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    Matt McGinley

    Research Analyst at Needham

    Matt McGinley's questions to Trulieve Cannabis (TCNNF) leadership

    Matt McGinley's questions to Trulieve Cannabis (TCNNF) leadership • Q2 2023

    Question

    Matt McGinley asked for clarification on the Q3 revenue decline guidance, questioning if it was primarily due to Arizona's heat or a more broad-based trend. He also asked if spending on the 'Smart and Safe Florida' campaign would now cease.

    Answer

    CEO Kim Rivers and President Steve White responded. Rivers noted that Florida is also experiencing extreme heat and price pressure. White confirmed that Q3 is seasonally weak in Arizona, and record heat levels this year would negatively impact transaction volume. Regarding the campaign, Rivers stated that the largest expense, signature gathering, is complete and spending will taper dramatically in the second half of the year.

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    Matt McGinley's questions to Trulieve Cannabis (TCNNF) leadership • Q1 2023

    Question

    Matt McGinley asked about the unusual projected revenue decline from Q1 to Q2, the revenue and EBITDA outlook for the remainder of 2023, and the expected timing for depleting higher-cost inventory as the new Jeffco facility ramps up.

    Answer

    CEO Kim Rivers attributed the outlook to market-wide pricing compression and consumer wallet pressure, which affects basket size despite strong traffic. She explained that while the new Jeffco facility will bring cost savings, this will be balanced against inventory wind-down efforts and consumer preferences for value products, impacting margins throughout the year. Rivers noted that inventory depletion will be gradual, as different product components (like flower vs. oil) have different absorption rates, but the goal is to work through it as soon as possible in 2023.

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    Matt McGinley's questions to Trulieve Cannabis (TCNNF) leadership • Q4 2022

    Question

    Matt McGinley from Needham & Company asked about the timeline for depleting older, higher-cost inventory and when the lower-cost inventory from the new Jefferson County facility would impact COGS and gross margin. He also inquired about the key drivers for the $100 million operating cash flow guidance for 2023, including year-end inventory targets and the plan for paying a deferred tax balance.

    Answer

    CEO Kim Rivers described the inventory transition as a 'three-dimensional puzzle,' explaining that the mix of legacy and new, lower-cost inventory will shift over time rather than being a simple switch. She noted that Q4 gross margin was affected by one-time items and expects a pickup in Q1. Rivers confirmed that a deferred tax payment will be made in Q1, which is already factored into the $100 million operating cash flow guidance, and that the company expects to exit 2023 in a more favorable inventory position.

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    Matt McGinley's questions to Ayr Wellness (AYRWF) leadership

    Matt McGinley's questions to Ayr Wellness (AYRWF) leadership • Q1 2023

    Question

    Matt McGinley of Needham & Company asked about the company's inventory management goals, specifically the target for inventory days or dollars and the timeline to achieve it. He also inquired if the expected SG&A improvements would come from a lower rate on higher sales or an absolute reduction in SG&A dollars.

    Answer

    President & CEO David Goubert stated that while he wouldn't provide a specific dollar target for inventory, he expects a significant decrease in inventory dollars and an even greater improvement in inventory as a percentage of sales by year-end. CFO Brad Asher clarified that the company is targeting an SG&A rate of around 30% of sales by the end of 2023, down from 33.1% in Q1, and this will be achieved through a combination of absolute dollar savings and operating leverage on sales growth.

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    Matt McGinley's questions to Ayr Wellness (AYRWF) leadership • Q4 2022

    Question

    Matt McGinley asked for clarification on how Ayr plans to achieve its 25% adjusted EBITDA margin target for the second half of 2023, given the expectation for flat gross margins. He also inquired about the outlook for G&A expenses.

    Answer

    CFO Brad Asher explained that the primary driver for EBITDA margin expansion will be operating leverage on SG&A. He projected that adjusted SG&A as a percentage of sales would decrease from approximately 35% for the full year to the 30% range by the end of 2023. CEO David Goubert added that they expect gross margins to hold steady, as internal improvements are anticipated to offset ongoing market-wide price compression.

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    Matt McGinley's questions to Ascend Wellness Holdings (AAWH) leadership

    Matt McGinley's questions to Ascend Wellness Holdings (AAWH) leadership • Q1 2023

    Question

    Matt McGinley from Needham & Company followed up on the gross margin decline, asking for quantification of impacts beyond the New Jersey issue, such as price declines and lower Illinois transactions. He also questioned if the strong net wholesale revenue growth included any one-time benefits and what the outlook was for Q2.

    Answer

    Daniel Neville, CFO and Interim Co-CEO, clarified that the Southern Illinois market impact accounted for a 250 basis point decline in gross margin, in addition to the New Jersey issue. He projected a further 200-250 basis point margin decline in Q2 from the full run-rate impact. Abner Kurtin, Executive Chairman, added that he expects a strong rebound in Q3. Regarding wholesale, Daniel Neville confirmed there were no one-time inventory liquidations and projected wholesale revenue to be flat to slightly up, moderated by increasing vertical sales in Massachusetts and Illinois.

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    Matt McGinley's questions to Ascend Wellness Holdings (AAWH) leadership • Q4 2022

    Question

    Matt McGinley from Needham & Company asked about the specific revenue impact on the company's Southern Illinois stores following the launch of adult-use sales in Missouri and the key drivers behind the revision of the 2023 EBITDA growth guidance from 30% down to 15%.

    Answer

    President and Interim Co-CEO Frank Perullo confirmed that the Southern Illinois stores, which had about 7% of total company revenue exposure, saw a 37% decline from their Missouri customer base. Executive Chairman Abner Kurtin added that while Illinois pricing is competitive, customer convenience is a major factor. Frank Perullo explained the guidance revision was primarily due to the earlier-than-expected start of Missouri's adult-use market. He anticipates a temporary step back in gross margin in the first half of 2023, with improvements in the second half, alongside SG&A leverage throughout the year.

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    Matt McGinley's questions to Green Thumb Industries (GTBIF) leadership

    Matt McGinley's questions to Green Thumb Industries (GTBIF) leadership • Q1 2023

    Question

    Matt McGinley from Needham & Company questioned the $6 million sequential increase in SG&A, asking if the $56 million in core G&A represents a new baseline for future quarters.

    Answer

    CFO Matt Faulkner confirmed that SG&A is expected to grow, particularly in the second half of the year with the opening of new retail stores. He explained that the Q1 increase was not due to a single significant item but rather a 'confluence of a series of events' reflecting disciplined expense management.

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    Matt McGinley's questions to Green Thumb Industries (GTBIF) leadership • Q4 2022

    Question

    Matt McGinley from Needham & Company inquired about the fourth-quarter gross margin falling below the 50% target, asking what actions could improve margins in 2023 and whether to expect a lower rate due to price compression in Illinois.

    Answer

    President Anthony Georgiadis acknowledged that price compression and consumer trade-downs impacted margins. He stated that while the company is not immune to price pressure, it is focused on improving CPG operational efficiency, managing SG&A, and leveraging vertical integration. Georgiadis emphasized that the primary goal is overall cash flow generation, for which the company has multiple levers beyond just gross margin.

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    Matt McGinley's questions to Green Thumb Industries (GTBIF) leadership • Q2 2022

    Question

    Matt McGinley of Needham & Company asked about the 12% quarterly drop in CPG sales to external customers, questioning if it was due to price compression or loss of shelf space.

    Answer

    CFO Anthony Georgiadis explained that the decline was a strategic choice to push more wholesale products through Green Thumb's own retail stores to combat price compression, a trend he noted is widespread in the industry.

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    Matt McGinley's questions to Cresco Labs (CRLBF) leadership

    Matt McGinley's questions to Cresco Labs (CRLBF) leadership • Q4 2022

    Question

    Matt Mcginley of Needham & Company questioned the gross margin outlook, asking if it was still realistic to expect a rate above 50% given ongoing pricing pressures. He also asked about the Q1 EBITDA trend, specifically if the rate would be similar to Q4 and whether improvements would stem more from gross margin recovery or SG&A reductions.

    Answer

    CFO Dennis Olis clarified that the Q4 gross margin dip was due to one-time, non-cash inventory cleanup charges and that the underlying margin was at the 50% level. He affirmed that 50% remains an achievable target, as operational efficiencies and the rationalization of lower-margin markets are expected to offset pricing pressures. For Q1, Olis stated that sequential improvement would primarily come from gross margin recovery, as the company will not have the one-time charges from Q4, while the significant SG&A savings will begin to flow through later in Q2.

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    Matt McGinley's questions to Verano Holdings (VRNOF) leadership

    Matt McGinley's questions to Verano Holdings (VRNOF) leadership • Q3 2022

    Question

    Matt McGinley from Needham & Company inquired about Verano's wholesale capacity in New Jersey and whether it could support growth in Q4 or if it would decline with overall revenue. He also asked about the sustainability of G&A cost controls and whether expected Q4 margin pressure would stem from gross margin or G&A.

    Answer

    CEO & Founder George Archos stated that Verano has sufficient wholesale supply in New Jersey, but growth is contingent on new third-party dispensaries opening. CFO Brett Summerer added that SG&A as a percentage of revenue is expected to remain consistent or even improve in Q4. However, he anticipates gross margin deterioration due to lower production efficiencies after building inventory in Q3.

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    Matt McGinley's questions to Verano Holdings (VRNOF) leadership • Q1 2022

    Question

    Matt McGinley inquired about the expected cash outflow in Q2 for deferred consideration, CapEx, and taxes, and requested a breakdown of the items included in the adjusted EBITDA calculation.

    Answer

    CFO Brett Summerer clarified that Q2 cash outflow for deferred payments would be lower than Q1, around $34 million. He detailed that the adjusted EBITDA add-backs included a $17 million gain on equity from a transaction, earnouts, inventory step-up, and costs related to the IFRS to U.S. GAAP conversion and M&A fees.

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    Matt McGinley's questions to Verano Holdings (VRNOF) leadership • Q4 2021

    Question

    Matt McGinley of Needham & Company inquired about the significant decrease in Verano's wholesale business in Q4, asking for the net wholesale versus retail revenue split and whether the projected Q1 revenue decline was weighted towards wholesale or retail. He also sought clarification on the IFRS financial restatement and its connection to a 2019 acquisition.

    Answer

    CFO Brett Summerer stated the Q4 split was approximately 18% wholesale and 82% retail. He noted that for Q1, retail increased, and profitability was stronger due to lower discounting. CEO George Archos added that inventory was intentionally built up in New Jersey for the adult-use launch, temporarily reducing wholesale availability. Regarding the restatement, Summerer clarified it was a separate issue from a prior auditor disagreement and was done to align with the final U.S. GAAP conversion, with a minimal net impact on shareholder equity.

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