WEED.TO - Earnings call 3 2024 | Canopy Growth Corporation

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Operator

Good morning. My name is Joanna, and I will be your conference operator today. I would like to welcome you to Canopy Growth's Third Quarter Fiscal Year 2024 Financial Results Conference Call. [Operator Instructions]

I will now turn the call over to Sarah Paré, Vice President, Investor Relations. the begin may you conference call. Sarah,

Sarah Paré

Officer, Joanna. us. On you, Chief Officer, Chief Good have morning, joining for Executive Financial and Klein; you thank David Hong. our Growth's and Canopy Thank Judy call we today,

under SEDAR issued on financial Before announcing Investors news filed statements the third ended have the Canopy The our XXXX. EDGAR, our release December for been a XX, financial and results news today, available markets quarter open website will Growth be financial release tab. on and

Before I our like statements end issued the remind discussion forward-looking its management's and to during based news in the today. by forward-looking of qualified assumptions, current entirety are regarding we statements include that the would included begin, is note release you this views and at this that call that discussion on will cautionary

Canopy's review that various filed reports with release the cause for materially could projections. earnings actual differ Please and regulators factors Canadian to from today's securities and the SEC results

In included in non-GAAP addition, are all release. otherwise note Please in dollars GAAP earnings financial unless measures closest that reported Canadian reconciliations stated. to is our measures provided their between information any

question-and-answer David from by remarks conduct we session a Judy, questions we will take Following analysts. where will and

call And with over turn that, I will the David. to

David Klein

advance everyone, is to an of immensely non-participating Third class strongly Canopy a positioned feel the a we USA morning, dawn to We're articles for our demonstrating amendment a are business to We're scheduled to to structure. Quarter thank of the Canopy exchangeable we completion each Canopy. us and our we leadership. new and consider Growth's across our shareholders Good date proud meeting We're marks of QX expect for which you nonvoting XXX% cannabis-focused. our era today definitive shares, of have consistent growth fiscal create Canopy units, that The review joining for of 'XX results. where new lasting and for

rightsized now cannabis-focused Let's business. our review

our markets is December and in exclusively enterprise, cannabis XXXX, and operating our XXX% By and strengthened works consumer feel is now well this ensure on focused of divestiture greatest cannabis we the Canopy the path nonaligned delivering sustainable focusing our the rightsizing With to of last opportunity. for built on of positioned greatest footprint, to we what lifetime. trend profit we've capitalize are our purpose

to execution and summarize, across we're all a and of second the To our level. measurable has this dramatic business with the performance growth while are and these margins And mid-XXs our with of that margins, first QX the margins on the looking in and gross to enabled Canopy backed focused business generating the review base, cut improvements we're are enhanced on by size improve strengthened us total commercial growth improved let's in significantly now gross enhanced future high-quality overall have of demonstrating execution row actions optimism, From in produced. marking we've units. at consistent the This to company our delivering quarter products.

and the excluding such by how can't Tiger as and received continuing and Canadian boards, when to we growth also offerings. high we're in with growth. softgels. new record thanks to flower, platform a us and vapes quarter, all-time packs, to demand comes has that overstate our of of flower has including that most during Cushman's and provincial XXX the burners several high-quality an to we now to deliver and dialed and pipeline I in to of months. that not contributors points yield introduction by nationally across pre-rolls, of we've production over Cake, continue our This feel every quality launching from the Tweeds, of for both from our straight going divestiture distribution win ways In being Tweed infused added new for incremental large XX% on our to cycle to high is pre-rolls cultivars quarter of the working mention remain In our And developed platform. our to business our proud also QX, great produce. When consumers, priority and meet a very the further categories, really XAcres. are high-quality We've importantly, our staff. gram flower validated further demand is ongoing fourth retail our are selling up share robust the flower, cannabis an we retailers, increase are revenue it flower cannabis to we're pre-rolls, soon market and third come strains, got we its at can growth, at is coming There in core, product our success well market and business. delivered But our year-over-year this by

and of profiles, truly share market make flavor and softgels, coming firmly XAcres soon-to-come products differentiated In step to the featuring softgel historic see recently Canopy, significant we into consumers larger pack through vape we cannabinoid exciting expertise we an Tweed of expect potential and and launched an area at addition, Shifting products with as ratios. sizes category. to we unique to win back have to delight lineup

method consumers and we and achieve feel to to affordable consumption, discrete addition of high-margin dosed well category, convenience a cannabis provide softgels is a -- precisely category Canopy being positioned leadership. convenient In

third across edibles foundation Wana in quarter we as Finally, engagement. retailer active our of with relaunched portfolio, very Canada the the

the edibles to through the expect gaps Canadian additional growth also drive new that products of introduction market. Wana in specific We address current

improving backed pillar of Canadian our margin-enhancing quarterly while led Spectrum to margins. expansion the in achieved of as exclusive daily, to a patient team our drive ongoing assortment our products, and a proud including exceptional third has importantly, range Medical in revenues including service. weekly, And record monthly medical especially an these wide all revenues strategy We're were quarter. This they record basis, on the important by Canadian has strategy. continue to store, of business. Shifting This

medical, Rest-of-World our but business, with doubling strong another cannabis quarter shifting revenues reported with we to year-over-year. Sticking

Our quarter XXth Australian its revenue. record team delivered consecutive of

Deluxe strains, Cushman's, training Cake Czech QX. Tiger as as practitioners Canadian to sales OG and educational shipments of growth medical contributed and increased Polish including cannabis proven Australian, with medical in Additionally, our in well

most growth partners international international flower ton think Finally, we're also sales expect portfolio. the strong Bickel and the markets a company's we Storz entire business. paying XX-year Venty Bickel's onboarding our Black continue Friday possible already medical by for that driven vaporizer the Storz report and the where I'm and of portable a third of distribution quarter, as supply across demand delivered as successful there's across active, in dividends of and well new generating consistency across history, cannabis pleased new our will to

increase in number versus promotional fact, year, sold driving In of devices being despite remarkable a discounted. week the including the not the device XX% Venty strong last showcased the sales

I best vapor is enough even It's up, at continue liters device. the about amazed -- throughput quickly XX vaporizer be the Speaking it to can't of is a say its exceeded you're more from heats within available. this experience claiming Venty, just thing portable I consumer the which but really by how option. closest experience for a minute device and Venty all portable going has expectations our the it me, hero the in the get portfolio. to the status rapidly demand and legendary reviews take But this don't volcano to

the further capacity of demand, had will we've ensure the the matches shows like our a production after central to Storz increase run, the Bickel portfolio shift initial of a be add fact, and second pillar no expect availability slowing. which iconic Venty term. Volcano, In sign in we Much to consumer the long and

product the demonstrating are point momentum businesses important reinforce price sum, and of truly and rest these that As our with reflecting to lineup, delivering command impressive are the SMB In it's quality. premium a commercial their results. products

talk be statement to that Simply forward. Canopy setting put, we're about or on let's April vote XX, February We're proxy moving up for filing a So around shareholder will our USA. we special report XX. pleased definitive

a USA to finding Wana with a Canopy Jetty, anticipated and of through unified proceed Following multistate able shareholder successful to acquisition will its business. Acreage, operating be growth accelerate synergies vote,

of impact regulatory we as Schedule This the will, of cannabis its and the cautiously provide U.S. that near rescheduled its recommendation III. term, development, reform be and our optimistic DEA the in Department communicated to on recommendation know, are and the Services further you was potential the that Health and welcome Looking many a initiate in August, of strategy, Human to process. this

Moving cannabis assets to Schedule U.S. for by III for would Canopy be a and the significant boost USA, Canopy Growth. held

U.S. improved cash a our the Through flows corporate income XXXE, would see boost sheets. through taxes, and significant value we assets, across strengthen expect Section balance which of reduced appreciation removal financial

these demonstrating in while high to the III on moved also would build operating we growth momentum to advocate catalysts, today. continue business cannabis for cannabis being and We remain behind reform we Schedule And our U.S. regulations focused believe potential other efforts to

lower markets exposure product fastest-growing summary, gross exciting growing world. a successful and We a company believe is consumer a are margins, sheet. forward, shareholders time a we the and operating the attractive Canopy arguably April we resolute cannabis shareholder on expenses, to on XX. with opportunity the to a USA look top offers a In in stronger to vote unique our focus Canopy balance significantly gain into moving trend line forward most of cannabis,

will Judy results. of our further financial that, details speak With to

Judy Hong

we've 'XX to and third start very our 'XX. balance make to of continued taken priorities everyone. balance and fiscal across discuss P&L I year. you cash followed and much, the progress will David, our fiscal results, flow, the this Thank our good I'll improve for we've year-over-year including actions morning, additional by then outlook sheet significant by reviewing our quarter

Let's reduction can rightsized substantial QX demonstrated begin profitability improvement burn that with deliver. QX and before quarter business in cannabis-focused results. our our third a by cash

QX, of revenue which XX% drivers QX. year of divestitures. XX% from ago and were by million up revenue net cannabis the grew year its retail year-over-year Rest-of-World Canadian the quarter, divestitures last XX% sequentially up when compared in $XX consolidated were driven launch QX to of by sales excluding delivered And to last over revenue cannabis QX. Canada of and revenue, to Storz by excluding in Bickel retail grew Main X% compared compared Venty. Canopy increased a is

cash QX a by 'XX. loss our EBITDA profitability. the a flow of the improvement of loss in of Consolidated QX year, last key year improvement compared $XX XX% Canada, have and improvement improvement adjusted was XX%, executed results compared our reduced free XX% nearly gross million QX quarter. of adjusted like initiatives driver path $XX last year. against costs. to over was a EBITDA $XX progress meaningfully to improvement now an million, of significant to businesses in was a transformation versus operational of XX% And which margins of business detail, in including last Canada versus outflow in $X improvement the last The was an QX fiscal biggest I'd an the million million, review and more to X%

a the including First, the Canada. QX to assortment in quarterly was medical that products, Canadian net to of grow by million, of brand growth. third revenue compared in strongly, sequential August. driven revenue XX% high-quality began row of sales Wana increasing year, $XX introduction increased continued last quarter

Our with large adult last from Wana as the X% offerings mostly during revenue of growth as addition Tweed, business growth by year, to of BXB well use Edibles. was driven up compared pack flower quarter, the the

Canadian cost in Canada back of [ biggest reduction the year-over-year to and the adding transformation XX%. was the cost gross improvement is ] gross cost cash the margin depreciation was from driver and QX initiatives. quarter, margin last Similar business XX%, noncash

Our flower as see rightsized excess costs material our manufacturing we efforts inventory. reduction expenses, obsolete direct to and have and continue reduction in expenses overhead we in aggressively inventory and drove costs,

to its prior double-digit aided performance as business margin to by revenue over achieve XX%, as mix, over pleased XX% in part mid-XX% track by well sales the Rest-of-the-World noncore XX%, growth period. also shipments. and was in to cash Australian product during XXXX. impacts gross returned XX% XXth also Poland Canadian due improved consecutive year-over-year performance revenue cannabis Germany negative in gross markets grew quarter, see slapping Australia year-over-year. had increased record Rest-of-World year-over-year, to We're year driven business our our in year-over-year. fiscal improvement growing margin by flower margin in on

history. second brands but demand sales a sequentially, Black benefited Storz revenue demand. Venty Sales exceeded production, vaporizer for that XX% were the sales production X% better the launched its from during and most Friday in quarter we constrained period in portable of Initial consumer to up year-over-year. By in early QX. Venty in new quarter, demand successful align was Friday added resulting campaign Bickel $XX ever and sales million were Storz for strong, those in was for production and QX sequentially shift very brand's the with Bickel strong down

Sales reduced Storz to than and financial to was to input part the Venty XX% margin to due on a the challenges by higher positive shipments Bickel last were carry due compared with of the basis a U.S. portfolio. in impacted shift year, rest gross lower by distributors. continued and year-over-year faced XX% margins costs gross mix

in included for XXXX between XX, With the revenue Works X, This XX, divestiture October of 'XX, This and Works sales XXXX. we December December

driven result, improvement As of loss a million, reported of in flat which $XX adjusted EBITDA revenue. execution, $XX 'XX loss is since we primarily additional a adjusted compared million realized million across growth I essentially profitable $XX compared quarter driving an a QX XXXX. of Works the as included negative reduction year improvement fiscal $X well prior this $X would as QX QX, was during businesses. by best This to to of note cost EBITDA our revenue million focused our million, a the The quarter fiscal that is year, ago. of full

on of announced closely, combined initiatives our result February million, $XX of looking G&A the a $XXX or Now $XXX million our reductions, to XX% of strategic million. $XXX our and more year selling SG&A cost as XXXX, transformation has our at program. marketing, by cost million Canopy realized targeted ago 'XX well R&D declined in April reduction savings cumulative cost and a expenses achieve Through a to compared, to way and expenses now

the growth in our confidence adjusted continued positive EBITDA expectation of in in businesses with business 'XX. for our all our Our achieving along of us fiscal cost give discipline, exiting target units

flow in Free $X review million outflow of to an cash QX, I'd includes which like in and now payment million our million $XX flow interest sheet. cash cash balance and $XX CapEx. was in

asset by principal the USD proceeds a which the BioSteel majority proceeds QX, reduction. balance use amount In private assets we aggregate from to the QX. debt sheet, delever of million a also towards we sales, completed additional million the $XX from further payment During expect reducing for cash an we the with placement, million $XX during completed of including January, XX

sheet. the to turning Now balance

XX, short-term December million, we As debt million XXXX, and of $XXX of total of and had $XXX million. cash investments in resulting net debt balance in $XXX

year, our sheet balance actions over the we've past strengthened position. have Following significantly completed series of the we financial

short-term the while First,

[Audio Gap]

Brands. this mostly relates to the promissory note with Constellation

expect to on settled We our equity, be cash in balance this thus preserving sheet. note

This and Within to expect of debt senior end being our focused the additional commitment -- short-term $XXX loan over from balance, to debt due further minimal our with on loan stands deliver original these in on improve -- total our coming amount further to And long-term months. obligation. fiscal delever financial 'XX, position factors, we our million our the at secured be of USD term now at USD a reflecting million around reduction is activities XXXX. executing XXX XXX March is the million, of

of Canada path products to and 'XX fiscal key and fiscal ensuring remain profitability near accelerating growth 'XX launching into Australia, Republic, focus the outlook firmly 'XX. product products Germany, our term. Czech fiscal third priorities remain portfolio In see we cannabis, line focused priority the high-quality in key cannabis, to Poland, into end now as strengthened these and top our back balance and we of like as expect consistent markets Rest-of-World for as and the markets of new supply on and In of achieving 'XX. in to in close well fiscal growth on out a provide we I'd on our

in to changes should and that further in driven we cash on also with the interest loss ramped having adjusted Venty to reduction expenses. fourth offset up from Bickel impact we flow to our From demand year-over-year SMB For vaporizer QX, some see experience portable softer by from to regulation strong cash Venty sales typically expect production expect EBITDA seasonally improvement, upcoming Australia during the a operations the continue we new vapes. Storz standpoint, sales lower show see and of quarter. the

confidence, results time. profitability and questions from concludes take we my shareholder now profitable QX our in now This to prepared comments. We'll drive closing, a have solid enhance but growth believe foundation over achieve In analysts. our and place reinforce we value

Operator

Lavery from First Instructions] from [Operator Piper question comes Michael Sandler.

Michael Lavery

lot some Congrats you're ways just of environment progress that and get of I how of laid on you Canada better on the that love managing out. a just market to just little color bit and pricing in looks. would outlook the a the

David Klein

Yes.

So compression it, we're pricing tiered we're making almost way I that is a thinking think, categories. the the in managing standpoint. some there's think, from sure Michael, really And of I still about price

are there meet price enough And some there is can't competitive to consumer where because areas there. to we areas taking produce product So demand. need be some we us market where are the then

actually we we've where take so And had some instances price increases.

But managing in is of really mix it there's pressure kind the some the So, across yes, marketplace. -- it's -- the still still there's portfolio.

Judy Hong

compression - margin our also definitely and - mix. shifting I'd in we're the our to despite but are seeing in seeing price extent improvement obviously, we that say, also some because gross part P&L we're

we're better and we're in cost. our find more categories And where at to looking it's also, product leaning of So ways there savings profitable, with continuing say really margins.

more. are So down looking costs year-over-year, we're our cost cultivation to but improve even our

as platform of in improvement to that of mix think, actually So you of seeing and that margins more variable business seeing well. margin know, improvement product the lastly, And part medical compression, is as that our business as portfolio. the some very we're across our also price a I begin in improvement some we see business, with high-margin the we're offset can than you're that seeing with, the then, and

Michael Lavery

give relatively And it's of imagine wrong… Can able sense the where to I'm magnitude? take you modest, you've been helpful. I'd but price? maybe a That's

David Klein

It's consumer with just it's the of -- really with of and yes, -- it's expectations. the Michael, kind set really just aligning kind competitive

it's -- our our to we the guess, hard specific a But classics sure to offerings, from we're with example, I bring at so make competitive but our be we're going premium. innovation we market a at, quick so pricing with like that And Wana say, come that formulation, pricing to if you up look standpoint. as very a

So really it's on basis. SKU-by-SKU almost a

Operator

comes Chen The next Markets. BMO Tamy from Capital question at

Judy Hong

Tamy, are you mute? on

Tamy Chen

about wrong I'm that, sorry the button. I hit

Australian competitors business. margin your really gross Rest-of-the-World the that of one Medical quarter, now driven in QX prepared gross margin X was versus there. yesterday, your And by noted the know, out previous this it we -- was that this we XX%. as acquired quarter in you the really margin XX-ish the remarks percent, quarters, jumped Australia their was XX pointed So, primarily And and

that dig want into maybe in also, and about with we share So market Australia attractiveness And talk puts plans, gross to what for you? takes about us, really margin your you number? could are to want that of the that that the

Judy Hong

start, Sure. I'll Tamy.

So look would our margin mostly driven if out frankly. there performance right by that gross you're One, at there, was I of historically, a a in you few the in lumpiness point Rest-of-World lot things. business, noncore markets,

some BXB I when was know item, changes that gross have the we've and think the focus quarters. as in revenue U.S. we margins business U.S. there and of there changes our some strategic include our tightened CBD line as business the in well in and impacted the our you really

gross volatility bulk to in markets the shipments the performance historically had America, of margin as North had that well. also outside and also some created We

relatively margin So QX our say at it's quarter gross clean I performance, when in engaging think, you performance. I'd look a

Bickel business, in the reported sales growing sales improvement -- we year-over-year to at an a really The our thing our Europe, and performance basis the Bickel mix product through Australia to Australia their We has Storz segment -- we is one also seeing of But are strongly standpoint Australian call that a and on business, also that the frankly, as standpoint Australian improved Storz go part as as from there have business looking are seeing out well. in margin Australia. improving. in even from just and sales margin Rest-of-the-World

that in be the I really Australia Bickel, business us combination So in we're well give but flower growth improvement of now seeing Storz margins in in seeing today Germany strong business going we're that sustainable should confidence as growing as think forward. the the the markets and like

Operator

Grey Aaron Global from comes at question next The Alliance Partners.

Aaron Grey

forth certainly question the can and me, First I the situation Canopy between for exchanges SEC appreciate regarding and ongoing the back USA.

with can in wanted to on some get new of the disclosures you the just in with with the some the from just that be agreed the that expect with agreement clarify that filing vote -- that the more just deconsolidation Canopy in to of like clarify so USA, I of MD&A, in of February, combos seems So it the the you you you'll terms SEC first, OCA before clarity believe builds able in April? your

to be then a potential any And provide the going in level could of Canopy USA look if information terms not even be in would company provide you to on the with supplemental color additional consolidated? of able how it's might pro second, forma you of basis, terms

David Klein

Yes.

USA, -- you in be we we'll proxy our be our for all said, financial you even the to be and that. our will we indicated will this we statements filing results. know of Canopy into once be as consolidated remarks, as definitive though, And want that information close available it So could we financial week filing in won't

picture see financial will in those our So statements. investors the entire

I Canopy of we're also about we sure USA. that make want whenever USA. Canopy that benefit the talk to about talking

in U.S., lot really the how me, an big terms a in structure the in and brands attractive market. having some create is markets of really But interest which for strong So profitable I brand-led some a really with cannabis just there's that to real will capabilities know extremely sort of is we business. combined focused of business benefit

Judy Hong

financial Growth even USA. will that Canopy would think USA, know thing you is I only not the though a The in consolidating interest significant be interest own Growth also add I Canopy in just Canopy Canopy will

at once attractive for as the creating USA Wana, operating they're So Growth really owning and exercise and an platform benefits to USA, think, trigger by The value options well. owning an Canopy able Acreage. value creation really, Jetty, on we proposition Canopy of the is Canopy shareholders

Aaron Grey

I and for me, optics disclosed the appreciate look of I about performance if the versus I A quick to the that, talking business for financials. that color. definitely second that could. forward more was Thanks of one the on

of in EBITDA reach guidance the you to the year. profitability as terms Just exit fiscal

Just reach if the could some as exit drivers you profitability help the triangulate to us maybe EBITDA an of year. you

You This And was that had savings. gross sure but other it drag margins, the not a divested healthy if cost the Works notable business about at level. the the EBITDA talk drivers

$XXX had now million You've believe, last cumulative $XXX I versus, million quarter.

actually you would savings through that So help in put margin be potential there. very P&L reaching that that? of SG&A just us could to you're think or reach and us help if the how I helpful will start that gross terms flow

Judy Hong

Sure. Sure, Aaron.

we'll those So levers. fully few we and confident cost the do execute We coming that in there is, program. I'd remain generate are savings a I left in One have are months. savings think, say remaining that some the

think businesses I look, really now growth. is, driver second our are The delivering profitable

without line EBITDA previously, revenue that stronger So forward. growth of cost drive rightsized growth margin now those even should line as and a a some top businesses, improved the that gross our really base cost with structure reductions even have we we've top going announced

on are business the at looking at growth really on of our So sustained basis. the driver we and I'd efficiencies is strong to particularly G&A say be some expect the across lastly, corporate And continued second to base the we looking a [indiscernible] then cost side. continue that that's go-forward

that EBITDA there plan. all of we So is opportunities streamline finalizing still fiscal go-forward we make are to business corporate basis a our 'XX our continue on a We're for do to our to units. really that looking sure positive think at adjusted cost

So we we'll more fiscal details on QX profitability 'XX as May. outlook results for provide the our report in

Operator

comes next from from John The Zamparo CIBC. question

John Zamparo

year-over-year. excited some and I down products was revenue sequential are included that sounds the business with very like the this and but coming that's and X% new pricing a Storz Bickel I and launch. ask embedded to product about into that wanted It about improvement. out, Presumably, you're it appreciate

if color on on and you So from framework expect provide 'XX? in business it I'm just some wondering add you could what some calendar that

David Klein

Yes.

kind years, to of point has level. line to Bickel want I'd John, at and Storz in doubled that the like just out the set past So I X doubled stage, the top just

held late we're in would across reasonably I the our say a launch little were in that which consistent back seeing the of late by Venty, So, growth QX quarter. bit results happened business. the

And right? so activity through there of right activity over launch. Bickel history, Venty launches the a fair we the way from was we're and Storz coming backlog see with production And amount from launch. units, quarter and our product working substantial of the like which around exited So a its programming we Venty growth now, new

future. then combined And launch U.S. prospects the the near the innovation, future we for are very the of tier years, duress bright potential Venty that from for the and growth and last that has vape seen under us brand. some the get States. in the time. can growth some in also into we've -- result the But with U.S. U.S. And distribution think the over distribution it shops out I tier up caused And that back the the we as Bickel we United And when improves the Storz like also products point across that launch been a meaning is that mix. that we so launches think - overall of because a of distribution growth. new that's as you we Venty expanding takes margin into brand - couple set pain know,

Judy Hong

just year-over-year, year-over-year. to add David's on down point though up And actually margins, to gross revenue even Yes. was were profit dollars

seeing the that really year-over-year through to even the basis. growth. really comes continues gross show in think big a And I evidence think a we're leaning dollar on profitable I So profit that that growth one with profitable we're

John Zamparo

a want? about helpful. to to additional plans you you of question then are was actions expect That's can I guess can the to actions do high waiting event both consolidated flow through but cost plan? you but P&L? costs profitability your the and Or right. wanted confidence get that the sales cuts, positive think And you And And that Aaron's have you achieve you sounds for growth case? if up these answered end just it, on growth to you basis cost in you the on and require additional EBITDA and additional savings cost savings. the to taken All get just you're those sales I don't it Do follow clarify, like would already

Judy Hong

mean, businesses foundation Yes. I strong our say a Look, now profitability. John, I for have

evidence And improvement see but from in improvement. is just there one think the businesses you improvement and in we seeing that also well. not is just that the profitability a I Rest-of-World and growth public you're cost I'd from cost. as mix Bickel -- margin say driving standpoint, Canada, reduction Storz a gross and company that's a are not but that's perspective, area

drive just we're actively all will in on where But targets. units fiscal will So of there related -- being we'll that public 'XX, are that to comments, as areas prepared our -- and our being the we are profitable. of opportunities exit with focus and believe already said then and of as that we an of costs towards cost, we've continue there, identified profitability a be and that some company cost be we really business area to we do savings

So pleased the with we're really far. so performance

Operator

comes from Question MKM. from ROTH Instructions] [Operator Bill Kirk

William Kirk

clarification. Judy, to just to that I back go you for just something want said,

the consolidated EBITDA all profitable, even So, make if corporate unallocated all maybe expenses, would EBITDA negative EBITDA Or that level, a consolidated business positive? are at does adjusted were business profitable? that mean units the units

Judy Hong

So segment Bill, break EBITDA the we adjusted level. information at don't out

to -- So be profitable obviously, all is our consolidated we can I say is the at goal level.

profitability track the at 'XX. profitable? mean we to full the on we feel quarter adjusted is Does are that that achieve EBITDA is level the business said, exiting I FY profitable? Does unit that As consolidated mean

still lumpiness There is some point corporate the to basis. a how is also quarter-over-quarter we areas sometimes see need would sits plays costs that there out out. in on I of that some that just some

all top the very that focused generating in really line terms in I positive 'XX. that, say things fiscal our So those EBITDA bottom focused business the are as obviously, we're all of mitigating. and I view, And adjusted across the we just And my businesses are growth. on think exit we're of the of performance encouraging would on

William Kirk

to margin And Canadian legalization, think I I gross your that's I the adjusted point, best since mean, think.

when gross a when ago in mid-XXs. I big -- so of XQ, the said you the be couple guided was you you talked you months be expected what margins to gross XQ And about adjusted surprise to guess margins

knowable I what So from when the stuff of about had XQ. was new expectation? mean, I imagine cost-savings few months that was you ago a some

XX? really mid-XXs what's So new from to

Judy Hong

Sorry.

Canadian business QX, this our reported gross So in the in I quarter, XX... at was margin mid-XXs growth think

William Kirk

XQ Sorry, when guided -- when at said... you So quarter, last to you if gross margins XQ, remember you the you I right? correctly, mid-XXs,

Judy Hong

Yes.

margin bit gross Storz say the probably driven probably better by, better margin material was of then benefits The lower I'd in and Canada even we I'd well. in gross than some came Bickel a partly and Venty from the XX%. consolidated did we Canadian in mid-XX%. come the was say margin as So expected. And margin the obviously, in bit than a expected, costs

we some we of did benefit I call had had of use QX. out from opportunistic where quarter lower cost benefits We in think some lingering said I inputs. that last

Canadian well. at performance than a in helped the that So anticipated margin QX point bit that in we time gross little better business as

Operator

Canaccord. The next Matt from comes question Bottomley from

Matt Bottomley

least a get on opportunity end to the to operations. your retail the provide sale can at a commentary, little be of sort outlook and to I if to declining. at wanted seems of flat overall you overall level more bit domestic Clearly, we've Canadian your Canada softness medical the year, just in seen

decent know all, if can XX-month to if just the I'm how give quarter. company? outlook as a as some But driver curious I notable, the year-over-year for a you you So, this the at growth the year will end growth for operations saw of domestic be

David Klein

gross have believe focus -- we think we've to in delivering the continuing on the And with some now into market. to I right? that our terms verge that of now done terms think margins, in is what I date of the on bringing how for NPD market, growth, us, it's of in on strains have we're to drive build the we the just area we of so

then past. in some than and in had the as momentum been my I on a coming of in we've more aggressively we've building script, In little into into the bit the said leading softgels pre-rolls, particular, back space vape

a opportunity marketplace. across We also that our think there's the of distribution for lot brands

in of sector. that addressing think particular, that I products So strategy. how the ourselves the consumers with good it's lines and executing margin around our continuing see in go-to-market having more are we adult Canada, aspects to resonating in all grow of That's

Judy Hong

And side, share has the on medical say declining, medical gaining been and but growing market the in I'd market we've been the market.

that grow our continued respect, that lot is A business. growth actually the coming we think of from sizes. medical increased from there basket is opportunity So to

seeing order function are think products a an in now assortment I product of our that's So that platform. have Spectrum on we we store. actually our increased more And patients

continue driving our we So in medical would growth to the platform. see that

Matt Bottomley

now And then side switching on international to of more for one it. Got things. the me, just just

respect markets of mentioned been the So side constructive one of know was with U.S. has international that the even the Australia the constructive things. of MSOs yesterday, and deal has there's someone been been lot EU. to in a certain mentioned commentary on outlook referenced I pretty in the

is some focus just trailing a lot been a you the considering balance of sort there's an on primary the to deploy in some basis, think or think on XX-month ability that been a dispositions. Or where that the there's into sheet near and not in asset there's runway enough markets be of of Do term? of that changes? advance So need for focus might do capital any regulatory you these Canopy long

David Klein

in I kind being say into the of our markets. one Matt, of game that would experience first Yes.

a the in by would capital markets grow be offerings like like remain we however, like - Germany, international and we'll really Australia, international -- careful product we on very the but we likely and market with Poland, that into bringing will asset-light, U.S. is where think can the markets. areas would team, any well really Czech and get most focus Canada do -- I to with lean What focused think into Republic I deployed operating will, very are strong we in operating like make sure

Operator

David There over closing questions. back call comments. to will Klein no for the I now further are turn

David Klein

singularly Thanks up, focused wrap for questions. the on we we're To conference attending cannabis. today's call. Appreciate as started,

margins, demonstrating cannabis of and Canopy markets. unique Canopy businesses forward. offers that of is we growth exposure USA to going. proud where the option and really And Our where are we're the feel growing as moving We're world's healthy for I a are as well confident

a answer be additional day. Relations Have Our will Investor to fantastic team questions. available

Operator

following This provided A concludes XXXX this attending Third Financial Call. for earlier of accessed company's May the available release issued until Quarter today's in Canopy be Growth's Fiscal can X, you today. conference Conference press be Results replay instructions the and will call Thank XXXX, call.

Canopy Growth (CGC) 9 Feb 242024 Q3 Earnings call transcript