Ayr Wellness Inc.

Thank you Operator, and good morning everyone. Today we will discuss our third quarter results, provide updates on our business, and discuss the evolution of the cannabis sector, market dynamics, and consolidation landscape.

We will discuss forward-looking matters on this call, including our revised targets for 2019 and 2020 revenue and adjusted EBITDA. This forward-looking information is subject to the assumptions and risks as described in our MD&A for September 30, 2019.

As well, we remind you that adjusted EBITDA is a non-IFRS measure. We refer you to the reconciliation to IFRS measures and other disclosures concerning non-IFRS measures contained in our MD&A for September 30, 2019.

We are extremely pleased with how well our business is executing after just four months of combined operations. In that brief time, we have made considerable progress on key initiatives both in the western and eastern U.S.

Organic growth has exceeded our expectations and our retail stores are amongst the most productive in the industry, and our wholesale sales have become substantial contributors to the top and bottom line. In Nevada, we continue to generate margin improvements from vertical integration of our four companies we acquired.

In fact, our dispensaries are now sourcing even more products internally than they were just a few months ago, and our cultivation expansion in Nevada remains on track for completion in the first half of 2020. In Massachusetts, our wholesale business continues to gain momentum during the quarter as our monthly revenue has nearly tripled since closing our qualifying transaction in May.

The organic growth in our business has exceeded our expectations. Our retail stores are amongst the most productive in the industry and our wholesale sales have increased from de minimis amounts to substantial contributors to the top and bottom line, all this in light of the third quarter being our first full quarter of controlling these businesses.

In less than just over four months of ownership, we are generating some of the highest quarterly levels of adjusted EBITDA and cash flow in the entire global cannabis industry. Well run cannabis businesses like ours are performing very well.

As we will discuss later in the call, our day-to-day operations are generating strong results in spite of what seems like daily evolution of the regulatory landscape. To discuss more details of our Q3 growth, I’d like to introduce our new CFO, Brad Asher to walk you through our financial highlights and execution for the quarter.

Brad has been our controller since the start of Ayr and since that time, he has proven to be an exceptional finance and accounting professional as he’s been instrumental in implementing the financial controls and systems that are helping to drive the efficiencies across our portfolio of businesses. With that, I’ll turn the call over to Brad to discuss our Q3 financial results.

Thanks John. Q3 marks our first full quarter of financial results following our qualifying transaction on May 24, 2019.

Revenue for the quarter was USD $32.1 million with gross profit before biological assets of $17.2 million and adjusted EBITDA of $8.7 million, with adjusted EBITDA margins of 27%. We continue to generate consistent organic growth.

Both the revenue and adjusted EBITDA figures for the quarter are in line with our revised annualized forecast range. Even after absorbing the corporate and public company costs, our Q3 annualized adjusted EBITDA still represents an approximate 50% increase over 2018 adjusted EBITDA.

Furthermore, when comparing Q3 to our most recent reporting period, there is an approximate 15% sequential increase in adjusted EBITDA when normalizing for the partial quarter we reported in Q2. In terms of our third quarter revenue of $32.1 million, this is an approximate 80% increase in revenue compared to 2018 on an annualized basis and represents an approximate 20% increase in average weekly sales from the five weeks post the acquisition close in Q2.

Now before getting into details on Q3 sources and uses of cash, I wanted to give a quick update on the share buyback program announced in late Q3. We have initiated opportunistic repurchases in Q4, being cognizant of the volatile markets so far this quarter and our somewhat limited capacity over the next 12 months.

You’ll recall we can only repurchase 5% of shares on the Canadian securities exchange versus the more customary 10% on other exchanges. Regarding Q3, we have generated approximately $4.2 million of cash flow from operating activities over the quarter, which we reinvested to fund our cultivation expansions in each of Massachusetts and Nevada.

In each case, we will more than double our existing square feet under canopy. As of September 30, 2019, we have funded approximately $8 million of the total $15 million of capex needed for the expansion projects.

These expansions are the driver for growth in 2020, whereas our strong performance in Q3 was 100% derived from our existing asset base. As I mentioned earlier, our Q3 numbers are in line with our revised annualized 2019 forecast and we are achieving this organic growth thanks to the strong performance, hard work, and collaboration from our teams on the ground.

Thanks Brad. We are extremely pleased with how well our business is executing, the solid cash flow that our operations generate, and the growth potential we see from here.

The robust health of our business is in real contrast to what we see elsewhere in the sector and in contrast to the capital markets for our industry. As most of you following the space know by now, the capital markets are effectively closed for cannabis companies.

Companies cannot raise any meaningful amount of cash and what they can raise is small amounts at very high capital costs. Business plans that require cash are extremely challenged and that is nearly every business in the cannabis space, but Ayr does not require incremental cash to fulfill its business plan, which puts us at an incredible advantage.

Those who have been following Ayr up to now have heard me say this: we built our company knowing this day would come, and now companies who need capital can’t raise capital and our cash flow gives us the upper hand. We will use our strong position to take advantage of this distressed market to add excellent assets beyond our current geographic footprint, which we can do today at prices that are 50% to 70% lower than just six months ago.

As we said last quarter, we will be very disciplined in terms of our business combinations. We will not do transactions that leave us beholden to the capital markets for funding.

We will not take on other people’s problems. We did not build a well-run cash flow positive company just to clean up someone else’s mistakes.

Everything we do will maintain the discipline of not relying on the capital markets to fund our business plan. In today’s market, there is no cash component to deals, so companies are more and more focused on the quality and value of the stock they take on as consideration.

Many of the opportunities we are evaluating are only available to us because we are seen as a partner of choice, run by disciplined management and strong operators. We are actively engaged on several fronts and feel confident that these discussions will give us the opportunity to create a top five MSO, which would have been much more difficult to achieve before this market stress.

We find ourselves at an inflection point for the cannabis sector. On the one hand, there are very positive dynamics at the consumer level.

Consumer demand for cannabis continues to grow. Acceptance from cultural mainstream continues to grow.

For Ayr, our business continues to grow from a strong base, as evidenced by our Q3 results. At the same time, there are many reasons for us to prepare for continued volatility ahead.

The competition is in a weakened financial position which can lead to volatility, and the regulatory environment has become more complex as the industry grows. As more is at stake, regulation is becoming more political, but we believe it’s important to prepare for volatility as we simply cannot predict the actions of the regulators and the politicians, nor can we predict the actions of the financially weakened competitors.

It’s important to be nimble and disciplined in these types of business environments, but also be opportunistic and patient. That said, the overall demand for cannabis is strong and growing.

Our interactions with the consumer reinforce every day the solid support from deep customer demand. Our own business is solidly growing off a strong base.

Thanks John. We’re extremely pleased with the performance of our underlying businesses since our acquisitions, particularly in light of the fast moving regulatory environment.

Like any business in a volatile environment, we believe it’s important to be transparent and communicative with investors. As cannabis investors are likely aware, in late September Massachusetts implemented a four-month ban on all vape sales after which we at Ayr quickly developed substitute products and pivoted our production, reflecting the flexibility of our underlying operating platform.

As Brad mentioned earlier, our Q3 revenues and adjusted EBITDA were in line with expectations despite having order cancellations due to this Massachusetts vape ban, which was literally announced the same day that we increased our 2019 guidance as we had been seeing better than expected performance from the businesses to that point in Q3. In light of the ban and our quick reaction to it, we believe we will meet our revised 2019 revenue guidance of $120 million to $130 million in annualized revenue without sale of vape cartridges in Massachusetts, which was roughly a quarter of our sales in that state.

Because some of the substitute products, however, are generating lower margins than vapes, we may come in slightly short on an annualized basis in adjusted EBITDA versus our revised 2019 forecasts, which were $35 million to $40 million, because of the vape ban. Despite potentially being a bit light on adjusted EBITDA, we think perhaps just over $1 million less in Q4 contribution to adjusted EBITDA because of this mix shift in Massachusetts, despite that demand is extremely strong in the cannabis sector in this state.

Every month, we continue to sell every single gram we produce, and we feel comfortable that margins will return to prior levels when the vape ban expires, currently set to expire January 25, 2020. For 2020,a key growth driver for our business has been cultivation expansion in Massachusetts, and I’m pleased to announce that we’ve completed our new construction which expands our capacity by more than 150% to 32,000 square feet under canopy.

While the construction is complete and flower is ready to be transported to the facility to complete its growth cycle, we’re still awaiting final regulatory approval from the Massachusetts Cannabis Control Commission. The staff has inspected and reviewed and approved, but we are still awaiting the final stamp of approval from the Cannabis Control Commission, which has decreased the frequency of its meetings since health issues around vapes began hitting the press in September.

For context, the Massachusetts CCC met twice a month or more earlier in the year, but is now only meeting once per month. Also, the CCC is now responsible for determining the state’s future regulatory position on vapes, which is very much in the spotlight.

All of this takes time and attention and has meant delays, so the greater impact of the Massachusetts vape ban has been to take the attention of regulators and to impact the timing of these regulatory approvals. Due to the regulatory delays, we now expect an increase in our wholesale capacity for Massachusetts to come later in 2020 than in our prior forecast.

I want to highlight, though, that once we are on the CCC agenda, because staff has already approved our inspection, the CCC approval itself is administrative in nature and no facility approved by staff to open has ever been denied in the past. Now, we would normally only be talking about 2019 today on our Q3 earnings call, leaving the discussion of 2020 to our Q4 call when we have more detailed information, but given the impact of the Massachusetts regulatory delays on the higher wholesale capacity for 2020, we believe it’s prudent and transparent to share this information sooner.

Because we cannot predict the exact timing of regulatory approval, we want to be as transparent as possible about the economic contributions of the Massachusetts cultivation expansion. We’re highly confident in the earnings power of our expanded production capacity.

Once we have the approval, we’re extremely confident in the run rate revenue and adjusted EBITDA from our expansion. Our team on the ground is excellent, as demonstrated by their very fast pivot in response to the vape ban to alternate products and production schedules.

Despite these regulatory delays, the opportunity set for recreational cannabis in Massachusetts continues to be one of the strongest in the country. Our wholesale demand is robust, we sell every gram that we make each month, and overall consumer demand is far outpacing supply, particularly given the limited number of recreational cannabis dispensaries in operation today.

While we can’t predict the exact timing of Massachusetts regulatory approval and the subsequent increase in wholesale supply, we estimate that each month of delay in approval would result in delays of roughly $6 million of revenue and $4 million of adjusted EBITDA from our prior 2020 forecasts, which were for revenue of $225 million to $245 million and adjusted EBITDA of $105 million to $115 million. Our best thinking today is that there may be a two to three-month delay from our prior expectations.

While we now see a delay to our Massachusetts expansion, our Nevada business remains solidly on track, generating the highest per-store revenue in the industry, as quoted by BDS Analytics. As a reminder, other drivers of 2020 growth include the expansion of our Nevada cultivation facility, which will allow us to more fully vertically integrate and capture greater margin, new product development in both Massachusetts and Nevada, the transition to recreational sales in Massachusetts, and of course potential acquisition activity.

We anticipate that we will have further updates regarding the timing on all these drivers of 2020 growth on our Q4 earnings call or sooner, should there be greater clarity on timing before then.

Thanks Jen. We are in pivotal times for the cannabis sector.

Our company was built to make the most of this environment. We have the chance to build our company to a top player in the industry at pennies on the dollar compared to the costs just a few months ago.

We have a deep talent pool today, made up of finance, cannabis and operational executives, which is increasingly recognized by those looking to take stock as consideration in deals. As we remain disciplined in the coming months to enhance shareholder value, we continue to have three simple objectives motivating everything we do day to day: one, to deliver on our stated plan for strong organic growth; two, to look at all forms of business combinations to expand on our excellent initial portfolio and footprint; three, to increase corporate visibility sharing the Ayr story more broadly in both the institutional and the retail investor communities.

Our team is extremely motivated and engaged by the strength of our core business on the ground and the opportunities to expand by capitalizing on our core strengths. I can’t stress enough how excited we are about the positioning today and the growth opportunities ahead.

With that, I will turn it back to the Operator for Q&A.

Good morning. Congratulations Brad on the CFO position.

Thank you.

I think this is either for Jonathan or Jen. You guys are still doing a lot of work in terms of due diligence on potential targets, and obviously the price has come down for what’s out there.

I’m also wondering how the vape crisis is affecting some of the due diligence there, so is that creating extra work to ensure folks have clean supply chains with Tier 1 suppliers in place? Is there any kind of nuance there in terms of just making sure that you guys aren’t walking into anything where quality is concerned?

Thanks Bobby. I would say this.

Every business we look at, their product mix is different, but when it comes to the vape pen part of their businesses, the diligence we’ll do around that and the testing we’ll do around that will be quite extreme. Again, our mantra is not to take on other people’s problems when we make these acquisitions, so we’re very focused on this issue.

Okay. You guys obviously have been spot on in terms of your estimation of what would happen in the capital markets and we’re starting to see this sort of extinction period, I think, for companies that are cash dependent and don’t have healthy balance sheets.

Is there a regional dynamic to what you’re seeing out there? I know you want to go after growth in contiguous states.

Are you seeing certain regions where the affliction is worse maybe and there are more opportunities because of lack of access to capital, or is it spread across multiple states evenly?

It’s certainly--we certainly don’t see it as a regional issue. We don’t in fact even see it as a small company versus large company issue.

I think that over the last two years, there was a general strategy - get big as quickly as possible, do that land grab, and in fact the investment community rewarded that. I think what we’re seeing today is the people that will be rewarded, and more importantly will be the survivors, are those people that have always operated their businesses in a very disciplined manner, so as I look forward and try to predict what will happen from this point on, the haves and the have nots, the haves are the people that are great operators with capital on their balance sheets and the have nots are people that in the past land grabbed without the financial discipline to be able to actually operate those businesses.

Okay, one last one from me before I jump back in the queue. In terms of Massachusetts, there’s some delay there I guess with the CCC issuing the final approval, but you’ve gotten the inspections done and it sounds like it’s ready to go.

What do you think is happening in terms of the backlog more generally there with just one meeting a month, and is it impacting retail stores and wholesale cultivation applications equally or do you think there’s potential that maybe some other wholesale efforts are able to get up and running and that supply-demand imbalance shifts as we get into mid-Q1?

I’m going to focus on the wholesale capacity part of the issue first. I would say generally what we see across the country is the fact that capital is so constrained, it will in fact constrain capacity.

When we used to think about Massachusetts, we’d get questions from our investors, yes, we have one of three wholesale licenses, what does mean for pricing forward, maybe your pricing will be sticky for a year or two but then more capacity will come on the marketplace, and how are you reflecting that in your model? One of the things that I feel very strongly about is that because of the capital constraints and lack of access to capital markets, whoever has the capacity today, that lead which normally would last a year or two probably gets extended.

I can’t tell you how long it will get extended because I can’t predict when the capital markets will reopen.

Great, and you think that supply-demand imbalance in Massachusetts is probably sustained for a while in terms of strong pricing and outsized share for Ayr in terms of wholesale footprint?

Yes, I do believe that. When you look at just generally distressed environments, as an investor over the last 30 years, I have to make a decision.

I have to look and decide when I’m acquiring or investing in a company, is it a good business with a broken balance sheet or is it a bad business with a bad balance sheet? The consumer demand, as Jen touched on, is extraordinarily strong, so this industry from a consumer perspective is extraordinarily strong.

It gets overshadowed in the press and the markets today because of the health of the companies that supply that consumer demand, and if for a moment we can separate consumer demand from the health of the companies, that’s what gets us excited. I would think for the people we compete with who are in similar positions with us would also be extremely bullish.

Sorry about that. Congrats on a great quarter and good to see what a full quarter looks like.

Hopefully this will put you on far more radar screens. Maybe if I could just ask a few questions, starting with Massachusetts.

Just wondering on the wholesale front, what are you looking at now in terms of the number of dispensaries you’re selling into on a wholesale basis?

Sure, thanks Russ. Right now, we’re selling into 17 of the 34 stores and as we’ve said, we expect that number of stores, both the numerator and the denominator to increase as we go into Q4 and into Q1.

Just a bit of color - even with all of the changes around the vaping ban, which is set to lift on, I think, January 25, we’re still only selling for the first week of the month on wholesale. We basically fill up in the first week and then fulfill those orders for the rest of the month, so we are excited for new stores to open up to expand our customer base, but we’re even more excited about the supply-demand imbalance and how that can move our business going forward.

Great, and if I could probe just a little bit on that, 17 stores, can you give us a sense as to how balanced that is or how much concentration there is? For example, what share of that revenue is coming from your three or your five biggest customers on a wholesale basis?

It’s pretty balanced. I mean, with an order book like ours, it’s a challenging allocation process, and talking to a capital markets guy, I think you can probably understand that.

It’s a challenging allocation process because we want to keep everybody as happy as possible because we’re thinking about the long term in terms of these relationships, but at the same time we’re extremely limited in terms of supply, so we have the luxury of really being able to try to balance our order book thinking ahead, and that means we don’t want to have too much concentration, but at the same time it is one of the hardest things because everyone would want to take much more than they can get.

Great. Just one last question on Massachusetts.

The Cambridge store, I believe it’s still closed. Just wondering what the game plan is there, if you can share on that.

Yes, on Cambridge, our thought process is that it’s always been a medical store up until this point, and we’re looking at all the options in terms of what we can do with that as we turn it to rec, and maybe that means a different location than prior.

Just moving on, if I could ask on Nevada, wondering what your latest is there in terms of share of sales coming from your house brands as opposed to third party products.

We’re breaking 20% at this point in terms of the percent of internally sourced products. It’s low 20s, 22%, 23%.

Always looking to increase that. To date, we’ve been increasing that through concentrates and infused products and new product development, like the full spectrum vapes that we talked about, I think on our last call, that have been really, really great sellers into our stores, infused pre-rolls, new products that we’re developing specifically based on that really quick feedback between customer demand, what people seem to want in the stores and our product development, and that’s something that again is totally new, totally as a result of bringing these companies together, totally new as a result of creating that vertical integration that we did when we finished the transaction at the beginning of June.

That’s been the main source of an increase in vertical integration, and once we get the Nevada cultivation expansion online, which we expect facilities to be done probably sometime in Q1 and then additional capacity to come on in Q2, then we’ll be able to move closer to that half of our products sold coming from our own production.

Good morning John, Jen and Brad. Thanks for taking the questions.

I’m sorry if I missed this, but total revenue increasing about 19% sequentially, was just wondering if you could give a sense of the levels of growth in the eastern portfolio relative to the western.

Most of the growth in the eastern portfolio will have come from wholesale. I think as most of you guys on the call probably know, who follow us well, until we move to rec, or medical retail sales are fairly constant in the eastern portfolio, so it will be wholesale gains in the east and strong gains in terms of volume and a little bit of gain in terms of average ticket size as well in the western portfolio.

Got it, that’s helpful. If I could just revisit the vaping ban, you maintained the guidance despite the four-month ban in Massachusetts, and it does make sense that you’d be able to substitute a lot of those vape products in the store.

I was just wondering if you could be a little bit more specific on the financial effects that you’re going to be seeing from the removal of the vape on the mix.

Can you just repeat that last bit about after financial impacts?

Yes, just financial impact in Q4 of the removal of vape in the mix.

Yes, so as we said, we do expect revenue to come in line based on the substitute products. From an EBITDA standpoint, we continue to target that range that we lifted to at $35 million to $40 million literally the day of the vape ban being announced, which is amazing in hindsight.

We have a number of new products that we developed quite quickly in October and that are beginning to sell now into the channel. These are some higher margin products that are new, that start to approximate vape margins, so we’re hopeful that these higher margin products can get us back to within that heightened range, but we just can’t be sure because we’re only starting to see them sell into the channel.

To the extent that we don’t see impact from these new higher margin products, we think we’ll be maybe about $1 million, not quite $1.5 million light on the Q4 EBITDA contribution, so we’re hopeful that we can still meet the 35 at least based on these new products, but if not, quantifying the number, it’s probably a little over $1 million in Q4 contribution that we might miss on margin.

Got it.

Remember, it’s not so easy to substitute products because you have to go back to the regulators to get the new products approved. That can take 50 days, so we quickly--

And tested.

And tested, so we quickly reformatted our products to use the oil to enhance existing products, which increases margins not quite at the vape pen level but better than the existing portfolio. Those products are just coming out of testing now and approval, and are being sold to our customers.

Jen is hedging a little bit because they’re brand new products. We think there will be strong demand for these products, but we’re just at the very start of the selling process.

That makes sense, and I appreciate that color. Last one from me, even though there wasn’t a ban in place in Nevada, how have you seen the vape sales trending in that space following the health issues nationwide, maybe relative to before?

In Nevada, it’s down, I would say, roughly 15%.

Got it, thank you.

Yes, but our revenues there have remained strong and solid and according to plan, because as you’ve alluded to, Greg, there’s been substitution to other products. People want their cannabis, they’re just getting it in a different form.

And that’s a great thing, and we said that earlier, the consumer--while the politics around this issue have been quite clear, the consumer demand for THC has not changed. It’s a game of substitution and for our part, just to reiterate, it’s about providing those products or alternative products that the consumers want, and we did that, I would say, as quickly as we could have imagined.

Great, that’s what I assumed as well, so that’s good to hear. Thank you.

Good morning. Congrats on the quarter, and thanks for the questions.

Real quick, to follow up on Massachusetts, what is the retail side for approval for your potential rec dispensaries going forward? I know you guys looked at May and September timeframes for next year.

Are we seeing a push-out on that side?

At this point, we don’t. Look - I think what we’re trying to do on this call is to be very clear.

What this management team can control and does control, we feel we’ve executed on everything we’ve told our investors. If the climate gets more political, if the regulators slow down, we’re trying to be transparent on this call to say what we control as a management team will exceed expectations, what we hope.

What we don’t control, and that’s a big part of this call today, what we can’t control, we’ll just do the very best to mitigate that, and I would say generally as we look across the country, as we look at acquisitions, we’re in lots of states and the political climate around cannabis is getting more and more extreme. That’s a general proposition, that’s not necessarily a Massachusetts proposition.

Okay. Then real quick, with the consumer demand and demand-supply issues in Massachusetts, you have the capacity to bring on more wholesale or cultivation.

Will you pull forward some future capex or future plans for adding more capacity in Massachusetts here?

In Massachusetts, we think about our cultivation in three phases. We bought the existing phase, call it M1, we just completed M2, and we have the right to build out M3.

We’re being very disciplined on using our capital at this point, so we will see if the projected demand, which we feel is there because there is still an enormous supply imbalance in the market, once that is generating cash, we will then move to M3. Again, we’re going to be very disciplined about our cash.

We never want to be subject to the capital markets, and we will use our cash flow to extend our capacity.

Thanks for the color. Then last question, kind of on potential acquisitions, obviously you have been very disciplined and you’re looking for great operators.

Are you seeing that in more mature states’ opportunities, or how are you looking at the newer states coming on board potentially for an acquisition standpoint?

What we’re not looking at is any acquisition that takes a big capital commitment to get it to profitability. What we want to reiterate on this call is when we started in December of ’17, we promised our SPAC investors we would build an EBITDA company from day one, and we did that.

We continue to be EBITDA and cash flow positive. What we won’t do is break that commitment to our investors, so when we look at acquisitions, companies have to be EBITDA positive and they also have to have the cash to build out their business.

What we don’t want to do is what I said earlier - we don’t want to be in a position at any price to take on other people’s problems. If and when we find those companies that meet that criteria, we will acquire them.

Okay, thanks. That’s it for me.

Hi, thanks for taking my question. In this quarter, in the press release you said you generated $4 million of cash flow from operations and adjusted EBITDA of just under $9 million, so it’s just under 50% conversion of EBITDA to operating cash flow.

Is that something that’s like due to inventory investment, and also, what can we expect in terms of the cash flow that you guys are going to need to set aside for taxes each quarter? How should we think about that as a percentage of, say, gross margin going forward?

That cash flow from operations number, which is I think a bit over $4 million, it’s just under $4.5 million, maybe $4.2 million, that cash flow from operations includes provisions for taxes, particularly the impact of 280e, so that’s a proper cash flow number prior to capex. The conversion rate at 50% I think is a little bit low for the quarter because of some inventory investments, because of some working capital.

We think it probably normalizes a bit more at 60%, but why don’t I turn it over to Brad Asher to just talk a little bit about our conversion rate, because I know Brad, you and I have been talking about that quite substantially.

Yes, for sure, Jen, and you’re absolutely right - the taxes are fully baked in there. I think what you’re seeing is also the impact of the acquisition related expenses flowing through there, which are stripped out of EBITDA as it relates primarily to the SPAC, the SPAC business, and so as those whittle down over the next quarter, you’ll see that percentage increase as well.

Just with respect to taxes, totally understand it’s obviously baked into that number. My question was more what should we model or what should we look at as a steady state tax rate as, say, a percentage of gross margin going forward?

I think we feel comfortable right now with a 60% conversion rate from EBITDA to operating cash flow, and we’ll obviously update that going forward as we have more operating history with the businesses. But I think we generally, to Brad’s point, came in a little bit light because of working capital and some final acquisition expenses from cash standpoint for Q3.

But we expect more of a 60%-ish conversion rate going forward, and as we expand our capacity in Massachusetts and Nevada and those will come on at higher margin, we think there’s room for expansion there, but we’ll dial that in more closely when we have more information.

Okay, thank you.