Q4 2023 SNDL Inc Earnings Call
Participants
Zach George; Chief Executive Officer; SNDL Inc
Alberto Paredero-Quiros; Senior Vice President; SNDL Inc
Tank Vander; President, Liquor Retail; SNDL Inc
Tyler Robson; President - Cannabis; SNDL Inc
Frederico Gomes; Analyst; ATB Capital Markets Inc.
Presentation
Operator
Good morning, and welcome to SNDL's year end and fourth-quarter 2023 financial results conference call. This morning, SNDL issued a press release announcing their financial results for the year end and fourth quarter ended on December 31, 2023. This press release is available on the company's website at sndl.com and filed on EDGAR and SEDAR as well. The webcast replay of the conference call will also be available on the sndl.com website. SNDL has also posted a supplemental investor presentation along with a shareholder letter from the Chief Executive Officer, Zach George, on its sndl.com website.
Presenting on this morning's call, we have Zach George, Chief Executive Officer; Alberto Paredero, Chief Financial Officer; Tank Vander, President, Liquor Retail; and Tyler Robson, President, Cannabis.
Before we start, I would like to remind investors that certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the company's financial reports and other public filings that are made available on SEDAR and EDGAR.
Additionally, all financial figures mentioned are in Canadian dollars unless otherwise indicated. We will now make prepared remarks, and then we'll move on to analyst questions.
I would now like to turn the call over to Zach George. Please go ahead.
Zach George
Good morning, everyone, and thank you for joining us on our full year and fourth-quarter 2023 earnings call. 2023 was a transformational year for SNDL marked by several financial milestones including record revenue and gross profit. The year began with a remarkable year-over-year revenue growth of almost 1,000% in Q1 of 2023, which was then followed by positive free cash flow generation of $18 million in the second half of the year. 2023 net revenue reached a record$909 million, a 28% increase from the previous year, while gross profit surged to a record $190 million, up 36% from the prior year.
SNDL's team has worked to build a scaled and diversified platform that we believe will be the basis for the creation of sustainable shareholder value. Our operations include award-winning liquor and cannabis retail banners, broad manufacturing capabilities, and a uniquely positioned non-consolidated exposure to US cannabis operators with a fair value of more than $0.5 billion. We are also in the process of monetizing a number of real estate and credit assets that will continue to feed and strengthen our industry-leading balance sheet.
The acquisition of Valemus in January of 2023 was a key tactical move for us and the L enhancing our upstream capabilities in Canadian cannabis. We now have manufacturing capabilities across all major product categories and continue to drive automation and labor efficiencies. We have exited exposure to high-cost own cultivation and leaned into procurement opportunities, integrating Bowne's this operation into our infrastructure has led to significant synergies, resulting in approximately $22 million in annualized cost savings.
These savings stem from better capacity utilization and various cost reduction initiatives, including the optimization of our cultivation footprint. Our progress is reflected in the steady sequential improvement of our gross profit over the year. We expect our cannabis operations segment to deliver additional operating efficiencies in 2024 and are excited by growth opportunities in B2B and international markets. We've continued to build upon the stable foundation of our liquor retail segment with a focus on margin enhancement. We've achieved this the launch of our data program, the refinement of inventory management practices and growth in private label offerings.
These initiatives have been pivotal in optimizing our operations within this segment. We also reached record results in revenue, gross profit and cash flow within our cannabis retail segment. The increase showcases the company's efforts in continued margin expansion initiatives and data program enhancements. In 2023, we streamlined our investment portfolio by divesting from equity securities and certain credit exposures. As of year end, the Company held a portfolio of cannabis related investments with a carrying value of $572 million, including 538 million to SunStreet as Indian joint venture sunscreen Bancorp launch SunStreet USA Group in the third quarter.
This new entity is designed to hold the post reorganized equity assignment and ParAllele, which include licenses in Florida, Michigan, Massachusetts and Texas. It is structured to exclude voting our operational control, enabling D to preserve its NASDAQ listing until further regulatory reform allows for the consolidation of these exposures. The establishment of assumption USA group represents a compliant arm's length expansion, ensuring that SNDL. does not engage in plant-touching activities while participating in a multistate cannabis platform. The restructuring assignment in parallel result in simplified capital structures, the elimination of certain material liabilities and improved competitive positioning.
The closing of these transactions will provide funds in USA group with the optionality to access third party investors engage in industry consolidation through mergers and acquisitions and gain critical consumer insights. The structure of SunStreet USA group is being reviewed by NASDAQ to align with all U.S. compliance and governance standards, while many Canadian operators make promotional statements regarding future U.S. dominance. SMDL. is the only Canadian licensed producer with cannabis enterprise exposure in the US. At this scale we look forward to updating shareholders on the developments in the near future.
As mentioned in my shareholder letter, which can be found on our website, SNDL maintains a debt-free balance sheet with a market capitalization of around $530 million, well below our cash and credit investments valued at $767 million and without any consideration for our operating segments, which continue to show both revenue growth and margin improvement. We believe that the company's recent market valuation does not reflect SNDL's intrinsic value and that the valuation gap is so significant that investors purchasing shares today could potentially be acquiring substantial asset value at a low or even negative cost on an applied basis.
Considering the broader Canadian cannabis industry context and the CRA's garnishments to combat an estimated $300 million in unpaid excise taxes, SNDL's financial health places us in an enviable position with our debt-free cash rich balance sheet with no tax arrears, we expect to benefit from the financial instability of peers who will struggle to consistently deliver product to provincial boards and end markets on a profitable basis. Our steadfast consumer-centric approach and unwavering commitment to quality and regulated products remain the bedrock of our strategy. Our demonstrated success with both mergers and acquisitions and organic growth has laid the foundation for our team to build momentum and strive for excellence in execution.
Looking ahead to 2024, we are well positioned for expansion utilizing the extensive scale of our platform to drive sustained value creation for our shareholders. We are focused on realizing efficiencies and margin expansion across our segments with quality of consumer experience at the forefront of our endeavors.
Finally, I want to express my gratitude to the entire S. and DL. team for their dedication in 2023. The outstanding results we achieved are a testament to your hard work and commitment to our vision to our investors. This is a team that wants to win. We have significant work ahead, but the undeniable improvement in our results is driving conviction in our ability to push harder as we aggressively pursue our performance goals and outcomes.
I will now pass the call to Alberto to provide more information on RPM financial results.
Alberto Paredero-Quiros
Thank you. And I want to remind you all that amounts discussed today are denominated in Canadian dollars, unless otherwise stated, certain amounts referred to on this call are non-GAAP and non-IFRS measures. For definitions of these measures, please refer to us and deals management discussion and analysis document. He's joining us and the team in July. I have seen significant progress, not just in terms of our financials, but for our organization as a whole, we have navigated the challenges of the regulated products industry and made strong improvements in how we operate and how we manage our finances.
Our focus has been on strengthening the balance sheet, enhancing cash flow generation and driving profitable growth through several strategic initiatives and disciplined financial and operational management while improving our cost structure and sharpening our capital allocation, not only how we redesign our operating governance and financial planning processes. We have also realigned the finance structures and attracted key talent to drive value creation while increasing the efficiency of our back office. It is exciting to see how this change is already having a positive impact in 2024.
Now let's dive into our consolidated financial performance. For Q4 2023, our net revenue reached EUR249 million for 3% growth from EUR240 million the same quarter last year. This includes a revenue elimination entry of EUR12 million that we introduced as of the third quarter of 2023 Without this adjustment, our net revenue growth in the fourth quarter would have been 8%. I'm particularly proud to highlight our gross profit for the quarter, which sets a new record of EUR57 million or 23% of sales compared to EUR44 million in Q4 2022.
The significant improvement is a testament to our supply chain optimization efforts, including the strategic decision to close our Olds, Alberta cultivation facility announced in October, change in cash and cash equivalent was negative 7 million compared to a negative EUR12 million in the fourth quarter of 2020 to a 42% improvement. We achieved a positive free cash flow of 1.4 million during the quarter, showcasing the effective cost management, despite the usual increase in working capital associated with the holiday season. This reflects our second consecutive quarter of positive free cash flow in 2023. Our operating income saw a loss of 85 million, which includes EUR29 million of restructuring costs and restructuring related asset write-offs and also EUR29 million of goodwill impairments. This is a 45% improvement over the 155 million loss we reported in the fourth quarter of 2020.
To Lastly, our adjusted EBITDA was a positive 3.5 million 147% improvement from the loss reported in the last quarter of 2022. This improvement is a clear indicator of our commitment to streamline and operations and enhancing our financial health.
Turning to our annual performance, I'm pleased to report several record achievements in 2023. Our net revenue reached an all-time high of EUR909 million, up 28% from EUR712 million in 2020. Gross profit for the year of the new record at EUR180 million or 21% of our sales. This is a significant increase of 36% compared to the EUR140 million or 20% of sales were reported last year, which is a testament to our improved cost management and operational efficiency. Gains in cash and cash equivalents was negative EUR84.5 million in 2023 compared to a negative EUR279 million, 70% year-over-year improvement. A highlight for the year was achieving positive free cash flow in the third and fourth quarters totaling 17.7 million. This includes an impressive 16.3 million in the third quarter and 1.4 million in the fourth quarter. And as mentioned earlier, demonstrating our ability to generate cash while continuing to invest in growth.
Our operating income showed a loss of EUR163 million for the year, which includes restructuring charges of 20 million and asset impairments of EUR55 million, as well as streamlining our operations to enable future profitable growth. Despite this, we have seen a remarkable 53% improvement from the previous year's loss of EUR348 million.
Finally, our adjusted EBITDA from continuing operations increased to EUR29 million in 2023, a significant improvement from a loss of 16 million in 2022. I will lead times and Tyler provide more details on the Q4 and Year-end 2020 Results for the liquor retail and cannabis operations segments. But I would like to comment on the results for our cannabis retail segment. Cannabis retail revenue includes operations of Nova retail stores for the period of March 31st, 2022, December 31st, 2020. In Q4 2023, our cannabis retail segment witnessed a 10% increase in net revenues, reaching EUR75 million compared to 68 million in the same quarter of the previous year, and same-store sales increased by 2%.
Gross profit was 20 million or 27% of sales, making a 27% increase from the previous year. Our proprietary data licensing program generated EUR4.2 million in Q4 2023 for the year end 2023 for our categories retail segment, we achieved a record net revenue of 290 million, making a significant 41% increase from the EUR206 million reported in 2022. Equally noteworthy is the record gross profit from this segment, which reached 74 million or 25% of sales in 2023. This represents a substantial 56% year-over-year increase from 47 million or 23% of sales in 2020. These figures highlight our successful margin expansion initiatives and operational efficiencies, but DCME, our proprietary data licensing program generated 12.3 million in revenue in 2020, up 193%, so EUR4.2 million in 2022.
Finally, looking at our investments and equity positions in the year and 2020 as of the end of 2023, the company had deployed capital into cannabis related credit investments with current value of EUR572 million, including EUR530 million through the Sunstone joint venture in 2023 our investment portfolio generated a positive operating income of 12 million, a significant improvement from the EUR91 million loss in the previous year. Despite the minor decrease in interest and fee revenue to EUR14 million from EUR17 million. Our equity accounted investees showed a notable recovery contributed 6.8 million in profits compared to 43 million loss in 2022.
The Company financial health is strong, supported by 766 million in unrestricted cash, marketable securities and investments, leading to an annual value of 1.2 billion. It is also important to highlight that we have not raised any cast share on offering since June 2021. And to date, the Company had no debt SMDL.'s Board of Directors approved extending the Company's share repurchase program through November 20th, 2024. The Company's share repurchase program continues to be available to lower the outstanding share float management will continue to assess opportunities to utilize the program and to the extent we believe it is in the best interest of our shareholders for the three months ended December 31st, 2023, the company did not purchase common shares for cancellation. Our results this year represent another solid step towards executing our business strategy. Our culture of financial rigor and continuous improvement and the hard work and dedication of our employees.
Looking ahead, we're committed to continuing our path of fiscal responsibility and the strategic growth. Our goals are clear to deliver value to our shareholders to invest in innovation and growth opportunities and to strengthen our market position.
I will now pass it off to Tank to provide an update on our liquor retail results.
Tank Vander
Thank you, Alberto, and thank you all for joining today. Our liquor retail segment remains a steady revenue driver, providing opportunities for increased margins in SNDL.'s regulated products. Business margin expansion remains a crucial focus as consumer patterns shift in liquor retail. This ensures ongoing growth for our liquor banners while consistently delivering exceptional customer experiences.
Looking at full year revenue for 2023, liquor Retail contributed EUR579 million to our cumulative revenue. This represents a growth of 25% year-over-year from 462 million revenue comparisons for liquor retail in 2020 to include operations from March 31st to December 31st, 2022, following the acquisition of Alcan in Q4 2023, revenue remained steady at EUR159 million, stable from Q4 2020 to an increasing 5% from EUR152 million in the preceding quarter. As of December 31st, 2023, our store count remained stable with 170 total stores comprised of 12 Wine and Beyond 20 Liquor Depot and 138 eight liquor discounter locations, the impact of Wine and Beyond banner and new markets, as highlighted by the success of our Cologne Arndale work location, which has seen a 20% increase in revenue year-over-year.
Additionally, the billboard location has seen its margin increased 17% from the year prior. We look forward to opening a new one and beyond location in Airdrie, Alberta in early Q2 2020 for building on the success of this banner, gross profit for 2023 amounted to $137 million, representing approximately 24% of sales, up 29% from a product for the fourth quarter. Gross profit increased to $38 million or 24% of sales from $37 million in Q4 2022 and up 3% from Q3 2023. These increases are driven by seasonality, procurement productivity and a continued focus on expanding and enhancing our private label offerings, which is the key driver in total margin expansion.
Private label sales increased by approximately 28% in 2023, now representing 11% of total sales across all banners, an increase of 2% from the year prior in Q4 2023, gross profit for private label increased 19% from Q4 2022 and 20% sequentially. As a key growth tactic, we are continually developing our private-label program to boost margins while maintaining the diverse selection our customers know and love.
Looking into additional growth opportunities. We have officially launched proprietary data agreements for our liquor retail segment and revenue will be reported in the first quarter of 2024, leveraging insight from our cannabis retail segment, we are now able to capitalize on our customer insights to improve vendor relations and the end to end customer experience, creating accretive revenue and margin growth initiatives with no associated cost of sales.
We continue to focus on expanding our reach and accessibility, specifically through digital and e-commerce avenues, piloting new advertising opportunities we aim to broaden our digital reach while reducing our environmental footprint. Moving away from traditional print methods is expected to deliver significant cost savings while creating new opportunities to engage our consumer base.
Our achievements in 2023 underscore our sharp focus on fundamentals and margin expansion, positioning our business to adapt to changing market conditions. This sets the stage for sustained top line growth throughout 2024.
Thank you, and I will now pass the call over to Tyler Robson to cover our cannabis operations segment.
Tyler Robson
Thank you, Teck. Reflecting on my first full calendar year with SMEO. I'm incredibly proud of the team's achievements and confident in our strategic direction moving forward.
2023 was a building year. We had to dismantle the house and fortify our foundation to support the future of S & Ds. We reorganized our facility footprint, streamline our product portfolio, optimize our processes with a sharp focus on quality. We changed the fundamentals of our business units very near term profitability for our cannabis operations segment. This set the stage for a strong 2024, and we have already seen preliminary indicators of our future success.
Net revenue for 2023 was 87 million. That growth represents a 96% increase from the year prior supported by preventing for revenue increasing by 102% and wholesale revenue by 391%. Net revenue for the fourth quarter of 2023 was $26 million, up 112% from 12 million in Q4 2022 and 24% sequentially. This revenue increase highlights the impact of our strategic initiatives, including the acquisitions of balancing benefits and improving the sales performance across our portfolio. For 2023, we saw an improvement in gross profit to negative $1 million from negative $9 million in the same quarter of the previous year, marking an 88% improvement. This significant enhancement in gross profit primarily resulted in the decision to close all the Alberta facility and move away from high-cost cultivation.
We still have room for improvement, but we have established substantial competitive advantages over the past year. We have better aligned our operations to manage the fluctuating market by addressing inventory and cost challenges that have stalled our gross margin growth in previous years. We have rationalized our portfolio and shifted over our cultivation efforts to better meet consumer demand, emphasizing quality, potency and consistency. SMBL. has adopted a fewer, bigger, better effect, resulting in the reduction of our total skew count from three 27 to 125, sharpening our focus on key consumer categories.
Our improvements in innovation are apparent in record depletion rates and increased acceptance of new skews by the provincial boards. We have a clear path to win in the key categories of flower pre-rolls through improved hardware, increased potency and to ensure consistent and exacting quality standards. After the quarter end here, Volker cultivation license from the old facility following the transition of all cultivation activities to at the moment granted in October 2023, the significantly reduced overhead costs coupled with the promising cultivation yield position us to further capitalize on revenue and margin growth in the coming quarter. After a tactical and transformative year, we are seeing our expected results and strengthen path forward for our cannabis operations. And we remain diligent on quality, financial prudence and process innovation to continue to deliver long-term value for our shareholders and our consumers.
Thank you, and I will now pass the call back to Zach for closing remarks.
Zach George
We are proud of our milestones this year and remain focused on sustained profitability. We are determined to continue this upward trajectory, and the team is committed to driving shareholder value and excellence in all aspects of our operations. Thank you for your attention this morning. We look forward to providing additional material updates on our initiatives and presenting our Q1 2024 results in the next 45 days.
I will now pass the call back for analyst questions. Thank you.
Question and Answer Session
Operator
(Operator Instructions) Frederick Gomez with ATB Capital Markets. Please go ahead.
Frederico Gomes
Hi, good morning and thank you for taking my questions. Zach, in your shareholder letter, you mentioned how attractive your valuation is and you said that either the management team is going to close the valuation gap or market forces will. So could you just expand a little bit on that in terms of the alternatives you have or are evaluating tried to close that gap? And also why be more aggressive with buybacks this quarter?
Alberto Paredero-Quiros
Thank you.
Frederico Gomes
Good morning, Fred. Thanks for the question. So just taking that in reverse order due to our earnings cadence and strategic activity. We've actually been in a blackout for quite awhile. That blackout gets lifted into the end of March here. So we do have the option to repurchase shares at these at these levels.
In terms of the reference to closing the valuation gap, and we're focused on fundamentals first and foremost, and I'm as we've been speaking for the last two years about our journey to sustainable free cash flow. We do believe that that's the key to bringing in incremental investors getting institutions to take a look at our business model and ultimately result in much higher implied values and what we're seeing today in terms of other alternatives, I think that that's somewhat self-explanatory. And there are a whole host of options. You've got a multi-segment business model. You have a debt-free entity that is cash, Rich. And so there are a number of opportunities for a variety of different transactions that could be looked at in order to unlock value.
Thank you.
Tank Vander
And I guess my second question is on the competitive environment in Canada, specifically on your cannabis operations, there obviously have been reports about this year, a cracking down on delayed excise taxes. I'm just curious, are you seeing any meaningful improvements and competition here at this year? And I guess from a supply and demand standpoint, do you think the Canadian market's looking better at this point or still oversupplied?
Alberto Paredero-Quiros
Thank you.
Frederico Gomes
It's a great question. And I would say that we can safely say that Canada US remains very well supplied. Certainly recent actions and the government, some effects that we're seeing and just at the early stages are going to have an impact on product availability and the number of licenses ultimately that are that are out there in Canada, but it's still early early days. You've seen you've seen a few companies disclose events or move into restructurings as a result of excess liabilities. But we believe there's quite a large Iceberg underneath the water on. So the concentration of these some of these excise arrears, we are unclear at this time, we expect a greater impact. But this is this is an important part of them. So the balance being brought back to the Canadian industry is certainly going to take some time, but that process is absolutely underway.
Tank Vander
Thank you very much. I'll hop back in the queue.
Thanks.
Operator
Johan Kang, Canaccord Genuity.
Hi, good morning. This is Aaron calling on behalf of Matt Bottomley. Thank you for the question on just mark ask about the adjusted EBITDA margin this quarter on came in about 1.4% sequentially, about 5.5% on. Could you comment on the drivers behind this in that slide on sort of the order intake?
Alberto Paredero-Quiros
Yes. Thank you don't think your question on the other main driver was actually a change in valuation in our Sun stream, our investments and related to an increased contribution from our company. We have to remember, we're valuing this on upstream investment, particularly right now for polymers came in on the basis of the future cash flow generation. So any short-term changes to investments or collections have short-term impacts in those valuations. But on the underlying cash flow expectations that we have from these businesses in the future remain steady on. So I will say is a purely on the way our accounting works on, but that's the main driver is actually on $8 million on the loss that we recorded in the fourth quarter.
Operator
According to that, I just thank you so much. And if I could just ask a follow-up on I think you guys already touched upon this on during Federico question, but how have you guys taken the recent regulatory changes that have been proposed indicating cannabis environment. But as you know, the recommendation coming out of the committee in terms of adjusting the excise tax structure on Yes, sorry. And the elimination of provincial stance, along with your We're hearing some news about potential retailer and licensed producer partnerships you are being recommended. And so I guess my question is how have you guys been taking this news on? Has this kind of impacted any of your future expectations going forward?
Frederico Gomes
Thank you.
It's a great question. And there are a number of questions in there.
Look, in terms of excise reform, I would we would reiterate the view that this is going to take quite a bit of time. No one is coming to save us as participants in this industry. And so we don't actually expect excise reform to impact the fundamentals of Canadian operators in the near term. That's probably a multi-year path there are there is room for optimism. We are seeing a common sense reform move across a number of provinces and the federal government. So whether that's on some some loosening of rules around marketing, a clear path and understanding of the allowable relationships between retail license holders and LPs, increase in license cap at changes to allowable product formats. There are a number of initiatives that are going to drive efficiencies and improvement and ultimately improve the consumer experience better that are undeniable positives. But but we expect a pretty slow pace of change on some of the larger items such as excise reform.
Operator
Got it. Thanks so much. I'll jump back into the queue.
Our next question comes from Pablo Zuanic with Xantic and Associates.
Please go ahead.
Good morning, everyone from the SEC. Regarding the the Sunstone portfolio, maybe I lost I missed it in the presentation, but I think the fair value of 551 million. I don't know if you can comment about the outstanding principal on its five credits, how much of that is parallel amend? And if you can remind us what is the rest? I think in the past you've given some color on that, but immunized and of the of the principle, you know, how much is being at Dice and how much is still outstanding, if you can give some color there. Thank you.
Frederico Gomes
Yes, thank you, Pablo, and good morning. Good to hear from you. So we haven't given delineation on individual credits, you're correct that of the five we have three performing credits in the portfolio. Two are in the process of being equitize because those those capital structures need to be solidified in the restructuring itself and the fact that we are right in the midst of a review with NASDAQ, and we're going to we're going to hold off on commenting on the scale and individual valuation of those and those equitized credits that we expect to occur in the near term. And when we do when we do move forward and the NASDAQ reviews completed, we expect to give significantly more transparency on the state of play with those entities, the structure and the of the initial valuation.
Thank you. And then in terms of your Southeastern USA, the new company you're setting up is the only thing pending the NASDAQ issue or is there any type of litigation still going on? I mean, the trade press you know, has has had comments on the matter, especially around our Sky meant anything in parallel, but just some color would be helpful there. Is it all done and completed it now a matter of I know the NASDAQ issue or is there field spending? Thank you.
Frederico Gomes
In terms of outstanding matters, the key issue for us to close is this final hurdle with the NASDAQ. There are, as you point to, there are lingering litigation involving these restructurings, frustrated stakeholders on pursuing different outcomes and taken action against various stakeholders and sometimes legacy stakeholders and sometimes existing creditors, which would include our sunscreen group. So those are ongoing and we're not going to enter into too much detail about current litigation, but we don't believe that this is going to hold up our time line on button any further.
Understood. And then if I can just one more on. I mean, obviously, Florio, we are all waiting for April first, right, who happens to Supreme Court there, there could be a scramble for expansion. Capital investments is sort of Terra to some extent or parallel hamstrung for the time being until this whole deal closes? Or can you help them in any way to expand even if that were to make sense?
Frederico Gomes
I would not describe either US government or ParAllele as being hamstrung and the existing management teams are aggressively working to rightsize their business. There's been significant improvement in their cost structures over the last two years, and they have very much living reality. And the improvement in those parts of those businesses has been material again, where we don't have those positions consolidated. And so we are excited about being able to provide detailed supplemental information as we complete those restructurings.
Okay.
Alberto Paredero-Quiros
Thank you.
Blow your mind. I mean, I don't know if there's more people in the queue, but I'll add a couple of more.
So regarding the other three credits and sunscreen, you can I know you can't say much there, but on the JV since June Bancorp, but once you set up sensitive USA, and you have all these very attractive asset in Florida, Michigan and other places you become an attractive partner to a number of people, right? So so I know it's a bit hypothetical, but the three other credits, even though they may or may be performing, they could still become part of the ecosystem, right? I'm saying you believe and equitize them. If that were to make sense that you would negotiate that. Can you make any general comments on that or is that just out of the question?
Frederico Gomes
It's an astute observation. There are a number of opportunities for further consolidation in the U.S., we have been approached by a handful of parties that are very interested in gaining greater efficiencies and scale and consolidating the U.S. landscape. Those parties may be a part of the existing credit book, but there's also a number that are outside of that group as well. So there are a number of broader discussions that you've had from time to time and if something material were to arise, that would certainly be disclosed. And until then, we're really focused internally on improving performance within our platform, but do expect at the margin that consolidation and M&A opportunities will arise over the next 12 to 24 months.
And then very last one. I mean, obviously, we have a lot of focus on the US, but this Friday, we may have some good positive news about Germany with the Bruins won this right decision when people asking about Canadian companies and exposure there to go try to go at Aurora and others. Of course, I know a good relief continues to make inroads there. What can we say about this in detail in terms of their current position in front of European opportunities or the plans that you may have.
Thank you, Anton.
Frederico Gomes
I would have Tyler, just comment on the current state of play in international and related opportunities?
Yes, happy to bomb.
Tyler Robson
Look, we've been spending a lot of time evaluating international markets. Obviously, Germany is one of the biggest populous countries over there and there's a ton of opportunity. So we're anxiously awaiting the final news for medical versus what sure what that landscape looks like. And we will behave to ICBC to not only meet a few individuals but get a better label. And but you'll kind of see us focus on a few over there like Germany. So we're all good at that for now.
But you'll definitely see some opportunities or some foresight into that market once legislation fully rolled out.
Understood. Thank you. Very helpful.
Operator
This concludes the question and answer session. So I would like to turn the conference back over to Zach George for any closing remarks. Please go ahead.
Frederico Gomes
Thank you to everyone for joining us this morning, and we look forward on updating you on our progress in the near future. Have a good day.
Operator
This concludes today's conference call. You may disconnect your lines, and thank you for participating, and have a pleasant day.
