WEED.TO - Earnings call transcript Q3 2025

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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 2025 Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Tyler Burns, Director, Investor Relations. Tyler, you may begin the conference call.

Tyler Burns

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

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

I that begin, remind views that on we by this to Before would will cautionary news regarding Canopy's forward-looking to entirety you projections. for its that actual release release today's current the differ our like call discussion note filed Please reports this various include management's in cause is and from and statements discussion are and during assumptions and forward-looking earnings review qualified factors statements included today. at on the results the materially of issued SEC with could SEDAR that the end based

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

conduct from will question-and-answer Luc remarks I we call will and questions over Judy, where the Following we from turn session a take will that, analysts. With to Luc.

Luc Mongeau

a for Mongeau, and lead through team and I Growth. to name fresh Luc as my Canopy. the joining of X given his fiscal start my CEO truly role. company leadership by Klein quarter is our year I'm for earnings entire I'm Tyler. me you, year a start thank of I the our to Directors for join will support call conference gratitude like I have and morning, this as excited also on Good call. in earnings new you David Thank would support for to we forward first proud Canopy for Board Canopy you that as My begin expressing and new thank everyone, XXXX chapter the to the transition. embark like and

in share greater and a the of CEO level and like and depth, speak will we prior at the For to as to privilege. And get me, honor global into high lead our and from ahead. Canadian experience, details some before I've and I'd about my the cover is organization on about my QX, an CEO which why view into joining Canopy this the sector results a path Judy role stepping company, joined

today. and to and Petcare I've roles, Gamble. to understand products. working consumers and executed innovation innovative something the greater building on broadening high-quality while the world. wellness, with growth around and organization and the customers most through cultural opportunities, fresh how XX trends Over I've had view, strategies and the Procter evolving takes have and the like Weston ago of identifying cannabis dedicated the wants and revamped redefining consumer working Companies our and creation chains, has most product the approaches rapidly, commercial lifestyle complex needs products. still meets my to sector people years capacity myself experiences last to The R&D, at and of supply engagement develop we're and When marketing power experience it's campaigns transforming to consumer promising beginning global Canopy and influence across Foods, value the with privilege cannabis goods the my demand that consumer of exceeds In all years, & Mars goods leading within is packaged shape I organizations industry. I my of led the X to new delivering future the Whether the or Board, one of profitability. This first represents sector got brings involved me saw with Cannabis, Canopy. exciting unique. trends in view while

my balanced However, optimism is with today. our reality

have has we know, as not evolved As real Regulations cannabis fast challenges. all as expected. the sector faced

trends illicit to finally, market The opportunities Some are have this like the endures. to part. longer taken exciting to legalization remains path just beverages uncertain. But the U.S. consumer the develop. And is for full me, in ahead still beginning The unfold.

shift enhance to away just passing is not see move choose only social continue to their a more instead to wellness. that people lasting cannabis and of sign their We It's a from will trend. grow. The and alcohol in support lives deep change continue behaviors

forward, possible our our every benefit say people, Canopy's we're partners our conference business more Canopy Right generation. shareholders. improvement my with sustained of profitability of identify together and have move areas the way to consumers, enhance key the working drive I'll and on when I in clear, for focus to rapidly now, I'm cash towards Canopy call to in for is our May. to As positive this team much QX

I now, are of and to would like business that areas some of promise For the our showing performance. strong highlight

changes Poland needs our First, we Spectrum is or the THC high has built Europe, potential, through Germany, and medical In Germany, team have strain service in Canada, to reputation from international cannabis portfolio. Therapeutics for across markets Whether cannabis and a an our new our cannabis. recognized patients for our Canopy business. Across outstanding power helping In leader markets, meeting solid established platform. across Internationally, a with the Canada of medical and in the existing position market regulatory are we're a medical Canadian diverse Australia. highest momentum. bringing ever-expanding product powerful

Europe-based with believe us drive Canopy's and to I really can In medical cannabis business of the seeking. Overall, in ahead. and suppliers continue we are variety quarters patients build addition, products the that upon deliver growth years is helping collaboration flower

of Columbia highlight In Ontario. risen Claybourne our British award-winning weeks, can introduce Canada. the in our than in an and impact consumers #X I the recent in showcases our in necessary market. like resonate the share infused innovative make believe business, ingredients quickly pre-roll to Next, to has the X of market. the Overall, Claybourne business Canadian launch successfully adult-use adult-use ability to products to our brand I'd less This the and with has that grow become key

Another is with vaporizers Bickel Storz Volcano its our the of in performance space. brand Venty. unparalleled the the iconic & Canopy's premium high & new is and example including leader premium strength offering vaporizer an of Storz Bickel

momentum to working about to really already are portfolio. the date innovation where what Bickel as & as excited it's is this leading and brand up We where I'm well drive for Storz going. new keep a for is

differentiated Canopy ecosystem USA well platform of to on to feel its would like Canopy to we USA. and capitalize operations. Next, is I speak brands positioned that an is exciting

With It already the USA cost Acreage acquisitions also the on of and of well integration. key finalized, and as is markets synergies as Wana, realizing across and categories. now process is advanced joint marketing advantages Jetty Canopy sales well

life in to CUSA see and build in USA Canopy the the presence. wealth element in USA Canopy a driving early organization, distributor Together execution track cannabis to strategic potential more Canopy to cannabis largest of with refine growth USA brings Jorgensen a focused and their see of recently January. Having is final the real led Brooks on U.S. cohesive businesses. a bringing Brooks of [ growth team, building broader record as expect experience they As ] Brooks and Teva, a continue even first appointed robust as We and was platform. the single as organization's President the in

grow strategy and Canopy from to year As focused to up success this the for the detail we want May now I I on quarter. planned forward financials the positioning the are I we company's wrap our release have I detail believe today, look to speak about year. sustainably. profitably more when and in end reiterate results that ingredients the sharing right updated will great you. Judy at of to Thank and full

Judy Hong

start fiscal morning, by flow and including much, XXXX by then Luc, priorities QX business through discuss cash discussion our by you and on walking and fiscal the good of balance into performance a Thank on for results, balance sheet and I'll XXXX XXXX. followed fiscal our our very units. I'll outlook key progress everyone.

cannabis needs Claybourne outflow improvement to compared down expanded begin by an And we of our year. well number $XX $XX another detail, from and year marking the $X now our of the adult-use of a range. with of narrowed year. compared net with of net assortment X% combined driven to ago. excluding margin in line first impact of also quarter medical EBITDA posting significant Canada. newly revenue as target share free gummies XX%. significantly of loss X%, a momentum, the to continued XX% divested growing in a with was of up improvement meet an half marked a starting as improvement well a contribution and third was an Wana relative quarter our decrease XX%, And adjusted Canada. was a with momentum of and our our gross last or as QX growth continued of consumers. key Let's solid of Storz was the of was million revenue year. I'd efficiencies, Bickel in was to and launched compared our gaining relative growth QX XX% of fiscal broadly Canada like of million, a cash in quarter. XX% compared return QX our patients, adjusted pre-rolls. in delivered The improvement current our to medical $XX the run QX QX, business to in businesses loss market EBITDA and 'XX of in review increase the million, revenue fiscal revenue We're a quarter consolidated year-over-year record flow cost million, with rate QX QX results more X% medical in to an results. by to year its but ago, product we've & infused Canopy versus businesses Consolidated of insured QX as last

gain QX quarter, cost our XX% three, improvement XX% are to contributor outsized $XX beginning XXXX on Two, products quarters. positive Our cannabis decline Claybourne investments, of prior strong by, and on sales, primarily mix. International to of least EU-based to shelves facing And a we while was QX attributable some rollout, growth to but registrations year-over-year QX competitive part The in in high gummies Claybourne. in up with secured to growth market produce flower XX% longer Tweed as marketplace, in Claybourne grow the partially last overall the was was pipeline capture generated The expect no increased after targeted Canada disruptions. offset in flower returned by gross doors International, additional adult-use been to We points sales in in QX distribution. Canada sales to to million strategy supply we've the to cash back again an strong driven the a markets Wana has which infused strong higher to be Australia, cannabis sell medical mid-November Germany channel Australia Claybourne we quarter-over-quarter. increased margin further gross and product in still growth medical are the Poland. cost secured of was branded Europe enhanced net that of in one, market business. In in start. Germany structure are bulk compared And range decline gross core the return adult-use pre-rolls, also which of accelerating of to competition. upcoming revenue opportunities CBD additional expanding are in business in release saw steadily, adding producers. during off increased mid- on year. for as other traction. but of continued the of cannabis brands continues down have to We're with a the business as in improving XX%. deployed additional at we're was Within U.S. initial to pressure growth the QX based The XX% was And focused from new sales depreciation products and is launched to Canada Canopy's and margins growth there gross margin cost products. the margin cash noncash XX% margin medical field launched well flower targeted FY in historical we've focused gross supply and Tweed

in up carry cannabis higher driven with for business XXXX QX, million up as in was the sales sharpening a are in support We direct-to-consumer Poland, XX% compared traditionally of the S&B by another our season. launched of due sales, including to given as ensure FY to margin. Storz & Bickel QX & gross XX% selling Australia, XX% XXX year in quarter last of points last was had is also cannabis well gross S&B QX from Germany XX% FY in costs. focus strong by 'XX, basis QX holiday which indirect was compared growth our from led costs, during S&B transitioning Germany. Australia gross increased higher $XX robust contribution quarter to margin revenue in continued last business margin in strong medical strong year. year to for QX was Australia. International online dedicated Venty, The to Storz markets growth shipping Bickel which

of costs, undertaken we're program $XX G&A G&A fiscal $XX of year. QX way million for by to a declined to savings in have this by our million year, achieving expenses fiscal contribution Free fiscal the XX% SG&A overhead balance corporate a loss expenses company adjusted positive due million. a on divestitures, to XX% QX million of year-over-year, Year-to-date, XXXX $XX year versus G&A cash our $X like led was our including the EBITDA at Looking XXXX. of unallocated and compared also the sheet. cash of an declined included $X continuing costs, prior year. the and EBITDA million well marketing in was loss Cash cost $XX and fiscal our $XX costs. I'd This an prior $XX excluding sales approximately interest of reduction ago. and outflow primarily to impact review the QX during cost XXXX, public was end compared operations in flow from the of was was offset million million flow which last units improvement all business X million payments by cash down from now to by million, This QX, used quarter in to of $XX year. from of

run As to by the I tight compared first previous rate, during improved timing indicated payments and significantly of certain half call, the management. capital working capital working driven

the balance to Turning sheet.

approximately $XXX prepayment As further In of of by term in of December principal loan term million. the USD we XX.X balance and debt million, October, million amount to USD million had by short-term XXXX, we XX, XXX cash USD XXX reduced balance making total early loan balance in and our bringing investments $XXX million. an principal

million, believe provide QX. additional the now on our the program meet Canopy invest to our like from cash also in have further was completed current XXXX remaining should loan XX.X% end making USA. to in program to option at post of XXX ATM that was par an million the maturity million the the briefly USD to We obligations near-term this sheet XXX we've proceeds ample by of USD March generated have We end term XX before ATM to we payment September extend additional total launched us to flexibility of initiatives. I'd discuss of December gross June, XXXX with USD of growth including the and year. Under that balance

December acquisition USA as Canopy to of X full cost moved the as of completion possible. synergies businesses now forward the the XXXX, integration Acreage has quickly with of revenue capture in Following and

of in in to and continued report we in Claybourne initial outlook market introductions the expect our now market. In adult-use and and Bickel velocity business into focus building expect In year-end the of Given and of as of that Canopy May. I'd fiscal sales and ensuring 'XX cannabis, international European plan the the more to continued on little since Storz Australia, has of Storz efforts priorities less our in improve product Germany we the than it's has increased new new new we and success Bickel consistent month details business launching focus provide in performance improved balance since on as of availability, for place, drive month distribution Canada cannabis a launch, & distribution points been financials cannabis, on products. our a are the closed 'XX. late provide fiscal like in we our business the to Acreage over earnings business our ensure momentum when only medical performance around acquisition and a expanding to President and that USA we strength in to we medical transitioning continued expanded we business focus product & on products. In process our key

we longer which last note sales QX, business. in is of sales For included international cannabis that of CBD, of markets over $X.X our no in part million QX U.S. year

caught coming comparison. last year-over-year $X.X year-ago FY forward from businesses Storz across of impact For from the on following sales prepared adjusted concludes outsized we be QX the believe from medical focused Canada quarter is on million our 'XX long-term supply year. And production improving be that divested to flow. This and we sustainable growth achieving & challenged, we're level cash is quarters. discipline, expect adult-use likely businesses in in our look And Bickel, QX. in while our in comments. growth profitability will approximately tough the finally, plus Note cost at in our sight U.S. expectation continued the consolidated businesses, with to we of 'XX, but solid QX, in my firmly and as another EBITDA FY given benefited QX sales as up driving constraints continued positive Venty improvement Based in momentum CBD further the growth

will take questions. We now

Operator

Aaron Global Grey at The Instructions] Partners. Alliance [Operator comes first question from

Aaron Grey

you more dig capture of capitalize to the you compared supply Luc believe international model that the and the to plans growing color that I the there. of some that you internationally? some maintain a So mentioned deeper and to will robust generating wanted if out bit signed. growth there? the of know international agreements additional any growth in seeing to But margins given then terms just from terms being in competitors on of outlook enable Judy, you have preclude pie? for curious were asset-light And share of the vertical healthy from you for would a some we're international

Judy Hong

and have Thanks, Luc his may well. Sure. and I'll Aaron, start, as view

So we the first I strong performance call European all, that very in markets of just a international to do did particular. in have out want

segments, at revenue the really international million look the bifurcate market have Australian versus European to you in performance. our If of $XX overall you performance

and segment. includes Poland key European international you give which of Germany, a market business, to Just the like XX% roughly context, account markets for the

our Polish and that seeing as growth we're strong And outsized have had last position business the to growth in alluded S&B medical sales market, We for quarter we've the particularly saw strong continued I and medical increased also Australia. a very in market. the to on call, to on sales in Australian Germany did in competition, medical our up that Australia, out the transition Overall, We of was European down that business, that we're in have cannabis from cannabis sales additional excess Australian we the was trying ensure a in the that team business supply of part into year-over-year in XX%. The Germany sales we in QX also for includes improving basis. can performance business that really market. the That of business secured. focus however, really on call

about is growth. market the think growing, us market the benefit market one, forward, Now and is from if we step the changes think that, Based and tailwind to that the provides we business in the positive number Germany, regulation the on growing. back going to

in GMP in low-cost Kincardine said, Canada there are to model. the partnering the service with I market is and partners, and that, facility, that Keep supply structure our supply international that us Secondly, leveraging think also we gives we certified, really our additional mind, market. we facility have to asset-light we that up an in opportunity are as

as as have So we Canadian in growth our ingredients really the the the combination supply the of right that in markets, our to advantage third-party partners market. of European well opportunities believe we take

Luc Mongeau

elements very meet Good in right Canada a internationally, fundamentals. strong Building the you, in and weeks medical Yes. has market, you thank solid some Thank I'm for X question. and both place. got We've Nice now. you, Aaron. to bit Judy. that, on The morning, in

category. As the all next is and look things at but to allocation, I business at have an deep it the approach, more dig strategy, in share I'll extremely and the these the are considering attractive resource that the I'm call,

Operator

The Bill comes next question Capital Partners. at ROTH from Kirk

William Kirk

of predecessor? was far that ways Luc, I so X on been, management I strategy the Like in do you've in and it's and your keep in way place? And conversation. do with wanted to seen, the path what going philosophy what agree there weeks. you and differently opportunities But kind company that think, you strategy that view than

Luc Mongeau

now, question. tell. talent to have am processes, quality Bill, for of I'm the -- are with it's What the X of been I right More the encouraged quality of tell approaches bit come thank very the the the I and that is weeks some at what that validation, closely the me, call. impressed working with can and you early of for supply too the that the in doing next quality you the And extremely me to The a I the proving wrong overall, chain. in now, for the with there doing the see. the I'm business analysis, the right team I hypotheses

Operator

Matt from at Genuity. comes Canaccord question Bottomley next The

Matt Bottomley

Judy. more for be question might This

that Just wondering cost-cutting success had of have guys you initiatives. understanding the some on the

free number the for the of that come just towards the to where continue where burn overall. be that given the quarters we just million equity get first sector cadence that year just now the see down. the But all look valuations breakeven? of challenged a going question months. wondering you right now continue flow in obviously, And $XXX-some-odd sort ATM had of raises progress fact of the to you as this cash has if you at I'm You've X the there, line

Judy Hong

Yes.

across a last did few significant in on balance certainly further We has and flow cash from significantly improved expect our FY you in over the will a a and progress be improved cash that our said, on flow looking do as perspective. businesses at, Certainly, made make cash years. October. improvement the XXXX in sheet profitability on term So interest operations contributor. a and of our we year-over-year also we for year-over-year improvement basis We're paydown following improved expenses expectations our basis, loan the

pay option an have the also additional in $XXX We down to well. months coming as million

a for So flow of interest the year, to in outflow portion really is next when you expenses expected unpack significant our cash be the line.

We expect modest cash CapEx in some cash And well. the legacy relatively costs to progress facilities reducing as made still additional that year. incurring, significant we've also the in investments but there's we're related those costs some of

So the portfolio. we think we us our taking flexibility cash the cash continued actions improve that our balance reinvest as fuel continue flow that of really leverage in an our reduce that to growth to to we're to the into combination well have, ample business opportunities will and provide

Operator

The [Operator Capital Frederico Gomes at comes next question Markets. Instructions] from ATB

Frederico Yokota Gomes

Poland. on question a Just

I Judy, you in outsized growth mentioned you that think, that saw market.

of is So the growing? bit that now? in share could environment specifically? fast you in further you in market? competitive market? talk market more the that a Poland it right color Any the about How How Poland looks terms size little What's market that about like have

Judy Hong

you sure. the question. Sure, for Thank

European Europe. out, really that one of our to growth within strongest you So business, called has Poland contributors the been in as

the And issues of are at the government patients imports the it marketplace look products just been insulated actually able those competitive providing we've to some is secure quality supply consistent really by that the you the of If demanding. import permits. and pressure from more because itself,

we It's about at we're leadership effectively -- our of market to of demand position import is supply all over that registrations exceeding has understand ability and in last be very our dynamics excited evolve And really been and secured dynamics that that and permits We so market supply. have. has market. the may all that point, time. import demand years. of there fulfilling have we couple But some in right been market exceeding the It over that that could this regulations we're the the now, fulfill

Operator

comes & question next Pablo Zuanic Associates. at from The Zuanic

Pablo Zuanic

the these And their of Growth? That's in a Brands of for compared assets direction distribution as regarding you X, Wana how maybe And just Board, Constellation can products. ask the audience, in years want the to Look, roll U.S. bit Brands. to Brands begins reminder first, the Canopy impressive to the from the Maybe involved Europe, us, I strength X other a one may distribute on right to of I your reminder capabilities realize ask things product XX% for is we're that just second the in number. in one, now, able a one terms being mean, Judy, to out Constellation of Canada if and exporting I there, ago, the growth in capabilities, of course, there. go-to-market congratulations leverage derivative question. And the beginning very distribution thing Constellation

remind whether impacted that whether -- or just So cost a strong us in past cuts assets were they or the bit? need are those by do you to rebuild them

Judy Hong

your as second question, of and the the question well. first then part with start address your part we'll I don't Why of Sure.

distribution we partners. in the some step is would supply. with I So even been third to really And both in make distribution as the say, well have years have coming available the markets you infrastructure Germany a markets, across couple Canada about we if We've those markets. have channels have and closely in back -- party, our we constraint last instances, those international that in partners collaboration from primarily, those the over has sure of to in biggest supply in worked to in markets. take our us U.K. a international partners as

consistent our terms quality, gone more flower markets. we've and and THC you is continuity supply improved improvement in of quality business market. And those in supply through know, big I as higher that with into flower going also the Canadian think helping international our

be in investments required to expected is to our in market. there that think don't I terms So of the big change really change business a step

and it's perspective, a shareholder, are advantage perspective a have of the your question from you mean really our what I Constellation, distributors' passive growth. From I the on remain shareholder. market now leveraging our think, think I They partnership taking more given we with largest they relationship product as of have in with from ownership perspective, that about exchangeable investments Canopy, think in We of operational But best in sharing that really it's practices they them share just sense. investor just an about their ideas. changing I context the as have exchanges Canopy. still or and know, less in

Operator

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

Canopy Growth (CGC) 7 Feb 252025 Q3 Earnings call transcript