Q4 2025 Canopy Growth Corp Earnings Call
My name is Joanna I'll be a conference operator today I would like to welcome you to canopy growth's fourth quarter and fiscal year 2025 financial results Conference call. Currently all participants are in a listen only mode.
I will now kind of a call over to Tyler Burns director of Investor Relations you May begin the conference call.
Speaker Change: Good morning, and thank you for joining us on our call today, we have canopy growth's, Chief Executive Officer, Luc Macho and Fi.
Tyler Burns: Financial Officer, Judy Hong before financial markets opened today and that would be growth issued a news release announcing the financial results for our fourth quarter and fiscal year 2025 ended March 31.
Tyler Burns: 2025, the news release and financial statements have been filed on Edgar and SEDAR and will be available on our website under the investor tab.
Before we begin I would like to remind you that our discussion during this call.
Tyler Burns: We will include forward looking statements that are based on management's current views and assumptions and that this discussion is qualified in its entirety by the cautionary note regarding forward looking statements included at the end of the news release issued today.
Speaker Change: Please review today's earnings release and canopy growth.
Tyler Burns: Our reports filed with the SEC and SEDAR for various factors that could cause actual results to differ materially from projections.
Tyler Burns: In addition, reconciliations between the non-GAAP measures to their closest reported GAAP measures are included in our earnings release. Please note that all financial information is provided in Canadian dollars.
Tyler Burns: Unless otherwise stated.
Speaker Change: Following remarks by loop and Judy we will conduct a question and answer session, where we will take questions from analysts with that I will turn the call over to Lynn.
Tyler Burns: In truth either.
Speaker Change: Good morning, everyone.
Tyler Burns: And thank you for joining us today.
Tyler Burns: It is a pleasure to be back with you as we review the fourth quarter and fiscal year 'twenty five and look ahead to the path forward.
Tyler Burns: To date.
Tyler Burns: Almost five months at the helm.
Tyler Burns: I want to share my observations about the business.
Tyler Burns: And share a series of actions that are already underway to drive performance in fiscal 2006 and beyond.
Tyler Burns: Judy will then speak to our financial results and give an update on canopy USA.
Tyler Burns: Since joining canopy I've worked closely with our teams across every business function in region.
Tyler Burns: What's clear to me is that canopy as the key ingredients to become a winning operator and both the Canadian adult use and then the Canadian and global medical cannabis markets.
Tyler Burns: And to strengthen our leadership within the global premium by Prizer category.
Tyler Burns: We have strong brands and products.
Tyler Burns: Capabilities and a highly talented team.
Tyler Burns: But like many companies in an evolving industry, we face challenges.
Tyler Burns: A lack of focus.
Tyler Burns: Combined with too many priorities.
Tyler Burns: Sub optimal alignment and in light of a lack of cross functional synchronization.
Tyler Burns: Shifting regulations and a lack of consistent execution at scale.
Tyler Burns: We have started taking key steps to focus streamline and synchronized organization and to create the space within the P&L and balance sheet for more impactful actions.
Tyler Burns: We're focusing our teams on the core category fundamentals.
Tyler Burns: Growing I quality cannabis efficiently.
Tyler Burns: Converting that cannabis into desirable products and keeping these products in stock at the right price and with attractive margin.
Tyler Burns: We're setting clear strategic priorities and supporting them with a lean organizational structure strong operational planning and disciplined execution.
Tyler Burns: It's about simplification.
Tyler Burns: Synchronization and execution all excellent.
Tyler Burns: That's the core of our plan going forward.
Tyler Burns: And we are acting with urgency to reduce cost.
Tyler Burns: Prove margins and create financial flexibility.
Tyler Burns: Yes.
Tyler Burns: Now, let me walk you through some of the actions we've already taken.
Tyler Burns: Starting with structure and focus.
Tyler Burns: As part of our transformation, we've restructure all lines of business to improve synchronization between our supply chain and our commercial teams to drive sharper execution across the company.
Tyler Burns: First.
Tyler Burns: We have unified our global medical cannabis businesses across Canada, Europe, and Australia into a single structure reporting directly to me a single structure to improve speed.
Tyler Burns: Scalability and market responsiveness.
Tyler Burns: Building on the strength of our profitable Canadian medical business.
Tyler Burns: Which grew up plus 13% in fiscal 'twenty five.
Tyler Burns: This action reinforces our commitment to global medical cannabis by improving product availability.
Tyler Burns: And then seeing the health care provider and patient experience.
Tyler Burns: And positioning us for expansion in key European markets over the next 12 to 18 months.
Tyler Burns: We've also reprioritise, our spectrum therapeutics, red yellow and blue product lines in Germany and Poland.
Tyler Burns: To simplify the prescribing and purchasing journey.
Tyler Burns: We strongly believe this focus will help drive consistent supply patient retention and reinforces our branded leadership in the Europe European medical market.
Joanna: Good morning, my name is Joanna.
Joanna: I will be your conference operator today. I would like to welcome you to Canopy Growth's fourth quarter and fiscal year 2025 financial results conference call. Currently, all participants are in a listen only mode.
Health care provider and patient experience and.
And positioning us for expansion in key European markets over the next 12 to 18 months.
Tyler Burns: Our existing medical sales also now complemented by integrated bulk cannabis sales and to select European markets.
Tyler Burns: I will now turn the call over to Tyler Burns, Director Investor Relations. Tyler, you may begin the conference call. Good morning and thank you for joining us.
We've also reprioritise, our spectrum therapeutics, red yellow and blue product lines in Germany, and Poland to simplify the prescribing and purchasing journey.
Tyler Burns: All of these action combines are already showing early signs of success.
Tyler Burns: On our call today we have Canopy Growth's Chief Executive Officer, Luc Mongeau, and Chief Financial Officer, Judy Hong.
We strongly believe this focus without drive consistent supply patient retention and reinforces our branded leadership in the Europe European medical market.
Tyler Burns: Second.
Tyler Burns: We're Sydney significantly refocusing and streamlining our Canadian adult use business to gain share profitably.
Tyler Burns: Before financial markets opened today, Canopy Growth issued a news release announcing the financial results for our fourth quarter and fiscal year 2025 ended March 31, 2025. The news release and financial statements have been filed on EDGAR and CDAR and will be available on our website under the Investor tab.
Our existing medical sales also not complemented by integrated all candidates sales into select European markets.
Tyler Burns: Particularly in the product segments with greatest profit potential, including ipod and see flower pre rolls and base.
All of these action combines are already showing early signs of success.
Tyler Burns: We completed the SKU rationalization in Q4 <unk>.
Tyler Burns: Before we begin, I would like to remind you that our discussion during this call will include forward-looking statements that are based on management's current views and assumptions. and that this discussion is qualified in its entirety by the cautionary note regarding forward-looking statements included at the end of the news release issued today. Please review today's earnings release and Canopy Growth reports filed with the SEC and CDAR for various factors that could cause actual results to differ materially from projected In addition, reconciliations between any non-GAAP measures to their closest reported GAAP measures are included in our earnings release.
Tyler Burns: We were moving about a third of our low lowest performing skus and shifting focus to argue velocity higher margin products and categories.
Second.
We're Sydney significantly refocusing and streamlining our Canadian adult use business to gain share profitably.
Tyler Burns: This tighter.
Tyler Burns: Targeted portfolio is focus on the item and formats that we can supply consistently.
Particularly in the product segments with greatest profit potential, including ipod and see flower pre rolls and base.
Tyler Burns: This combined with tighter joint planning processes is already strengthening our relationships with boards and key accounts.
We completed the SKU rationalization in Q4.
Removing about one third of our low lowest performing skus and shifting focus to argue velocity higher margin products and categories.
Tyler Burns: This focus is allowing us to bring innovation to market in a faster and more impactful way as well.
Tyler Burns: This quarter, we introduce advanced T cell all in one base the Canadian market onto the Sweden, 700 acres brands and launch and expect expanded lineup of play board infused pre rolls.
Tyler Burns: Please note that all financial information is provided in Canadian dollars unless otherwise stated.
This tighter.
<unk> targeted portfolio is focus on the item and formats that we can supply consistently.
Tyler Burns: Following remarks by Luke and Judy, we will conduct a question and answer session where we will take questions from analysts.
This combined with tighter joint planning processes is already strengthening our relationships with boards and chia cap.
Luc Mongeau: With that, I will turn the call over to Luke. Thank you, Tyler. Good morning, everyone, and thank you for joining us today.
Tyler Burns: Early consumer response has been positive.
Tyler Burns: With encouraging signs in market share and growth Wang teams.
This focus is allowing us to bring innovation to market in a faster and more impactful way as well.
Tyler Burns: Okay.
Luc Mongeau: It is a pleasure to be back with you as we review the fourth quarter in fiscal year 25 and look ahead to the path forward. Today, after almost five months at the helm, I want to share my observations about the business and share a series of actions that are already underway to drive performance in Fiscal 26 and beyond.
Tyler Burns: We have established a dedicated centralized global operation function reporting directly to me.
This quarter, we introduce advanced C. So all in one base the Canadian market I'll do that Sweden seven acres there.
Tyler Burns: Expanding its scope beyond Canada support all cannabis markets.
And launch and expect expanded lineup of Claiborne infused pre rolls.
Tyler Burns: This structure is designed to improve supply and demand planning.
Early consumer response has been positive.
Tyler Burns: Enable smarter product allocation to high margin high opportunity market and strength in execution across every line of business.
Encouraging signs in market share and growth Wang teams.
Luc Mongeau: Judy will then speak over financial results and give an update on CanopyUSA. Since joining Canopy, I've worked closely with our teams across every business, function, and region. And what's clear to me is that Canopy has the key ingredients to become a winning operator in both the Canadian adult use and in the Canadian and global medical cannabis market. and to strengthen our leadership within the Global Premium Vaporizer category. We have strong brands and products. right capabilities, and a highly talented team.
Third we've established a dedicated centralized global operation function reporting directly to me.
Tyler Burns: A key mandate of dysfunction is enhancing our sales and operations planning process and calibration with each business.
I think it's called beyond Canada support all cannabis markets.
Tyler Burns: These improvements are already showing up in higher fill rates, which have risen from the mid <unk> range that we saw time during fiscal 'twenty six to the mid <unk>. This past March and April driven by better forecasting planning and coordination.
This structure is designed to improve supply and demand planning.
Enable smarter product allocation to high margin high opportunity market and straight into an execution across every line of business.
Tyler Burns: We're taking a disciplined approach to improving the efficiency of our operations.
A key mandate of this function is enhancing our sales and operations planning process and collaborations with each business.
Tyler Burns: A recent upgrade our German medical facility is expected to materially improve pharmacy order fulfillment.
Luc Mongeau: But like many companies in evolving industries, we face challenges. A lack of focus. combined with too many priorities. Suboptimal alignment and a lack of cross-functional synchronization. Shifting Regulations. and a lack of consistent execution at scale. We have started taking key steps to focus. streamlined and synchronized organization, and to create the space within the P&L and balance sheet for more impactful action. We're focusing our teams on the core category fundamentals. growing high quality cannabis efficiently, converting that cannabis into desirable products, and keeping these products in stock at the right price and with attractive markets. We're setting clear strategic priorities and supporting them with a lean organizational structure, strong operational planning, and disciplined execution.
These improvements are already showing up in higher fill rates, which have arisen from the mid <unk> range that we saw time during fiscal 'twenty six to the mid Ninety's. This past March and April driven by better forecasting planning and coordination.
Tyler Burns: We're also investing in automation enhancements to lower our production costs across our Canadian manufacturing operations.
Tyler Burns: Lastly, we've introduced our new stage gate process for product development and commercialization.
We're taking a disciplined approach to improving the efficiency of our operations.
Tyler Burns: Bear with a more focused portfolio strategy. This will help ensure our new products are competitively positioned and margin accretive at launch.
A recent upgrade our German medical facility is expected to materially improve pharmacy order fulfillment.
Tyler Burns: Our stores in vehicle, we're focusing on streamlining the operation and increasing our ability to bring key innovations to market to broadens our brand reach and strengthen our global leadership position.
We're also investing in automation enhancements to lower our production costs across our Canadian manufacturing operations.
Lastly, we've introduced our new stage gate process for product development and commercialization.
Tyler Burns: We've also we've also taken steps to drive more financial efficiency.
Bear with a more focused portfolio strategy. This will help ensure our new products are competitively positioned and margin accretive at launch.
Tyler Burns: With a new structure in place, we're focused on reducing costs and ensuring financial discipline across the organization.
At Storz <unk> bickel.
Focusing on streamlining the operation and increasing our ability to bring key innovations to market to broadens our brand reach and strengthen our global leadership position.
Tyler Burns: We have already undertaken a company wide cost review to identify these efficiencies in our business.
Luc Mongeau: It's about simplification, synchronization, and executional excellence.
Luc Mongeau: That's the core of our plan going forward. and we're acting with urgency to reduce costs. improve margins, and create financial flexibility.
Tyler Burns: We initiated this action during the fourth quarter and we're on track to reduce operating expenses on an annual basis by at least $20 million over the next 12 to 18 months.
We've also we've also taken step to drive more financial efficiency.
With our new structure in place, we're focused on reducing costs and ensuring financial discipline across the organization.
Luc Mongeau: Now let me walk you through some of the actions we've already taken. starting with structure and focus. As part of our transformation, we've restructured all lines of business to improve synchronization between our supply chain and our commercial teams to drive sharper execution across the company. First, We've unified our global medical cannabis businesses across Canada, Europe and Australia into a single structure, reporting direction to me, a single structure to improve speed, scale, scalability and market responsive. building on the strength of our profitable Canadian medical business. which grew up plus 13% in fiscal 25. This action reinforces our commitment to global medical cannabis by improving product availability, enhancing the healthcare provider and patient experience.
Tyler Burns: Roughly 80% of the targeted savings have already been identified and.
Tyler Burns: And over 50% of already been executed.
We have already undertaken a companywide cost review to identify these efficiencies in our business.
Tyler Burns: Additionally, at the end of the fourth quarter.
Tyler Burns: We made an additional $100 million of U S. Early prepayments again, our senior secured term loan.
We initiated this action during the fourth quarter and we're on track to reduce operating expenses on an annual basis by at least $20 million over the next 12 to 18 months.
Tyler Burns: That steps reduced our annual interest expense by approximately $13 million U S dollars.
Roughly 80% of the targeted savings have already been identified.
Tyler Burns: Together these actions are creating the space, we need in our P&L and balance sheet to gradually reinvest in the business.
And over 50% have already been executed.
Additionally, at the end of the fourth quarter we.
Tyler Burns: Including strategic M&A, when the right opportunities arise.
We made an additional $100 million of U S. Early prepayments again, our senior secured term loan.
Tyler Burns: Yeah.
Tyler Burns: For fiscal 'twenty six.
Tyler Burns: Our focus is on accelerating profitable growth across all businesses by executing with discipline and aligning resources to the highest potential opportunities.
That steps reduced our annual interest expense by approximately $13 million U S dollars.
Together these actions are creating the space, we need in our P&L and balance sheet to gradually reinvest in the business.
Tyler Burns: In global medical where price of prioritizing supply consistency and deepening engagements with clinics, our care providers and patients.
Luc Mongeau: and positioning us for expansion in key European markets over the next 12 to 18 months. We've also reproductized our Spectrum Therapeutics red, yellow and blue product lines in Germany and Poland to simplify the prescribing and purchasing journey. We strongly believe this focus will help drive consistent supply, patient retention, and reinforces our branded leadership in the European medical market. Our existing medical sales also now complemented by integrated ball cannabis sales into select European markets.
Including strategic M&A, when the right opportunities arise.
Tyler Burns: And Canada adult use.
Tyler Burns: We're focused on winning and <unk> formats, and straightening out presents a burrito.
For fiscal 'twenty six.
Our focus is on accelerating profitable growth across all businesses by executing with discipline and aligning resources to the highest potential opportunities.
Tyler Burns: And at the stores and vehicle, we're enhancing margins to production procurement efficiencies and preparing to launch a new device later this calendar year.
And global medical where price of prioritizing supply consistency and deepening engagements with clinics, our care providers and patients.
Tyler Burns: Looking down subs.
Tyler Burns: We continue to believe in the long term potential of the U S market.
Tyler Burns: Canopy USA now fully operational and due to the leadership of Brooks yoga.
Canada adult use we're focused on winning and <unk> formats, and straightening out presents up retail.
Tyler Burns: This team is focused on streamlining operation and leveraging its people products and footprint to drive growth and scale.
Luc Mongeau: All these actions combined are already showing early signs of success. We're significantly refocusing and streamlining our Canadian adult use business to gain share profitably. particularly in the product segments with greatest profit potential, including iPod and Seaflower, free rolls, and We completed skew rationalization in Q4, removing about a third of our lowest performing SKUs and shifting focus to higher velocity, higher margin products and categories. This tighter, more targeted portfolio is focused on high demand formats that we can supply consistently. This combined with tighter joint planning processes is already straightening our relationships with boards and key account This focus is allowing us to bring innovation to market in a faster and more impactful way as well.
And at the stores and vehicle, we're enhancing margins for production procurement efficiencies and preparing to launch a new device later this calendar year.
Tyler Burns: At <unk> USA is navigating financial challenges, particularly related to acreage.
Looking down subs.
Tyler Burns: Monitoring the current situations closely and we'll provide further updates as necessary.
Continue to believe in the long term potential of the U S market.
With canopy USA now fully operational and due to the leadership of Brooks yoga.
Tyler Burns: Judy will speak more to the financial details and value of investment in more detail shortly.
This team is focused on streamlining operation and leveraging its people products and footprint to drive growth and scale.
Speaker Change: As I wrap up I want to be clear that my immediate focus as CEO is on the areas of our canopy growth is the key risks.
At <unk> USA is navigating financial challenges, particularly related to acreage.
Speaker Change: Up to near term value creation.
Speaker Change: Our financial priorities remain unchanged.
Monitoring the current situations closely and we'll provide further updates as necessary.
Tyler Burns: <unk> positive adjusted EBITDA and generating positive free cash flow.
Judy will speak more to the financial details and value of investment in more detail shortly.
Tyler Burns: These are the critical milestone for canopy and we're acting decisively to ensure there were structural and operational improvements translate into stronger performance.
Speaker Change: As I wrap up I want to be clear that my immediate focus as CEO is on the areas of our canopy growth is the key part.
Tyler Burns: I believe that canopy growth is right brands products people and assets to lead in all the markets we serve.
Speaker Change: Two near term value creation.
Speaker Change: Our financial priorities remain unchanged.
Tyler Burns: I look forward to sharing further updates as we move through fiscal 2026.
Speaker Change: Achieving positive adjusted EBITDA and generating positive free cash flow.
Luc Mongeau: This quarter, we introduce advanced C-cell, all-in-one based on the Canadian market under the 3 and 7 acres brand. and launch an expanded lineup of Playboard-infused pre-rolls. Early consumer response has been positive. with encouraging science and market share and growth ranking.
Tyler Burns: Thank you and with that I'll turn it over to Judy to walk through our financial results and outlook.
Speaker Change: He is on a critical milestone for canopy and we're acting decisively to ensure that we are structural and operational improvements translate into a stronger performance.
Judy Hong: Thank you Luke and good morning, everyone.
Judy Hong: Start by reviewing our fourth quarter and full year fiscal 2025 results, including performance by key business unit.
Speaker Change: I believe that canopy growth is right brands products people and assets to lead in all the markets we serve.
Judy Hong: I will then discuss progress on our balance sheet and cash flow followed by an update on canopy USA and.
Luc Mongeau: Third, we've established a dedicated, centralized, global operation function reporting directly to me, expanding its scope beyond Canada to support all cannabis markets. The structure is designed to improve supply and demand planning. enable smarter product allocation to high margin, high opportunity market, and strengthen execution across every line of business. The key mandate of this function is enhancing our sales and operations planning process in collaboration with each business. These improvements are already showing up in higher fill rates, which have risen from the mid 80s range that we saw at time during fiscal 26 to the mid 90s this past March and April, driven by better forecasting, planning and coordination.
Speaker Change: I look forward to sharing further updates as we move through fiscal 2026.
Tyler Burns: And I'll end with a discussion on our priorities and outlook for fiscal 2026.
Speaker Change: Thank you and with that I'll turn it over to Judy to walk through our financial results and outlook.
Tyler Burns: Let's begin with our fourth quarter results.
Tyler Burns: Q4 fiscal 'twenty five fell short of our expectations driven by lower revenue in soybeans, nickel, Poland and Australia medical businesses.
Judy: Thank you Luke and good morning, everyone I'll start by reviewing our fourth quarter and full year fiscal 2025 results, including performance by key business unit.
Tyler Burns: Were partially offset by continued strength in our Canada, and Germany medical and our continued cost discipline, which drove year over year improvement in adjusted EBITDA.
Judy: I'll, then discuss progress on our balance sheet and cash flow followed by an update on canopy USA.
Judy: And I'll end with a discussion on our priorities and outlook for fiscal 2026.
Tyler Burns: On a full year basis, excluding the impact of divested businesses and U S. CBD net revenue was relatively stable compared to last year and adjusted EBITDA loss improved significantly compared to the prior year.
Judy: Yeah.
Judy: Let's begin with our fourth quarter results.
Judy: Q4 fiscal 'twenty five fell short of our expectations driven by lower revenue in Storz, <unk>, Bickel, Poland and Australia medical businesses.
Tyler Burns: Free cash flow was an outflow of $36 million for Q4 compared to an outflow of $23 million a year ago as lower interest payment was offset by higher capex and increases in working capital in part due to timing.
Judy: These were partially offset by continued strength in our Canada, and Germany medical and our continued cost discipline, which drove year over year improvement in adjusted EBITDA.
Luc Mongeau: We're taking a disciplined approach to improving the efficiency of our operation. A recent upgrade of our German medical facility is expected to materially improve pharmacy order fulfillment. We're also investing in automation enhancements to lower our production costs across our Canadian manufacturing operations. Lastly, we've introduced a new stage gate process for product development and commercialization. pair with a more focused portfolio strategy. This will help ensure new products are competitively positioned and margin accretive at launch.
Judy: On a full year basis, excluding the impact of divested businesses and U S. CBD net revenue was relatively stable compared to last year and adjusted EBITDA loss improved significantly compared to the prior year.
Tyler Burns: For full year fiscal 'twenty, five free cash flow improved by $55 million compared to a year ago.
Tyler Burns: I'd like to now review the results of our key businesses in more detail starting with Canada.
Judy: Free cash flow was an outflow of $36 million for Q4 compared to an outflow of $23 million a year ago as lower interest payment was offset by higher capex and increase in working capital in part due to timing.
Tyler Burns: Q4, net revenue was $40 million up 4% compared to a year ago.
Tyler Burns: Canada medical business maintained its momentum and grew sales, 13% versus last year benefiting from customer mix continuing to shift towards a greater number of insured patients.
Judy: For full year fiscal 'twenty, five free cash flow improved by $55 million compared to a year ago.
Tyler Burns: A larger product assortment and the spectrum online store.
Luc Mongeau: At Storz & Bickel, we're focusing on streamlining the operation and increasing our ability to bring key innovations to market to broaden the brand reach and strengthen our global leadership position. We've also taken steps to drive more financial efficiency. With a new structure in place, we're focused on reducing costs and ensuring financial discipline across the organization. We've already undertaken a company wide cost review to identify these efficiencies in our business. We initiated this action during the fourth quarter and we're on track to reduce operating expenses on an annual basis by at least $20 million over the next 12 to 18 months.
Judy: I'd like to now review the results of our key businesses in more detail.
Tyler Burns: Our adult use business was down 3% as strong contribution from Claiborne infuse pre rolled joints was offset by lower sales and flower and non infused payrolls.
Judy: Okay.
Judy: Yes.
Judy: Okay.
Judy: Okay.
Tyler Burns: We are seeing improvement in our Tweed flower and pre rolls in recent months driven by increased distribution and stronger velocity.
Judy: Sure.
Judy: Okay.
Judy: Okay.
Judy: Thank you.
Judy: Okay.
Judy: Okay.
Speaker Change: Canada adjusted gross margin in Q4 was 11% and adjusted cash gross margin, adding back noncash depreciation cost in Cogs was 2023%.
Judy: Okay.
Judy: Okay.
Judy: Sure.
Judy: Sure.
Judy: Our adult use business was down 3% as strong contribution from Claiborne infused pre rolled joints was offset by lower sales and flower and non infused payrolls.
Speaker Change: Let me Unpack, Canada gross margin for Q4, which was negatively impacted by a few factors in the quarter.
Speaker Change: First similar to Q3, we experienced higher cost to produce Claiborne, which was launched in November of last year.
Judy: We are seeing improvement in our Tweed flower and pre rolls in recent months driven by increased distribution and stronger velocity.
Judy: Canada adjusted gross margin in Q4 was 11% and adjusted cash gross margin, adding back noncash depreciation cost in Cogs was 2023%.
Speaker Change: It's typical to experienced higher initial cost for new products and we have to utilize both internal and external production capabilities to fulfill initial orders that exceeded expectations.
Luc Mongeau: roughly 80% of the targeted savings have already been identified, and over 50% have already been executed. Additionally, at the end of the fourth quarter, we made an additional $100 million U.S. early prepayment, again, our senior secure turn loan. that steps reduce our annual interest expense by approximately 13 million U.S. dollars.
Judy: Let me Unpack, Canada gross margin for Q4, which was negatively impacted by a few factors in the quarter.
Speaker Change: We've already implemented measures to improve margins by refining price pack architecture, and installing semi automation capability to lower labor costs and reduced reliance on third party production.
Judy: First similar to Q3, we experienced higher cost to produce Claiborne, which was launched in November of last year.
Speaker Change: Second we incurred higher write down of inventory of select products. During Q4. Following our typical year end inventory review and also reflecting our more streamlined product portfolio strategy.
Judy: Typical to experienced higher initial cost for new products and we have to utilize both internal and external production capabilities to fulfill initial orders that exceeded expectations.
Luc Mongeau: Together, these actions are creating the space we need in our P&L and balance sheet to gradually reinvest in the business. including Strategic M&A when the right opportunities arise.
Speaker Change: We have now stood up new sales and operations planning process and a more stringent procurement control to tightly manage our inventory in fiscal 'twenty six.
Judy: We've already implemented measures to improve margins by refining price pack architecture, and installing semi automation capability to lower labor costs and reduced reliance on third party production.
Luc Mongeau: for fiscal 26. Our focus is on accelerating profitable growth across all businesses by executing with discipline, aligning resources to the highest potential opportunities. In global medical, we're prioritizing supply consistency and deepening engagements with clinics, healthcare providers, and patients. and Canada Adult Hughes. We're focused on winning in high demand formats and straightening our presence at retail. And at Storz and Bickel, we're enhancing margins, production procurement efficiencies, and preparing to launch a new device later this calendar year.
Speaker Change: Despite quarterly fluctuation, Canada adjusted gross margin for the full year fiscal 'twenty five was 25% and cash gross margin was 36% we.
Judy: Second we incurred higher write down of inventory of select products. During Q4, following our typical yearend inventory review and also reflecting our more streamlined product portfolio strategy.
Tyler Burns: We expect Canada gross margins to show improvement over the course of fiscal 2006.
Tyler Burns: International markets, Canada sales declined 35% in Q4 fiscal 'twenty five compared to Q4 fiscal 2004, which included approximately $1 7 million and U S. CBD sales.
Judy: We have now stood up new sales and operations planning process and a more stringent procurement control to tightly manage our inventory in fiscal 'twenty six.
Judy: Despite quarterly fluctuation, Canada adjusted gross margin for the full year fiscal 'twenty five was 25% and cash gross margin was 36% we.
Tyler Burns: Excluding U S CBD sales, which has been transitioned out Q4 sales declined 23%.
Luc Mongeau: Looking down south. We continue to believe in the long-term potential of the U.S. market with Canopy USA now fully operational under the leadership of Brooks Juergens. This team is focused on streamlining operation and leveraging its people, products and footprints to drive growth and scale.
Tyler Burns: Germany saw another quarter of double digit growth. However, this growth was more than offset by declines in Poland, which was negatively impacted by a significant drop in the number of medical cannabis prescriptions following a regulatory ban on online prescription.
Judy: We expect Canada gross margins to show improvement over the course of fiscal 2006.
Judy: International markets, Canada sales declined 35% in Q4 fiscal 'twenty five compared to Q4 fiscal 'twenty four which included approximately $1 7 million and U S. CBD sales.
Tyler Burns: Australia also saw decline in medical Canada sales due to increasing competition and larger clinics increasingly prescribing their own product.
Luc Mongeau: As CanopyUSA is navigating financial challenges, particularly related to acreage, we're monitoring the current situation closely and will provide further updates as necessary.
Judy: Excluding U S CBD sales, which has been transitioned out Q4 sales declined 23%.
Tyler Burns: For full year fiscal 'twenty five international market sales decreased 4% with growth in Europe offset by a decline in Australia.
Judy: Germany saw another quarter of double digit growth. However, this growth was more than offset by declines in Poland, which was negatively impacted by a significant drop in the number of medical cannabis prescriptions following a regulatory ban on online prescription.
Tyler Burns: Judy will speak more to the financial details and value of investment in more detail shortly.
Tyler Burns: International markets gross margin was 25% in Q4 fiscal 'twenty, five which was lower than expected due to softer sales in high margin Poland.
Luc Mongeau: As I wrap up, I want to be clear that my immediate focus as CEO is on the areas where Canopy Growth has the clearest path to near-term value creation. Our financial priorities remain unchanged. achieving positive adjusted EBITDA and generating positive free cash. These are the critical milestone for Canopy and we're acting decisively to ensure that our structural and operational improvements translate into stronger performance. I believe that Canopy Growth does the right brands, products, people, and assets to lead in all the markets we serve.
Judy: Australia also saw decline in medical cannabis sales due to increasing competition and larger clinics increasingly prescribing their own products.
Tyler Burns: We are focused on improving gross margins in Europe, as we expect to recapture growth in Poland as the market stabilizes and we're also refining product mix and pricing in Germany.
Judy: For full year fiscal 'twenty five international market sales decreased 4% with growth in Europe offset by a decline in Australia.
Tyler Burns: In Australia, we have streamlined costs and expect to launch additional new products in fiscal 'twenty six.
Judy: International markets gross margin was 25% in Q4 fiscal 'twenty, five which was lower than expected due to softer sales in high margin Poland.
Tyler Burns: And we also expect contribution from opportunistic bulk sales to international markets in fiscal 2006, as part of our global supply planning initiatives.
Judy: We are focused on improving gross margins in Europe, as we expect to recapture growth in Poland as the market stabilizes and we're also refining product mix and pricing in Germany.
Tyler Burns: <unk> had a soft quarter with revenue of $17 million in Q4 down 23% year over year.
Luc Mongeau: I look forward to sharing further updates as we move through fiscal 2026.
Tyler Burns: Last year's Q4 benefited significantly from having a full quarter of contribution from Betsy <unk>.
Judy: In Australia, we have streamlined costs and expect to launch additional new products in fiscal 'twenty six.
Luc Mongeau: Thank you.
Judy Hong: And with that, I'll turn it over to Judy to walk through our financial results and outlook. Thank you, Luc, and good morning, everyone. I will start by reviewing our fourth quarter and full year fiscal 2025 results, including performance by key business units. I'll then discuss progress on our balance sheet and cash flow, followed by an update on CanopyUSA, and I'll end with a discussion on our priorities and outlook for fiscal 2026. Let's begin with our fourth quarter results. Q4 Fiscal 25 fell short of our expectations, driven by lower revenue in sores and bickles, Poland and Australia medical businesses.
Tyler Burns: Additionally, certain vehicle sales were pressured by softer than expected vaporizer demand in its key markets, which began in the middle of Q4.
Judy: And we also expect contributions from opportunistic bulk sales to international markets in fiscal 2006, as part of our global supply planning initiatives.
Tyler Burns: We believe that increased uncertainty around tariffs and inflation is temporarily dampening consumer demand for vaporizer devices in general.
Judy: <unk> had a soft quarter with revenue of $17 million in Q4 down 23% year over year.
Tyler Burns: This softness has continued into Q1 fiscal 'twenty six as evidenced by assortment that goes direct to consumer sales declining over 50% during the fourth 20 promotional events compared to last year.
Judy: Last year's Q4 benefited significantly from having a full quarter of contribution from Betsy <unk>.
Judy: Additionally, <unk> sales were pressured by softer than expected vaporizer demand in its key markets, which began in the middle of Q4.
Tyler Burns: Storz <unk> Bickel Q4, gross margin was 37% compared to 41% last year, driven primarily by lower sales.
Judy Hong: These were partially offset by continued strength in our Canada and Germany medical and our continued cost discipline, which drove year-over-year improvement in adjusted EBITDA. On a full year basis, excluding the impact of divested businesses and U.S. CBDs, net revenue was relatively stable compared to last year, and adjusted EBITDA loss improved significantly compared to the prior year. Free cash flow with an outflow of $36 million for Q4 compared to an outflow of $23 million a year ago as lower interest payment was offset by higher capex and increase in working capital in part due to timing. For full year fiscal 25, free cash flow improved by $55 million compared to a year ago.
Judy: We believe that increased uncertainty around tariffs and inflation is temporarily dampening consumer demand for vaporizer devices in general.
Tyler Burns: Looking at our SG&A expenses for Q4 fiscal 'twenty, five sales and marketing G&A and R&D expenses.
Judy: The softness has continued into Q1 fiscal 2006 as evidenced by assortment that goes direct to consumer sales declining over 50% during the 420 promotional events compared to last year.
Tyler Burns: Combined declined 28% year over year, primarily due to cost reduction initiatives as well as lower bonus compared to Q4 fiscal 2024.
Tyler Burns: Q4 fiscal 'twenty five adjusted EBITDA loss was $9 million, an improvement of $6 million compared to a loss of $15 million a year ago.
Speaker Change: Storz <unk> Bickel Q4, gross margin was 37% compared to 41% last year, driven primarily by lower sales.
Speaker Change: Looking at our SG&A expenses for Q4 fiscal 'twenty, five sales and marketing G&A and R&D expenses.
Tyler Burns: Q4, adjusted EBITDA was impacted by lower than expected sales and a sore thumb vehicle and Poland as well as higher inventory write down in Canada.
Judy: Combined declined 28% year over year, primarily due to cost reduction initiatives as well as lower bonus compared to Q4 fiscal 2024.
Tyler Burns: We are disappointed that we did not achieve positive adjusted EBITDA in fiscal 'twenty five, but we're committed to achieving positive adjusted EBITDA in the near term driven by additional cost reductions improved growth in global medical and better commercial execution and Canada adult use.
Judy Hong: I'd like to now review the results of our key businesses in more detail, starting with Canada. Q4 net revenue was $40 million, up 4% compared to a year ago. Canada medical business maintained its momentum and grew sales at 13% versus last year, benefiting from customer mix continuing to shift towards a greater number of insurer patients and larger product assortment in the spectrum online store. Our adult use business was down 3%. A strong contribution from Claiborne infused pre-roll joints was offset by lower sales in flour and non-infused pre-roll. We are seeing improvement in our tweed, flower, and pre-rolls in recent months, driven by increased distribution and stronger velocity.
Judy: Q4 fiscal 'twenty five adjusted EBITDA was loss was $9 million, an improvement of $6 million compared to a loss of $15 million a year ago.
Judy: Q4, adjusted EBITDA was impacted by lower than expected sales of sorts in vehicle and Poland as well as higher inventory write down in Canada.
Tyler Burns: I'd like to now review, our cash flow and balance sheet free.
Tyler Burns: Free cash flow was an outflow of $36 million in Q4 compared to an outflow of $23 million in Q4 of last year.
Judy: We are disappointed that we did not achieve positive adjusted EBITDA in fiscal 'twenty five, but we're committed to achieving positive adjusted EBITDA in the near term driven by additional cost reductions improved growth in global medical and better commercial execution and Canada adult use.
Tyler Burns: Cash used from continuing operation was 33 million, which included cash interest payment of $12 million down from $18 million last year.
Tyler Burns: Full year free cash flow was an outflow of 177 million an improvement of $109 million compared to fiscal 'twenty four.
Judy: I'd like to now review, our cash flow and balance sheet free.
Tyler Burns: In addition to negative adjusted EBITDA fiscal 'twenty five free cash flow includes $63 million in interest payments $40 million of outflow from negative working capital movement, mostly driven by inventory build in Canada 30 million in restructuring and nonrecurring cash payments, including lease.
Judy: Free cash flow was an outflow of $36 million in Q4 compared to an outflow of $23 million in Q4 of last year.
Judy Hong: Canada adjusted gross margin in Q4 was 11%, and adjusted cash gross margin, adding back non-cash depreciation costs in COGS was 23%.
Judy: Cash used from continuing operation was 33 million, which included cash interest payment of $12 million down from $18 million last year.
Judy Hong: Let me unpack Canada's gross margin for Q4, which was negatively impacted by a few factors in the quarter. First, similar to Q3, we experienced higher costs to produce Claiborne, which was launched in November of last year. It's typical to experience higher initial costs for new products, and we had to utilize both internal and external production capabilities to fulfill initial orders that exceeded expectations. We've already implemented measures to improve margins by refining price tag architecture and installing semi-automation capability to lower labor costs and reduce reliance on third-party production. Second, we encourage higher write-down of inventory of select products during Q4 following our typical year-end inventory review and also reflecting our more streamlined product portfolio strategy.
Judy: Full year free cash flow was an outflow of 177 million an improvement of $109 million compared to fiscal 'twenty four.
Tyler Burns: Payments for facilities, not being used and $11 million in Capex for.
Tyler Burns: For fiscal 'twenty, we expect to achieve significant improvement in free cash flow driven by interest expenses of approximately $38 million for the full year down from $63 million based on current debt balances and interest rates.
Judy: In addition to negative adjusted EBITDA fiscal 'twenty five free cash flow includes $63 million in interest payments $40 million of outflow from negative working capital movement, mostly driven by inventory build in Canada.
Tyler Burns: Improvement in working capital driven by tighter inventory management and initiatives to improve the timeliness of revenue collection, particularly into Canada medical business.
Judy: $30 million in restructuring and nonrecurring cash payments, including lease payments for facilities, not being used and $11 million in capex.
Tyler Burns: Lower restructuring and nonrecurring cash expenses relative to fiscal 'twenty, five and reduction in capex compared to fiscal 'twenty five.
Judy: For fiscal 'twenty, we expect to achieve significant improvement in free cash flow driven by interest expenses of approximately $38 million for the full year down from $63 million based on current debt balances and interest rates.
Tyler Burns: Turning to the balance sheet as of March 31, 2024, we had $131 million in cash and short term investments and a total principal debt balance of $316 million.
Judy: Improvement in working capital driven by tighter inventory management and initiatives to improve the timeliness of revenue collection, particularly into Canada medical business.
Tyler Burns: During Q4, we further reduced our term loan balance by USD 100 million by making an early prepayment in the amount of USD $97 5 million, bringing term loan principal balance to approximately USD $150 million and extending maturity to September 2027.
Judy Hong: We have now stood up new sales and operations planning process and a more stringent procurement control to tightly manage our inventory in fiscal 26. Despite quarterly fluctuations, Canada adjusted gross margin for the full year, Fiscal 25, was 25%, and cash gross margin was 36%. We expect Canada gross margins to show improvement over the course of Fiscal 26.
Judy: Lower restructuring and nonrecurring cash expenses relative to fiscal 'twenty, five and reduction in capex compared to fiscal 'twenty five.
Judy: Turning to the balance sheet as of March 31, 2024, we had $131 million in cash and short term investments and a total principal debt balance of $316 million.
Tyler Burns: During Q4, we completed a USD $250 million ATM program that was launched in June of last year and launched a new USD $200 million program in February of this year.
Judy: During Q4, we further reduced our term loan balance by USD 100 million by making an early prepayment in the amount of USD $97 5 million, bringing term loan principal balance to approximately USD $150 million and extending maturity to September 2027.
Judy Hong: International markets cannabis sales declined 35% in Q4 Fiscal 25 compared to Q4 Fiscal 24, which included approximately $1.7 million in U.S. CBD sales. Excluding U.S. CBD sales, which has been transitioned out, Q4 sales declined 23%. Germany saw another quarter of double-digit growth, however, this growth was more than offset by declines in Poland, which was negatively impacted by a significant drop in the number of medical cannabis prescriptions following a regulatory ban on online prescriptions. Australia also saw a decline in medical cannabis sales due to increasing competition and larger clinics increasingly prescribing their own products. For full year fiscal 25, international market sales decreased 4% with growth in Europe offset by a decline in International markets gross margin was 25% in Q4 fiscal 25, which was lower than expected due to softer sales in high margin Poland.
Tyler Burns: We've generated total gross proceeds of USD $27 million under the new program and have USD $173 million left to be completed.
Tyler Burns: I'd like to now provide an update on canopy USA.
Tyler Burns: We have previously indicated that we plan to provide more details around the business performance and financials of canopy USA. When we report our year end earnings.
Judy: During Q4, we completed USD $250 million ATM program that was launched in June of last year and launched a new USD $200 million program in February of this year.
Tyler Burns: As a reminder cannot be USA was deconsolidation from our financials as of April 2024, and the acquisitions of 77% of Jedi closed in June acquisitions of 100% of Varna closed in October and acquisition of 100% of acreage closed in December of 2024.
Judy: We've generated total gross proceeds of USD $27 million under the new program and have USD $173 million left to be completed.
Judy: I'd like to now provide an update on canopy USA.
Judy: We have previously indicated that we plan to provide more details around the business performance and financials of canopy USA. When we report our year end earnings.
Tyler Burns: Acreage was also a public company until the acquisition closed.
Tyler Burns: Starting with our Q1 fiscal 'twenty five filing canopies noncontrolling interest and canopy USA had been reflected as long term assets within our balance sheet with associated changes in fair value recorded through our income statement.
Judy: As a reminder cannot be USA was deconsolidation from our financials as of April 2024, and the acquisitions of 77% of Jedi closed in June acquisitions of 100% of on a closed in October and acquisition of 100% of acreage closed in December of 2024.
Judy Hong: We are focused on improving gross margins in Europe as we expect to recapture growth in Poland as the market stabilizes, and we're also refining product mix and pricing in Germany. In Australia, we've streamlined costs and expect to launch additional new products in Fiscal 26. We also expect contributions from opportunistic bulk sales to international markets in fiscal 26 as part of our global supply planning initiative.
Tyler Burns: The determination of fair value is based upon underlying assumptions, including current and expected business performance.
Speaker Change: In addition cannot be also holds investments into acreage that.
Judy: Acreage was also a public company until the acquisition closed.
Speaker Change: At March 31, 2025, the fair value of canopy, USA investments, including acreage debt, which is presented within the other investments line of our balance sheet was approximately $178 million on a combined basis.
Judy: Starting with our Q1 fiscal 'twenty five filing canopies noncontrolling interest and canopy USA had been reflected as long term assets within our balance sheet with associated changes in fair value recorded through our income statement.
Judy Hong: Storz and Bickel had a soft quarter with revenue of $17 million in Q4, down 23% year-over-year. Last year's Q4 benefited significantly from having a full quarter of contributions from Venti. Additionally, sores and bickles sales were pressured by softer-than-expected vaporizer demands in its key markets, which began in the middle of Q4. We believe that increased uncertainty around tariffs and inflation is temporarily dampening consumer demand for vaporizer devices in general. The softness has continued into Q1 Fiscal 26, as evidenced by Sores & Pickles' direct-to-consumer sales declining over 50% during the 4-20 promotional event compared to last year.
Speaker Change: This is comprised of approximately $33 million of value relative to entities, which holds tariffs and investments which was down from $151 million as of June 32024, driven primarily by the decline since Harrison share price.
Judy: The determination of fair value is based upon underlying assumptions, including current and expected business performance.
Judy: In addition cannot be also holds investments in the acreage that.
Judy: At March 31, 2025, the fair value of canopy, USA investments, including acreage debt, which is presented within the other investments line of our balance sheet was approximately $178 million on a combined basis.
Speaker Change: And approximately $145 million of value represented by debt and equity investments in canopy, usa's ownership and Wanna jetty and acreage down from $289 million as of June 32024, where the decline in value is primarily driven by continued challenges in acreage.
Judy: This is comprised of approximately $33 million of value relative to entities, which holds tariffs and investments which was down from $151 million as of June 32024, driven primarily by the decline since Harrison share price.
Speaker Change: As we have indicated during the prior earnings call acreage as results were impacted by its credit challenges in 2024, and underperformance relative to expectations in the Ohio adult use cannabis market since the third calendar quarter of 2024.
Judy: And approximately $145 million of value represented by debt and equity investments in canopy, usa's ownership and Wanna jetty and acreage down from $289 million as of June 32024, where the decline in value is primarily driven by continued challenges in acreage.
Judy Hong: Storrs and Bickle's Q4 growth margin was 37% compared to 41% last year, driven primarily by lower sales.
Speaker Change: In August of 2024 acreage previously disclosed that their Ohio based revenue was expected to double however, Ohio has still not fully opened up as an adult use market and thus acreage as revenue is falling well short of their expectations.
Judy Hong: Looking at our SG&A expenses for Q4 fiscal 25, sales and marketing, G&A and R&D expenses have combined declined 28% year over year, primarily due to cost reduction initiatives, as well as lower bonus compared to Q4 fiscal 2024. Q4 fiscal 25 adjusted EBITDA loss was $9 million, an improvement of $6 million compared to a loss of $15 million a year ago. Q4 Justin Ibiza was impacted by lower than expected sales and stores in Bickel in Poland as well as higher inventory write-down in Canada.
Judy: As we have indicated during the prior earnings call Acreages results were impacted by its credit challenges in 2024, and underperformance relative to expectations in the Ohio adult use cannabis market since the third calendar quarter of 2024.
Speaker Change: In addition to underperformance in Ohio liquidity challenges faced by acreage have persistent impairing its ability to invest in its business and negatively impacting performance in its core states, including New Jersey.
Judy: In August of 2024 acreage previously disclosed that their Ohio based revenue was expected to double however, Ohio has still not fully opened up as an adult use market and thus acreages revenue is falling well short of their expectations.
Speaker Change: And primarily as a result of challenges that acreage for canopy USA. Its fiscal year ended December 31, 2024 on an annualized basis cannot be USA is run rating at approximately USD $210 million of annual annualized revenue well short of the original estimated 2000.
Judy Hong: We are disappointed that we did not achieve positive adjusted EBITDA in fiscal 25, but we're committed to achieving positive adjusted EBITDA in the near term, driven by additional cost reductions, improved growth in global medical, and better commercial execution in Canada adult .
Judy: In addition to underperformance in Ohio liquidity challenges faced by acreage have persistent impairing its ability to invest in its business and negatively impacting performance in its core states, including New Jersey.
Speaker Change: 'twenty three revenue run rate of USD 300 million as previously indicated during our Q1 earnings call.
Speaker Change: Turning quickly to Wanna and jetty, one is revenue in Colorado and its licensing revenue were pressured by challenging market dynamics and intense price competition in the gummies category.
Judy: And primarily as a result of challenges that acreage for canopy USA. Its fiscal year ended December 31, 2024 on an annualized basis cannot be USA is run rating at approximately USD $210 million of annual annualized revenue well short of the original estimated 2000.
Judy Hong: I'd like to now review our cash flow and balance sheet. Free cash flow was an outflow of $36 million in Q4 compared to an outflow of $23 million in Q4 of last year. Cash used from continuing operations was $33 million, which included cash interest payment of $12 million, down from $18 million last year. Full year free cash flow with an outflow of $177 million, an improvement of $109 million compared to fiscal 24.
Speaker Change: In March of 2025, one announced that hence infused ready to drink wanted beverages are available at total wine and more locations nationwide.
Judy: 'twenty three revenue run rate of USD 300 million as previously indicated during our Q1 earnings call.
Speaker Change: Jet is shipment was impacted by a distributor transition in mid year 2024, However, its depletion revenue, which is revenue from distributors to retailers remained strong and it maintains its market share leadership in the sovereign listen the category in the U S. In 2024.
Judy: Turning quickly to Wanna and jetty, one is revenue in Colorado, and its licensing revenue where pressure by challenging market dynamics and intense price competition in the gummies category.
Judy Hong: In addition to negative adjusted EBITDA, Fiscal 25 free cash flow includes $63 million in interest payments, $40 million of outflow from negative working capital movement, mostly driven by inventory bills in Canada, $30 million in restructuring and non-recurring cash payments, including lease payments for facilities not in use, and $11 million in CapEx. For Fiscal 26, we expect to achieve significant improvement in free cash flow driven by interest expenses of approximately $38 million for the full year, down from $63 million based on current debt balances and interest rates. Improvement in working capital driven by tighter inventory management and initiatives to improve the timeliness of revenue collection, particularly in the Canada medical business.
Judy: In March of 2025 want to announce that hence infused ready to drink wanted beverages are available at total wine <unk> more locations nationwide.
Speaker Change: For the first time. We've also included summarized balance sheet and income statement information for canopy USA in note 13 of the financial statements in our 10-K.
Judy: Jet is shipment was impacted by a distributor transition in mid year 2024, However, its depletion revenue, which is revenue from distributors to retailers remained strong and it maintains its market share.
Speaker Change: We note that the income statement information included here is for the eight months ended December 31, 2024, and reflects the P&L of Wanna jetty and acreage from the time of the close of the acquisition, which occurred at different times during 2024.
Judy: Your leadership and to solve in the sleep category in the U S. In 2024.
Speaker Change: Now I'll speak briefly about acreage is liquidity challenges acreage is currently in default under its credit agreement dated as of September 13, 2020 for the lenders, which includes canopy have agreed to forbear remedies with respect to such default until June one 2025, while potential solutions.
Judy: For the first time. We've also included summarized balance sheet and income statement information for canopy USA in note 13 of the financial statements in our 10-K.
Judy: We note that the income statement information included here is for the eight months ended December 31, 2024, and reflects the P&L of Wanna jetty and acreage from the time of the close of the acquisition, which occurred at different times during 2024.
Judy Hong: lower restructuring and non-recurring cash expenses relative to Fiscal 25 and reduction in CapEx compared to Fiscal 25.
Speaker Change: Including a potential debt extension are being discussed.
Speaker Change: I'd like to now provide our key priorities and outlook for fiscal 2006 in.
Judy Hong: Turning to the balance sheet, as of March 31, 2024, we had $131 million in cash and short-term investments and a total principal debt balance of $316 million. During Q4, we further reduced our term loan balance by USD $100 million by making an early prepayment in the amount of USD $97.5 million, bringing term loan principal balance to approximately USD $150 million and extending maturity to September 2027.
Speaker Change: Global medical cannabis and we expect continued strong momentum in Canada medical growth in Europe with efforts aimed at maximizing our growth potential in Germany, and Poland, driven by an increased number of in demand products and ensuring consistent supply while were focused on stabilizing our business in Australia medical cannabis.
Judy: Now I'll speak briefly about acreage is liquidity challenges.
Judy: Acreage is currently in default under its credit agreement dated as of September 13, 2020 for the lenders, which includes canopy have agreed to forbear remedies with respect to such default until June one 2025, while potential solutions, including a potential debt extension are being discussed.
Speaker Change: Yes.
Speaker Change: We note that we now have fully transitions in stores in the golf business in Australia to Storz, <unk>, Bickel, Germany, which generated approximately $8 million in fiscal 'twenty four.
Judy: I'd like to now provide our key priorities and outlook for fiscal 'twenty six.
Judy Hong: During Q4, we completed USD$250 million ATM program that was launched in June of last year and launched a new USD$200 million program in February of this year. We've generated total gross proceeds of USD $27 million under the new program and have USD $173 million left to be completed.
Judy: In global medical cannabis and we expect continued strong momentum in Canada medical growth in Europe with efforts aimed at maximizing our growth potential in Germany, and Poland, driven by an increased number of in demand products and ensuring consistent supply while were focused on stabilizing our business in Australia medical.
Speaker Change: And Canada adult use we expect to show improved performance in revenue and margins driven by a more focused product portfolio driving better sales execution and continued momentum behind our new products, including Claiborne infused pre rolls and recently launched tweet and seven acres all in one day.
Judy: Candidates.
Judy: We note that we now have fully transitions in stores in the golf business in Australia to Storz, <unk>, Bickel, Germany, which generated approximately $8 million in fiscal 'twenty four.
Speaker Change: We're also focused on improving gross margin by lowering program cultivation costs and reducing production costs.
Judy Hong: I'd like to now provide an update on CanopyUSA. We have previously indicated that we plan to provide more details around the business performance and financials of Canopy USA when we report our year-end earnings. As a reminder, CanopyUSA was deconsolidated from our financials as of April 2024, and the acquisitions of 77% of Jetty closed in June, acquisitions of 100% of Vauna closed in October, and acquisition of 100% of Acreage closed in December of 2024. Acreage was also a public company until the acquisition closed. Starting with our Q1 Fiscal 25 filing, Canopy's non-controlling interest in Canopy USA has been reflected as long-term assets within our balance sheet, with associated changes in fair value recorded through our income statement.
Speaker Change: For Storz <unk> Bickel, we're focused on navigating a challenging macro backdrop by working closely with our key distributor, while reducing cost to protect our margins we.
Judy: And Canada adult use we expect to show improved performance in revenue and margins driven by a more focused product portfolio driving better sales execution and continued momentum behind our new products, including Claiborne infused pre rolls and recently launched tweet and seven acres all in one day.
Speaker Change: We expect sales to decline in the first half of the year with improvement expected in the second half of the year driven by a new device launch planned for this fall.
Speaker Change: And as Luc indicated we've identified additional cost reduction opportunities in all areas of businesses and we expect to realize annually annualized savings of at least $20 million over the next 12 to 18 months through a reduction in head count a more efficient sales and marketing spend and lower professional fees.
Judy: We're also focused on improving gross margin by lowering program cultivation costs and reducing production costs.
Judy: For Storz <unk> Bickel, we're focused on navigating a challenging macro backdrop by working closely with our key distributor, while reducing cost to protect our margins.
Speaker Change: And it expenses.
Judy: We expect sales to decline in the first half of the year with improvement expected in the second half of the year driven by a new device launch planned for this fall.
Speaker Change: We're committed to achieving positive adjusted EBITDA as soon as possible, but we're not providing the exact timing at the moment due to a heightened macro uncertainty and its relative and its potential impact towards stores and Deco business.
Judy Hong: The determination of fair value is based upon underlying assumptions, including current and expected business performance. In addition, Canopy also holds investments in the aqueous debt. At March 31, 2025, the fair value of Canopy USA investments, including acreage debt, which is presented within the other investments line of our balance sheet, was approximately $178 million on a combined basis. This is comprised of approximately $33 million of value relative to entities which hold Terrasen investments, which was down from $151 million as of June 30, 2024, driven primarily by the declines in Terrasen's share price. And approximately $145 million of value represented by debt and equity investments in Canopy USA's ownership in Juana, Jetty, and Acreage, down from $289 million as of June 30, 2024, where the decline in value is primarily driven by continued challenges at Acreage.
Judy: And as Luc indicated we've identified additional cost reduction opportunities in all areas of businesses and we expect to realize annually annualized savings of at least $20 million over the next 12 to 18 months through reduction in head count a more efficient sales and marketing spend and lower professional fees.
Speaker Change: In closing our refined strategy and focus along with rigorous cost discipline is expected to position us for accelerated growth improvement and improved margin in fiscal 2026 and beyond.
Speaker Change: This concludes my prepared comments, we will now take questions.
Judy: And it expenses.
Judy: We're committed to achieving positive adjusted EBITDA as soon as possible, but we're not providing the exact timing at the moment due to a heightened macro uncertainty and its relative and its potential impact to our stores and digital business.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone.
Speaker Change: You'll hear a prompt that you had has been raised if you are using a speaker phone. Please lift the handset before pressing any case would.
Judy: In closing our refined strategy and focus along with rigorous cost discipline is expected to position us for accelerated growth improvement and improved margin in fiscal 2026 and beyond.
Speaker Change: Would you ask that you. Please limit yourself to one question should you have additional questions. You May press star one again to be joined the queue.
Speaker Change: First question comes from Aaron Grey at Alliance Global Partners. Please go ahead.
Judy: This concludes my prepared comments, we will now take questions.
Speaker Change: Okay.
Aaron Grey: Hi, good morning, and thank you for the question.
Judy: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone.
Aaron Grey: I appreciate the color.
Speaker Change: Hi can you guys hear okay.
Judy Hong: As we have indicated during the prior earnings calls, Acreage's results were impacted by its credit challenges in 2024 and underperformance relative to expectations in the Ohio adult-use cannabis market since the third calendar quarter of 2024. In August of 2024, Acreage previously disclosed that their Ohio-based revenue was expected to double. However, Ohio has still not fully opened up as an adult-use market, and thus Acreage's revenue is falling well short of their expectations. In addition to underperformance in Ohio, liquidity challenges faced by Acreage have persisted, impairing its ability to invest in its business and negatively impacting performance in its core states, including New Jersey.
Judy Hong: Yes, we can hear you iron Hi, How're you doing Judy.
Judy: You'll hear a prompt that you had has been raised if you are using a speaker phone. Please lift the handset before pressing any case would.
Aaron Grey: Appreciate the color and Luca you provided including kind of the management style that you're looking to take with the business with streamlining some of the operations.
Judy: Would you ask that you. Please limit yourself to one question should you have additional questions. You May press star one again to be joined the queue.
Aaron Grey: In line with that you know it would be great to get some additional color maybe in terms of what youre seeing as more of the near term low hanging fruit opportunities versus actions in place that will benefit you in the long term and then if we think about.
Speaker Change: First question comes from Aaron Grey at Alliance Global Partners. Please go ahead.
Aaron Grey: Hi, good morning, and thank you for the question.
Speaker Change: I appreciate the color.
Speaker Change: Hi can you guys hear okay.
Aaron Grey: What will be the key levers that you're going to have to ultimately get to that positive adjusted EBITDA and I know, you're not giving a timeline now but we.
Judy: Yes, we can hear you iron Hi, How're you doing Judy.
Judy: Appreciate the color that you provided.
Aaron Grey: We've talked about in the past, it's really going to come down to getting a growth driver on the top line. So where are you seeing the best opportunity for that maybe via Storz, <unk> Bickel international or Canadian so.
Judy: Kind of the management style that you're looking to take with the business with streamlining some of the operations.
Judy: In line with that you know it would be great to get some additional color maybe in terms of what youre seeing as more of a near term low hanging fruit opportunities versus actions in place that will benefit you in the long term and then if we think about.
Judy Hong: And primarily as a result of challenges at Acreage for CanopyUSA's fiscal year ended December 31, 2024, on an annualized basis, CanopyUSA is run rating at approximately USD $210 million of annualized revenue, well short of the original estimated 2023 revenue run rate of USD $300 million, as previously indicated during our Q1 earnings call. Turning quickly to Juana and Jetty, Juana's revenue in Colorado and its licensing revenue were pressured by challenging market dynamics and intense price competition in the gummies category. In March of 2025, Juana announced that its hemp-infused, ready-to-drink Juana beverages are available at Total Wine & More locations nationwide.
Aaron Grey: I know it was on there, but maybe some high level commentary on that would be appreciated that you've been there to help a little bit longer. Thank you.
Aaron Grey: Open to us.
Aaron Grey: For me I look at the business. So look at fiscal 'twenty five we ended up with.
Judy: What will be the key levers that you're going to have to ultimately get to that positive adjusted EBITDA and I know, you're not giving a timeline now but we.
Aaron Grey: Minus 23 million of EBITDA, we're focusing we have identified.
Aaron Grey: $20 million of cost reductions that gives you a bit of.
Judy: We've talked about in the past, it's really going to come down to getting a growth driver on the top line. So where are you seeing the best opportunity for that maybe via Storz, <unk> Bickel international or Canadian so.
Aaron Grey: <unk>.
Aaron Grey: Dimensions, we're going up to the $20 million very aggressively.
Aaron Grey: Just as we've done.
Aaron Grey: Most importantly, it's about the growth the growth.
Judy: I know it was on there, but maybe some high level commentary on that would be appreciated that you've been there to help a little bit longer. Thank you.
Aaron Grey: We're very bullish on our medical.
Judy: Open to us.
Aaron Grey: The business, we know this business in Canada is doing extremely well.
Judy: For me I look at the business. So look at fiscal 'twenty five we ended up with.
Aaron Grey: All four wall estimate was not getting the full attention that it deserves. So we're talking about a business that grew up double digits in fiscal 'twenty five.
Judy: Minus 23 million of EBITDA, we're focusing we've identified.
Judy: $20 million of cost reductions that gives you a bit of.
Judy Hong: JETI's shipment was impacted by a distributor transition in mid-year 2024. However, its depletion revenue, which is revenue from distributors to retailers, remained strong and it maintained its market share leadership in the sovereignty category in the U.S. in 2024.
Aaron Grey: <unk>, we have the right products, we have the right.
Judy: Uh huh.
Aaron Grey: They're so this business is now report reporting direct can be into.
Judy: Dimensions, we're going up to the $20 million very aggressively.
Judy: So as we've done.
Judy: Most importantly, it's about the growth the growth.
Aaron Grey: And to me and we're giving you the attention it deserves the same time, we combined our medical business in Europe, and Australia with the leadership of the Canadian business and now we're fully integrated.
Judy: We're very bullish on our medical.
Judy: The business, we know this business in Canada is doing extremely well.
Judy Hong: For the first time, we've also included summarized balance sheet and income statement information for CanopyUSA in Note 13 of the financial statements in our 10-K. We note that the income statement information included here is for the eight months ended December 31, 2024, and reflects the P&L of Juana, Judy, and Akeridge from the time of the close of their acquisition, which occurred at different times during 2024.
Judy: All four wall estimate was not getting the full attention that it deserves. So we're talking about a business that grew up double digits in fiscal 'twenty five.
Aaron Grey: I'll be honest, we are disappointed with our 25.
Aaron Grey: <unk> medical results and the key driver of that was inconsistency of supply.
Judy: <unk> will have the right products, we have the right spot.
Judy: They're so this business is now report reporting directly into <unk>.
Aaron Grey: Have a great team.
Speaker Change: In Germany, we have a great operation.
Judy: And to me and we're giving you the attention it deserves the same time, we combined our medical business in Europe, and Australia with the leadership of the Canadian business and now we're fully integrated.
Speaker Change: In Germany, we've when we're in stock we know we can bring great quality flower at the right price, we know how to distribute it when we're in stock we do extremely well just to maybe into auctions and supply has led to a bunch of false starts so we're focusing on.
Judy Hong: Now, I'll speak briefly about Acreage's liquidity challenges. Acreage is currently in default under its credit agreement dated as of September 13, 2024. The lenders, which includes Canopy, have agreed to forbear remedies with respect to such default until June 1, 2025, while potential solutions, including a potential debt extension, are being discussed.
Judy: I'll be honest, we are disappointed with our 25.
Judy: <unk> medical results and the key driver of that was in consistency of supply.
Aaron Grey: In the near to us opportunities that we know will.
Judy: Have a great team.
Aaron Grey: The feedback.
Aaron Grey: Feedback and should pay back relatively swiftly.
Judy: In Germany, we have a great operation.
Judy Hong: I'd like to now provide our key priorities and outlook for Fiscal 26. In global medical cannabis, we expect continued strong momentum in Canada medical growth in Europe, with efforts aimed at maximizing our growth potential in Germany and Poland, driven by increased number of in-demand products and ensuring consistent supply, while we're focused on stabilizing our business in Australia medical cannabis. We note that we now have fully transitioned stores and Bickel business in Australia to stores and Bickel Germany, which generated approximately $8 million in fiscal 24. In Canada Adult Use, we expect to show improved performance in revenue and margins driven by a more focused product portfolio, driving better sales execution and continued momentum behind our new products, including Claiborne infused pre-rolls and recently launched Tweed and 7 Acres All-in-One Dates.
Judy: In Germany, we've when words stock we know we can bring great quality flower of the right price, we know how to distribute it when we're in stock we do extremely well just to maybe into auctions and supply has led to a bunch of false starts so we're focusing on.
Aaron Grey: Then we will look at Canadian <unk>, we believe in Canadian Rec. It is a big market. It's a $5 billion market. There are significant opportunities for players who are focus so in the past we used to be we played we tried to play in every single categories in Socal.
Judy: In the near to us opportunities that we know will.
Aaron Grey: So we took.
Aaron Grey: The size of action.
Aaron Grey: In recent months as I said, we streamlined the portfolio, but most importantly, we're focusing.
Judy: The feedback.
Judy: Feedback and should pay back relatively swiftly.
Judy: Then we will look at Canadian <unk>, we believe in Canadian Rec. It is a big market. It's a $5 billion market. There are significant opportunities for players who are focus so in the past we used to be we played we tried to play in every single categories in Socal.
Aaron Grey: With clear intentionality and the large segments, where we know we can compete and we can provide consistent.
Aaron Grey: On the system.
Aaron Grey: Supply you've probably heard about it we launched <unk> for example.
Aaron Grey: Of.
Aaron Grey: Fiscal 'twenty five the brand is already known.
Judy: So we took.
Judy: The size of action.
Aaron Grey: Some regions so when canopy focuses.
Judy Hong: We're also focused on improving gross margins by lowering per gram cultivation costs and reducing production costs. For Soars and Pickles, we're focused on navigating a challenging macro backdrop by working closely with our key distributors, while reducing costs to protect our margins. We expect sales to decline in the first half of the year with improvement expected in the second half of the year driven by a new device launch planned for this fall. And as Luc indicated, we've identified additional cost reduction opportunities in all areas of businesses, and we expect to realize annualized savings of at least $20 million over the next 12 to 18 months through a reduction in headcount, a more efficient sales and marketing spend, lower professional fees, and IT expenses.
Judy: In recent months as I said, we streamlined the portfolio, but most importantly, we're focusing.
Aaron Grey: Canopy can be successful so short answer we're focusing of the axa on the opportunities that are the nearest to us with the iris but.
Judy: With clear intentionality and the large segments, where we know we can compete and we can provide consistent.
Aaron Grey: Essentially for return.
Aaron Grey: Next question from Bill Quirk at Roth Capital Partners. Please go ahead.
Judy: On the system.
Judy: Supply.
Judy: We were about it we launched <unk> for example.
Bill Quirk: Hi, Thanks for taking the call taking the questions.
Judy: Of this <unk> 25, the brand is already known.
Speaker Change: We've heard versions.
Speaker Change: Increased focus on streamlining operations cost savings programs. We've heard we've heard this before so I guess, Luke what truly makes today's conversation incremental to the programs of the past and the progress of the past.
Judy: Some regions so when canopy focuses.
Judy: Canopy can be successful so short answer we're focusing on the axa on the opportunities that are the nearest to US we've got <unk>.
Luke: Yes, I cannot really comment that much of what was said.
Judy: Potential for rhythm.
Speaker Change: In the past but.
Speaker Change: Next question from Bill Quirk at Roth Capital Partners. Please go ahead.
Ken: Hi, Ken I can assure you that from my perspective the <unk>.
Judy Hong: We're committed to achieving positive adjusted EBITDA as soon as possible, but we're not providing the exact timing at the moment due to a heightened macro uncertainty and its relative and its potential impact to our stores and Bickel business.
Bill Quirk: Hi, Thanks for taking the call taking the questions.
Speaker Change: Actions being taken are dramatically streamlining the organization. So from my point of view I noted an organization that was set up for lack of a better word like a large corporations I've worked at organizations that were billions of dollars have been narrowed to what I would qualify.
Judy: We've heard versions.
Judy: Increased focus on streamlining operations cost savings programs. We've heard we've heard this before so I guess, Luke what truly makes today's conversation incremental to the programs of the past and the progress of the past.
Judy Hong: In closing, our refined strategy and focus, along with rigorous cost discipline, is expected to position us for accelerated growth, improvement, and improved margins in fiscal 2026 and beyond.
Judy: Yes, I cannot really comment that much of what was said.
Speaker Change: As a large corporation structure, we're transforming the organization its culture into business fighting business units focused streamlined.
Judy: In the past but.
Tyler Burns: This concludes my prepared comments. We'll now take questions.
Judy: Hi, Ken I can assure you that from my perspective, the actions being taken are dramatically streamlining the organization. So from my point of view I noted an organization that was set up for lack of a better word like a large corporations have worked the.
Tyler Burns: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the handset before pressing any key.
Speaker Change: By adding units, which just the right amount of centralized core capabilities to really enable these units to win I'll give you. An example, and Canadian Rec, we eliminated two layers of management management between myself.
Judy: Patients that were billions of dollars.
Tyler Burns: We do ask that you please limit yourself to one question. Should you have additional questions, you may press star one again to rejoin the.
Judy: I've been there to what I would qualify as a large corporation structure, we're transforming the organization its culture into this filing business units focused streamlined.
Speaker Change: And our sales leadership.
Speaker Change: So as you can imagine decisions are made much faster. We're pushing this is this isn't making down in the organization.
Aaron Grey: First question comes from Aaron Grey at Alliance Global Partners. Please go ahead. Hi, good morning, and thank you for the question. Appreciate the color. Hi, can you guys hear me OK? Yeah, we can hear you. Hi, Aaron. Hi, how you doing, Judy?
Aaron Grey: Allowing us the right data at the right time make the right decision and a much much swifter miners than we did.
Judy: By adding units, which just the right amount of centralized core capabilities to really enable these units to win I'll give you. An example, and Canadian Rec, we eliminated two layers of management management between myself.
Aaron Grey: So it's way more than just a cost reduction.
Aaron Grey: Appreciate the color and look that you provided, including kind of the management style that you're looking to take, you know, with the business with streamlining some of the operations, you know, in line with that, you know, it'd be great to get some additional color, maybe in terms of what you're seeing as more of the near term, low hanging fruit opportunities versus actions in place that will benefit you in the long term. And then if we think about, you know, what will be the key, you know, levers that you're going to have to ultimately get to that, you know, positive adjusted EBITDA.
Aaron Grey: Exercise it is really a change in the culture of all we go to market and I'll tell you honestly I'm extremely.
Judy: And our sales leadership.
Judy: So as you can imagine decisions are made much faster. We're pushing this is this isn't making down in the organization.
Aaron Grey: Encourage by the reaction of the organization these are individual's quality.
Aaron Grey: <unk>.
Judy: Allowing us to have the right data at the right time make the right decision and a much much swifter miners than we did.
Aaron Grey: Talented individuals who want to win and now we're giving them the tool and most importantly, the structure the processes that will allow them to go out there and compete and win.
Judy: So it's way more than just a cost reduction.
Aaron Grey: I know you're not giving a timeline now, but, you know, we've talked about in the past that it's really going to come down to, you know, getting a growth driver on the top line. So where are you seeing the best opportunity for that? Maybe via Storz and Bickel, International or Canadian. So, you know, some, I know there's a lot in there, but maybe some high level, you know, commentary on that would be appreciated now that you've been at the helm a little bit longer.
Brennan Cunnington: Next question comes from Brennan Cunnington at HEB capital markets. Please go ahead.
Judy: Exercise it is really a change in the culture of all we go to market and I'll tell you honestly I'm extremely.
Speaker Change: Hi, This is Brian on for Frederico, Thanks for taking my questions.
Brennan Cunnington: Regarding acreages under performance. So in addition to your earlier commentary on Ohio, New Jersey underperforming expectations based on the company's losing certain new York's weekend, hopefully safely assume that that's also been a very challenging market for them.
Judy: Encouraged by the reaction of the organization these are individual's quality.
Judy: Yes.
Judy: Talented individuals who want to win and now we're giving them the tools and most importantly, the structure the processes that will allow them to go out there and compete and win.
Luc Mongeau: Thank you. Fantastic. You know, for me, I look at the business, I look at fiscal 25, we ended up with minus 23 million of EBITDA. We're focusing, we've identified 20 million of cost reductions, that gives you a bit of dimensions there. We're going up to the 20 million very aggressively, as fast as we can. Most importantly, it's about the growth. And the growth, we're very bullish on our medical business. We know this business in Canada is doing extremely well for us, and it was not getting the full attention that it deserves. So we're talking about a business that grew up double digits in fiscal 25.
Brennan Cunnington: So just curious what other factors are really underpins the underperformance of acreage and how should we be thinking about canopy USA more broadly going forward.
Brennan Cunnington: Next question comes from Brennan Cunnington at HEB capital markets. Please go ahead.
Aaron Grey: Sure. So I think we provided a lot of details already on and my pre care prepared comments, but really I think we've said in previous calls that acreage is performance in 2024 was challenged by its liquidity and credit challenges the company was public until the.
Speaker Change: Hi, This is Brian on for Frederico, Thanks for taking my questions.
Judy: Regarding acreages under performance. So in addition to your earlier commentary on Ohio, New Jersey underperforming expectations based on the company's losing certain new York's weekend, hopefully slightly as soon as that's also been a very challenging market for them.
Aaron Grey: The close of the acquisition in December their public filings through September quarter, and that I think shows the performance was challenged.
Judy: So just curious what other factors are really underpins the underperformance of acreage and how should we be thinking about canopy USA more broadly going forward.
Aaron Grey: And I think the key driver really was the underperformance in Ohio that I think a lot of the market participants expected to open.
Judy: Sure. So I think we provided a lot of details already on in my prepared prepared comments, but really I think we've said in previous calls that acreage is performance in 2024 was challenged by its liquidity and credit challenges the company was public until the.
Luc Mongeau: We have the engine, we have the right products, we have the right back of the house there. So this business is now reporting directly into me and we're giving it the attention it deserves. At the same time, we combine our medical business in Europe and Australia with the leadership of that Canadian business, so now we're fully integrated. I'll be honest, we're disappointed with our 25 global medical results, and the key driver of that was inconsistency of supply. We have a great team in Germany. We have a great operation in Germany. When we're in stock, we know we can bring a great quality of flour at the right price.
Aaron Grey: With a lot of growth potential and unfortunately, even as we sit here today, it's still not a full adult use market. So there was a <unk>.
Aaron Grey: <unk> underperformance relative to your expectations in Ohio.
Judy: The close of the acquisition in December or public filings through September quarter, and that I think shows the performance was challenged.
Aaron Grey: And based on the underperformance of Ohio.
Aaron Grey: Liquidity challenges really continues to persist, which also then impacted their ability to invest and grow in other parts of their core markets, including New Jersey, as well as New York So.
Judy: And I think the key driver really was the underperformance in Ohio that I think a lot of the market participants expected to open.
Judy: With a lot of growth potential and unfortunately, even as we sit here today, it's still not a full adult use market, but there was a.
Aaron Grey: That is the situation.
Aaron Grey: Today.
Aaron Grey: We are so bullish on the long term potential of the U S market.
Judy: <unk> underperformance relative to your expectations in Ohio.
Aaron Grey: But I think the situation today is that there has been.
Judy: And based on the underperformance of Ohio.
Aaron Grey: Underperformance relative to really acreage as expectations, primarily because of Ohio.
Luc Mongeau: We know how to distribute it. When we're in stock, we do extremely well. Just too many interruptions in supply has led to a bunch of false starts.
Judy: Liquidity challenges really continues to persist, which also then impacted their ability to invest and grow in other parts of their core markets, including New Jersey, as well as New York So.
Speaker Change: Ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Luc Mongeau: So we're focusing on really near to us opportunities that we know will pay back and should pay back relatively swiftly.
Speaker Change: Next question comes from Pablo <unk> Associates. Please go ahead.
Judy: That is the situation.
Speaker Change: Thank you good morning, everyone. Luke congratulations on the progress you've made since you started.
Judy: Today.
Judy: We are so bullish on the long term potential of the U S market.
Speaker Change: My question is about you've talked in the call about inconsistencies in the supply chain, especially for international.
Luc Mongeau: Then we look at Canadian REC. We believe in Canadian REC. It is a big market. It's a $5 billion market. There are significant opportunities for players who are focused. So in the past, we used to be, you know, we played, we tried to play in every single categories and subcategories. So we took decisive action in recent months. As I said, we streamlined the portfolio, but most importantly, we're focusing with clear intentionality in the large segments where we know we can compete and we can provide consistent supply. You probably heard about it. We launched Playborn, for example, at the end of fiscal 25.
Judy: But I think the situation today is that there has been a.
Speaker Change: Can you talk about how youre thinking about in terms of investing in our supply chain, whether you need to have more control over supply one more supply whether it in kind of at a kind of overseas and.
Judy: Underperformance relative to really acreage is expectation primarily because of Ohio.
Judy: Ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Speaker Change: And by the same token understood in terms of the reorganization and alignment, but will you need to make more investments downstream in international industrial route to market.
Speaker Change: Next question comes from Pablo <unk> Associates. Please go ahead.
Speaker Change: Thank you good morning, everyone. Luke congratulations on the progress you've made since you started.
Speaker Change: Can touch on that.
Speaker Change: Just a separate one if I may add a second one.
Speaker Change: My question is about you've talked in the call about inconsistencies in the supply chain, especially for international.
Speaker Change: We don't hear many companies talk about Canadian medical and of course, you know very good performance. There. If you can just give US a reminder of how that market is doing it seems to be declining, but theres more reimbursement.
Judy: Can you talk about how youre thinking about in terms of investing in our supply chain, whether you need to have more control of our supply one more supply whether it in kind of at a kind of a or overseas and.
Speaker Change: The outlook for that market market share getting potential if we can do more correlated with you. Thank you.
Judy: And by the same token.
Judy: In terms of the reorganization and alignment, but will you need to make more investments downstream in international industrial route to market.
Aaron Grey: Yes, good morning.
Luc Mongeau: The brand is already number three in some regions. So when Canopy focuses, we know Canopy can be successful. So short answer, we're focusing on the action, on the opportunities that are the nearest to us with the highest potentials for return.
Aaron Grey: It's probably three questions in there so let me start with the supply so we don't.
Judy: I can touch on that.
Aaron Grey: As I said earlier, we're focusing on the opportunities that are very near.
Speaker Change: Just a separate one if I may ask a second one.
Judy: We don't hear many companies talk about Canadian medical and of course, you know very good performance. There. If you can just give US a reminder of how that market is doing it seems to be declining, but theres more reimbursement.
Aaron Grey: Right in front of US right now so for global medical it's all about consistency of supply.
William Kirk: This is a question from Bill Kirk at Rothkapp. Hi, thanks for taking the call, or taking the questions.
Aaron Grey: I'll simplify the what the situation was we have a global organization that was functioning and great parks.
Judy: What's the outlook for that market market share gain potential if we can do more corollary would help thank you.
Luc Mongeau: You know, we've heard versions of increased focus or streamlining operations, cost-savings programs. We've heard those before, so I guess, Luke, what truly makes today's conversation incremental to the programs of the past and the progress of the past? Yeah, I cannot really comment that much on what was said in the past, but I can assure you that from my perspective, the actions that we're taking are dramatically streamlining the organization. So from my point of view, I inherited an organization that was set up, for lack of a better word, like a large corporation that worked at organizations that were billions of dollars.
Speaker Change: Yes. Good morning, just probably three questions in there so let me start with the supply so we don't.
Aaron Grey: Independently of the rest of the organization and combined that we are the supply chain that was really much led by our Canadian.
Speaker Change: As I said earlier, we're focusing on the opportunities that are very near.
Aaron Grey: <unk> business and so you can imagine.
Speaker Change: And right in front of US right now so for global medical is all about consistency of supply.
Aaron Grey: The lack of connections the conflicting.
Aaron Grey: Priorities and agenda.
Judy: I'll simplify the what the situation was we added global organization that was functioning and great parks.
Aaron Grey: So with the restructuring we've pretty much.
Aaron Grey: And we've made are eliminated.
Aaron Grey: What I would call Dysfunctionality.
Judy: Independently of the rest of the organization.
Aaron Grey: Two.
Judy: And combined that we are the supply chain that was pretty much led by our Canadian Rec business and so you can imagine.
Aaron Grey: To characterize a little bit and we were in a place now where we're way better.
Aaron Grey: Quick to decide what we planned what we cultivate what we rvs and where we distribute this flower, allowing the decisions to be made ultimately by myself to allocate the flower to the.
Luc Mongeau: I've inherited what I would qualify as a large corporation structure.
Judy: The lack of connections the conflicting.
Luc Mongeau: We're transforming the organization, its culture into fighting business units, focused, streamlined fighting units with just the right amount of centralized core capabilities to really enable these units to win. I'll give you an example. In Canadian REC, we eliminated two layers of management between myself and our sales leadership. As you can imagine, decisions are made much faster. We're pushing decision making down in the organization, and it's allowing us to have the right data at the right time, make the right decision in a much swifter manner than we did in the past. So it's way more than just a cost reduction exercise.
Judy: Priorities and agendas.
Judy: So with the restructuring we've pre March.
Aaron Grey: Best opportunity in the market.
Judy: And we've made it eliminated what.
Aaron Grey: So as you can imagine where central centralized supply chain team centralized sales and operations process, we get the demand signals now from across every single business unit.
Judy: I'd call Dysfunctionality.
Judy: Two.
Judy: To characterize a little bit and we were in a place now where we're way better.
Judy: Equip to decide what we planned what we cultivate what we rvs and where we distribute this flower, allowing the decisions to be made ultimately by myself to allocate the flower.
Aaron Grey: <unk>, which wasn't the case before which allows us to make the right decisions every single step of the growing process.
Aaron Grey: Well with centralized resources, we now can get lower materials.
Judy: So the best opportunity in the market.
Judy: So as you can imagine where central centralized supply chain team centralized sales and operations process, we get the demand signals now from across every single business unit the units, which wasn't the case before which allows us to make the right decisions every single.
Aaron Grey: In.
Aaron Grey: The open markets.
Aaron Grey: <unk> will allow us to take our service levels much higher than they've been.
Luc Mongeau: It is really a change in the culture of how we go to market. And I'll tell you honestly, I'm extremely encouraged by the reaction of the organization. These are individuals qualified in the 12th... talented individuals who want to win. And now we're giving them the tool, most importantly, the structure, the processes that allow them to go out there and compete and win.
Aaron Grey: So we don't foresee in the near future having to make any investments too.
Aaron Grey: To allow us to capture these opportunities.
Judy: <unk> steps of the growing process as well with centralized resources, we now can get lower materials.
Speaker Change: And I guess I'll touch on the medical Canada medical performance and Pablo and Youre right. We have not in the past spoke a lot about our medical business. It's really has been performing.
Judy: In.
Judy: The open markets, which truly will allow us to take our service levels much higher than they've been.
Speaker Change: In a successful way from a market perspective, I think there's not a lot of data out there, but we think the market was down in the mid single digit rate.
Brenna Cunnington: This question comes from Brenna Cunnington at ATP Capital.
Judy: In the past so we don't foresee in the near future having to make any investments too.
Brenna Cunnington: Hi, this is Brenna for Frederico. Thanks for taking our questions. Regarding acreage's underperformance. So in addition to your earlier commentary on Ohio, New Jersey underperforming expectations, based on the company's losing stores in New York weekend, hopefully, that's also been a very challenging market for them. So just curious what other factors have really underpinned the underperformance of acreage? And how should we be thinking about Canopy USA more broadly, going forward? Sure, so I think we've provided a lot of details already in my prepared comments, but really, I think we've said in previous calls that Acreage's performance in 2024 was challenged by its liquidity and credit challenges.
Speaker Change: We think we are number two in the market share and I think you have also access to some of the information from some of the leading players in the marketplace. We've outperformed in the market. So we were up 16% and Canada medical as I said market was down kind of in the mid single digit rate and I think our loss.
Judy: To allow us to capture these opportunities.
Judy: And I'll I guess I'll touch on the medical Canada Medical performance and Pablo and Youre right. We have not in the past spoke a lot about our medical business. It's really has been performing.
Judy: In a successful way from a market perspective, I think there's not a lot of data out there, but we think the market was down in the mid single digit rate.
Speaker Change: Just competitor was up sort of in the 4% rate. So we have outperformed and we are gaining market share. The team has really been focused on.
Speaker Change: <unk> really growing.
Judy: We think we are number two in the market share and I think you have also access to some of the information from some of the leading players in the marketplace. We've outperformed in the market. So we were up 16% and Canada medical as I said market was down kind of in the mid single digit rate and I think our loss.
Aaron Grey: The patients that provide us with the highest value and really providing.
Speaker Change: That patient as well as the broader patient group the best customer experience our spectrum online store is.
Luc Mongeau: The company was public until the close of the acquisition in December, their public filing through September quarter end that I think shows the performance was challenged. And I think the key driver really was the underperformance in Ohio that I think a lot of the market participants expected to open with a lot of growth potential. And unfortunately, even as we sit here today, it's still not a full adult use market. So there was a sizable underperformance relative to the expectations in Ohio. And based on the underperformance of Ohio, the liquidity challenges really continue to persist, which also then impacted their ability to invest and grow in other parts of their core markets, including New Jersey, as well as New York.
Speaker Change: Is the highest I think quality ended the feedback we get from the customer experience on the products, then and just a broader experience has been really tremendous and so team is continuing to really focus on going after those and making sure that they're continuing to get that experience from from Ah patients.
Judy: Just competitor was up sort of in the 4% rate. So we have outperformed and we are gaining market share. The team has really been focused on.
Judy: <unk> really growing.
Judy: The patients that provide us with the highest value and really providing.
Aaron Grey: Joining perspective, and as Luke said, we're trying to leverage also that experience and that knowledge into our international medical markets.
Judy: That patient as well as the broader patient group the best customer experience our spectrum online store is.
Aaron Grey: Thank you. This concludes canopy growth's fourth quarter and fiscal year 2025 Finance results conference call.
Judy: Is the highest I think quality ended the feedback we get from the customer experience on the products and and just the broader experience has been really tremendous and so team is continuing to really focus on going after those and making sure that they're continuing to get that experience from patients.
Aaron Grey: A replay of this conference call will be available until August 28, 2025, and can be accessed following the instructions provided in the company's press release issued earlier today.
Luc Mongeau: So that is the situation today. We are still bullish on the long term potential of the U.S. market. But, you know, I think the situation today is that there's been underperformance relative to really Acreage's expectation, primarily because of Ohio.
Aaron Grey: Canopy Costa Investor Relations team will be available to answer any additional questions.
Judy: Journey perspective, and as Luke said, we're trying to leverage also that experience and that knowledge into our international medical markets.
Aaron Grey: You for attending today's call.
Judy: Thank you. This concludes canopy growth's fourth quarter and fiscal year 2025 financial results Conference call.
Tyler Burns: Ladies and gentlemen, as a reminder, should you have any questions, please press star 1.
Judy: A replay of this conference call will be available until August 28, 2025, and can be accessed following the instructions provided in the Companys press release issued earlier today.
Pablo Zuanic: question comes from Pablo Zuanic at Zuanic and Associates. Please go ahead. Thank you.
Luc Mongeau: Good morning, everyone. Luc, congratulations on the progress you've made since you started. My question is about, you've talked in the call about inconsistencies in the supply chain, especially for international. Can you talk about how you're thinking about in terms of investing on supply chain, whether you need to have more control over supply, own more supply, whether in Canada or overseas? And by the same token, understood in terms of the reorganization and alignment, but would you need to make more investments downstream in international in terms of route to market, if you can touch on that?
Judy: Canopy cost Investor relations team will be available to answer any additional questions.
Judy: You for attending today's call.
Judy: [noise].
Judy: Okay.
Judy: Yeah.
Luc Mongeau: And just a separate one, if I may add a second one. We don't hear many companies talk about Canadian medical, and of course, very good performance there. If you can just give us a reminder of how that market is doing, it seems to be declining, but there's more reimbursement. What's the outlook for that market, market share gain potential? If you can give more color there, it will help. Thank you.
Judy: Okay.
Luc Mongeau: Yeah, good morning. There's probably three questions in there. So let me start with the supply. So we don't, you know, as I said earlier, we're focusing on the opportunities that are very near and right in front of us right now. So for Global Medical, it's all about consistency of supply. And I'll simplify what the situation was. We had a global organization that was functioning in great part, independently of the rest of the organization, and combine that, that we had a supply chain that was pretty much led by our Canadian REC business. And so you can imagine the lack of connections, the conflicting priorities and agendas.
Luc Mongeau: So with the restructuring, we've pretty much eliminated what I call dysfunctionalities to characterize a little bit. And we're in a place now where we're way better equipped to decide what we plant, what we cultivate, what we harvest, and where we distribute this flower, allowing the decisions to be made ultimately by myself to allocate the flower to the best opportunity in the market. So as you can imagine, we're a centralized supply chain team, centralized sales and operations process. We get the demand signals now from across every single business unit, which wasn't the case before, which allows us to make the right decisions at every single step of the growing process.
Luc Mongeau: As well with centralized resources, we now can get flower materials in the open markets, which truly will allow us to take our service levels much higher than they've been in the past. So we don't foresee in the near future having to make any investment. to allow us to capture these opportunities.
Luc Mongeau: And I guess I'll touch on the medical Canada medical performance. And Pablo, you're right, we have not in the past spoke a lot about our medical business, which really has been performing, you know, in a successful way. From a market perspective, I think, you know, there's not a lot of data out there, but we think the market was down in the mid single digit rate. We think we're number two in the market share. And, you know, I think you have also access to some of the information from some of the leading players in the marketplace.
Luc Mongeau: We've outperformed in the market. So we were up 16% in Canada medical, as I said, market was down, kind of in the mid single digit rate. And I think our largest competitor was up sort of in the 4% rate. So we have outperformed and we are gaining market share. The team has really been focused on really growing the patients that provide us with the highest value and really providing that patient, as well as the broader patient group, the best customer experience. Our Spectrum online store is the highest, I think, quality and the feedback we get from the customer experience on the products and just the broader experience has been really tremendous.
Luc Mongeau: And so the team is continuing to really focus on going after those and making sure that they're continuing to get that experience from a patient journey perspective. And as Luke said, we're trying to leverage also that experience and that knowledge into our international medical market.
Luc Mongeau: Thank you.
Tyler Burns: This concludes Canopy's growth fourth quarter and fiscal year 2025 financial results conference call. A replay of this conference call will be available until August 28, 2025, and can be accessed following the instructions provided in the company's press release issued earlier today. Canopy Growth's Investor Relations Team will be available to answer any additional questions.
Thank you for attending today's call.