference call. On a macro level, THC demand and consumption remain at all-time highs. Our brands, including Rhythm, Dog Walkers, and Incredibles, are showing real strength, along with record awareness, as we increase their brand power and introduce the brand lifestyle, lack of clarity on policy, hemp confusion, and lack of institutional investment has made the sector challenging. You would think that an industry doing more than $35 billion in sales in 2025 that is fueled entirely by domestic demand, employing more than 420,000 Americans full-time, and producing goods cultivated exclusively in the United States would receive more love from Washington. Cannabis companies are about as close as you can get to Trump's America first agenda. Green Thumb continues to actively advocate for federal regulatory change and with this president anything is possible. So as you've heard me say many times our approach has been to tune out the noise and focus on what we can control. Our second quarter performance reflects that our entire team is on the same page doing just that and delivering strong results despite persistent price compression across certain key markets. 2-2 revenue was $293 million, a 5% gain over the comparable period. Adjusted EBITDA was $83 million, or 28% of revenue, and our second quarter cash flow from operations was $56 million. Of note, we also bought back 5.6 million shares for $24 million, which is an average cost of $4.28 per share. By now, most of you know the foundational values that have been our North Star since we started Green Thumb 10 years ago. Cash is king. High conviction capital allocation, strong balance sheet, and outstanding execution. Along the way, we've built an amazing portfolio of brands, Rhythm, Incredibles, Bebo, Dollwalkers, Rise. And we believe we've only scratched the surface of their opportunity. So for now, our main focus continues to be unlocking the potential of our brand currency in the market. and that plan is well underway first we have a deep understanding of the consumer relationship to cannabis and we are successfully leveraging that insight to connect consumers to our brands through experiences that foster connection create buzz build loyalty and strengthen our market position in q2 we kicked off our three city series of the rhythm bug balls with events in new york philadelphia and chicago for the fifth year in a row bug ball celebrates the cannabis professionals who fuel the industry every day while showcasing what it really means to live the Rhythm lifestyle. I want to give a huge thanks to our team for all the hard work they put in to bring these events to life. Next up is the Miracle of Mundelein on September 6th and 7th. Tickets are selling fast for our third annual music festival presented by Rhythm alongside partners including Rise Dispensaries and Senorita THC Margaritas. The festival features on-site cannabis consumption and a star-studded lineup, including Damien and Stephen Marley, De La Soul, Humphreys-McGee, and more. We strongly believe in the future of THC drinks, especially as alcohol consumption continues to decline. To strengthen our position in this category, Greenspun became a major investor in Agrify Corporation, and we are supporting growth for its seniorita THC margaritas by securing distribution at top retailers, establishing notable partnerships and event presence and driving awareness in our direct-to-consumer channels. We are now supporting Agrify's next step to further expand its presence in the drink category by licensing Rhythm THC beverages to Agrify, bringing the rhythm lifestyle to more Americans in a new fashion. Rhythm beverages come in two bold formulations designed to match your mood. Rhythm Sativa fuels your day with an uplifting blend of THC and naturally sourced caffeine, delivering a smooth, energizing boost, and Rhythm Kush helps you unwind with a calming mix of THC, CBD, and other goodies crafted to relax the body without clouding Both drinks hit shelves in mid-July in Illinois and New Jersey, and direct to consumers via rhythmdrinks.com. And for those of you on the phone now, for the next 24 hours, if you use the code DRINKRHYTHM25 on the site, you'll get a 25% discount on your first order. We had the opportunity to share Rhythm drinks with attendees at Bug Ball Chicago, and they were a home run. We look forward to introducing Rhythm beverages to more markets in the coming month and having them available at the Miracle of Monde line this September. Finally, we will continue to innovate with our brands, form meaningful partnerships, and carefully manage our balance sheet, which gives us the flexibility to be opportunistic, especially in this capital-constrained environment. we have the best team in the business to continue moving our plan forward and we thank them all for their hard work next i'll turn the call over to anthony to review operations thanks ben as you just heard the team delivered another strong quarter generating 293 million in revenue 83 million in ebitda a five percent sequential increase in top line growth when we're walking through a few key developments from q2 and where we're focused in the back half of the year

First, CapEx. We invested $19 million in capital during the quarter. Retail investments included store relocations, renovations, and openings in Pennsylvania, Minnesota, Ohio, and Florida. On the wholesale side, we made selective investments with a focus on expanding capacity and efficiency. While we still anticipate full-year CapEx to approximate $80 million, our threshold for new spending remains high and will continue to be. second cpg market share as we discussed last quarter we continue to lean into markets and verticals where we see room to grow since the start of the year we've grown our cpg market share in key states including illinois pennsylvania and new jersey while the foundation of our brand strategy remains rhythm premium flower we are encouraged by our share gains within the pre-roll and bank categories this will remain a strategic focus for us going forward third adult use opportunities the company remains focused on its adult use opportunities in minnesota pennsylvania and virginia minnesota is expected to launch adult use sales this fall and our team is ready in parallel we are active in pennsylvania and virginia educating decision makers on the various adult use frameworks that have experienced success and failure we remain cautiously optimistic that either virginia or pennsylvania will pass adult use legislation in the next 12 months Last, near-term outlook. Overall, we remain cautious about the near-term outlook for our business and the industry. The challenges we've previously highlighted include systemic price compression at both wholesale and retail, largely due to increased competition and oversupply. Regulatory uncertainty, whereby regs surrounding hemp and cannabis make it very difficult to allocate capital with a long-term lens. And macroeconomic pressure, with consumers feeling the squeeze amid widening wealth disparity while the outlook on rescheduling has improved rescheduling alone does not address these systemic challenges to combat these pressures we are doubling down on the fundamentals operational discipline brand strength scale and a well capitalized balance sheet our strategy is simple put the consumer at the center of everything we do THC demand in the U.S. is not only growing, it's diversifying as new formats and channels for consumption rapidly emerge. Over the long term, we're confident in both our team and our approach. We believe we're well-positioned to navigate near-term headwinds while staying in lockstep with the evolving U.S. consumer, one who is increasingly discovering the many ways THC can enhance their lives. Before I close, a quick reminder. Our third Miracle in Mundelein takes place September 6th and 7th. This two-day groundbreaking music festival is held at our Mundelein, Illinois dispensary and allows for open cannabis consumption. It's going to be a vibe, and we hope to see you there. With that, I'll turn the call over to Matt to review our financial results.

Thanks, Anthony, and hello, everyone. In the second quarter, we delivered over $293 million in revenue, a 5% increase compared to Revenue was driven by increased consumer packaged goods sales. overall retail revenue was up slightly versus the second quarter of 2024 due to new stores offset by significant pricing pressure second quarter 2025 comfortable sales for stores open at least 12 months decreased four percent versus the prior year period on a base of 91 stores due to continued price compression consumer packaged goods net revenue for the second quarter 2025 25 increased 17% versus the prior year period, driven by continued growth in New York and the addition of adult use sales in Ohio. Looking forward, we expect third-quarter sequential revenue to be flat to down low single digits assuming the launch of adult use in Minnesota does not occur in the third. Gross profit for the third quarter was $146 million or 50% of revenue, down from $151 million or 54% of revenue year-over-year. The decrease in gross profit was primarily driven by price compression. Starting in the OpEx, selling general administrative expenses 7 million or 36% of revenue, compared to 97 million or 34% of revenue for the sale. The increased total expenses was primarily attributable to an increase in comp and benefits as GNA excluding depreciation, amortization, one-time transaction costs, instead of a normalized operating In the estimated $74 million, the increased year-over-year is mainly attributed to the 14 incremental retail stores, along with increased cash-based compensation. The company incurred a net loss of $1 million, or $0.01 per basic and diluted share, down from net income of $21 million, or $0.09, in the prior year, due to the $12 million loss on asset sales. Excluding this loss, net income would have been $11 million, and EBITDA, which excludes non-cash stock-based compensation and other non-operating costs, was $83 million, down from $94 million for the cycle. Further decline is that we continue to experience pricing challenges that will keep the strong balance sheets, including cash of $177 million and working capital of $226 million. In conclusion, we're pleased with our team's performance so far in 2025 and appreciate their ongoing commitment and contract. Together, we remain committed to driving long-term growth.

Thanks, Matt. As we move into our second decade of operations, we are proud of what our team has built and the dedication and commitment they bring to work every day. I firmly believe that our team is our biggest differentiator and our greatest asset. And I want to thank everyone for their hard work. We are optimistic and energized about the opportunity ahead. That said, we will take a pause. GreenThumb is long-term focused on creating value, and given the obstacles to wider investor support that we have repeatedly discussed, we see the market is not focused on and does not recognize the fundamentals of the business quarter-to-quarter. I think this is a practical and realistic decision, and importantly, we'll be back when the timing is right. In the meantime, we will continue to fully communicate to our quarterly press releases, security filings, and other announcements, provide robust written disclosures, and our team will continue to be available for analysts and investors as requested. For now, know that we're working hard to build long-term value for our... Thank you all, and I'll pass the call back to operators.

We will now begin the question and answer session. To ask a question, you may press star, then one 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 too. At this time, we will pause momentarily to assemble our roster. The first question comes from Pablo Zuanic from Zuanic and Associates. Please go ahead.

Good afternoon, everyone. This is Rahul on for Pablo. Hello. We have two questions. So first we have, can you talk about any changes you have made in Minnesota regarding cultivation capacity, product assortment expansion, store relocations or refurbishings? And the second one would be, are you gaining wholesale share in New York State?

If yes, could you give any color in terms of distribution, penetration, and products and brands sold sure uh both really good questions i'll take them both uh the first answer on minnesota is um is yes we've done all the things you kind of mentioned uh we have expanded capacity that that was completed last year we have renovated as well as relocated some stores to kind of give them ready use conversion um that i mentioned in my prepared remarks was um uh we expect to take place this fall and then we have increased uh effectively our brand offering to uh additional skew registration so we did all that work in advance um and uh since then we've been focused on staffing and training and we're ready for uh for the game to start in minnesota uh in new york you know we've seen a lot of um we've seen nice growth on the cpg side of the business retail um has taken a bit of a hit as more stores have opened up um the data for new york is a bit murky however what we can see is uh that we're confident in is is through our own lens which is how many stores are we shipping to what are total sales and what's the total amount of biomass that we're that we're moving to cpg channel unfortunately all three of those charts are up into the right So my guess is we'll have probably more detail on how that continues to evolve in the coming quarters. But so far, we're pretty excited about the progress that we've seen in New York and super excited about the rest of the year.

Got it. And can we add one more? Are you able to sell your Delta 9 drinks in your dispensaries?

We'll sell Delta 9 drinks in our dispensaries. Yes, it's a finished good. The manufacturing process has to be different by state. So it's not sourced from the same place, but it's the same end product. A perfect example of the real conundrum that makes really no sense.

Got it. Thank you.

The next question is from Bill Kirk with Roth Capital Partners. Please go ahead.

Yeah, this is Nick on for Bill. Thanks for taking the questions um just one for me on new york and the zoning miscalculations there it looks like over 100 locations may have to be moved and another 44 pending now don't comply i'm just wondering if you've heard anything incremental around what may happen to these locations and just your sense for the near-term future of new york and how they'll kind of resolve this thank you yeah you know uh anthony here another good question um it's murky right uh we've you know we saw the announcement we kind of scratched our heads like everybody else it sounds like there's a couple ways this could evolve and play out one could be a legislative fix that would kind of solve the issue and so that folks would not have to move um the other is uh we've heard that they've offered

up um some sort of payment to compensate folks for the amount of work that they would uh that they're going to have to embark upon to boot their stores you know unfortunately the comedy of errors in new york just kind of continues and this is just reflective of of really what we've seen um with that rollout since since it really you know uh took place fortunately for us none of our stores are impacted but um you know our hearts do go out to those that are impacted because we know um we can only imagine kind of the emotions when they got that notice from the state understood i appreciate the color the next question is from john chapman with alliance global partners

Please go ahead.

Good afternoon. Thanks for the question. This is John. I'm for Erin Gray. So I know you touched on in the prepared remarks on the Agri-Fi licensing agreement, but could you provide some more color around the strategy you're looking to deploy, leveraging your cannabis brands to the THC hemp market, allowing for potential national distribution as seen with Rhythm hemp THC beverages? And how are you aiming to approach this strategy given the federal legality uncertainty? that remains?

Yeah, it's a great question, John. It's been, I think it's insightful. Look, we think we build real brands and we now have an opportunity to operate with the Rhythm brand, not constrained by Schedule 1, Schedule 3, or anything like that. It's fully legal. It's Farm Bill compliant product. We plan to, and we are. It's really just the beginning and it's really a common denominator. Like the question a second ago, is the end product the same? We know consumer demand. We know what consumers want. We know how to make consumers feel really good with THC. And so now it's just the continuation of that. So we're able to take advantage of these sort of capital market anomalies, lower our cost of capital, invest appropriately to build brands Americans love, same strategy, into products that are now available in thousands, literally. It's never before been possible in what was called marijuana, that I don't even really know what that is anymore, because of how murky the rules are and the definitions. But we're all in on the investment, and we love what's going on in the landscape because we see and it's amazingly positive. So you're invited and everybody's invited out to the Miracle and Mundelein coming up in a few weeks on the Rhythm site to buy the drakes and see what you think. But we're excited.

Great. Thanks. And high level with wholesale, it's continued to grow year over year and pretty analytics data indicates it's you know performed well the past few quarters um is there maybe some more color on how much of this has been driven by expanded distribution in third party doors versus greater velocity and existing doors and maybe any other color you can provide on uh third-party credit risk is ar risk has been uh recently called out by some of your peers Yeah, another really good question.

You know, the vast majority of the CPG growth we've seen has been through third party doors. You know, we already had healthy verticality kind of coming into the year. And so we really didn't have a lot of kind of room to grow that verticality within a number of markets. So really focused on third parties and really leaning into a number of kind of key states, I talked about in my prepared remarks, we've seen nice share games in Illinois, Pennsylvania, New Jersey. We've added a lot of new doors to New York. And, you know, it's something that as the retail business, you know, has softened, it's an area that we've really focused. The other thing that we're constantly kind of tracking is the velocity and how fast kind of the skews are turning both within our doors as well as third party. And so what we're seeing is that the velocity is also increasing, which is super exciting because we know that's the way we can continue to kind of drive the business forward. So the team's done a really nice job and pumped us to see what they can do in the back half of the year.

Great. Thanks for the questions.

The next question is from Breanna Hummington with ATB Capital Markets. Please go ahead.

Perfect. Thank you. And thanks for taking our questions. Just curious on your thoughts on like what we're seeing in the markets with some companies going under and restructuring.

Sure, I'll take that. Thanks, Brice. Ben, you know, always remains interesting. I think the headline is we're being measured, we're opportunistic, but several bankruptcies, restructurings, or whatever words you want to use means there's massive sale of assets going on as equity values are gone. And so we are being as opportunistic as we can, at the same time not wanting to inherit other problems, understanding tax issues dealing with folks things like that um you know do not look for us to do a transformational deal we're being more surgical strategic on what can help us where we can measure the roi keep in mind our business trades at a very low multiple so we're not likely to do a deal at a higher multiple and it's hard to trust the low multiple and find a deal that'll work so we're very active but i you know it's hard to get things over the line it's a difficult industry but we're here and you know we're talking to folks understood so kind of as a follow-up to that with regards to your capital allocation priorities what would you say the top three priorities are for the excess cash on hand and is expansion to international markets a potential sure I can take that it's Ben again you know we're watching international we're studying it we're gonna go back and listen to the conference call that's going on now to learn more I still think our capital, it's hard for me to get my head all the way around the return on invested capital overseas. We think we're building brands American love, and eventually that's going to create material value for shareholders. And we see that happening in Europe, and we think it'll happen in other places, but today that's not high on the list. Uses of capital are, you know, always have enough cash on hand to be able to sleep very well. We understand our debt. We love our balance sheet. And we're investing in the facilities. We're investing in growth. We're investing, as Anthony talked about, in Minnesota and New York and other places. We're ahead of the adult use markets in a couple states as they come, hopefully Virginia. And then we have, you know, funds looking for strategic M&A that could make sense. But we're okay sleeping with a lot of cash.

Okay, perfect. Thank you very much. That's all for me. I'll jump back in the queue.

The next question is from Andrew Semple with Ventum Financial.

Please go ahead. good evening uh thanks for taking my question here uh just a single question but i'm going to leave it pretty broad um i imagine the world will look a bit different for the cannabis industry next time we uh circle up for a gti earnings call here uh so i was hoping that you could leave us with a two to three year roadmap uh to the extent that it's possible to do so in the never evolving cannabis industry uh in short you know what are some of your most important strategic objectives for the next few years uh so that uh you know we have a checklist of uh things to evaluate the business on as investors and analysts uh over the next uh over the next few years here uh where do

you where um where are the strategic priorities for the business that's a good question maybe a lot you know i would say the headline answer to that is what is the power of our what does the awareness we should look like headline two would be what's the balance sheet uh if we've got a balance sheet that's in a precarious position things did not go well so we want to keep the balance sheet well under control and i think the third check-in would be and again we're going to have annual meetings and we're available for anybody to ask any questions and we invite everybody to come to the annual meeting uh is how's the team doing uh you know the secret to our success is the team i've mentioned that over time uh we really believe in it we're investing in the team and keeping the team together there's obviously going to be changes over time but making sure that people are working liking where they work having a good time uh and enjoying what we're up to uh remains key to what we do so that's great that's helpful i'll turn the call back over thank you the this concludes our question and answer session i would like to turn the conference

back over to Ben Kovler for any closing remarks.

Thanks, everybody. Those of you who have been with us, 29 conference calls in a row, we appreciate that. A few of you are out there. We noticed that. Coming up in June, look forward to that. Buckle up, everybody. It should be an interesting fall. Enjoy the rest of your summer. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.