SHF Holdings Inc (SHFS) 2024 Q3 法說會逐字稿

Greetings, and welcome to Safe Harbor Financial's third-quarter 2024 earnings conference call. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Phil Carlson from KCSA. Thank you. You may begin.

大家好，歡迎參加 Safe Harbor Financial 2024 年第三季財報電話會議。溫馨提示，本次會議正在錄製中。現在，我很高興將電話會議交給 KCSA 的 Phil Carlson。謝謝。您可以開始發言了。

Thank you. Hello, everyone, and welcome to the third-quarter nine months 2024 earnings conference call for Safe Harbor Financial. Before we start, please note that remarks made today include forward-looking statements, including statements with respect to the company's outlook, and the company's expectations regarding its market opportunities and other financial operational matters.

謝謝。大家好，歡迎參加Safe Harbor Financial 2024年第三季（前九個月）財報電話會議。在開始之前，請注意，今天的演講包含前瞻性陳述，包括有關公司前景的陳述，以及公司對其市場機會和其他財務運營事項的預期。

Each forward-looking statement discussed on today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements and reported results should not be considered as an indication for future performance.

今日電話會議中討論的每項前瞻性陳述均受風險和不確定性的影響，這些風險和不確定性可能導致實際結果與此類陳述中的預測有重大差異。實際結果和某些事件發生的時間可能與此類前瞻性陳述預測或暗示的結果或時間有重大差異，且報告的結果不應被視為未來績效的指標。

Additional information regarding these factors appears under the heading Risk Factors in the company's filings with the Securities and Exchange Commission, or the SEC, which are available at www.sec.gov and on our website at ir.shfinancial.org. Forward-looking statements in this call will speak only as of today's date, and the company undertakes no obligation to update or revise any of these statements.

有關這些因素的更多信息，請參閱公司提交給美國證券交易委員會（SEC）的文件中“風險因素”部分，這些文件可在www.sec.gov和我們的網站ir.shfinancial.org上查閱。本次電話會議中的前瞻性陳述僅截至今日有效，本公司不承擔更新或修訂任何此類陳述的義務。

Also during the call, Safe Harbor will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which you can find on the company's Investor Relations website or on the SEC website. All dollar amount expressed today are in U.S. currency.

此外，Safe Harbor 還將在電話會議中展示 GAAP 和非 GAAP 財務指標。非 GAAP 與 GAAP 指標的對帳表已包含在今天的收益新聞稿中，您可以在公司投資者關係網站或美國證券交易委員會 (SEC) 網站上找到。今天顯示的所有金額均以美元計算。

Presenting today will be Sundie Seefried Chief Executive Officer; and Jim Dennedy, Chief Financial Officer of Safe Harbor. I'll now turn the call over to Sundie. Sundie, please go ahead.

今天的演講嘉賓是Safe Harbor執行長Sundie Seefried和財務長Jim Dennedy。現在我將把發言時間交給Sundie。 Sundie，請開始。

Thank you, Phil, and welcome, everyone, to our third quarter and nine months of 2024 earnings call. Throughout the third quarter of 2024, we continued to build our credibility as a trusted financial partner for the businesses operating in and around the cannabis industry. And I am pleased to say that our best-in-class financial services platform remains the industry standard as cannabis-related businesses look to ensure regulatory compliance in this fast-changing sector.

謝謝菲爾，歡迎大家參加我們2024年第三季及前九個月的財報電話會議。在2024年第三季度，我們持續提升信譽，成為大麻產業及週邊企業值得信賴的財務合作夥伴。我很高興地說，我們一流的金融服務平台仍然是行業標桿，因為大麻相關企業希望在這個快速變化的行業中確保合規。

Financial highlights for the third quarter 2024 include net income, which increased 147% year-over-year to $354,000 compared to a net loss of $748,000 for the year ago period. Third quarter and 9 months 2024 loan interest income increased 48% and 143.5% year over year, respectively.

2024年第三季的財務亮點包括淨收入，較去年同期成長147%，達到35.4萬美元，而去年同期淨虧損74.8萬美元。 2024年第三季和前9個月的貸款利息收入分別較去年同期成長48%和143.5%。

Meanwhile, third quarter and nine months 2024 operating expenses decreased by 13% and 66% year-over-year, respectively. Revenue for the third quarter of 2024 in which we experienced a decline from the second quarter in our fee, loan and investment income was negatively impacted by challenging market conditions for cannabis-related businesses.

同時，2024年第三季和前九個月的營運費用分別較去年同期下降13%和66%。 2024年第三季度，我們的費用、貸款和投資收入較第二季度下降，這主要受到大麻相關業務市場環境嚴峻的負面影響。

During the quarter, headwinds were seen across much of the cannabis sector, resulting in flat to slightly decreased sales. Factors affecting sales included pricing pressures, excess supply and increased competition as new states continue to legalize. Despite these challenges, which specific to Safe Harbor included lower deposit activity, we managed to increase net income and cash flow. One additional factor impacting Cannabis sales that is highly controversial is the emerging market of CBD and THC derivatives from [HEP].

本季度，大麻產業大部分領域都面臨阻力，銷售額持平或略有下降。影響銷售的因素包括價格壓力、供應過剩以及隨著新州陸續合法化而加劇的競爭。儘管面臨這些挑戰（尤其是Safe Harbor特有的存款活動減少），我們仍設法增加了淨收入和現金流。另一個影響大麻銷售且極具爭議的因素是大麻二酚（HEP）和四氫大麻酚（THC）衍生物的新興市場。

These are not regulated at the state level, but rather under the [Temp Farm Bill]. While it is a new market and Safe Harbor continue to determine if it is a market into which we can expand, the lack of regulation makes providing compliant financial services to the health industry a higher risk.

這些並非受州一級監管，而是受《臨時農場法案》監管。雖然這是一個新興市場，安全港法案仍在繼續，以確定我們是否可以擴大該市場，但缺乏監管使得為醫療產業提供合規金融服務的風險更高。

The cannabis market continues to grow with 24 states non-legalizing adult use and 38 states legalizing medicinal use. In 2023, Delaware, Minnesota and Mayo legalized adult-use cannabis with the increased market size being realized in 2024. The continued legalization of adult-use cannabis at the state level is good for our business model, allowing for additional national growth.

大麻市場持續成長，目前有24個州尚未將成人大麻合法化，另有38個州將醫用大麻合法化。 2023年，德拉瓦州、明尼蘇達州和梅奧郡將成人大麻合法化，市場規模的擴大將在2024年實現。州一級成人大麻合法化的持續推進有利於我們的商業模式，並有助於實現全國範圍內的進一步增長。

We continue to focus on new markets as they ramp up to assist early licensees with their financial needs. Legalization at the state level is one thing, but the implementation of a legal market certainly lags legalization. According to an industry report from Grand View Research, the cannabis market size is expected to reach $33.6 billion in 2024 with a CAGR growth rate of 12.1% from 2024 through 2030. We believe Safe Harbor is well positioned to continue to take advantage of expected market growth year-over-year. Safe Harbor is making competitive changes that we believe will make us more attractive to incoming cannabis entities.

我們持續關注新興市場，協助早期持牌人滿足財務需求。州級的合法化是一回事，但合法市場的落地實施無疑地落後於合法化進程。根據 Grand View Research 的行業報告，大麻市場規模預計將在 2024 年達到 336 億美元，2024 年至 2030 年的複合年增長率為 12.1%。我們相信 Safe Harbor 已做好準備，並繼續利用預期的市場逐年成長。 Safe Harbor 正在進行競爭性變革，我們相信這將增強我們對新興大麻實體的吸引力。

One of the initiatives responsible for this positive activity is that we started to raise or reduce fees with other internal programs that operators may choose to neutralize such fees ranging from minimum balances to ATM placement programs. We are able to lead with competitive pricing as we continue to see lending income compensate for decreased depository revenue.

促成這一積極業績的舉措之一是，我們開始提高或降低其他內部項目的費用，運營商可以選擇透過這些項目來抵消從最低餘額到ATM機安置計劃等費用。我們能夠憑藉具有競爭力的定價保持領先地位，因為我們持續看到貸款收入彌補了存款收入的下降。

In the long run, the programs in place, we believe, will replace and even increase the income loss due to the programs. Subsequent to the end of third quarter, we originated a new $1.07 million secured credit facility for a Missouri-based cannabis operator. The facility is secured by a portfolio that includes 4 retail dispensaries and a manufacturing facility in Missouri.

從長遠來看，我們認為，現有的項目將取代甚至加劇項目造成的收入損失。第三季末之後，我們為一家位於密蘇裡州的大麻業者提供了一筆107萬美元的新擔保信貸額度。該額度由位於密蘇裡州的4家零售藥房和一家生產工廠組成的投資組合提供擔保。

And this is the first tranche of a $5 million commitment to refinance existing senior debt. The refinancing reduces the operator's borrowing cost and will enable them to optimize their operations within the state's growing cannabis market. This is an example of executing on our strategy to offer cannabis operators access to capital with competitive pricing in our evolving industry.

這是500萬美元承諾再融資現有優先債務的首筆款項。此次再融資降低了營運商的借貸成本，並使其能夠在本州日益增長的大麻市場中優化營運。這是我們執行策略的一個例子，即在不斷發展的行業中，以具有競爭力的價格為大麻運營商提供資本。

It also grows our credit portfolio further delivering value to investors. Throughout our history, Safe Harbor has shown its commitment to a more inclusive and equitable cannabis industry by supporting the development and growth of minority-owned small businesses and entrepreneurs from underserved communities.

它還擴大了我們的信貸組合，進一步為投資者創造價值。縱觀我們的發展歷程，Safe Harbor 始終致力於打造更具包容性和公平性的大麻產業，支持少數族裔擁有的小型企業和來自服務匱乏社區的創業者的發展壯大。

In July, we announced a new partnership with BIPOCann, a Denver-based consulting firm dedicated to aiding social equity and minority entrepreneurs in the cannabis sector. Under this partnership, BIPOCann, will offer its full suite of membership benefits valued at $600 to all existing Safe Harbor social equity clients at no additional cost. Additionally, BIPOCann, members will receive a 75% discount on application fees for financial services complementing Safe Harbor's existing social equity discount program.

今年7月，我們宣布與BIPOCann建立新的合作關係。 BIPOCann是一家總部位於丹佛的顧問公司，致力於幫助大麻產業的社會公平和少數族裔創業家。根據此次合作，BIPOCann將向所有現有的Safe Harbor社會公平客戶提供價值600美元的全套會員福利，無需額外付費。此外，BIPOCann的會員在申請Safe Harbor現有社會公平折扣計畫的金融服務時，將享有75%的申請費折扣。

By providing these businesses with access to reliable financial services and resources Safe Harbor and BIPOCann aims to create a more inclusive and equitable cannabis industry. Before handing over to Jim to review our financial results, I will speak briefly on the recent election results as well as the upcoming hearing on reclassification.

透過為這些企業提供可靠的金融服務和資源，Safe Harbor 和 BIPOCann 致力於打造一個更具包容性和公平性的大麻產業。在交給 Jim 回顧我們的財務表現之前，我將簡要介紹最近的選舉結果以及即將舉行的大麻重新分類聽證會。

With the election now behind us and President-elect Trump coming back to the White House in January, we hope that both sides can find middle ground and support cannabis-related businesses. While President-elect Trump has stated that he will leave it up to the states to decide on whether cannabis should be legalized, we are confident that he sees the opportunity for this industry through job creation and additional potential revenue streams.

大選已成定局，候任總統川普將於明年1月重返白宮，我們希望雙方能找到妥協點，支持大麻相關產業。儘管候任總統川普表示，他將大麻合法化的決定權交由各州，但我們相信，他看到了大麻產業透過創造就業機會和增加潛在收入來源所蘊含的機會。

We are looking forward to 2025 and beyond for the potential opportunities for the cannabis industry. As we have previously said, we believe rescheduling cannabis from Schedule I to Schedule III be a positive for our industry in several ways, and we will know more soon as the DEA has scheduled a December 2 hearing to review expert opinions on the proposed scheduling of cannabis.

我們期待2025年及以後大麻產業的潛在機會。正如我們之前所說，我們認為將大麻從附表一重新列入附表三將在多個方面對我們的行業產生積極影響。美國緝毒局已安排在12月2日舉行聽證會，審查專家對大麻擬議列入附表的意見，屆時我們將很快獲得更多資訊。

As you likely know, reclassification will reduce tax burdens under Section 2AE, which has the potential to strengthen the balance sheet of our customers as well as our balance sheet. Reclassification would also help level the playing field for cannabis businesses relative to other sectors. As the first mover in our industry, Safe Harbor is well positioned to capitalize on the evolution of the regulatory environment. We view these developments as positive steps towards Federal cannabis reform, and Safe Harbor is monitoring this closely.

您可能已經知道，重新分類將減輕第2AE條規定的稅負，這有可能增強我們客戶的資產負債表以及我們的資產負債表。重新分類也將有助於大麻企業相對於其他產業創造公平的競爭環境。作為業界的先驅，Safe Harbor 已做好準備，充分利用監管環境的演變。我們認為這些進展是朝著聯邦大麻改革邁出的積極一步，Safe Harbor 正在密切關注此事。

To recap, we are concentrating our efforts to expand the growth of our customer base, continue to deliver best-in-class service and develop innovative offerings, all of which we are confident will result higher capacity for lending.

總而言之，我們正集中精力擴大客戶群，繼續提供一流的服務並開發創新產品，我們相信所有這些都將提高貸款能力。

Our near-term growth strategy remains to acquire account portfolios from banks looking to exit the business as well as expanding our deposit base and adapting our platform to meet demand of CRDs. Furthermore, we are striving to be more competitive with our pricing structure by weighted needs on higher balances. As we continue to execute on our business strategy, we remain focused on driving our bottom line by looking at generating additional revenue streams while decreasing overall expenses.

我們的近期成長策略仍然是從有意退出該業務的銀行手中收購帳戶組合，同時擴大我們的存款基礎，並調整我們的平台以滿足客戶記錄的需求。此外，我們正努力透過加權高餘額需求來提升定價結構，從而增強競爭力。在繼續執行業務策略的同時，我們將繼續專注於創造更多收入來源，同時降低整體支出，從而提高獲利水準。

I'd now like to hand the call over to Jim to discuss our financial results for Third Quarter ended September 30, 2024. Jim?

現在我想把電話交給吉姆，討論我們截至 2024 年 9 月 30 日的第三季的財務表現。吉姆？

Thanks, Sundie, and good afternoon, everyone. For the three months ended September 30, 2024, Safe Harbor reported revenue of $3.5 million, down 19.6% from $4.3 million in the comparable prior year period. For the nine months ended September 30, 2024, Safe Harbor reported total revenue of $11.6 million a decrease of 11.6% from $13.1 million for the comparable prior year period.

謝謝，Sundie，大家下午好。截至2024年9月30日的三個月，Safe Harbor報告的營收為350萬美元，較去年同期的430萬美元下降19.6%。截至2024年9月30日的九個月，Safe Harbor報告的總收入為1,160萬美元，較去年同期的1,310萬美元下降11.6%。

In the third quarter of 2024, revenue for deposit activity and onboarding was $1.6 million, a decrease of 26% versus the comparable prior year period. And for the nine months ended September 30, 2024, revenue for deposit activity and onboarding revenue was $4.9 million, a decrease of more than 29.6% versus the comparable prior year period.

2024年第三季度，存款活動及客戶入職收入為160萬美元，較去年同期下降26%。截至2024年9月30日的九個月，存款活動及客戶入職收入為490萬美元，較去年同期下降超過29.6%。

Revenue earned in the three months ended December 30, 2024, for investment income was $475,000, a decrease of approximately 60% versus the comparable prior year period. And for the nine months ended September 30, 2024, investment income was $1.75 million, a decrease of 56.5% versus the comparable prior year period.

截至2024年12月30日的三個月，投資收益為47.5萬美元，較去年同期下降約60%。截至2024年9月30日的九個月，投資收益為175萬美元，較去年同期下降56.5%。

In the third quarter, loan interest income grew 48% versus the comparable prior year period to $1.3 million. And for the nine months ended September 30, 2024, loan interest income grew 143.5% versus the comparable prior year period to $4.8 million. Moving down the income statement. For the three months ended September 30, 2024, total operating expenses were $3.3 million compared to $3.8 million for the comparable prior year period.

第三季度，貸款利息收入年增48%，達130萬美元。截至2024年9月30日的九個月，貸款利息收入年增143.5%，達到480萬美元。利潤表方面，截至2024年9月30日的三個月，總營運支出為330萬美元，而去年同期為380萬美元。

The decrease in operating expenses was largely driven by decreases in compensation and employee benefit expense and decreases in general and administrative expenses. For the nine months ended September 30, 2024, total operating expenses were $10.8 million versus $32.1 million in the prior year period. Operating expenses for the 9 months ended September 30, 2023, included an impairment charge of $16.9 million. Excluding the impairment charges, total operating expenses for the nine months ended September 30, 2023, were $15.2 million.

營運費用的下降主要得益於薪資和員工福利費用的下降以及一般及行政費用的下降。截至2024年9月30日的九個月，總營運費用為1,080萬美元，而去年同期為3,210萬美元。截至2023年9月30日的九個月的營運費用包含1,690萬美元的減損費用。扣除減損費用後，截至2023年9月30日的九個月的總營運費用為1520萬美元。

When excluding the impairment charges taken in 2023, for the nine months ended September 30, 2024, the business reduced expenses by approximately $4.4 million for the period ending September 30, 2024, versus the comparable prior year period. Net income in the third quarter of 2024 was $354,000 compared to a net loss of $748,000 in the comparable prior year period.

剔除2023年提列的減損費用，截至2024年9月30日的九個月，與去年同期相比，該業務減少了約440萬美元的支出。 2024年第三季淨利為35.4萬美元，去年同期淨虧損為74.8萬美元。

And for the 9 months ended September 30, 2024, the company reported net income of $3.3 million versus a net loss of $19.8 million for the 9 months ended September 30, 2023. When adjusting net income for interest, taxes and depreciation and amortization expense, and further adjustments to exclude noncash, unusual and/or infrequent costs, we compute and adjusted EBITDA, which management believes is a better measure to evaluate our operating performance.

截至 2024 年 9 月 30 日的 9 個月，公司報告淨收入為 330 萬美元，而截至 2023 年 9 月 30 日的 9 個月淨虧損為 1,980 萬美元。在調整利息、稅項、折舊和攤銷費用的淨收入，以及進一步調整以排除非現金、不尋常和/或不頻繁的成本時，我們計算並調整了 EBITDA，管理層認為這是評估我們經營業績的更好指標。

A reconciliation of net income to adjusted EBITDA is provided in the press release and 8-K filed earlier today. Adjusted EBITDA for the quarter ended September 30, 2024, was $764,000 versus $1.05 million in the comparable prior year period. And for the nine months ended September 30, 2024, the company reported adjusted EBITDA of $2.8 million versus $2.3 million in the comparable prior year 9 months ended September 30, 2023.

新聞稿和今天早些時候提交的8-K報表中提供了淨收入與調整後EBITDA的對帳。截至2024年9月30日的季度，調整後EBITDA為76.4萬美元，去年同期為105萬美元。截至2024年9月30日的九個月，公司報告的調整後EBITDA為280萬美元，而去年同期（截至2023年9月30日的九個月）的調整後EBITDA為230萬美元。

Moving to the balance sheet. At September 30, 2024, the company reported cash and cash equivalents of $5.9 million compared to $4.9 million at December 31, 2023. Cash provided by operating activities through the third quarter of 2024 was $3.2 million compared to cash used in operating activities of $225,000 in the comparable prior year period.

再來看資產負債表。截至2024年9月30日，公司報告的現金及現金等價物為590萬美元，而2023年12月31日為490萬美元。截至2024年第三季度，經營活動提供的現金為320萬美元，而去年同期經營活動所用現金為22.5萬美元。

Turning to our liquidity. The company reported a net working capital deficit on September 30, 2024, of $2.5 million versus a deficit of $135,000 at December 31, 2023. Our working capital deficit of $2.5 million includes [$7.3 million] recorded for the forward purchase liability, which may be paid in common stock to the company. Excluding the liability that may be paid in common stock versus cash, the company would have a positive working capital of approximately $4.8 million.

談到我們的流動性。公司報告稱，2024年9月30日的淨營運資本赤字為250萬美元，而2023年12月31日的赤字為13.5萬美元。我們250萬美元的營運資本赤字包括記錄的730萬美元遠期購買負債，該負債可能以普通股形式支付給公司。扣除可能以普通股而非現金支付的負債，公司將擁有約480萬美元的正營運資本。

Looking ahead to the balance of 2024, we expect to report full year revenue for 2024 in the range of $15 million to $15.5 million.

展望 2024 年餘下時間，我們預計 2024 年全年營收將在 1,500 萬美元至 1,550 萬美元之間。

I'd now like to turn the call over to the operator for question-and-answer session.

現在我想將電話轉給接線員進行問答環節。

[Operator Instructions] I note no questions at this time. I would like to turn the call over to Ms. Sundie Seefried, CEO, for closing remarks.

[接線員指示] 我注意到目前沒有問題。我想將電話轉給執行長 Sundie Seefried 女士，請她做最後發言。

Thank you all for joining us on today's call, and thank you to our investors for their continued support. We look forward to updating you on our year-end 2024 call in March. I will now ask the operator to close the line.

感謝各位參加今天的電話會議，也感謝投資人一直以來的支持。我們期待在3月份的2024年年終電話會議上向大家報告最新情況。現在，請接線生結束通話。

Thank you all for joining on today's call, and thank you for our investors for their continuous effort. We will look forward to updating you on our year end 2024 call in March. You may disconnect.

感謝各位參加今天的電話會議，也感謝各位投資人的持續努力。我們期待在3月份的2024年年終電話會議上向您報告最新進展。您可以斷開連線。