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Ayr Wellness (AYRWF)

Participants
Jonathan Sandelman Chairman, President, CEO & Corporate Secretary
Brad Asher CFO
Jennifer Drake Co-COO
Matthew McGinley Needham & Company
Russell Stanley Beacon Securities Limited
Matt Bottomley Canaccord Genuity
Scott Fortune ROTH Capital Partners
Vivien Azer Cowen and Company
Andrew Semple Echelon Capital Markets
Greg Gibas Northland Capital Markets
Jason Zandberg PI Financial Corp
Howard Penney Hedgeye Risk Management
Call transcript
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Operator

Welcome to the Ayr Wellness First Quarter 2021 Earnings Call.

Joining us today are Ayr's CEO, Jonathan Sandelman; the company's CFO, Brad Asher; and the company's Co-Chief Operating Officer, Jennifer Drake. The company will discuss forward-looking matters on this call, including targets for revenues and adjusted EBITDA. This forward-looking information is subject to the assumptions and risks as described in the company's management discussion and analysis for the quarter ended March 31, 2021.

As well, we remind you that adjusted EBITDA is a non-GAAP measure. March the measures GAAP discussion contained for quarter to disclosures and and you the non-GAAP concerning in ended refer reconciliation measures to other analysis We XXXX. XX, Ayr's management turn now to Jonathan call I will the Ayr's over CEO, Sandelman.

Jonathan Sandelman

everyone. afternoon, good and you, Thank

The quarter our truly business. transformative was first quarter for

our Our force this experience more We're quality serves cannabis, today communities. best at customer to reckoned deliver better our of change results remainder progress strategic to XXXX. highest beginning reflect of to excited anticipated the a be and in name the report QX to year our mission the happy the for the for strong even and

grew in but in that Our much as closed portfolio. mostly of our total, year-over-year, quarter, organic acquisitions largest and more we QX in to acquisitions the this growth change revenue year. first the our adding adjusted in too closed as In retail to beginning with was in our rest of quarter fourth footprint contribute late through Florida XX% X major than the move Health Science, February to will EBITDA doubled. we our the QX, Liberty This acquisition

flower called closed in Pennsylvania stores And to Ohio. first this our also the closed in a end We acquisition in our we dispensaries West. latest shelves emerge month. acquisition we our the of March, able Arizona March, on which adult-use new also the large in adding X earlier hit in In our one of harvest expansion Revel, at and cultivation the markets to were

the in to with for Las Nevada, revenues The month execution progress the but since of the can nearly Vegas incredibly our our beginning in the strong, January. in return X/XX record also We Airport, dispensary closest the tourism you show We revenue. store told substantial to April total all was our had, the to sixth state. in are seen entire monthly successful amazing results of be about for opened the time And numbers. just we our doubling

You acquisition, online. the to as through build will next come projects as New continues Jersey our improve see this we and cultivation continue close our to Florida year

to the our We XXXX, our foundations X been brands. future we strong that increasingly building building of expand for as business. focus our committed have states, In investment will always on in

putting and evolving into the Wellness are We significant elevating brand. Ayr resources

Ayr As build to to are To wonder. part bring partnered of branding of reimagining to developing adult-use we for Boston experience. showcased the we creators across design and branding, strategy be the Pennsylvania and introduced stores in concept in and of our our and light, this when a be our of this, iconic the premier with time national company rest the branding cultivators foundation consumer footprint rolled the will is right. This Florida wellness and dispensary Wellness including first new then retail stores out Greater

of positioned uniquely support cultivator Ayr at portfolio brands everything Ayr focus around and to can Our scale, regional the and a the growing belief national that are across aligned strategy high-quality marketing on be will retail us premier expect with wholesale select power And as plant. sold to of this at you our see our starts cannabis core group our narrower, footprint. national and consumer-focused efforts core with

are XX% Origyn according in of further markets have BDS, we'll Massachusetts across and million customer Ayr the March which developing sold support concentrate will in phenomenally a has and Florida journey. the market. done in than revenue doubling since introduce success follow the last Extracts retail investments, marketing in X, the entire in has For Origyn Nevada, mass in over Wicked Sour a To its Florida stack to ecosystem its we Wellness digital and with BDS. integrating consumer-facing huge year, late the Gummies, best-of-breed to debut Arizona. the well example, and according more $X.X become our technology fourth consumers branding June to quarter over

budget. see in and the XXXX and Jen the said We investments far, what XXXX work revenue for second we we through and But will have XXXX XXXX. walk would accomplished in have details the do. into drive brand half so these to on reach additional XXXX we have of set the milestones target You we still time remaining you will beyond. to of on and

everyone in pass very work the we team Our financial through ourselves proud day am CFO, set here call With puts Asher, works have reach happen. I the Ayr shareholders. I'll to for our goals walk that to to the and of every Brad tirelessly hard that, results. at our make to the

Brad Asher

Good afternoon, everyone.

we Jon QX. growth As mentioned, are the of substantial proud in

days As the the contribution of XX and a reminder, days of from only QX from contribution included Liberty X acquisition. Arizona acquisition

as and show in assets areas between fair were that value longer and way. line are Ayr Warrants differences And in presented biological inventory. the no the also Under QX not a first any reported biological important will I unique business change pro these differences greatest to X U.S. any industry. fair the note call, treated the this of forward. norms GAAP, our IFRS We results in few asset to actual forma to to liabilities. through is walking removed under be all we without previous equity want GAAP see key and of in It's Therefore, I'll our our have signaled you and going with our differences of our opposed GAAP. reiterate the on from requirement. quarter value and as Now to industry QX are results all adjustments. warrants

a IFRS which marked is applies requirement fair the Florida, value value to acquisitions. and Ohio our inventory Whereby one date, exception is this on is with inventory In However, fair the the QX, previous treatment. Arizona consistent acquisitions. from purchase for at

statements, fair as in cost this to the the presentation inventory combination. business incremental see will basis a subsequently adjusted Throughout gross cost goods has value we've a our identified on is cost inventory impact EBITDA inventory in footnote, acquire these and sold, itemized sold this you amounts reconciliation. downward As financial of And cannabis margins.

under or of goods leases now addition, financing considered and leases as In Whereas expense reporting, of operating rent depreciation expense G&A. of sold GAAP, our interest. through leases considered cost treated and and are were under U.S. the majority capitalized as previous all IFRS leases, part

now footprint open have classification cash an While this expense sales $X.X Arizona in million our to the monthly current of build the doesn't expectations this impact Florida. change Based I'll quarter. a increased exit January IFRS. was in an Lease of continue million in the under on first our month over QX. key will exponential sales first results of million as impact adjusted $XXX Liberty lease increase lease In and full To any our from million, impact $XXX adjusted EBITDA, of from it and QX, XX% provide expense the to summary XX% reported number sales target representing to acquisition sales way, financial in does of metrics the jump by acquisition. days of EBITDA, an our annual on to with $XX.X the from in year, GAAP-related flow on prior brief X the particularly reclassification more we prior there in throughout from we EBITDA over driven quarter adjusting expands XXXX and relative as of March, quarter. expense for year stores sales, are adjusted of XX% consistently this

with a XXX% million, for representing EBITDA $XX.X GAAP quarter quarter. prior apples-to-apples an on increase in was line the adjusted and Our year prior over basis

retail With basis. as integration. of a prior and to from million increase facilities sequential represents vertical from Adjusted the with in leases, gross margins of operations an that IFRS decrease higher of XX% continue online anticipated ahead X% X% an the cultivation was markets, respectively. to the X% in IFRS our quarter, supply-constrained first margins quarter substantial million $XX.X treatment The year $XX on and decrease we apples-to-apples and come prior coming adjusted represents new increase EBITDA ramp prior

sequential of which This year represents a continued our infrastructure, largely talent investment was to XX% of branding, on business. was in million our with $XX.X a basis. approximately a expense consistent of increase of from of and Our percentage XX% representing due of increase percentage SG&A as sales, sales while the sales, foundations prior QX strong

associated start-up costs as their intended preparing well locations use. with As for

hired costs as in comparability people ongoing million we For not for example, month future only of the the these we expenses we amount this in XXX $X.X start-up adjusted QX, are just Florida EBITDA total, periods. to and X in and in operations quantifying enhances of adjusted prior In indicative business. believe we own

year, the an total propel raise proceeds of over January, USD federal initiatives. hand $XXX.X Drake. in hand of million subsequent offset year-end as in million year-end. a with was to position and XXX Lastly, million. our cash to Co-COO, With that, partially combination by we million to CapEx capital ended primarily of paid increase This equity for a the $XXX.X our compared as $XX million end I'll by on well with taxes paid $XX.X gross driven acquisitions Jennifer cash was to strong growth The from in quarter demonstrating to it

Jennifer Drake

Brad. Thanks,

Arizona as After As of there's call that the of months that I on million to peers, in basis. first we're throughout will Brad XX% our closing $XXX adjusted on tried translates dramatically we and the target, because critical our on and in GAAP around XXXX few ability way from his quarter. as a targets. on XXXX $XXX this mentioned, well more to remainder Ayr's our uncertainty business our clearly, different million many in it Jon we to in acquisitions relative today EBITDA did set mentioned milestones the our of Ohio, than IFRS we year-end hit adjusted some opening target ago at an to Florida, to meeting out time million judging our revenue which, putting EBITDA spend detail discount call $XXX EBITDA ramp-up remarks, when and to look the our laid our want revenue

revenue have contributors ramp We've the Arizona. acquisitions Wellness the These a Nevada, of new April up of been our ramp begun run in cultivation. dispensary already with have and X combined stores our Ayr our rate the The to accomplished. states, we've addition to and X in January. in to doubling in sixth in first already versus Florida contributed near And closed major Pennsylvania in

the Pennsylvania, up EBITDA in to important in this Pennsylvania month, in stores revenue the base flower As Jon and at month be mentioned, drive will wholesale, July, of X in began the wholesale increases from of in our in June and it XXXX of Nevada selling acquisition in online additional will Pennsylvania, move we very more and further closing will in increases dispensaries will in least manufacturing margins Adding in May, at additional drive the Pennsylvania. coming retail. like revenue our New Jersey dispensaries and is margin both opening it just This own X Florida state. this because in revenue that our

in second our cultivation significant July, from phase capacity revenue Pennsylvania, begin supply-constrained growth selling in in constrained adding very quality flower of and for Additionally, supply we'll expansion market. that

received harvest Revel strains reviews nearly Pennsylvania Our in reaching of flower XX%. X launch an THC first with and initial launch from levels our top

facility and dispensaries and further as drivers Massachusetts incremental in incremental XX,XXX open product production. significant cultivation as margin square wholesale our XX,XXX manufacturing as XXXX we Boston business and for our in in and retail online, will there our adult-use new new adult-use square in launching these drivers, Ohio on cultivation, wholesale in really Jersey comes sales Greater cultivation ramps scaling New and of gross in facility driving and growth expansion ramp Arizona cultivation of be: Beyond our feet up foot turn X retail canopy growth

continued and Florida add experience expanded cultivation more and driving better much production, retail with revenue throughout our a Finally, XXXX, footprint. will in EBITDA our turnaround in improvements

the at are and to Our revenue of EBITDA we which ever end growth that so this are an guidance an reaching reach corporate focused to important our for that year such moving been year. It's later of state store revenue the we average, important average stopping when us. 'XX. that average? assumes the by headquarters lever per our getting for Florida on such it business, Florida we But is and is we per and only Florida have of million content $X right

strong definitely milestones So visibility both are all These the needed and them, projects to are on and resources we all-in human have we Florida. complete where financial. on

Importantly, nearly cash we on have the ready in $XXX with bank. hand million

senior scalable project strong, foundations, whom strong We SWAT milestones XX execution practices specifically our team management and place needed also best leadership projections. make XXXX X,XXX on controls have focused people and milestones the in business expertise and the that the human these integration, and systems, over dedicated happen, are drive of to of operational with capital

to continue contribute X presence revenue over In see we states, states will to X As XXXX, our in scale states significant $XXX a that will $XXX target. our X operations of million of revenue million you matter. in our

more address of many Before many have I pass Jon, issue up-listing, to I topic, you few it one the is -- the last over months. want this back of about asked to which as

to U.S. us regulatory completing listings. this filer. no are become or plant-touching exchanges Brad jump to there GAAP As discussed, hurdles the in as quarter, we've to that are a to the once are elected we ready This additional U.S. audit U.S. transition take for reporting reporting means

those can absolutely fronts. be ready done go the drop up-list. So We've to hat on we to at good of we are everything to the

the to back So to Jon. plant-touching take ready I'll that, list. are are exchanges listings, U.S. to hand With ready we when it

Jonathan Sandelman

Thanks, Jen.

result excited our we're strong recent coming as were as in results discussed, see we by a quality April of producing our As and encouraged strategy execution and to online. the are acquisitions playing planned out

see New closing are to cultivation we and Pennsylvania and look and acquisition our continued our summer, this states capacity on Jersey more Florida. in we later bring We to progress existing focused online dispensaries as from expect

our see existing remain right new want can additional we needle. to states generate revenue M&A, footprint. assets there when to that possible and also We price. in right to committed X the in the through $XXX the at expansion to deepen excellent where We are over to say move is be XXXX Having continue out our the we people to of right X add meaningful million opportunities presence for in states in mean we states and finding our our and states both what

open you footprint. We sometime to continue through talked today even function arise. of sales I and to over much hand that year. to and look step forward welcoming it diverse in for to expected look next those to results growth leverage all as to to milestones forward With headquarters operator plus QX demonstrating summer, We full strong our we've so up this new now announcing opportunities this reporting opportunities, the they later that, for new our later questions. that opportunities look more Florida to the about We the

Operator

[Operator Instructions].

first with comes from McGinley The Needham. question Matt

Matthew McGinley

predominantly the When change was out same for implicit and the margin costs, and assume we Nevada adjusted that strip start-up margin you the XX% noise it real had second in inventory And there Massachusetts? the rate quarter? in first that, is rate in in rate in gross gross rate does new states, the stay related to I that any acquired in quarter, which EBITDA guided margin the you gross to about as second in

Brad Asher

this Matt, is Yes. Brad.

the all that through is our $XX only cost acquisitions, P&L. to relates flowing of inventory million incremental Florida. relates million to sheet the and on $X.X balance to was Almost that the So it acquire of

that to none Nevada. relates So Massachusetts or of

quarter. terms from In very margins, just to those incremental all not to I Massachusetts I been of are consistent or And reiterate Nevada. they've think that at want costs prior related

Matthew McGinley

that Great. XX% that for stay implicit about Brad, the EBITDA second does the same? in rates margin quarter, gross And rate

Brad Asher

Yes.

of margin that see in year. second the second you're same think to going the stay I the in half quarter

get to I EBITDA especially think operating improvement, you're see going trend as to up. overall SG&A margins will with start some some leverage, we

Operator

Beacon comes from Russell Securities. question with next The Stanley

Russell Stanley

time increase initiatives yield. huge in take around seen have the priority. you some you've a that results, major already number produce to a a although underway Florida, And Just obviously, of

actual a the made? taking list, these there of do wondering, actually you how have in your way Just much there? the to Are you progress far? XX% so from items of of action standpoint way of on XX% terms

Jonathan Sandelman

that cultivation our at to in Russ. So recently now was we've failure look rate line rate Florida, talked the I've the in that, the we business other back site. is seen various August, question. I'll with take Thanks interviews progress. crop simply for XX%. And major In that when

about up product. you have So of if you XXX% XX% with to think the the produce and end only cost it, you

it's been eradicated. So that's a essentially major expense

foot, has about Florida. per the already We've Next, square talked by gram increased that XX%.

had, issues had in the stores. that its X of flower days Liberty One only week it a

July, have X we We still to flower flower we should have and have genetics. but have our By Now stores week. we a XX, we're X our X genetics today. and days June week, narrow days a on X only in should

So store. improving drives the then inventory efficiency turn per which drives which in and stores, the cultivation, progress the in in major yields in the the revenue

Russell Stanley

Great. one Milford. expansion just in question plan around more underway could That's sneak Massachusetts your helpful. and If I at

I absorb level that many do question to you you in penetration planned? capacity your high, How see have that the need dispensaries. around very market guess dispensaries Given already add more my is to additional order

Jonathan Sandelman

about when wholesale any be are put So if stores we our operating, won't we into the to to market. think product adult-use able it, have

we of maintain we in buy XXX have. to continues past, is from in capacity And of XXX the market coming that players to growth, the So stores. products. Most who year we're need grow about the end the the talked out as of we've today need to stores. by XX grow, to what just least projected at That's non-vertical as to

So we see growing. our business wholesale

us it had we saw locked had was been $X.X You we approximately material in almost million. in million to When sell, to or month released, a inspection finally wholesale recent product have $X.X up and quarter the when we average of return a our two to process. ago, took

able to retail with stores, we're that in to So markets. affecting further the growth supply, market without see there's And the demand. the able price. probably be we the average supply We've twice selling non-vertical there's we'll and always current that in demand that's felt

Operator

The Matt comes next Genuity. Canaccord Bottomley question with from

Matt Bottomley

Congrats relation are XXXX where EBITDA wanted for on in I things acquisition revert and margin the quarter the to closing. on to looking quarter to the just the recent guidance profile. back next

So a about XX%, if still margins XXXX GAAP And expecting my is be here. on QX into correct. around basis, even looks to going math XX%-plus

So I'm into Arizona of they're to that versus as is and Jersey play road strategy new what the margin margin well us markets as to expansion? just your between a large map appreciation curious wholesale how if to you New retail respect give that can like with contributors going of

Jonathan Sandelman

vertically Well, to know year. if product product. integration today, retail you cultivations that need to we operator just And comes And vertical than think get next would the and lot just the beginning the about our we're math. the not third-party of we has third-party a markets go extent simple And all margins our vertically that were the our stores flat, we higher towards even in, go it, of and integrated supply major some our in replace integrated product. stores, sales margins happens a of up. Cultivation If completed buy end the of own year that has that one it's up. margins as

Matt Bottomley

other And Okay. I the ahead looking to was on just question That's had then fair. quarter. next

much looks COVID fortunate, like but it you expect states it to you're to the Arizona. but color just open less so week a I'm in the within in quantify many If the obviously, relieved. we're versus from with dynamics Toronto in like performance the $XX are a not on of of how does I also more the being clearly, back looks as you states, then And QX. restrictions don't dynamics in quarter the the U.S. full many market give expecting now starting can here, QX full in little just that than say, million, on period

into behavior the for your opening the of on So back states up coming in period maybe QX consumer QX a next quarter. versus and full acquisitions anticipation online of

Jonathan Sandelman

right have closed we than any don't states Toronto So now. different that are

So sure the of I'm question. not

Matt Bottomley

Yes.

organic So themselves because within just of is I'm deal to an next the assets coming growth new online the revenues I guess quarter versus idea be just of to trying going much more closed? get how

Jonathan Sandelman

will about finishes the continue went Well, and bridge, it will contributing. showing. We've the period fourth more. of as talking second are you And the more -- cultivation already first into what a the We're We're off what that's that. paves online, we're quarter to and closed talked And that April. always XXXX. contribute. half are right? even CapEx And We're comes about the contribute talking year quarter. showing year quarter. half the program is they We're deals the investment we've And of in through second is that first about showing next Brad an

Operator

question Partners. Scott comes ROTH next from Fortune The Capital with

Scott Fortune

to Real a coming that Nevada, there. tourism, X Or a have added you're really the million-plus the how and added open stores sense market for up as want annually tracking expansion? to in producing production in get you another similar, and look that XX just the state. stores you'd potential along? we I see quick you that market have is How's capacity efficiencies Nevada

Jonathan Sandelman

Nevada dependent and growth difficult No, good does we're in tourists, and adding their when The manufacturing we're tourists back me. at hotels quarter start Vegas. had manufacturing the We're tourist rehire in capability capabilities, Las look help to the come not while the -- said, casinos it we've as we people. and a and when news adding on market, our that excuse is

We've been rate in market, been always employment but that has focused local local high. extremely markets. are state the on the focused -- We unemployment has on been

we growth strong we're think the potentially inflection seeing of right here. And point so at very

Scott Fortune

on Okay. a the us that bit And narrowing brands Massachusetts? strategy. appreciate through have color bit Origyn, in maybe new dispensary of that this that. rolling going No, out, little like that brands? on the putting in Is I color like on national what's strategy states? more existing of you little Boston, place And step you Kind in mentioned, on you're any down a some timings, really, kind updates just then more branding

Jonathan Sandelman

that branded and company. do to company is created, in. up have that my more to focused single branded on the and approximately portfolio take portfolios. a And asked our SKUs XXX that what approach we operators So original portfolio I've in have the other a every we team pick plus state we're in we through branding will The we acquisitions,

have and our will both in business. that We wholesale in our retail

brands be those and concentrated that, -- stores market stores. by And consistently in in will our we be we'll our the and competitors' same So doing brand portfolio.

how in we've brands. Nevada, in true create Sira effect, We XX% strong we the where brand in the it will, in we The done brand. In have well seen The national Massachusetts. to a first you've #X is brand, overall And highly brand according a Nevada brand. have brand. strong market, of shows edible BDS, is the

So these we retail. sell And have footprint we our we this it, it, narrow portfolio it. products. it it, to brand through wholesale to concentrate as extensive sell nationally-branded continues portfolio. this be will We market we expand, it We names our the in We market.

Scott Fortune

any on Boston from kind Massachusetts timing what's that Got the quick, then moving it. standpoint? real updates And of in

Jonathan Sandelman

I But to true. what no is I information we we've have to share. new know think said the past be what in

Operator

Vivien from with question Azer Cowen. next comes The

Vivien Azer

to estate solidify on costs? your Presumably, potential Florida relative wanted up to taking HQ to advantage attractive whether I really due any moving that follow real commitment was cost comment savings to you're of, could perhaps, more you're comment on you wondering market. your I your to the relocation. that

Jonathan Sandelman

So, cheaper. Vivien, much is real estate

the for of New Our that been about we per square what strategy to don't the the foot efficiencies the personal the worth But as X/X And in get think future what will in more past. itself We rapidly will my asset I my the a be on want front recently, today. fact, ability been they've because paying our us always than really goal down there issues, the -- the real belief in more pay it is have improvement that expand. give commercial will going stock It's goal is more to of because by than in City. out the made aggressive have while be we're of of than we I in that. that the rapid to spoke just estate. about we York XX, is cultivation And cultivation that's But of been Liberty savings current in can. cost as the the to we expand value mistake our

of So I made we is if that understanding think on importance upside tremendous. intensely the the the collective has focus Florida, this Ayr, state, at this just management decision

Operator

from comes with Andrew question next The Semple Capital Echelon Markets.

Andrew Semple

first Congrats on results. quarter the

quarter. your first would First just to the also to for in first understand expect in that of that own the in market be some second during trying earmarked wholesale question Would recognize second dispensaries? entirely Or harvest you completed revenues Pennsylvania quarter? the here, magnitude of your the

Jonathan Sandelman

me and be in if realize, market. very good wrong, as we'll having wholesale constrained, both the the will site and Brad, correct a -- harvest but we by market still must wholesale retail wholesale I'm And is market. the it's you very know,

wholesale see start do to there. any you'll that So revenues have Brad, to or... share that, you details on you want

Brad Asher

open stores exactly time. a we X at this reminder, as that's have mean, right. I No, And Yes.

feed So our but enough to have going a wholesale to producing we're harvest business to from with absolutely going that in are that state. stores flower, we start

Andrew Semple

in ask on about a helpful. question one That's comments wanted I in and step growth function the to Great. press the QX. release QX of

especially -- wording QX. the in think was I

wanted revenue growth. to you make just growth I called there that or Just point, last where sure we out in want QX, we you might rates we're statement. misinterpreting to Are clarify sequentially see on an the see the QX QX? relative QX that suggesting that to in acceleration maybe QX of not

Jennifer Drake

EBITDA the rate GAAP a will and start it's peak a adjusted number guidance XXXX. when of really online, come we're into that see for to run facilities think -- feeds to that's million matter in cultivation so that I going of reach QX, of the $XXX

Andrew Semple

number to They of state. then a Ohio. final And Understood. maybe just announced be here Okay. that dispensary issued a on in question licenses new

additional bringing to this Just adjust maybe online? a capacity to wholesale want priorities whether that whether dispensaries wondering strategic move coming with would all, bit little on market at quicker you'd announcement your

Jonathan Sandelman

a without manufacturer I think constrained is can. as a stores. a market at hope is retailer Ohio of store There, opening, point. to aware this our we're move to we We future. the it in strategy be in fast on a those as but still we cultivator those are And

our changes think as could. we I build anything originally So was because plan as don't to that fast

going on So to just that we're stay plan.

Operator

comes from Zandberg Gibas question PI Northland off. It with The Greg Jason Financial. Jason that question comes Securities. seems with next [Operator next The has Instructions]. from Zandberg dropped

Greg Gibas

I to result revenue I acquisitions as think we a Florida to year, your second, and for Ohio the growth about in how partial as of guess, to New we quarter? then QX Jersey how those? layer should and margins organic the July in new Arizona quarters guess business, first, in And then existing the trend and in would come gross expect you this

Jonathan Sandelman

take Brad, it? to answered do to you think we've respond But I that? do question Brad, you before. want to this want

Brad Asher

Yes.

do we say you're I'd The states going to XX% in it's sales. of range. what from quarter-over-quarter balance coming that in from growth online. growth And coming the to assets terms that XX% those is see QX our of that's So existing these X% with coming assets in online. quarter-over-quarter. really It's really have

a we're right? it's vertical have And with And original I vertical we're margins the margins. lower margins. see integration, in lift roughly So lower just in think to these states, once about customers are in we margin, point going than of -- you're terms pre-vertical we're, to acquiring basically, where also integration, In our integration XX% business. back retail substantial

Jennifer Drake

get store, be, the market people margins to because you're go allows like And market when want. able Pennsylvania buy like know they they they'll like more New New to to to will the where in go or the want Greg, should both they when to ironically, Jersey Pennsylvania And constrain Florida. going you a what more in -- a same. be Jersey vertical revenue and or be also the more It integration better

in For reasons, the different Florida. same dynamics

cultivation when supply-constrained So EBITDA can top stores, market play these we own out where the the production feed drives having dynamics line. that you're and have our our and both line it

Operator

question next with Zandberg PI from The comes Jason Financial.

Jason Zandberg

asked think Matt I'm there's ask, to wanted on by just clarification any the not I if though. sure earlier. it I was answer,

stores. the a a basket with coming basis differences of terms economy, now of have customers of terms in number seen consumer in any reopening in size, on in Just terms through of daily behavior you

color differences consumer on Just you helpful. could would any behavior in provide be

Jennifer Drake

-- Yes, when go Jon. we ahead,

Sorry.

Jonathan Sandelman

kind about are seeing, economy with wouldn't are opening, falling, we right, unemployment in seeing we people the in rate necessarily what disposable income the we're talked Nevada, is the start But Yes. rushing and that with that shopping seeing, conventional -- -- malls up. retailers I say and again. with experience of the retailers going

that We expect that will revenue. impact

of So opened economy it's opening trade stores don't we're been our all up. the through not the -- seeing strong business think COVID once because has I

down, and are don't But rates feeling I more they obviously, as more see spend to factor so point. at driving this if to people go And that money. tend secure, unemployment continue a

with agree that. would I So

Jason Zandberg

do at target? Okay. expect QX just No, And great. sort that's QX, or if to you When Florida. of in I in peak? peak a that production be of QX or clarify, yields could cultivation terms Is that

Jonathan Sandelman

that get a I a our in So but efficiency to more those when we the peak earlier, I yield. mentioned where we increase we can't tell do lot work states. line will happen, other I in still of seeing, you XX% have with average exactly we're in can as think yields and And

much higher I where But are today. very they'll than function. QX, be by smooth they think it's think I a

then also each that more add harvest we efficiency better think as And and and I better. will go yields up will the go I think genetics, the will get up.

that that XX adding you're only on it's as when accelerate strains, opposed dependent you're you'll If additional to X less strains. likely

our sites, they'll it's in that's other think in cultivation going improvement-by-improvement. of what to a be a more I and very smooth more efficient go So are our function harvest-by-harvest, number line to numbers

Operator

comes Penney Howard The Hedgeye. next question from with

Howard Penney

Nevada, same-store do sales to talk willing you about increase to sales be have would number? of XX% a close Or Or that? in retail that? that would be you The

Jonathan Sandelman

Brad?

Brad Asher

question, repeat specifically you around... the Can Yes.

Howard Penney

said just equal a I metric a same-store look trying to, and of sales, you same-store sales at was Nevada up XX% retail year-over-year. number? that's if I sales was wondering to are in like,

Brad Asher

say XX% that of I'd Yes, is.

additional ramping. store now, We have online it's but still an

So those it really is in organic stores. growth

Operator

and We conference And also, have currently call. phone no today's question-and-answer the session lines. questioners the this more in concludes

your Thank a day. may disconnect You pleasant and for lines. participating, you have