Ayr Wellness Inc. (OTCQX:AYRWF) Q3 2022 Earnings Conference Call November 10, 2022 8:30 AM ET
Company Participants
Jonathan Sandelman – CEO
Brad Asher – CFO
Jennifer Drake – Co-COO
David Goubert – President
Conference Call Participants
Kenric Tyghe – ATB Capital Markets
Matt Bottomley – Canaccord Genuity
Matt McGinley – Needham
Andrew Semple – Echelon Capital Markets
Scott Fortune – ROTH Capital Partners
Jonathan DeCourcey – BTIG
Andrew Bond – Jefferies
Operator
Welcome to the Ayr Wellness Inc. Third Quarter 2022 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 September 30th, 2022. As well, we remind you that adjusted EBITDA is a non-GAAP measure. We refer you to the reconciliation to GAAP measures and other disclosure concerning non-GAAP measures contained in Ayr’s management discussion and analysis for the quarter ended September 30th, 2022.
I will now turn the call over to Ayr’s CEO, Jonathan Sandelman. You may begin.
Jonathan Sandelman
Good morning, everyone, and thank you for joining our Q3 2022 conference call.
It’s been a busy quarter in the cannabis industry and the broader macro environment. So I’d like to start off today with a few comments on industry dynamics and the bigger macro picture. On one hand, rising interest rates and the threat of a recession are maintaining pressure on the consumer wallet, and supply and demand dynamics continue to impact wholesale cannabis prices.
On the other hand, despite this backdrop, cannabis continues to behave like a consumer staple that we know it to be evidenced by the strong unit volumes across our markets.
In Washington, the federal government has shown its strongest appetite yet for cannabis reform. The executive branch has ordered an expeditious review of the scheduling of cannabis, and safe banking appears to have its strongest ever chance of passing. While these would be welcome catalysts for the industry, at Ayr, we remain focused on optimizing our assets regardless of what is happening around us. We’re encouraged by the progress that we’ve made in this regard. In Florida, the results of our efforts are showing.
We’re delivering on what we’ve been working towards for the last 20 months. As Ayr continues to build market share with its revamped product offerings and a higher quality flower and premium genetics.
We are proud that the introduction of the Ayr brands and cultivation and production practices in Florida has resulted in the highest-ever market share, over 9% in flower and over 12% in oil in the month of October. That’s more than doubling our market share since Ayr took control of the business. We now anticipate initiating the transition to the Ayr retail brand in the first quarter of ’23.
And we’ll be proud to have the Ayr name on our Florida stores. In New Jersey, a few months into our adult-use sales, our stores are producing and picking up momentum, and we only introduced our flower in the adult-use market in late October.
We anticipate converting our Garden State dispensary stores to the Ayr brand this quarter. In areas like wholesale and our Boston dispensaries, we know that we still have work to do. Our wholesale team continues to make progress in the people and process elements of the business.
This is an area where continued improvement can and will lead to more opportunity regardless of the broader market dynamics. Our new dispensary location in Boston have ramped more slowly than we’d like to see, and we are implementing an improvement plan to swiftly address this.
As we look ahead to 2023, we expect further growth to come from closing on our dispensary 33 acquisitions in Illinois, adding adult-use sales to our Summerville, Massachusetts dispensary, beginning sales from our state-of-the-art cultivation facility in Ohio, 15-plus new stores opening in Florida and the continued base opening of our Massachusetts cultivation expansion. We expect these catalysts to begin to contribute in early 2023. For the fourth quarter 2022, we anticipate solid continued sequential growth from our existing assets.
Before getting into the financial results, I wanted to briefly touch upon the important milestone for our company, the hiring of our President, David Goubert, who we believe is a key addition to our team as we work to optimize our assets. David joins us from Neiman Marcus Group, where he served as President and Chief Customer Officer, responsible for the full P&L of the Neiman Marcus brand. Before that, he spent 20 years at LVMH, including 15 years in supply chain and retail stores at the flagship Louis Vuitton brand and five years running all retail in its Stolberg Cruise Line division. We are incredibly excited to have him on board, not only due to his resume and business acumen but his track record as a leader of people.
I’ll now turn the call over to David to further introduce himself and outline the short-term focus.
David Goubert
Thank you, John.
I’m incredibly excited for the opportunity to join Ayr at such a pivotal phase in the company’s journey. Ayr has built an incredible foundation over the past three years, and now my job is to help optimize and scale the business. As John outlined, my background as spans operations, supply chain, manufacturing and production, customer experience, retail and marketing. And I look forward to learning the trickiness of cannabis and how to best apply each of these experiences to this unique industry.
I love leading people and building strong cultures. And I believe cannabis provides an excellent opportunity to do that with a team that is passionate about the potential of cannabis and deeply invested in the social good elements that it brings. It is my personal goal to visit nearly all our facilities in the first three months of my tenure at Ayr.
I’m looking forward to meeting the teams to being immersed in the world of cannabis and applying what we believe are highly relevant adjacent skill sets to the unique industry that this is. I look forward to speaking with you all in the future and providing updates on our progress.
I’ll now pass the call over to our CFO, Brent Asher, to walk us through our third-quarter financial results.
Brad Asher
Thanks, David, and couldn’t be more excited to have you on board.
Jumping into the quarterly results. Q3 sales were $119.6 million represents an increase of $23.5 million or 24% year-over-year and an increase of $9.5 million or 9% quarter-over-quarter, tracking closely to our guidance of approximately 10% sequential growth. Retail sales increased 11% sequentially, primarily driven by the launch of adult-use sales in New Jersey and Massachusetts, a full quarter of contribution from our two Illinois stores and continuous improvement in our Florida stores.
The increase in retail sales was offset by a 4% decrease in wholesale revenue, driven by further price compression and shifting more of our products through our retail channel. As a result, retail sales from internal products increased by approximately $7.2 million sequentially, increasing to 56% of our total retail sales.
This shift, along with further improvements on yields and productivity, allowed us to expand adjusted gross margins by 60 basis points sequentially to 52.6%, our highest of the year. As our cultivation and production expansions continue to come online and further ramp, international brand portfolio continues to roll out across our footprint and gain market share, we anticipate internal branded retail sales will continue to increase.
Florida is the best example of realizing economies of scale in cultivation and production, with our improvements in these areas driving an approximate 50% reduction in cost per pound, while simultaneously improving quality, evidenced by our highest-ever flower market share within that state.
This is just one example of our four large-scale new cultivation facilities in Arizona, Massachusetts, Ohio and New Jersey, only the Arizona facility contributed fully to third-quarter results. Q3 adjusted EBITDA of $21.7 million represents a decrease of 17% year-over-year and an increase of 10% quarter-over-quarter. Loss from operations totaled $20.7 million and represents a 17% improvement from the prior period.
Both metrics are in line with our guidance of 10% sequential growth. The sequential increase in adjusted EBITDA was driven by the increase in sales and adjusted gross profit and with a further decrease in SG&A expenses as a percentage of sales, driving a sequential improvement on the loss from operations.
When excluding noncash expenses, adjust depreciation, amortization, and the gain loss on sale of assets, total operating expenses decreased by 300 basis points sequentially as a percentage of sales, which on a dollars basis represents an increase of $1.2 million relative to the $9.5 million increase in sales for the quarter.
We anticipate this metric to consistently improve with our sales growth expected to outpace SG&A in the fourth quarter and further into ’23. Assuming the current economic and market dynamics, we anticipate adjusted EBITDA margins expand to approximately 25% by mid-’23, as we continue to gain leverage from ramping sales along with increased verticality across our strategic footprint.
Moving to the balance sheet. We ended the quarter with a cash balance of $100.7 million, which is a decrease of 14% from the prior quarter. Decrease was driven by remaining CapEx payments along with further investment to build inventory in new markets, each accounting for approximately $8 million, respectively. CapEx spend during the quarter represents a 70% reduction from the average pace in the first half of the year. Overall, operating cash flow was modestly positive for the quarter, marking a significant improvement to the first half of the year.
We expect further improvement in this category over the coming quarters. The next quarter will be impacted by the timing of semiannual interest payments, which are due by year-end. We anticipate positive operating cash flow in 2023 in addition to minimal uses of cash for both CapEx and M&A during the year.
We anticipate CapEx in 2023 will represent less than $30 million, significantly less than the prior two years, and is fully funded with $100.7 million of cash on hand. And this is without considering the opportunity to further monetize our real estate portfolio, which we have done successfully over the first half of the year with industry-leading mortgage rates.
In closing, we believe we are well-positioned to benefit from the multitude of potential industry catalysts, both at the federal and state level. However, we are focused on achieving success based on the current market conditions, including the current volatility in the capital markets and the impact 280E has on cash flow. To that end, we will continue to focus on maximizing our cash position and liquidity profile as a top company-wide priority.
I’ll now pass the call over to Jennifer Drake, our COO.
Jennifer Drake
Thanks, Brad.
We all know challenges exist, both in the macroeconomic landscape and within the cannabis industry. While this is the world we live in today, it’s important to remember that our business is fundamentally well-positioned to weather difficult circumstances. Cannabis is not a discretionary item that customers turn away from when their budget is squeezed. It is an extremely important wellness foundation for many of our customers.
But now is the time to remain agile as a business, quickly identifying the most important issues on acting decisively to implement our plan of action. In Florida, we applied this mindset when we identified early that cultivation and production limitations were holding back the potential of our retail footprint in the state.
We implemented a plan to improve our store menus, focusing on cultivating quality flower efficiently at scale, adding capabilities to produce additional form factors and introducing our CPG brand portfolio throughout our retail footprint. The menu improvements that resulted from these changes have made our stores a destination for Florida cannabis consumers. Lost In Translation, Road Tripper, Haze, Entourage and Kynd are all driving strong volume at healthy margins, helped by Ayr’s low cost of production.
And the variety in form factor and price points we’ve established in our stores is allowing us to attract a wider cross-section of cannabis consumers. With product quality and availability we can be proud of, we have begun the process of rebranding our stores from Liberty Health Sciences to Ayr, which we expect to kick off in late Q1.
As John mentioned, we have the volume of product and menu variety to support opening 15-plus new stores by next summer. In New Jersey, we had a similar issue with our menu and product availability at the start of our adult-use sales in June. A limited menu was holding back our customer experience, and we’re currently in the midst of implementing a very similar playbook to what we just outlined for Florida.
Our retail operations are starting off from a much stronger base in New Jersey, but we have additional room to ramp as we continue to expand our menu with more high-quality internal product offerings. We are just now beginning to bring our brand portfolio into the New Jersey market, having only introduced our own adult-use flower in October.
The menu improvements since bringing our Ayr brand portfolio to New Jersey have led to an uptick in traffic and stronger margins. And with the customer experience on track, like in Florida, we can now convert New Jersey’s Garden State dispensary brand to the Ayr retail brand in the coming months. It is still early days for our New Jersey retail business, and we anticipate further growth in the coming quarters.
To accommodate that growth at retail, we’re increasing parking and POS stations across our stores. Florida and New Jersey both provide excellent examples where we identified issues, acted decisively to address them and are now capturing further growth from our assets as a result. We are in process now of acting decisively to address issues we’ve identified in Boston Retail and our national wholesale business, key areas where we know we can improve. In Greater Boston, our new retail locations have not ramped as quickly as we’d like. Our store locations are excellent, but these are brand-new locations, not existing medical stores adding recreational sales.
We can do more to build local brand awareness, and we’re now kicking off a large campaign for this with ambitious goals to boost customer traffic by the end of the year. In Wholesale, we’ve identified needed people and process updates and have focused on infusing our team with new talent and developing stronger internal systems to support them.
We believe there is significant opportunity in our wholesale business once our optimizations have time to take hold, backed by our investments in customer service, product quality, and variety and support for our well-crafted CPG brand portfolio that offers quality across price points.
Looking ahead, as John mentioned in his opening remarks, we anticipate solid Q4 2022 results that continue the sequential growth trends we established in Q3, and we expect that solid sequential growth to expand further in 2023. As interest rates rise and there is an increased potential for recession, we are mindful of the increased investor focus on balance sheet and cash flow generation for cannabis companies, including Ayr We have a very enviable footprint and asset mix to support our balance sheet while we grow into the earnings power of our business that we’ve outlined for the last few quarters.
We have a strong liquidity position today with over $100 million of cash on our books, and we are taking advantage of the ample time we have in front of our key maturities in 2024 to optimize our balance sheet. The most important factor in the strength of our balance sheet is the continued optimization of the assets we’ve just invested in. 2023 will be the first year where our CapEx cycle is essentially complete, and our infrastructure in most of our state-by-state footprint will be operational for the full year.
And at the same time, our earnings and cash flow are ramping. I’ll now turn the call back to John for his closing remarks.
Jonathan Sandelman
Thank you, Jen.
While we find ourselves in an uncertain time in our world, it remains an exciting time for cannabis. On Tuesday, voters in Maryland and Missouri proved that cannabis reform continues to be a priority, and it’s only a matter of time until we see more concrete action from the federal government.
Ayr remains ready to adapt and has laid much of the groundwork to uplist to a major exchange when that day comes. In the meantime, Ayr has many exciting developments to monitor, including the optimization of our existing assets and the upcoming catalysts that I discussed earlier that will unlock further revenue, profitability and scale for our organization. As always, thank you for your support and to our teammates for their invaluable contributions.
We’ll now take your questions.
Question-and-Answer Session
Operator
We will now begin the analyst question-and-answer session. [Operator Instructions]. Our first question comes from Kenric Tyghe of ATB Capital Markets. Please go ahead.
Kenric Tyghe
Thank you. And good morning. In the prepared remarks, you called out the high-quality flower and premium genetics in Florida. You also highlighted the improvement in market share and the menu changes that you made in that market. Could you speak to provide some insight on how that has also impacted your average basket and how the more premium flower quality has impacted your pricing power, both in absolute terms and also relative to your key competitors in that market?
Jennifer Drake
Thank you, Kenric. Thanks so much for the question. In terms of Florida, we really are incredibly pleased with the menu traction that we’ve had over the last several months, and it really has been a sea change over the last several months for us. So we’re very, very pleased with that and very happy to have that as the first question.
In terms of the impact on our particular basket and our – the SKU mix that we have in our stores, we really for the first time over the last few months have been participating more in the quality in the high-quality age segment of the market. And the more that we sell in that set of the market, the more we’re going to have larger basket sizes in Florida.
Now that being said, I will also say that introducing our Road Tripper brand, which is known as later days in Florida because it’s a very medicinal market, but it’s the same branding. Introducing our Road Tripper brand in Florida has been also an incredible success and really entirely taken over, I would say, the more value segment of our flower offering within Florida. People love the quality they’re getting. They love the everyday low pricing that we introduced over the summer. I think we’ve seen some other folks in the market follow suit with that.
So it indicates, I guess imitation is the greatest one flattery. But it’s something that we’ve done throughout our footprint. We started it in Nevada, where we were famous for being the home of the $40 aid sorry, $49 a quarter. And that approach to customers has been really powerful. So I would say we’re actually doing great on both ends of the barbell in terms of the high-quality flower and the – and also really wonderful reception for Road Tripper. Brad?
Brad Asher
Yes, I would just add that in late September, early October, we’ve launched our premium brands, including [indiscernible]. And so while we saw a little bit of a decrease in basket size in Q3, we expect those premium bans to settle out in terms of the sales mix in Q4 and that ticket to rebound in Q4 as well.
Operator
Our next question comes from Matt Bottomley of Canaccord Genuity. Please go ahead.
Matt Bottomley
Good morning, all. Thanks for taking the questions here. Just wanted to go back to the balance sheet. So I appreciate some of the color on some of the cash budgeting for next year on the CapEx coming in a lot less than historical levels. Is there any other buckets you’re able to provide, whether it’s working capital, a very acquisitive name relative to a lot of your peers? So I’m wondering if any of these potential contingent payments on M&A potentially come due in 2023, interest coverage. Anything that just gives a greater picture of the potential cash needs going into next year?
Jennifer Drake
Thanks so much for the question. We – so talking about the balance sheet, as we said, we feel very strongly about our near-term liquidity with over $100 million on the balance sheet. And we’ve looked to try to be very transparent with the external market when it comes to our capitalization. If you go to the capitalization slide from our deck, which I think is Slide 18 in the newest deck we try to give a decent amount of forward expectation with respect to that. It goes through a contingent consideration.
It goes through – break that out by consideration type stock, cash, debt, et cetera. And what you’ll see there is there’s virtually no forward cash considerations very, very low as a percentage of our contingent consideration. But happy to discuss it as a technical item, very happy to discuss it offline.
Operator
Our next question comes from Matt McGinley of Needham. Please go ahead.
Matt McGinley
Thank you. You noted that you expect EBITDA and operating income to grow 10% quarter-over-quarter, but you didn’t mention top line other than to note the macro pressures and price compression. Why would you have better visibility into EBITDA growth compared to revenue? And I guess, would you expect EBITDA margins to be up or down in the fourth quarter relative to the expectations that you noted you’d be in the, I guess, mid-20s by the middle of next year?
Jennifer Drake
Thanks for the question, Matt. I would say we expect Q4 to look a lot like Q3 in terms of the sequential growth, and that’s really what we were looking to indicate to the market. And I think we feel most strongly about our – the growth we will see at the EBITDA line because we think we’re going to get some SG&A leverage there as well. But what we really – what we really wanted to signal to people was that we expect Q4 to look a lot like Q3, which is strong, solid sequential growth quarter-over-quarter. Brad, why don’t you add?
Brad Asher
Yes. In terms of not guiding on top line, it’s more so on the internalization trends that we’re seeing and our shift of product to our stores. So whether it’s sold wholesaler in retail, it’s the same contribution on a gross profit dollars basis, and so we felt more comfortable guiding to profitability.
Operator
Our next question comes from Andrew Semple of Echelon Capital Markets. Please go ahead.
Andrew Semple
Congrats on the Q3 results. I just want to ask on and go back to the Florida market. And we can all see the volume data there. It’s clearly indicating that there’s been a significant improvement in dry flower volumes within the states. I guess I’m just wondering how we should be thinking about this into Q4 and 2023 on a gross margin basis. Should we expect gross margins to improve in that state as you better utilize existing infrastructure and as you bring down your cost per pound? Or is the company at this stage more focused on patient acquisition and running the business more along that strategy and so margins should remain relatively consistent in that state? How should we be thinking about that?
Jennifer Drake
Hi Andrew, thanks so much for the question. I would say we’re focused on both customer acquisition and continuing to have – continue to optimize our production, continue to bring costs down to the extent that we can, the continuous improvement focus that we have across our footprint. And I would say, almost especially in our Florida cultivation and production facility because over the last 20 months, we’ve been just uniquely focused on that in the Florida Grow and Make part of our business.
So it’s a very strong muscle memory to be continuously improving in our Florida cultivation facilities. That said, we are absolutely, to your point, starting to get really great gross margins out of our Florida business, and we will continue as we open these 15-plus new stores to be acquiring new customers. So I would say the answer to that is both and.
Operator
Our next question comes from Scott Fortune of ROTH Capital Partners. Please go ahead.
Scott Fortune
I appreciate the color on the menu stuff because you’re rolling out a lot of new products across new markets. But just help us understand the priorities there, initiatives in context with the consumer – the challenged consumer in this market. With the premium and the value segment, what are you seeing that’s sticking with the consumer on the new products? And then just a quick update on New Jersey. When do you expect to really fully optimize the New Jersey market as far as sales ramping in stores and the production side with those approved categories, that would be great?
Jennifer Drake
Sure. I think you stuck to in there, Scott, but we like to do so. 100% will answer road. So in terms of the menu, what – as you know, 50-plus percent of our SKUs are flower. So as we introduce our new branding into markets, it’s really important to us to get flower right.
And what we’ve seen in Florida is a great example is, as we’ve introduced these premium unique, differentiated genetics and brands like LIT, people are reacting extremely well to those even though they are at the more – the higher part of the price and value spectrum. People love Road Tripper. They just love it. It’s a great brand. It does incredibly well.
So what we’re seeing is those compelling brands because of the branding, because of active quality that’s inside that branding. It’s the quality of the product. We’re seeing people react well on both ends of the spectrum. We are – Road Tripper probably has a bit of a head start given the value nature of the consumer right now. But we are seeing really good traction when we introduced LIT into a market.
When we did that with Florida, we saw – it made up a huge portion of our SKU sales within, as we introduced it in the first few days, same with Massachusetts. So we’ve seen really – we’ve seen really good results on both sides. Switching to New Jersey briefly. As I mentioned, we got some of our own products in September. We got our own flower into the stores in October.
So again, 50% plus of the SKUs being flower, super important to get our own flower into the stores. So you’ll see the – we anticipate seeing New Jersey continue to improve and optimize through the fourth quarter and probably into the first quarter as well.
Operator
Our next question comes from Jon DeCourcey of BTIG. Please go ahead.
Jonathan DeCourcey
Hi guys. Congrats on the quarter. Just wanted to touch on – I don’t think you ever quantified how much of a drag Hurricane Ian closures were on Q3 results? And then piggybacking on that, were there any meaningful precautionary closures for either yesterday or today from the latest hurricane I’m trying to plan the name of it, but for today’s storm?
Jennifer Drake
John, thanks for the question. First of all, welcome to BTIG. I think this is your first call as our BTIG analyst. So I hope you’re settling in well there. In terms of the Florida impact of the hurricanes for us, we consider ourselves fortunate in that and did not have a particularly material impact on our business.
It was probably $500,000 of lost revenue, we think, for the third quarter. And our cultivation and production facilities were essentially unharmed and more importantly and most importantly, all of our people were safe and accounted for. So we consider ourselves very lucky and very fortunate because certainly, the state of Florida, where we’re sitting right now has had a tough time, particularly with Hurricane Ian. With Nicole, we’ve had, I would say it’s less – it’s been less impactable materially less impactful than Ian. So again, not something that’s going to make a big dent.
Operator
Our next question comes from Andrew Bond of Jefferies. Please go ahead.
Andrew Bond
Hi, good morning. Andrew Bond in the line for Owen Bennett. Thank you for taking our question. I wanted to revisit your comments around macro headwinds on the consumer. Could you expand on the dialogue, like which markets you’re seeing the largest macro headwinds or impacts from this? And are there any states where you’ve seen this be less of an impact? And can you comment on how your smaller scale relative to larger MSOs might impact your strategy as you navigate through these pressures? Thank you.
Jennifer Drake
Sure. Thank you so much for the question. In terms of the macro headwinds, I would say we’ve probably seen the biggest impact on areas where our consumer is – skews lower income. And in particular, for our footprint, that’s going to mean Nevada. I think everyone has seen the market share data or market data for Nevada depending on the month, it’s generally been – it’s generally – the size of that market is generally down roughly 1/3 relative to this time last year.
And that that’s a meaningful decrease. What I would say for us, and I think this is a point of pride for Ayr is that our Nevada business, while it’s down a little bit, it gained market share and it is incredibly strong. We continue to gain share and generate strong revenues and cash flow from our Nevada business despite the fact that is an incredibly tough market and very much the playbook that we’ve taken into places that are competitive like Florida comes out of our really strong success in Nevada. At this point, Florida is a larger contributor to our revenue than Nevada, but we have 51 stores – 52 now stores in Florida. And we have six stores in Nevada.
So that just goes to show the fact that I mentioned them in the same breadth and indicate that Florida just passed Nevada. That shows you how strong Nevada is for us. So we – when I said earlier that it’s important for us to remember that this business is fundamentally well positioned for these difficult environments. It comes from our strong experience being in tough markets like Nevada and knowing that the consumer uses this product as a foundation for wellness.
Operator
Our next question comes from Matt Bottomley of Canaccord Genuity. Please go ahead.
Matt Bottomley
Thanks. Just a follow-up for me. Just speaking more on some of the market share gains that you guys had at the retail level. I think you noted six out of seven markets so sequentially higher. Just given your historical premium nice strategy, if that’s a word, on a lot of the products that you’ve put out there. Obviously, you’ve had some share gains in Florida, as you mentioned. What’s your philosophy looking forward in this inflationary environment? If the dynamics stay the same? Do you think you’ll need to shift more down to what they call the value segment, which I know isn’t this profitable? How do you balance trying to build a premium brand versus where the market is right now in terms of what consumers are willing to spend?
Jennifer Drake
Sure. Thank you for that follow-up, Matt. When we think about our product offerings and the brand portfolio that we’ve put together, we put together our brand portfolio very consciously to have across form factors and across that price points. the best quality at each price point across the form factor. So that doesn’t mean that we’re only premium.
That doesn’t mean we only sell LIT and Kynd. We also sell Road Tripper. Road Tripper is a value brand. It happens to be my personal favorite brand. I love the branding and everyone who talks to me about it knows that I love it.
But we have consciously established our brand portfolio, so our customer can move up and down the price spectrum and get the best value for money at that price point by staying within our brand family. So in times like today, Road Tripper is probably going to be more popular, but with our customers than it would be if there will it was flush with cash.
But in two years or a year, whenever we see inflation come down, the economy pick up and people have a little bit more money in their pocket, they want to go – they want to splurge on a great midstream, they can stay within our family and do that. So we’ve been very conscious about putting together a brand portfolio that can weather different market conditions and still resonate with our customer.
Operator
This concludes the question-and-answer session as well as today’s Ayr Wellness conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
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