GrowGeneration Corp.GRWGNASDAQ
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Operator: Hello, everyone, and welcome to GrowGeneration Corp.'s fourth quarter and full year 2025 earnings conference call. My name is Alan, and I will be your operator for today's call. At this time, participants are in listen-only mode. Following prepared remarks, we will open the call to questions from analysts, with instructions to be given at that time. This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of GrowGeneration Corp.'s website. I will now hand over the call to Phil Carlson with KCSA Strategic Communications for introductions and the reading of the safe harbor statement. Please go ahead, Phil. Thank you, operator.
Phil Carlson: And welcome, everyone, to GrowGeneration Corp.'s fourth quarter and full year 2025 earnings results conference call.
Operator: With us today from GrowGeneration Corp. are Darren Lampert, Co-Founder and Chief Executive Officer, and Greg Sanders, Chief Financial Officer.
Phil Carlson: The company's fourth quarter and full year 2025 earnings press release was issued after the close of market today. A copy of this press release is available on the Investor Relations section of the GrowGeneration Corp. website at ir.growgeneration.com. I would like to remind everyone that certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements made today. During the call, we will use some non-GAAP financial measures as we describe business performance. SEC filings, as well as the earnings press release, which provide reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures, are all available on our website. Following prepared remarks, management will be happy to take your questions. We ask that you limit yourself to one question and one follow-up. If you have additional questions, please reenter the queue, and we will take them as time allows. Now I will hand the call over to GrowGeneration Corp.'s Co-Founder and CEO, Darren Lampert. Darren, please go ahead.
Darren Lampert: Thanks, Phil. And good afternoon, everyone. Thank you for joining us to review GrowGeneration Corp.'s fourth quarter and full year 2025 financial results, and to discuss our outlook for 2026. 2025 was a defining year for GrowGeneration Corp. We transformed the business, right-sizing our retail footprint, dramatically expanding proprietary brand penetration to 32.8% for the full year, and delivering a 370 basis point improvement in gross margin to 26.8%. These structural improvements drove a 58.9% year-over-year improvement in adjusted EBITDA and cut our GAAP net loss by more than half. The cost structure and brand platform we built in 2025 are the foundation for profitability in 2026. With the permanent structural improvements we have implemented, we believe the company is well positioned to reach approximately breakeven adjusted EBITDA for the full year 2026. First, I would like to talk about some of the financial highlights of last year. During 2025, net sales came in at about $162 million. The year-over-year decline was expected and driven by store closures. During 2025, we consolidated eight retail stores, bringing our current retail footprint to 23 locations as of December 31. On a same-store basis, our core locations remained relatively stable, which tells us the business is stabilizing as anticipated. Importantly, looking specifically at the fourth quarter 2025, net sales were up year over year. So during what is typically our seasonally lowest revenue quarter, we had slightly higher sales compared to last year with fewer retail locations. I think that says a lot about our core business and the revenue we were able to generate with a smaller, more focused retail footprint. For the full year 2025, gross margin expanded 370 basis points to 26.8%. As such, we were able to grow gross margin substantially, even as total revenue declined as the market came under considerable pressure. This highlights that our proprietary brands are working exactly as they were designed to. For the full year, our private label sales penetration represented 32.8% of cultivation and gardening revenue, up from 24.2% last year. Looking at the fourth quarter of 2025, our private label sales penetration was 35.8%. We are very happy about this because every percentage point of private label mix adds margin and pricing control for GrowGeneration Corp. Moving down our P&L, in 2025, we took nearly $27 million out of operating expenses compared to last year. That is a 28% reduction. Again, just looking at the fourth quarter of 2025, we saw a 44.4% year-over-year improvement in operating expenses. To be clear, these are not temporary cuts. They are permanent structural changes we have implemented throughout the company that will drive improved costs and savings going forward. All this led to an $8.5 million, or 58.9%, year-over-year adjusted EBITDA improvement for 2025, going from negative $14.5 million to negative $6 million. That is a sizable increase and puts us well within striking distance of reaching breakeven. To sum everything up, in 2025, we improved our adjusted EBITDA profitability by $8.5 million despite lower revenue volume. We think this shows the tremendous operating leverage that we have been able to achieve at GrowGeneration Corp. and the expanded margins we have generated from our growing segment of proprietary brand sales. Private label brands remain our primary growth driver as we move forward. Our leading brands Charcoir, Drip Hydro, The Harvest Company, Dialed In, and Power Si continue to see strong adoption in the market. These brands are still in their early stages of introduction, and we are expanding into new revenue channels and product extensions, mainly B2B as well as via multi-state operators. We expect proprietary brands to reach 40% of cultivation and gardening revenue in 2026. On a broader basis, we continue to shift beyond our legacy retail base to a national controlled environment agriculture supplier focused on the largest specialty agricultural and controlled environment markets. In the fourth quarter of 2025, we started selling our proprietary brands into the independent garden center channel and relaunched theharvestco.com to serve greenhouse and specialty crop growers. We also established a distribution partnership with Arett Sales, expanding our wholesale and B2B reach into thousands of new retail stores across 32 states. Additionally, the company entered the home gardening market through our 2025 acquisition of Viagrow, a domestic brand distributed across retailers such as Amazon, The Home Depot, Walmart, Lowe's, and Tractor Supply. The addition of Viagrow further provides us with a scalable platform to serve home gardeners and hobbyist cultivators across multiple retail channels nationwide. Last year, we also began to see cultivation infrastructure projects become a larger portion of our business. In 2025, this offering that we have branded as GrowGeneration Corp. Build contributed considerable revenue to GrowGeneration Corp. These are projects where we help commercial and craft operators to either modernize existing facilities or build new ones, including areas such as lighting, benching, fertigation, HVAC, irrigation, and automation systems. Demand for this offering remains strong, and we expect this business will be a meaningful contributor to revenue in the coming years. In 2025, we also continued our digital transformation of sales as more customers adopt our customized B2B Pro portal. Our commercial and wholesale customers are continuing to move their purchasing online, utilizing automated ordering and custom catalogs, while being able to view inventory in real time. Concurrently, this is reducing transaction costs and driving greater recurring revenue for GrowGeneration Corp. Last year, we also commenced our international expansion to improve our growth trajectory. Specifically, we look for opportunities to enter new high-growth cultivation markets with growing numbers of hemp and cannabis licenses. As part of this, we formed a distribution partnership with V1 Solutions to support commercial sales throughout the European Union. We also began distributing our proprietary products in Costa Rica, which opens up the Central American markets for us. We are thrilled to bring our proprietary products to professional growers across Europe and Central America and believe these distribution partnerships will allow us to quickly scale our brand presence in these markets with minimal capital investment. Complementing this, our MMI Storage Solutions segment also grew in 2025, reaching $27.5 million in revenue. MMI continues to diversify into industrial, agricultural, and specialty end markets, and we expect this segment will continue to grow steadily in 2026. Given our progress this past year, we believe repurchasing shares at current levels represents a compelling and responsible allocation of capital. Today, in tandem with our financial results, we announced that our Board of Directors has authorized a share repurchase program for up to $10 million of the company's outstanding common stock. This authorization reflects our confidence in GrowGeneration Corp.'s long-term strategy and our commitment to driving sustainable shareholder value. Turning to our outlook for 2026, we expect modest revenue growth for the full year, as we are focused on revenue quality, not volume. As I mentioned previously, we expect proprietary brand sales as a percentage of cultivation and gardening revenue to reach 40% by year end. We also expect to see further steady improvement in margins and operating expenses during 2026. Through all of this, we anticipate reaching approximately breakeven adjusted EBITDA for the full year. Greg will give more color on this shortly. With over $46 million in cash and no debt, our improved cost structure and growing multichannel brand strategy, we believe GrowGeneration Corp. is well positioned to capitalize on the anticipated growth of the controlled environment agricultural industry as well as positive developments within the cannabis industry. We expect to generate sustainable and profitable long-term growth from our growing proprietary brand sales, further revenue expansion across independent garden centers, greenhouse agriculture, specialty crops, and cannabis, and through cultivation infrastructure projects. We believe we are still in our early stages of the growth cycle, and that the best is yet to come. With that, I will turn the call over to our CFO, Greg Sanders.
Greg Sanders: Thank you, Darren, and good afternoon, everyone. I will briefly review our fourth quarter and full year 2025 results, and then I will provide additional context on our outlook for 2026. Starting with our fourth quarter 2025 results, GrowGeneration Corp. reported net sales of $37.8 million, up $0.4 million compared to $37.4 million during the same period last year. Encouragingly, the fourth quarter returned to year-over-year revenue growth despite operating with eight fewer retail locations. Net sales in our Cultivation and Gardening segment were $32.1 million for the quarter, compared to $32.9 million in the same period last year. Proprietary brand sales represented 35.8% of Cultivation and Gardening revenue, up from 30.4% in the prior year. This continued shift towards higher margin proprietary products remains one of the primary drivers of our margin expansion and long-term profitability strategy. In our Storage Solutions segment, net sales were $5.7 million for the quarter, up from $4.5 million in 2024, reflecting stable demand across product lines and diversification into new end markets. Gross profit increased to $9.1 million, an increase of $3 million compared to gross profit of $6.1 million for 2024. Gross margin increased to 24.1% in 2025 compared to 16.4% for the prior-year period, primarily due to higher proprietary brand penetration and the absence of restructuring-related costs incurred in the prior year. Now turning to expenses, in 2025, store and other operating expenses declined by approximately 26.6% to $6.8 million compared to $9.3 million in 2024, reflecting the benefits of our cost reduction initiatives. Selling, general and administrative expenses were $7.3 million compared to $6.8 million last year. This increase was mainly due to one-time severance and legal costs of approximately $1.5 million. Total operating expenses decreased by $13.3 million, or 45.3%, to $16.7 million, compared to $30.1 million in the comparable 2024 period. Depreciation and amortization totaled $2.4 million compared to $7.1 million in the same period last year. The decrease primarily reflects the absence of prior-year asset impairment and restructuring-related depreciation associated with store closures. GAAP net loss decreased to $7.4 million, or negative $0.12 per share, a $15.9 million improvement compared to a net loss of $23.3 million, or negative $0.39 per share, in the prior-year period. The improvement was primarily driven by higher gross margins and lower operating expenses. Non-GAAP adjusted EBITDA, as defined in our press release, was a loss of $2 million, a $6.1 million year-over-year improvement compared to a loss of $8.1 million in the prior year, reflecting improved sales mix from proprietary brands, gross margin expansion, and the continued benefits of our cost reduction initiatives. Now I will provide a quick overview of our full year 2025 results. Net sales were $161.7 million compared to $188.9 million for 2024, primarily due to declining retail volume from store consolidations. In 2025, proprietary brands accounted for 32.8% of Cultivation and Gardening sales, up from 24.2% in 2024. Additionally, proprietary brand sales increased on an absolute basis, growing from $39.5 million in 2024 to $44 million in 2025, representing an 11.3% year-over-year growth. Gross profit was $43.3 million for the full year 2025, a slight decrease compared to gross profit of $43.7 million for the full year 2024. Gross profit margin increased to 26.8% for the full year 2025 compared to 23.1% for 2024, an improvement of 370 basis points. Net loss was $24 million for the full year 2025, or negative $0.40 per share, a $25.5 million improvement compared to a net loss of $49.5 million for the full year 2024, or negative $0.82 per share. Adjusted EBITDA, as defined in our press release, was negative $6 million for the full year 2025, an $8.5 million improvement compared to negative $14.5 million for the full year 2024. The improvement in adjusted EBITDA was primarily driven by gross margin expansion from higher proprietary brand penetration and the continued realization of operational cost reduction initiatives. Now turning to the balance sheet, we ended the year with $46.1 million of cash, cash equivalents and marketable securities, and no debt. We have maintained one of the strongest balance sheets in our sector, which provides significant financial flexibility to support our strategic initiatives. As Darren mentioned, today we announced a share repurchase program authorized by our Board of Directors for up to $10 million of the company's outstanding common stock. Our Board evaluated the program in the context of our financial position, capital needs, and our view that the current share price does not reflect the long-term value of the business. With $46 million in cash and no debt, we have the financial strength to execute this program while preserving flexibility to pursue organic and strategic growth opportunities. We expect to be in the market in the near term. Now I will discuss our guidance for 2026. For the full year 2026, we expect modest revenue growth, as our focus remains on revenue quality and margin improvement more so than volume. We are guiding net revenue in the range of $162 million to $168 million. We expect proprietary brand sales as a percentage of Cultivation and Gardening revenue to reach approximately 40% by year end. We also anticipate further improvement in margins and operating expenses during 2026, although the majority of the savings we had expected to realize are already reflected in our current run rate. With this and the improvements we have made in our inventory base, we anticipate gross margins for the full year 2026 to be in the range of 27% to 29%. Based on these factors, we expect to achieve approximately breakeven adjusted EBITDA for the full year 2026. Our updated guidance assumes a softer first quarter, as is typical for our seasonally lightest period. We expect profitability to build progressively throughout the year, with Q2 and Q3 benefiting from outdoor cultivation season, continued gross margin expansion, and a lower operating cost base relative to 2025. Taken together, this expected cadence supports our goal of approximately breakeven adjusted EBITDA for the full year. To summarize, in the fourth quarter, we generated net sales that were slightly higher than the same period last year, despite having fewer retail locations. At the same time, we improved profitability dramatically, reflecting margin expansion and structural cost reductions. We have maintained a strong balance sheet while remaining debt free. Looking ahead, we enter 2026 with a significantly improved cost structure, meaningful financial flexibility, and clear operating targets, including 40% proprietary brand penetration by year's end, a return to sustainable top-line growth, and breakeven adjusted EBITDA for the full year. We believe the structural work we completed in 2025 positions us to execute on future growth and profitability targets. With that, I will turn the call back to Darren for closing remarks.
Darren Lampert: Thanks, Greg. And thank you again to everyone for joining us today. In closing, 2025 was a year of significant change for GrowGeneration Corp. We exited underperforming stores, reduced headcount, and implemented cost reduction initiatives across our entire organization. These actions were difficult but necessary for our future. Today's results clearly show that our restructuring plan is working. We have stabilized revenue, successfully executed our private label strategy, improved margins, and fundamentally reset our cost structure, demonstrating the tremendous operating leverage within our business model while improving profitability dramatically year over year. Looking forward in 2026, GrowGeneration Corp. is well positioned to scale as a lean, brand-led company supported by a strong balance sheet and ample liquidity. In 2026, we will continue the expansion of our private label brands. At the same time, we will work to increase our presence in the larger specialty agricultural and controlled environment markets. We will also continue our digital sales transformation as more and more customers migrate through our B2B e-commerce portal. Importantly, we also continue to prioritize margin expansion and disciplined cost control. We are proud of what we have accomplished in 2025, but now 2026 is all about executing with our new business model. Our target is clear: breakeven adjusted EBITDA for the full year, driven by 40% proprietary brand penetration and continued cost discipline. We appreciate your continued support and look forward to keeping you updated on our progress. That concludes our prepared remarks. Operator, please open the lines for questions.
Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Aaron Grey of Alliance Global Partners. Your line is now open.
Aaron Grey: Hi. Good evening, and thank you for the questions here. So first for me, I just want to talk about the share repurchase that you announced, mostly just in terms of what went into the contemplation. We can appreciate how you might feel the stock is undervalued, but we know there are a lot of struggles in the hydro products market right now that could present potential M&A opportunity that you spoke to in the past. So I will get some incremental color in terms of how you thought about the potential use of $10 million, assuming it is all used for the share repurchase, to be used for that versus potentially buying an asset to drive greater sales growth or potential profitability? Thank you.
Darren Lampert: Yes, I can start. I can answer that for you, Aaron. To start with, like anything else, nothing is ever an easy choice. When you take a look at GrowGeneration Corp.'s stock right now, we are trading at about a $60 million market cap with about $85 million of cash and inventory, and some tremendous assets within our company. We have been looking for the past year for acquisitions and have not found anything that really fit our profile. On the private label brand side of it, we continue to roll out new products. We have a tremendous R&D team at GrowGeneration Corp., so the products that we are rolling out are best of breed. As you can see from the increase of private label penetrations into the markets, on the store side of it, we are shedding stores, not buying stores. But we have pretty much shifted our operations around tremendously. So on the brand side of it, we just have not found something that, for the right price, fits our operations. With that, we believe come 2027, this company will be throwing off cash and still have $46 million cash on our balance sheet and almost $40 million of inventory. So we still have plenty of flexibility if we found that right acquisition. So we believe right now it is in our shareholders' best interest and certainly our company's best interest to start buying back stock and see where it goes. But we still are in the market still looking to find the right fit for GrowGeneration Corp. But, unfortunately, we just have not found it as of yet.
Aaron Grey: Okay. I appreciate the color. That is helpful there. And on proprietary brands, we want to talk a bit there. I know you have increasingly been selling your proprietary brands outside your own stores. Can you maybe give some color in terms of how much sales now are within your own channels versus third-party channels for category brands? And then secondly, how much of proprietary brand sales do you expect to be driven by sales to third party, and whether or not those third parties now start to increasingly go towards more traditional controlled environment markets? Thanks.
Darren Lampert: I think the majority right now, Aaron, you are seeing going through GrowGeneration Corp.; I would probably say about 80% still. We certainly would love that number to go down to 50/50. A majority of our private label brands are being sold either through portals or the commercial markets through our commercial team. So as we continue to shed stores, we are seeing an increase in private label penetration, as opposed to the other way. Way back when, it was pretty much the stores that were selling our own brands. But now, I think with the continued success of these brands, the continued success of our commercial team, our facility advisers that are going to the largest facilities around the country and certainly helping sell and introduce the value proposition of our brands, it is working. When you take private label divisions, when you go back a couple years ago, that was in the teens. Expecting over 40% this year and growing, it has been quite a successful endeavor for GrowGeneration Corp., and I do believe it changed the company, the outlook of the company, and where the company is going. You are starting to see products of ours going into the agricultural side of the industry. You are also seeing Drip Hydro products being sold through The Home Depot and certain other stores right now. Our Viagrow products are starting to sell within some of the big box stores. But we are starting off a base of zero in the gardening centers. So you will see 20% plus growth on this side of our business, but it is going to take time to ramp up to become a meaningful part of the GrowGeneration Corp. story.
Aaron Grey: Okay. I appreciate that, Darren. Last one from me, if I could. Just on Storage Solutions, nice rebound holistically for 2025 after some softness in 2024. Some accelerated growth in Q4. So maybe just talk about some of the dynamics that you are seeing there and outlook for 2026. Maybe if there has been some effort put back into the business after you no longer have it for potential sale. So any color in terms of that business line would be helpful. Thanks.
Darren Lampert: We have put effort into it. We will be consolidating different locations for MMI this year onto one location. Middletown. So it is starting to hit on all cylinders. The product that it sells is space saving. It is something that is needed in retail right now, in agriculture, and anything you do. As buy online, pick up in store, whether it is grocery, whether it is golf, whether it is agricultural, they have a tremendous niche and a tremendous clientele. And we see growth in that company for years to come. We are consolidating it into one location, which we believe will help, closing some legacy locations, buying new equipment for this company, putting some money into it, and believe it will pay off and continue to grow.
Aaron Grey: Okay. I appreciate the color, Darren. I will jump back in the queue. Thank you.
Operator: Your next question comes from Brian Nagel of Oppenheimer. Your line is now open.
Brian Nagel: Hey, guys. Good afternoon. I think I want to follow up on maybe that prior question, but I guess in a bigger picture. Darren, as you look at the business now, you have had a lot of success expanding the proprietary brands and really diversifying away from, as I understand, the core cannabis market. So as long as we watch here, you have been dealing with these cannabis headwinds, which have persisted a lot longer than I think most people expected. But what I guess I want to ask is, given the change in mix here and given the change in complexion of the business, at what point do you see GrowGeneration Corp. as a company really being driven by a different set of sector or macro factors?
Darren Lampert: As of now, Brian, our core competency still is in growing, whether it is cannabis, whether it is fruits, vegetables, specialty crop. Again, we were brought up in the industry in the cannabis industry, and when you look at the mix of our customers right now, it is commercial, it is B2B. So we have gone away from the business-to-consumer model. When you take a look at big ag, it is no different than big cannabis—MSOs, large single-state operators—with very complex growing techniques and facilities, and that is what we do. It is something that we have gotten much more involved in recently, again, starting to build facilities. We have brought in facility advisers. We have brought in some tremendous talent on the build side of it that are project managing, bringing in groups to build facilities for some of the larger groups out there in the cannabis space. It is no different in the ag space. We just have not gotten there yet. But we believe we have the products to do it. We have the best products on the market coming out of GrowGeneration Corp. right now, and they are extremely price competitive. The quality that we are seeing out there on the markets right now is exceptional. So we believe right now, the restructuring has taken way longer than we would have liked it. We have gone from 65 stores; we are down to 20 stores right now. We closed another three stores in the first quarter, and we will be closing an additional store in the first quarter. So you will see the store count down to 19 at the end of the first quarter. And you are not seeing it affect sales, and you are not seeing it affect private label brands. So I think the restructuring—what you have seen over the last three years—is coming to an end. Our cost structure is at a place right now where we believe we can start making money. We were dealing with some tariff issues last year that we have worked ourselves through. We saw almost a $3 million to $3.5 million tariff that, over the last couple quarters, has flowed through our P&L. So even with that, we do believe that you will see a profitable year out of GrowGeneration Corp., from losing $14 million on an adjusted basis in 2024. You are seeing us picking up about $6 to $7 million a year on the EBITDA side of it, and we do not see that stopping. We think these brands are just getting stronger. We think their reach is getting further. We just signed a deal six months ago with Arett, but that takes time. And same thing, getting into the agricultural industry. But we are hiring people and salespeople on that side of it. We have been to some of the trade shows on the ag side of it. And if we could start diversifying product mix from 90% cannabis to 50% cannabis, we are not losing cannabis business; we are picking up cannabis business. So if we can start on the other side of it, you can see an extremely explosive sales side of our business at high margins. That is what we are looking forward to, and that is one of the reasons why we feel comfortable right now with our share buyback of $10 million to start bringing the float down, especially at these levels.
Brian Nagel: That is helpful, Darren, and that is my segue to my second question. So you announced the buyback today. How should we be thinking about the timing of that? Is it something you could do relatively quickly, or is it more of an ease into it?
Darren Lampert: I think we will be easing into it, Brian, depending upon where the stock trades. I think it is more of an ease. Like anything else, it is not a quick fix. We are certainly not looking to move our stock, so I think it will be a controlled buyback, but I think it will be effective. And like anything else, GrowGeneration Corp. is happy to buy back stock at these levels.
Brian Nagel: Appreciate all the color. Thank you.
Darren Lampert: Thank you, Brian.
Operator: Your next question comes from Mark Smith of Lake Street. Your line is now open.
Mark Smith: Hi, guys. Darren, you just hit a little bit of this, but I wanted to dig deeper into the store base. Ended at 23. Sounds like you are 20 today and likely go to 19 at the end of the quarter. You called early in your commentary the store base kind of stable. I am curious if this ends some of these closures, or if there are still some maybe that come up at the end of lease periods that we see closed as we work through 2026.
Darren Lampert: I think we have been pretty clear that the future of GrowGeneration Corp. certainly is not in the retail stores. We are a B2B business, and some of our locations are not stores; they are more B2B distribution centers. So the name store is probably going to come out, and we are probably going to rename so there is no misunderstanding. GrowGeneration Corp. is no longer a business-to-consumer operation. Our stores are closed on weekends. Hours are different right now. There are warehouse people working in our stores as opposed to salespeople. There is a salesperson in each store, but even the mix of employees has changed within our stores. So I think when you look at GrowGeneration Corp. in 2026 and beyond, it is really a business-to-business, brand-driven company, as opposed to a retail location. Any of our retail sales are going through portals out of warehouses and also through distribution channels that we secure in the future. One is Arett, and hopefully there are others in other countries. We do believe probably this year we will finish somewhere in that 15-location range. So there are probably another four locations that we will shed by the end of the year, as long as we can do some work with the leases. But most of them are the smaller locations that are in areas where cannabis is not as abundantly sold as it used to be, as abundantly grown as it used to be. The future is small hubs, as we always said—not small, but 20,000 to 30,000 square foot hubs around the country—and a few large warehouses to supply for marketing and some areas where the growing is so intense that we believe that product within those areas makes sense.
Mark Smith: The next question for me is similar as we look at operating expenses that you guys cut in 2025. As we look at 2026, it certainly looks like built into your guidance is continued cuts. Is a lot of that just having a full year of some of the cuts that have already been made, or are there other places where you feel like you can still cut operating expenses?
Greg Sanders: Thanks for the question, Mark. In terms of operating expenses for 2025, we brought down our operating expense base $27 million in comparison to the prior year of 2024. We do see incremental improvements in 2026. Some of it is due to the eight closures that we had in 2025 where you had partial impact throughout the course of the year from those stores, potentially even closure costs that got embedded into the results as we are working through consolidation and moving inventory and shutting down the locations. And so some of the fallout in 2026 from an expense improvement perspective is just due to those changes operationally in the business. There are other areas of the business just in the same sense that we think there is incremental opportunity to continue to improve upon the expense base. So we expect expenses to continue to come down generally for both reasons in 2026.
Mark Smith: Great. Thank you, guys.
Operator: There are no further questions at this time. I would hand over the call to Darren Lampert for closing comments. Please go ahead.
Darren Lampert: Thank you. I would like to thank our shareholders and employees for their continued support. I look forward to sharing our progress on our first quarter call in early May. Thank you, everyone, and have a beautiful day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.