Today, and welcome to Cresco Labs' first quarter 2025 earnings Conference 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then one on your touch-tone phone. To withdraw your question, please press the star key followed by two. Please note this event is being recorded. I would like to turn the call over to T. J. Cole, Senior Vice President, Corporate Development and Investor Relations for Cresco Labs. Please go ahead. Thank you. Good morning and welcome to Cresco Labs' first quarter 2025 earnings conference call. On the call today, we have Chief Executive Officer and Co-founder Charlie Bachtell, Chief Financial Officer Sharon Schuler, and President Greg Butler, who will be available for the Q&A. Prior to this call, we issued our first quarter earnings press release, which has been filed on SEDAR and is available on our Investor Relations website. On Friday, May 30th, 2025, we filed the company's quarterly financial statements and MD&A for the quarter ended March 31st, 2025, on SEDAR and EDGAR. Before we begin, I want to remind you that statements made on today's call may contain forward-looking information. Actual results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described in our earnings press release and in the most recent annual information form and MD&A filed with the securities regulators. This call also contains non-GAAP measures also outlined in our earnings press release and in the MD&A filed with the securities regulators. Please also note that all financial information on today's call is presented in U.S. dollars, and all interim financial information is unedited. With that, I'll turn the call over to Charlie. Good morning, everybody, and thank you for joining our Q1 earnings call. Before getting into our financials, I want to briefly acknowledge the extended timeline for our filings and earnings release this quarter. Simply stated, our auditors needed additional time to complete the review of our first quarter financials. Please note that the financials as presented remain unchanged from what we were prepared to report on May 9th. We understand and share your frustration with such delay, and we appreciate your patience during this process. With that, I'd now like to discuss the broader strategy guiding our financial decisions over the last two years. For the last two years, we've deliberately focused on generating cash and strengthening our balance sheet rather than chasing short-term revenue. That strategy continues to pay off. We entered 2025 with the flexibility and financial strength needed to navigate market volatility, complete our debt refinancing, and remain both strategic and patient as we invest thoughtfully for long-term growth. In Q1, we delivered $166 million in revenue in line with guidance. This reflects our successful plan of limiting sales to wholesale accounts with credit risk to reduce our AR exposure. We generated $82 million in adjusted gross profit and $36 million in adjusted EBITDA. Our push for efficiency helped offset the lower operating leverage and minimize margin impact. Most importantly, these actions translate into strong cash results. We generated $30 million in operating cash flow and ended the quarter with $162 million in cash, our highest balance in the past three years. We're focused on ensuring our balance sheet remains in the strongest possible position to support long-term value creation. By staying disciplined and thoughtful in how we deploy capital, we're positioning Cresco Labs to drive margin expansion, gain market share, and invest in sustainable growth when the right opportunities arise. With that, I'll walk through the three strategic pillars we're executing against to build the strongest and most valuable Cresco Labs for the future. Number one, we're ensuring we have the most strategic footprint. We're expanding our footprint, intentionally prioritizing depth over breadth and profitability over revenue for its own sake. We're proud of our ability to drive cost-effective scale and consistent quality in our markets, and our cash flow enables us to develop new states as long-term accretive opportunities. We're putting this to work in our highest margin and growth states. In Pennsylvania, where we're number one in branded market share, we opened our 18th dispensary last week and are in the process of bringing more cultivation rooms online to meet increased demand. In Ohio, another high-growth market, we're on the verge of opening the first of three new dispensaries in the state, another example of low CapEx investments that drive high incremental cash flow. In Kentucky, we're excited to bring our capabilities to a new population and demonstrate what cannabis can do for their communities. At the end of April, Kentucky Governor Andy Beshear joined us to unveil our plans for one of the state's largest cultivation facilities in Winchester. We'll operate one of the state's two Tier III licenses, the largest available, and we're building relationships with local partners to ensure the success of our Kentucky operations. To help educate the public and policymakers, we recently gave tours of both our Ohio cultivation facility and the future site in Kentucky. It was a great opportunity to showcase the sophistication of our operations and provide a firsthand look at what a responsible, high-quality medical cannabis program looks like. We have a track record of being first to market, building leading operations, and investing to meet demand, and we're excited to do the same in Kentucky. By deploying capital selectively, we're strategically building a portfolio of cost-effective growth opportunities while also strengthening our core operations, setting us up for long-term value creation. We'll continue to evaluate new assets and additional state opportunities in our typically disciplined fashion. Number two, we remain the leader in branded wholesale products. Our branded product portfolio strategy is grounded in disciplined execution and deep consumer insight. In Q1, this focus helped us retain our number one market share positions in Illinois and Pennsylvania, two of our most strategically important markets, and maintain a top five position across all of our limited license wholesale markets. We are maximizing growth across our core markets by winning with independent accounts. In Q1, we served 13% more independent accounts than last year and saw independent growth increase across all core wholesale markets. We achieved this by continuously optimizing our portfolio for what independents need using real-time consumer and market data. For example, in Q1, we brought nearly 40 unique new flavors to market across key product categories. Looking ahead, we are pushing this momentum with innovation in product technology, formats, and packaging. This includes next-generation premium vapes under the Cresco banner, new hardware and larger formats for High Supply vapes and edibles, and new form factors designed to capture incremental occasions. Our partners know they can count on us, not just for consistent execution, but also for a reliable pipeline of winning products. Whether it's proprietary strains, breakthrough formats, or trusted SKUs from brands like Floracal or Good News, we're committed to delivering innovation that resonates with consumers and drives velocity on dispensary shelves. Number three, we're building a highly productive retail platform in the most strategic states. We continue to strengthen Sunnyside's competitive position, fostering loyalty, building bigger baskets, and selling more units than we did a year ago. Across our footprint, Sunnyside dispensaries consistently outperform, generating approximately 25% more revenue per store than the state average. Ohio, our newest adult use market, is a great example of our playbook in action. Our retail team managed the adult use transition exceptionally well, scaling up our five stores to meet new demand. In Q1, we processed over twice as many transactions as we did a year ago, gaining market share and growing sales 4% sequentially. In markets like Illinois, competition has intensified significantly, with over a 30% increase in dispensaries over the past year. This makes every touchpoint with our shoppers even more important, a key differentiator for us. Nearly 80% of our transactions come from Sunnyside dot shop, allowing us to build relationships and gather data that goes well beyond the point of sale. We're generating strong customer loyalty with over 60% customer retention and a growing rewards program comprised of nearly 400,000 active members. Competition is only getting tougher, and customers are looking for differentiation beyond price. Sunnyside is meeting the challenge and pulling new levers to make shopping more convenient, more enjoyable, and more rewarding. In closing, our overarching goal remains unchanged: to enhance the quality of our earnings, generate consistent cash flow, and position ourselves as a long-term leader in cannabis. This quarter was no exception. We made disciplined decisions to strategically fuel future growth and reinforce our balance sheet so that we're positioned to be a reliable, long-term leader in this highly volatile industry. With that, I'll hand it over to Sharon to walk through our Q1 performance in more detail. Thank you, Charlie, and good morning, everyone. As Charlie said, quality of earnings continued to be a theme for us. In Q1, we made deliberate decisions to forgo revenue opportunities that have questionable cash benefits in support of that goal. This resulted in $166 million in revenue. Total retail revenue was down 5% from Q4, driven by traditional seasonality and competition in Illinois, where we saw overall state sales decline over 6%. Wholesale revenue declined sequentially, largely related to volume decreases related to our purposeful decision to limit sales to accounts with credit risk. Our team has done a great job reducing receivables by 13% since the end of 2024. We are committed to profitable sales that convert to cash rather than chasing top line. Adjusted gross margin for the quarter was 49%, down 20 basis points sequentially. We continue to take proactive steps to preserve and strengthen profitability, even in the face of price compression. Our teams are aggressively executing targeted productivity initiatives, innovating products that command premium pricing, and leveraging our scale to optimize sourcing and production costs. Cost discipline remains a key driver of our strategy. We reduced adjusted SG&A by just under $1 million sequentially to $53 million this quarter, despite expenses tied to adult use in Ohio and upcoming dispensary openings. In the quarter, the decline in revenue and the corresponding reduction in operating leverage led to $36 million in adjusted EBITDA, representing 22% of revenue in the quarter. Most importantly, we generated $30 million in operating cash flow this quarter, underscoring the strength of our business model and the discipline of our execution. We remain committed to our capital allocation framework, prioritizing operational efficiency, disciplined growth investments, and balance sheet strength. In Q1, we invested $6 million in CapEx, resulting in free cash flow of $25 million and an ending cash balance of $162 million. Our cash balance is now the strongest it has been in the past three years. We are progressing on schedule with our debt refinancing and are confident we will complete it over the next few months. Given our strong and consistent cash generation, we expect to pay down a portion of the debt on refinancing, positioning us for an even stronger balance sheet. Our improved financial profile is attracting solid refinancing terms, and we are focused on securing a structure that enhances flexibility and reduces our cost of capital over time. Looking ahead to Q2, we expect revenue to be down slightly compared to Q1, largely due to one-time impacts related to Illinois' mandatory seed-to-sale system conversion taking place in May and June. As a result, we have seen an impact to wholesale sales in the state as retailers hold on new purchases and work through existing inventory in hopes of simplifying their conversion process. We expect this to normalize in future quarters once the conversion has taken place. Going forward, new dispensaries in Pennsylvania and Ohio, increased capacity in Illinois and Pennsylvania, and a strong lineup of product innovation and new efficiencies should help offset the impact of price compression and competition in the back half of the year, particularly in Illinois retail. We expect margin pressure in Q2, further amplified by the Illinois state conversion process and its impact on our state revenue mix. This will result in a couple hundred basis point impact in Q2. For the remainder of the year, we expect modest margin pressure with quarter-to-quarter fluctuations. On the expense side, we're squeezing every dollar to offset costs tied to growth, like new store openings and our build-out in Kentucky. As a result, we expect only modest increases in adjusted SG&A throughout the year. We have a strengthening balance sheet and strong cash flow with a plan to fund growth thoughtfully. We're excited to show more in the back half of this year and into 2026. With that, I'll turn it back over to Charlie. Thank you, Sharon. This industry remains complex and unpredictable, but we're staying focused on what we can control, leading in our core markets, maintaining a fortress balance sheet, and being disciplined in our pursuit of new growth opportunities. We are in a better position than ever to not only weather regulatory and market uncertainty, but to capitalize on these challenges and emerge in a stronger, more advantaged position. I want to thank the Cresco Labs team for another focused and successful quarter. With that, we'll open it up for your questions. Thank you. To ask a question, please press star followed by One on your telephone keypad now. If you change your mind, please press star followed by Two. When preparing to ask your question, please ensure your device is unmuted locally. The first question comes from Aaron Gray of Alliance Global Partners. Aaron, your line is now open. Please go ahead. Hi, good morning. Thank you for the questions and nice job with the cash conversion they've done for the last couple of quarters. First question for me is I want to talk about outlook for pricing pressure, whether or not you're seeing that somewhat stabilized or accelerated, and how the company looks at the long-term pricing trends given what we've seen the pricing curve evolve like in different types of market structures, such as limited license markets that increasingly become more open like in Massachusetts. Any type of commentary in terms of how you're now looking at the overall evolution of pricing pressure for different markets would be helpful. Thanks. Hey, good morning, Aaron. I'll take that. Each market is different. As you mentioned, there's a relatively common curve that we see when states transition from medical to adult use. Depending on the tenure of the state, they're in different positions as it relates to the curve. In our major markets, like Illinois, we're still seeing some pressure. There's no doubt about it. The opportunity that exists there is as pricing compresses, demand tends to increase. As an operator, it's up to us to make sure that we're prepared for the opportunity that that presents. It's why you see us bringing additional capacity online in states like Illinois and Pennsylvania. The different states are at different parts of that curve. Coming up with that curated custom approach to each market is key for managing this as we go forward. Thanks for that, Charlie. That's helpful. A second question for me, just in terms of the AR risk, how much of an impact do you believe that had on some of the software wholesale revenue compared to broader pricing pressure? I know it was called out in the prepared remarks. On the same topic, can you talk about where you stand in the process? Have you cut off the accounts that were at risk? Has that list of accounts held constant, or is there a growing number of accounts that have been added to that AR risk? Thank you. Sure, and I'll start that one too. Yeah, AR management, as you've heard on our prepared remarks, is key for us. We want to make sure that the revenue that we're producing as an organization is the highest quality that it can be. Managing that across the footprint has been a focus of ours for the last couple of quarters in particular. It has resulted in having, unfortunately, to shut down some accounts that were significant contributors to our business. It's also resulted, though, in obtaining some workout plans with other accounts that have allowed us to turn them back on. Something that, just like in any industry, and we've seen this in some markets that are more mature and more competitive markets, it is coming into some of these historically more limited license markets too with some larger operators. It's a part of the business. It needs to be actively managed. I'm proud of the team for reducing AR over the last quarter and also being able to bring some of those accounts back online so they can be productive going forward. Okay, great. Appreciate that color, Charlie. I'll jump back into the queue. The next question comes from Federico Gomes of ATB Capital Markets. Your line is now open. Please go ahead. Yes, good morning. Thank you for taking my question. Just following up on the question about the wholesale accounts, are you seeing any further improvement or deterioration in regards to wholesale accounts in different markets? Specifically, are there any markets that you can highlight where you think this is more pronounced? Thanks. Sure, Frederico. I'll start that. Yes, as I mentioned, it can be different from market to market, but it also can include some multi-state operators that have operations in multiple footprints. It is a dynamic situation. We've experienced it having a footprint that has included states like California and Michigan over the years. Again, those were markets where this may be reared its head a little earlier. We're seeing it with operators in states like Illinois and Ohio and Massachusetts. The active management of it is key. Greg, anything else to add? I think to Charlie's point, we're seeing both across independent state operators, but also multi-state operators. What we're also seeing is what it is forcing retailers to make choices on is picking brands that have the best velocities, the best profit for their stores. We will not ship until we get them on a productive repayment plan and payment plans for our company. We feel good that the strength of our brands ensures that we are in a position that we get payments or we do not ship. The role that our brands play in those stores is really important to them. That is really the trend that I think you're going to see is that these accounts are going to start picking brands and operators that have high-quality products that they need, and then those operators will force payment terms. Thank you. I appreciate that. Second question, could you talk about how you're looking at international markets, your interest in Germany, some of these other markets? How should we think about your strategy if you eventually choose to go international, and what do you think would be the best path for Cresco? Thanks. Sure. I might take that in reverse. We're developing the thesis on what we think the best path would be, which is just part of our overall approach right now, which is to learn as much as we can. We're a cannabinoid company. And so we're going to look at any opportunity that presents itself to make sure that we're positioning ourselves for long-term leadership as a cannabinoid-based company, whether that's in the U.S., whether that's internationally or otherwise. Yeah, we're in the learning phase, too early to let you know what we think is the best approach. What I will tell you is I think we see the development of these markets around the world similarly to the way that we've seen markets develop around the United States. They all have their uniqueness. They all have their points of differentiation, which creates opportunity. Great. Thank you very much. The next question comes from Luke Hannan of Canaccord Genuity. Luke, your line is now open. Please go ahead. Thanks. Good morning. I wanted to go back and talk about the seed-to-sale system conversion that is ongoing right now. Correct me if I am wrong. I think the go-live date is supposed to be July 1. Is everything in your views tracking towards that, or is there a risk of there potentially being slippage on that front? Secondly, maybe also related to that, just to make sure we understand correctly, the idea is right now that retailers are purchasing more wholesale products because they are waiting for this conversion to happen, and then just drawing down on existing inventories. Does that mean some of these sales basically are just deferred into the latter part of the year? The beginning of June. That's why. Apologies, everyone. We are losing connection with the speakers. Please stand by while we reconnect them. The call will resume shortly. Okay. Assuming we're back online now. Sorry for the technical difficulties here. Not sure if it was clear on the end of the question before as it relates to international. International, we evaluate the same as we do any new market or cannabinoid-based company. Whether the opportunity is in the United States or elsewhere, we approach it the same way. We are learning as much as we can about the other opportunities that exist. Luke, as it relates to your question about the Metrc transition in Illinois, it actually is occurring now. That conversion time was at the beginning of June, which is why we saw the pullback in purchasing through May, that the transition is happening now this week for the retail operators, which is why we see that risk, the unfortunate risk in Q2. As it relates, though, to sort of picking back up of ordering post-conversion to Metrc, we do believe it'll come back. We don't know, though, if that will also mean that there is sort of an overpickup to account for the lost purchasing through May and the beginning of June. If you can hear me now. I did want to follow up also on the 80% of transactions coming from Sunnyside Shop is particularly impressive. Can you help parse out for us? I mean, how much of that is, we'll say, online originated versus finished in store and then just purely sort of online only? I imagine you've gleaned some sort of customer insights related to that as well since you've had Sunnyside Shop in place now for a pretty long period. Can you just share with us, I mean, what have you learned more about your customer today versus perhaps when you first opened your online platforms? I'll start and then hand over to Greg for more detail. Just to confirm, all of those transactions are completed in the store, whether they're started online or otherwise. It all completes in the store. Now, as for the percentage that starts online and then maybe adds to it when they come into the store, I have detail on that. The vast majority is, as you said, 80% online, but all completed in the store. Luke, you hit on it. What we are so pleased about is the amount of data that we're able to collect from these customer transactions online. If you think about it, it not only enables us to ensure that we're giving the best customer experience and education about existing products, but new products are coming online. It allows us to do modeling to figure out if you come in and buy a type of product, how do I get you to expand your basket? Particularly, we can point to Illinois as a prime example of that, where shopper trends or trips have slowed as door growth has outpaced market growth. We have really been able to hold and grow our revenue in our stores due to basket sizing and getting more volume out of our baskets because we're able to use this data online to drive customer performance. More to come for us on that front. I think as we look to the future of how do we get more from our stores, the fact that we've built this and the fact that we have that relationship with shoppers gives us a great platform to continue to grow. Got it. Appreciate it. Thank you very much. The next question comes from Bill Kirk of ROTH Capital Partners. Bill, your line is now open. Please go ahead. Good morning, everyone. You talked a bit about the transition to seed-to-sale in Illinois. I guess, what are you expecting in New York State for the implementation of a seed-to-sale program? With that change, how Cresco sees the opportunities there in New York? Oh, it's a good question. It is a unique element of New York that they currently do not have a required seed-to-sale tracking software or system. It's also where we see a fair amount of risk in the market itself. These markets are successful because of the structure of them. When you don't have a seed-to-sale tracking software, that just brings risk to the veracity and sort of the trustworthiness of product that's in the marketplace. If that change, when it gets implemented, it will influence the way that we think about New York. There are other dynamics, broader dynamics, including the fee structure in New York. It's a data point, and it's definitely one that would be included in further decision-making as it relates to the state. We currently have no further questions, so I'll hand back to Charlie for any final or closing remarks. Yeah, I just want to thank everybody for joining the call today and for your patience in the closing of this quarter. We look forward to talking to you about Q2 very soon. Thanks, everybody. This concludes today's call. Thank you for joining. You may now disconnect your line.