Operator: Our next question is from Peter Grom with UBS.
Peter Grom: So I just wanted to ask — I wanted to ask on visibility. You kind of take a step back and you kind of look at the implied revenue guidance for this year, and I was just kind of going back to the model and it’s even below 2018 levels. And I know the business has cyclicality, but it just feels like this downward pressures has been far more pronounced than we all would have anticipated. So when we think about the guidance for this year, low teens to high teens decline, what’s your degree of confidence in that and what are kind of the underlying drivers of that? Just trying to understand when do you think we will reach a bottom here, just given kind of the performance we’ve seen over the last several years?
William Toler: Yeah, I think we have reached the bottom. The question is when are we coming off of it, right? And so we really felt like it was important for us to plan the year at being slightly profitable at the lowest sales level we’ve given out, right? That’s kind of our responsibility to come to you with that and then go out and try and beat those numbers, right? That’s the goal here is to say, all right, let’s say, it’s in the high teens, which I think hopefully is the worst, worst-case scenario, then we need to be ready to be profitable at that level. And then let’s get better than that and then we should have really nice business and a really good outcome. But I do think we are at a bottom. I think we’ve been at a bottom, frankly, for the last four or five months as an industry.
And I think you’re starting to see some things get a little bit better. Our visibility into kind of March, April, May with the pre-bookings around a lot of the look a good bit better than it did a year ago. But we’ve got this dilution among the distributor brands that has created this sort of drag and an anchor on us that’s creating the total number not being where we’d like it to be. But we also really think it’s important that we put a number out there, set up our cost structures, and our strategies around hitting — making money at the lowest possible level that we’re talking about and then going out there and trying to beat those numbers. And that’s really what our goal is and how we structured this year’s guidance.
Peter Grom: No, that’s very helpful. But I guess maybe a question following up on that. Just the positive adjusted EBITDA kind of following up on Andrew’s question, I guess, obviously positive is anything above zero. So can you maybe provide some guardrails in terms of how we should think about our model to reach that kind of similar EBITDA profit dollars versus what we saw this year? Should we expect sequential improvement? Just trying to understand because, you know, both we and consensus have something that’s more in the high single digit million dollar range, and I’m not sure if that’s far too optimistic at this point given the weaker revenue outlook?
William Toler: Yes, I think it is optimistic at this point because you got your head — higher fourth quarter and a higher ’24 building off that that created that consensus. And at this point, we said modestly positive last year and it was very modest, more modest than we’d like it to be. We’re saying positive this year. Yeah, I think we’d like to do better than we did certainly in 2023, but we’re not nearly in a position yet to start putting any kind of guardrails around how much that will be, how many millions of dollars or where. But a lot of it depends on what range we come in on the top line. In fact, all of it depends on that range because we’ve got our costs very much under control, but we’re not ready to kind of put any finer point on that, but we expect to be and want to be and are going to work to be positive EBITDA this year.
Operator: Our next question is from Bill Chappell with Truist Securities.
Davis Holcombe: Good morning. This is Davis Holcombe on for Bill Chappell. And you all had mentioned the seven new legalized adult-use states in 2023 and we’re just kind of wondering what sort of demand you might be seeing out of those newly legalized states and what kind of maybe regulatory environments they may have compared to some of the existing states that you all are operating in?
William Toler: Yeah. I think the newer states, whether it’s the Ohio’s or Missouri’s, they are some of our better performing states right now. The challenges, first of all, scale wise, they’re very small compared to your Colorado’s or California’s or Oregon and Michigan. So it takes a while to do and there’s a lag between legalization and implementation. And then, of course, there’s kind of the political dynamics that have slowed implementation even in places like in New York and New Jersey, but they’ve actually been finally picking up. It’s just a matter of scale, but you’ve got these long legacy states that are a lot bigger than the new ones, but you’re definitely seeing that shift now. California used to be by itself 50%, 60% of the total business.
