Brandon Mills: I’m doing well.
Leo Gontmakher: Good. Thank you.
Yewon Kang: This is Yewon on for Matt Bottomley. Just one for me here, so in terms of adjusted EBITDA for the quarter, it’s kind of hard to see because we’re given the revised numbers for Q2. But the increase of 70% sequentially, could you perhaps name any factors that have led to this increase quarter-over-quarter, now that the California operation impacts?
Andrew Thut: Yes. I’ll turn you over to Brian Ehmke, our Director of Finance. Brian?
Brian Ehmke: Thanks, Andrew. Yes, the number one factor there is going to be the California shutdown and the additional one-time add-back from that.
Yewon Kang: Right. Sorry, just one more. Would you be able to share what the normalized sequential movement would have been?
Brian Ehmke: I’d want to take that one offline and dig a little bit deeper into the normalized number.
Yewon Kang: Yes, for sure.
Brandon Mills: Hey, guys. I think the only other contribution would be the manifestation of the non-California-related reduction in force that kind of led through Q3 and we were able to realize some of the benefit near the end of Q3 once the severance periods were expired. So I think that would have helped as well.
Yewon Kang: Yes, very helpful. Thank you so much. I’ll jump back into the queue.
Operator: Your next question comes from the line of Jesse Redmond from Water Tower Research. Your line is now open.
Leo Gontmakher: Hey, Jesse. How are you?
Jesse Redmond: Hey, guys. I’m good, guys. How are you?
Leo Gontmakher: Excellent.
Brandon Mills: We’re good?
Jesse Redmond: Good, I just had a little question about Illinois since that’s such an important market going forward. From what I see in the data and talking to companies, it appears the wholesale opportunity might be improving perhaps as new stores open, especially some of these social equity doors start to open as well? However, I’ve been hearing more about retail getting more challenging due to increased competition from those doors that may help wholesale and also obviously with Missouri flipping to QREC some of those previous border stores have obviously come down a lot in revenue? So my question is, how are you overall seeing that market at this point, and specifically, are you seeing increased retail competition, and what is your perspective on wholesale as more of these doors open?
Leo Gontmakher: Yes, Brandon, do you want to kick it off and let Ray and Karl chime in?
Brandon Mills: Happy to. Yes, let you guys chime in. I think one thing that we’ve learned is that it really depends on the specific location. So when it comes to retail, there are certain locations, including some of ours, like our Calumet City location, that were incredibly insulated from competition at one point and have now seen more competition come in. And it’s sort of a case of we’re all eating from the same pie, right? So it’s a zero sum game and that’s been challenging. So as we turn toward our future retail expansion, that’s a very important part of the strategy is to understand where we might be insulated from competition, what areas are particularly attractive to us. And I believe we have a great, very strong thesis on what we want to see in the next chapter.
When it comes to wholesale, we’re currently only penetrated into about 55% to 60% of the Illinois market, so we have a lot of growth opportunity ahead once the supply comes online and maps in. I think we’re all anticipating the rate of opening of new stores to be impressive at some point. It’s not quite there yet today, and it’s probably just a lack of capital for the operators that have those licenses to get those stores up and operational. But over time, we will see the retail footprint double in Illinois, and we do see that as a pretty significant tailwind for the wholesale opportunity.
Jesse Redmond: That’s helpful, Thanks. Any read on the consumer generally in your markets? I’ve been hearing on some calls about value brands doing better and consumers shifting down, maybe more units, smaller basket sizes, a bit lower prices. Are you seeing that in your data that the consumers still feel stretched at this point and maybe shifting down in their consumption preferences?
